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 The many extracts on these pages are from copyright material. they are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made.

West Australia

The extracts quoted on this page are from copyright material, copyright held by the quoted entities or their owners. The extracts are reproduced here to foster discussion in the public interest. I believe this is legitimate. They should not be reproduced for profit or for any other purposes.

Introduction and Overview

This page describes some of the developments in Western Australia and the implementation of privatisation policy. I do not have information on co-locations in WA. The state now has a labour government and no more privatisations are planned.

Markalinga, AME and Mayne Nickless:- Markalinga had been founded by a group of citizens in Perth and my information is that this was a community focused for profit enterprise with a mission. It had maintained a patient centred service in Perth and Sydney. It owned Perth's main private hospital - the Mount Hospital. By 1991 it faced bankruptcy and it sold a controlling interest to the US company National Medical Enterprises (NME). A report recommending the sale was prepared for shareholders by Arthur Anderson. It did not mention the scandal engulfing the company in the USA. Shareholders voted in ignorance. Markalinga was renamed Australian Medical Enterprises (AME). AME dominated private care in Perth. It enjoyed strong government support. NME's US conduct and its less than frank disclosures to regulatory bodies was confirmed by court proceedings. It sold up in Australia in late 1995. AME was purchased by Mayne Nickless and incorporated into its expanding empire. Mayne Nickless had been poorly represented in West Australia.

Privatisation:- The privatisation of public hospitals in Western Australia follows much the same pattern as that in NSW. In 1996 a coalition government awarded the contract to build and operate a modern high technology 311 bed hospital at Joondalup. The hospital was opposed by the labour government and some community groups.

The project was soon mired in controversy. Once again an independent report by the auditor general was scathing about the contract which was clearly ideologically based. He indicated that there was no demonstrable economic advantage to the community of the privatisation and that the arrangements left loopholes which would give Mayne Nickless opportunities to manipulate the service and the care given to patients for profit.

This criticism is particularly relevant because this is exactly what Mayne Nickless is now accused of, not only in Port Macquarie but across Australia.

I have not found reports to suggest that care was seriously compromised during the early years. Since Smedley's appointment to run the company in 2000 this has changed. Not only has there been a bitter dispute about the downgrading of nursing care but there are reports in the press of a series of fatalities at the Joondalup hospital which the circumstances suggest should not have occurred. While it is difficult to draw firm conclusions from a small number of press reports the circumstances described point to deficiencies in care involving process and staffing. The hospital adopted an impersonal legalistic approach to these deaths.

In addition to this the company is once again in conflict with Professor Fels and the ACCC. This time there are allegations of indulging in anticompetitive price fixing with the AMA. Both have been taken to court.

The press reports tell the story.


Australian Medical Enterprises (AME)


The acquisition of AME, which is by far the largest ever made by Mayne Nickless, is an exciting development for the Company. It provides a very strong strategic fit with HCoA. The two groups have been moving into high technology, mainstream hospital services; establishing cooperative ventures with public sector authorities and, integrating related health services, such as pathology services. Both have very high calibre management expertise.

AME also provides a strong base for growth in WA, as well as into the Asian region. AME's facilities match extremely well with those of HCoA.

AME owns and operates four hospitals in WA, including the Mount Hospital, a major specialist hospital in Perth, and five hospitals in New South Wales. Its sixth hospital, the St George Private Hospital in Sydney, has just opened. Including St George, AME manages over 800 beds in Australia.

AME is also the major pathology provider in Western Australia and the Northern Territory through its Western Diagnostics business and this will complement our pathology practice, Sugerman's, in Sydney.
MAYNE NICKLESS LIMITED: Chairman's Address At AGM (Part B), Australian Stock Exchange Company Announcements 14 November 1995


The Joondalup privatisation

The full benefits of other recent, substantial projects such as Melbourne Private Hospital are starting to emerge. HCoA has maintained its strategy of moving into the provision of high technology, acute services, and into joint venture arrangements with the public sector, as well as maintaining an active acquisition and divestment program.

We have been selected as the preferred operator for the Joondalup Health Campus in the growing northern suburbs of Perth, and have been shortlisted for another major public/private hospital development in Mandurah just south of Perth.
MAYNE NICKLESS LIMITED: Chairman's Address At AGM (Part B), Australian Stock Exchange Company Announcements 14 November 1995

JOONDALUP TO BE STATES THIRD BIGGEST HOSPITAL The $50 million redevelopment of the Wanneroo Hospital, which is set to treble in size and be renamed the Joondalup Health Campus, will begin on June 1 following today's signing of contracts by the developer and operator, Health Care of Australia, and the Government of Western Australia. Joondalup Health Campus will be Western Australia's third biggest hospital for treating public patients and will incorporate for the first time separate private patient facilities.
The Joondalup Health Campus will quadruple the number of beds available at the local hospital (from 84 to 335, including 70 private beds), allowing the annual number of patient bed days to treble to about 61,300 in the first year of opening.
These services and facilities include intensive care and coronary care, day surgery, an endoscopic unit, paediatric unit, psychiatric unit, restorative care and day hospital for the aged, day oncology, renal dialysis, a medical centre, community health centre and hydrotherapy pool.
Mr Day also announced that HCoA planned to make Joondalup Health Campus a teaching hospital, with links to specialist units at Royal Perth, Sir Charles Gairdner, Princess Margaret and King Edward Hospitals.
The redevelopment will be completed in stages, from May 1997 to April 1998.
MAYNE NICKLESS LTD: Contract Signing For Heath Campus - Joondalup WA (Part A), Australian Stock Exchange Company Announcements 24 April 1996

- - - - - - - to build and run the 311-bed Joondalup hospital with an economy wing for 241 public patients and a first class wing for 70 private patients.
Private firm for hospital --- by Sanda O'Malley, West Australia ??? paper ??? date


Criticism of the contract

Mayne Nickless Ltd's Health Care of Australia has defended its reputation as a quality service provider following stiff criticism from the Western Australian Auditor-General of its $58 million development of the Joondalup Health Campus.

In a report tabled in the WA Legislative Assembly, State Auditor-General Des Pearson said HCoA's contract to redevelop the former Wanneroo Hospital, in Perth's northern suburbs, was riddled with the potential for "clinically inappropriate practices" and "selective treatment of patients" to maximise profitability.

He expressed doubt that the Government's estimated cost savings of $21 million over the 40-year term of the contract to build, operate and own the hospital would ever eventuate. He added that there was no indication it would provide greater benefit to the State than if the services were provided by the public sector.
Mr Pearson said the terms of HCoA's contract had been revised after the group was named preferred bidder. The deal offered no direct savings to patients in the cost of their treatment, he said.
The group, which is Australia's biggest private health-care provider, has contracted to operate the public component of the hospital for 20 years, after which control reverts to the WA Government, while it will run the private facility for 40 years.

Mr Pearson said HCoA, as the hospital's operator, had financial incentive to influence admission, treatment and discharge patterns to optimise profitability.

"It is possible . . . for the operator to seek to limit the quantity of services provided where . . . the operator considers it not to be in its commercial interests," he said.

The report said the operator could "discharge some patients early" to minimise costs, which "could have a negative impact on the overall quality of care . . . and could increase the cost of community health services funded by the Department (of Health)".
WA Auditor Blasts Hospital Project , Australian Financial Review 2 January 1998

The WA Auditor-General conducted a Performance Examination examining these claims in late 1997. This review found that the contract price for services provided for no direct savings in service prices, and reduced the flexibility and competitiveness of new services and facilities, limited the government’s control over quality of services, and provided financial incentives for the private operator to influence admission, treatment and discharge patterns.

The conclusion was that there was no reliable information to establish that the contract provides net tangible benefits to the State relative to the public sector alternative from either services or facilities.
Case Studies of Public Hospital Privatisation by Meredith Carter, Health issues Centre Journal September 1998


Downsizing Nursing ?

Mayne's attempt to downsize nursing by using relatively untrained nurse aids and keeping staffing levels down closely follows the strategies adopted by US health and aged care chains. The consequences for care are described in web pages on this site.

The consequences for care are obvious to nurses and doctors. Both are now aware of the US experience. It is more difficult for Mayne to impose these changes in public hospitals than in private facilities where there is less scrutiny. The dispute is therefore more public in Port Macquarie and Joondalup. The reports reveal Mayne's reluctance to negotiate and address the issues - until the government intervened.

NURSES say they will start closing beds at the Joondalup Health Campus from February 5 if nursing assistants are hired in place of nurses.
Hospital management has told staff representatives that the assistants' duties would include managing patients with naso-gastric tubes and observing patients receiving blood transfusions.

Australian Nursing Federation State secretary Mark Olson said nurses considered the move a recipe for disaster. They wanted a guarantee from hospital operator Mayne Health by February 5 that the plan would not be introduced. If they did not get it, the nurses would close beds.
Labor spokeswoman Judy Edwards said the proposal was an example of the dangers of privatisation. Labor would review the confidential contract.
Joondalup Nurses Give Ultimatum, The West Australian 26 January 2001

ANF State secretary Mark Olson said Mayne Health's national nursing director had refused to clarify the proposed role of the assistants or their qualifications at a meeting yesterday.

The ANF had been told Mayne Health executives would reconsider the proposal but had given the nurses' body no reason to be optimistic.
Nurses Needled By Joondalup Silence, The West Australian 31 January 2001

ABOUT 70 nurses at Joondalup Health Campus have threatened to resign if a plan to introduce nursing assistants goes ahead.
Health Minister John Day said the Government had a commitment from Mayne Health that nursing care would not be provided by any staff other than those clinical staff qualified to do so.
Joondalup Nurses In Quit Threat, The West Australian 5 February 2001

NURSES working at Joondalup Health Campus have decided not to close beds in protest at a decision by the hospital's operator, Mayne Health, to introduce nursing assistants.
Policewoman Shot Dead, The West Australian 6 February 2001

In fact, if anything Federal Labor’s stance on a similar matter at another Mayne Nickless hospital, the Joondalup Health Campus in Western Australia, should give the Coalition reason for optimism.
Federal Opposition health spokeswoman Jenny Macklin last year said a Labor government would set up an independent inquiry into the contracts and operation of the formerly public though recently privatised hospitals.
Upper House inquiry into base hospital, Port Macquarie News 6 April 2001


Failures in care

Four disturbing incidents in late 2000 and in 2001 point to problems in the hospital, which may be related to Smesley's new policies. A definitive opinion cannot be based on press reports alone and my comments are tentative only. Humans are fallible and mistakes do occur despite all attempts to prevent them. A cluster of events is more disturbing. The concern is that the focus of the hospital has been directed away from care. Human resources and motivation have been misdirected. Most apparent is the absence of processes to ensure safe care and effective backup for staff in training. There is much to suggest that this acute public hospital in one of Australia's main cities is being run like a third rate cottage hospital. I am aware of similar concerns about processes to ensure safe practices at Port Macquarie in NSW.

The death of a child due to the administration of incorrect medication clearly exposes a lack of process including proper checks and documentation in the handling of drugs. This can be due to the absence of proper processes, a failure to adhere to them, overworked staff (understaffing), untrained staff, too many agency nurses or poor staff morale. All of these things can occur when the hospital is focussed on profit rather than care. In this instance a child died following a massive overdose of a drug. In spite of this a second child was given 10 times the dose of another less lethal drug 1 year later.

Wrongly certifying a child as dead in a toddler suggests a lack of experience in junior staff at the hospital and the absence of a resuscitation protocol. Resuscitation of a child would usually be initiated by the first nurse or doctor on the scene. This hospital claims to be a high technology institution. In most big hospitals a well rehearsed emergency call system calls out a team, a resuscitation trolley and an experienced clinician to take charge. They arrive on the scene within 2-3 minutes. Resuscitation is maintained by the emergency team until an experienced clinician decides that there is no hope.

In this instance the child had been immersed in water for a period then resuscitated for over an hour. It was certain that he would be hypothermic yet no one took his temperature. Anyone who has worked in an operating theatre, in emergency medicine, and who has experience with children would be familiar with the problems caused by low core temperatures.

The reports on this case suggests unsupervised inexperienced staff, the absence of a protocol, inadequate training, no responsible person on call, a lack of supervision of trainees, and the absence of a program of ongoing education - in short a third rate cottage hospital. The concern is that these omissions are because the attention of those who organise the hospital are directed elsewhere - to the business of the market.

In the third case a patient bled to death from the portal vein during a gall bladder operation. The coroner was critical of a poorly written medical record. There is a very rare condition where an abnormality of the portal vein can result in injury and torrential life threatening bleeding which is difficult to control. I have encountered this situation only once in over 40 years of gall bladder surgery. This does not appear to be the problem in this case.

The portal vein normally lies some way from the gall bladder and is protected by the bile ducts which are more easily injured. One would need to be some way off course to injure the portal vein when removing the gall bladder. The portal vein is a low pressure system and bleeding can usually be controlled by pressure until a competent surgeon able to deal with the situation is called in. This case suggests to me that the operation was being conducted by a relatively inexperienced junior surgeon, who failed to call for help when he needed it, and that he was not being adequately supervised.

This can happen when less well trained overseas doctors who have not been assessed by the Australian Medical Council are used to staff hospitals and are not properly supervised. While most foreign doctors are competent some are unaware of their limitations. Mayne Nickless has been critical of the restrictions imposed by professional bodies on the practice of overseas doctors. They have pressed for increased use of these doctors.

I have helped organise teaching courses for foreign doctors and helped them to upgrade their skills. I also examine foreign doctors for the AMC. Most of the doctors are competent but there are a number who need retraining and others whose basic training is so deficient that they are most unlikely to reach an acceptable standard. While the AMC exams are the best we have been able to devise they are not infallible in weeding out problem doctors. Some doctors getting experience in hospitals before writing the exam need particularly close supervision. Those who pass the exam may not be familiar with the Australian system and still need support and guidance. Mayne's advocacy for the employment of foreign doctors concerns me lest this played some part in these unfortunate events.

Clearly comments without all the facts can only be very tentative - but four in a row is just too worrying.

The hospital's reluctance to meet and openly discuss what happened with the families of the patients, explaining what steps were being taken to prevent further occurrences is particularly disturbing. They advised the doctor in one case against speaking to the family about what had happened and apologising. This legalistic brick wall is typical of the corporate approach to deficiencies in care. Nothing could do more to fuel distrust and raise suspicions that the same thing could happen to others. It is concern that this sort of disaster could happen again which causes relatives to go to court. The wrong medication case illustrates this well. A brick wall is what first alerted me to possible problems in Tenet/NME's hospitals. I investigated further and what I found contributed to Tenet/NME's failure in Australia. I can understand how these parents feel and the concern is that if they were allowed to investigate further they might find that failures in the administration of drugs was common and that only a few unfortunates die. Widespread errors in drug administration have been exposed in understaffed and deskilled US corporate owned nursing homes. The occurrence of a second case suggests that this may well be the situation in Joondalup.

A POLICE officer called to a private hospital to investigate the death of a baby boy said yesterday he was amazed to find the toddler was still alive.

The toddler, 2, had been pronounced dead by hospital staff an hour and a half after apparently drowning in the family pool at Kinross, north of Perth.
Const Walker arrived at the hospital 20 minutes later and was taken to the child's bedside where the grieving parents waited, when he noticed the toddler breathing.

"You could see his nostrils were flaring and his chest was rising, so I alerted the medical staff and they took over," Const Walker said.
Hospital bungling declares tot dead, Courier Mail August 16, 2000, Wednesday

The hospital's respiratory paediatrician. Professor Peter Sly, said it was obvious someone had made a terrible mistake when diagnosing his condition.

He said anyone familiar with treating children should have been able to pick up a pulse, even a very weak one.

Professor Sly said the cold water in the pool would have caused the boy's body temperature to drop dramatically, protecting his brain from the decreased oxygen supply.
The boy who came back from the dead ; No pulse, but then toddler starts breathing, The Advertiser August 16, 2000

THE public is entitled to be deeply concerned by events in the past few weeks at the Joondalup Health Campus.

One child has died after being given incorrect medication at the campus and at the weekend another was mistakenly pronounced dead. That child is now in intensive care.

The hospital promised a thorough investigation into the child's death and must surely extend its pledge to the second incident.
That both incidents happened at weekends, when staff levels are reported to be low, is another concern which the hospital must address.

The history of the Joondalup Health Campus, opened in 1998 as the first non-government hospital in the State to provide significant medical services for public patients, has been vexed.

There have been complaints from patients and allegations of price-fixing of medical services have been levelled by the Australian Competition and Consumer Commission against its operator, Mayne Nickless.

The campus is faced with difficult and sometimes conflicting roles - of making money as a private health provider and meeting the needs of public patients. Its opponents have also criticised the amount of public money which has been pledged to the hospital.

Joondalup's owners must prove clearly that the tragic death of a child and the bizarre premature pronouncement of the death of another are not attributable to those conflicts.
Hospital Must Explain Incidents, The West Australian 16 August 2000

It is the second incident - - - and comes as experts urge greater accountability and management changes in the private sector.
Trowbridge Consulting's health practice spokesman Bruce Howe told a Victorian Health Benefits Council meeting last month research was challenging the notion that Australia had an efficient healthcare system.

"The need for change in the private hospital sector is self-evident," Mr Howe said. "Yet the positions of certain sectors of private medicine are often so entrenched as to require a reality check."

Mr Howe argued that there was no clear public process for measuring and reporting on the failings in private hospitals.

He said these could be a result of processes not being well structured and there was no feedback mechanism to identify issues of process and improve them.
Toddler sparks calls for change, The Australian August 17, 2000

An inquiry into the incident has found a medical team that tried to resuscitate the two-year-old boy, at the Joondalup Health Campus in the city's north, failed to measure the child's core body temperature at the time he was declared dead.
The Health Department investigation also identified problems with drug dispensing and administration systems at the privately managed Joondalup campus -- at which infants have been involved in two adverse incidents in the past two months.
Lazarus boy an 'error of judgment', The Australian August 29, 2000

THIS is the little Perth boy who came back from the dead.

He's a cheeky-faced, blue-eyed marvel named Joshua Van De Klashorst.
One year on he's like any other whirlwind three-year-old and living proof that miracles do happen.

There are no signs of brain damage and instead of spending the predicted four months in hospital, Joshua went home after a few weeks.
Proof miracles really happen; -- Traumatised Josh talks about angels, Perth Sunday Times August 19, 2001

THE parents of a toddler who died after being given the wrong dose of a drug at Joondalup Health Campus are suing the hospital because it will not admit liability for their daughter's death.
Mr Williams said the legal action was taken only as a last resort.

"We have exhausted every other avenue," he said. "They have not admitted liability and that's the really big thing for us - no one is taking responsibility for this. We still have not had anyone turn around and say: 'Sorry I did this and we are working to make sure it doesn't happen again'."

Documents obtained under Freedom of Information by Mr Potter reveal two errors when Julie-Anne was given an anti-seizure drug. Her medical notes show that 260mg of phenytoin was ordered to be administered intravenously over 30 minutes. Hospital staff gave Julie-Anne one gram over 10 minutes.

"How do we know this won't happen to more children," Mrs Williams said.
Dead Toddler's Parents Sue Hospital, The West Australian 25 November 2000

AN INQUEST will begin on February 13 over a toddler who died after allegedly being given the wrong dose of a drug at Joondalup Health Campus.
It is understood Mayne Nickless has since admitted liability and made an offer to the couple which has not yet been accepted.
Onslow Sea Wall, The West Australian 03 February 2001

AS the baby daughter of David and Natalie Williams lay dying in intensive care, a senior doctor confessed that staff had "f...ed up" her treatment, Perth Coroners Court was told yesterday.

Eighteen-month-old Julie Anne was given almost four times the required dose of an anti-seizure drug, the court heard. She went into cardiac arrest after she was intravenously administered 1 gram of phenytoin over 12 minutes, rather than the correct dose of 260mg over half an hour, at Perth's Joondalup Health Campus in July last year.
Later, as the Williams's daughter remained in critical condition, Princess Margaret intensive care specialist Geoff Knight told the parents they "had a right to the truth" -- that tests had revealed staff at Joondalup had given their daughter a "massive dose" of phenytoin.
When Julie Anne fell ill on July 16 and began fitting and frothing at the mouth, her parents rushed her to hospital.

Mr Williams said they were ignored for about an 1 1/2 hours before their daughter was assessed. When a doctor eventually examined Julie Anne, she began convulsing again and was taken to the trauma ward, where anti-seizure drugs were given. She went into cardiac arrest and never regained consciousness.
The nurse who prepared the drug dose, Sandra Smith, said she went into shock when she realised the medication had gone into the baby over a dangerously short period of time.
Doctor 'can't explain' fatality, The Australian February 15, 2001

THE doctor who accidentally administered a fatal drug overdose to baby Julie Anne Williams yesterday ignored the advice of his superiors and apologised to the parents of the 18-month-old in a private meeting at Perth Coroner's Court.
Yesterday, he told the court he was advised by Joondalup Health Campus emergency department director David Cruise it would be inappropriate to apologise to Mr and Mrs Williams and would only "complicate the matter".
Doctor says sorry for death of baby, The Australian February 16, 2001

A man undergoing surgery to remove his gallbladder bled to death when an important vein was cut, - - - - -doctors realised Saunders had too many adhesions and too much inflammation of scar tissue, and converted to open surgery. During the process, the portal vein, which supplies 90 per cent of the blood flow to the liver, was damaged.
Man bled to death in surgery, court told. The West Australian 18 July 2001 -- ABSTRACT - Australasian Business Intelligence:

A Perth coroner has foreshadowed a critical finding by an inquiry into circumstances behind a man bleeding to death in surgery.- - - - - medical notes taken during the surgery were abysmal. - - - her decision - - but indicated it would be critical of the events surrounding Saunders's death.
Notes on fatality "abysmal". The West Australian 20 July 2001 -- ABSTRACT - Australasian Business Intelligence:

DISCIPLINARY action has been taken against a doctor and two nurses at a private hospital in Perth, after an eight-month-old boy was allegedly given a drug dose 10 times the prescribed measure. An 18-month-old girl died at Joondalup in 2000 after an adult drug dose.
Hospital overdose discipline, The Australian February 8, 2002

Anticompetitive Behaviour

The action by the ACCC against the West Australian AMA and Mayne Nickless for alleged anticompetitive behaviour is an interesting development and some background is helpful. Quite where the blame lies is far from clear. Whatever their views on the matter the AMA seems to have been particularly stupid. The affair does illustrate the problems which arise for endeavours which are primarily cooperative when they are forced to conform to market prescriptions and competition policy. This is not to suggest that the earlier method of negotiating remuneration for staff working at public hospitals was optimal or even desirable.

History:- Medicine has been a cooperative endeavour and while doctors compete for patients this is low key. Cooperation in the provision of care and in the interests of patients is the value which is encouraged. Doctors traditionally compete on the basis of service and competence rather than price. The adverse consequences of competition for patients are controlled by ethical codes of conduct - codes which have been put under extreme pressure by economic developments in health care,

With the advent of health insurance recommended standard schedules of fees were established. These could not be negotiated by individuals. Professional bodies have addressed the problem by advising doctors of acceptable charges and by negotiating fee schedules on their behalf. By default they have become industrial organisations. They have the conflicting traditional roles of protecting the public interest and upholding ethical traditions while also filling the new role of acting in the doctors financial interests.

Hospital Appointments:- Until about the 1950's hospital appointments were a loose charitable honorary system - the service given to the poor was free. With the development of insurance and public hospitals, government wanted more control. Contracts and fees were established. These were schedules of fees based on timed sessions. It was not a competitive process in which doctors competed individually to provide services more cheaply. They competed for jobs based on their skill. Patient's were given the best care available. It was not tied to the money paid. With a fixed schedule of fees collective action was needed to negotiate changes.

Industrial action:- The government had far more power than individual doctors and the AMA became involved in discussion and mediation on behalf of doctors. Industrial disputes occurred and doctors sometimes threatened to resign. In the current industrial system you will be exploited if you do not have and do not show a willingness to use some industrial muscle. This has not been something the profession has wanted but something about which there is little choice. The government has used all its muscle to keep payment down so that general practitioners are now overextended and find it very difficult to provide the sort of care their patients need. The profession is drawn from the top 3% of Australian graduates and when placed in this position it could be expected to be successful in its response.

Downsizing professionalism:- Professionalism is seen by economists as no more than a system for ripping the public off and I agree some criticism is justified. The problem is not the diagnosis of the problem but the frames of understanding used, the solution proposed and the aggression with which it is pursued. Graeme Samuel (National Competition Council) and Alan Fells (ACCC) have been particularly vociferous in their attack on the professions and professionalism. Instead of dealing with the problems engulfing professionalism they have thrown out the baby with the bath water. In 1996 the government brought in regulations which forced the professions to comply with competition policy and market practices - effectively forcing the profession to identify with one of the strongest forces causing the problems.

Fels had been threatening to prosecute the Medical profession for years. He has taken a particularly hard line when the medical profession brought the problems they had with competition policy to him. There has been an ongoing battle of words as professional bodies have tried to explain the problems and Fels has attacked them.

The anticompetitive practices in WA:- The AMA in WA claim that in 1995 they became involved in three cornered discussions with the WA government which ran the existing hospital, and with Mayne Nickless in regard to staffing and payment of doctors at the new Joondalup public hospital. There had been difficulty in attracting enough visiting staff at the old public hospital. The press reports suggest that the discussions took the usual industrial bargaining form with threat and counter threat. This is not a desirable system for fixing salaries but it had become the established way of dealing with staffing issues and the AMA did not start this.

In 1996 the profession became subject to competition policy and doctors who were in individual private practice were required to negotiate as individuals with the government and big companies - a rather steep level playing field. Any form of collective bargaining or negotiation was illegal. Protests were ignored and Fels repeatedly made it clear that he would respond strongly to any breeches.

The AMA were at the very least extremely stupid. They claimed that they did not know that what they were doing was illegal and continued the negotiations into 1997. This is difficult to believe as Fels had made no bones about the position and his intention to impose large fines. They claim that when they realised that what they were doing was illegal they themselves reported it to the ACCC and then pleaded guilty and agreed to a fine. It is also probably true that they could not have paid the legal fees and $10 million fine had they contested the charges and lost which was possible if not likely. Needless to say Fels used the conviction to maximum effect in order to make his point. It is not a point I agree with. While there were problems this was not the way to deal with them.

Mayne Nickless have had ongoing battles with the ACCC going back 20 years. They always fight each case to the bitter end. They strongly deny the charges against them and are going to court.

Watchdog starts court action over fee deal at Joondalup
The ACCC will allege in the Federal Court that the AMA's WA branch held Joondalup Health Campus to ransom during negotiations over pay schedules for visiting doctors from 1995 to 1997.

The agreement allowed visiting doctors - both specialists and general practitioners - to change their fees from a sessional basis to a fee-for-service basis.
It created the opportunity of breaking away from existing fee structures but the ACCC will allege that the AMA agreement maintained the status quo.

The ACCC will allege that the agreement had the effect of fixing or controlling prices for medical services supplied by visiting doctors.

The ACCC alleged the AMA also breached primary boycott provisions of the Trade Practices Act when it threatened that the visiting doctors would collectively withdraw their services unless the hospital agreed to the pay negotiations.
Mr Bhojani said Mayne Nickless, operators of Joondalup Health Campus, were joined in the action because they allegedly participated in the price fixing.
"We were trying to get doctors to be attracted to the new campus because the Health Department had experienced significant difficulty in the past getting doctors to work there," she (for AMA) said.
Doctor Price-fixing Alleged, The West Australian 27 July 2000

Australia's competition watchdog has begun its first assault on the bargaining power of the medical profession, launching a price-fixing action against the Australian Medical Association and private health-care giant Mayne Nickless.

The Australian Competition and Consumer Commission began proceedings yesterday in the Federal Court in Perth, alleging the AMA's West Australian branch and Mayne Nickless breached the law in 1997 action which exposes Mayne to penalties of up to $10 million.

The AMA said it would not contest the case but Mayne Nickless was standing firm, arguing the ACCC's claim had ``no foundation''.

``Mayne Nickless did not negotiate with the AMA the fees to be paid to medical practitioners engaged to provide medical services to public patients,'' said Mayne Nickless's chief operating officer, Mr Bill Kirk.
Since 1996, individual professionals have not been able to collude to fix prices without breaching the Trade Practices Act. The law was extended to cover all economic sectors as a key part of the Hilmer competition reforms.
In the WA case, the ACCC alleges the AMA (WA) told Mayne Nickless visiting medical practitioners would withdraw their services unless it agreed to their terms a claim the AMA rejects.
In a statement issued yesterday, the AMA's WA past president, Dr Rosanna Capolingua-Host, said at no stage had it knowingly or intentionally sought to breach the competition laws. The AMA regretted the alleged conduct and had agreed not to contest the case.
Mayne will fight the case it could be fined $10m but the AMA will not.
ACCC Fires First Salvo At Doctor, Australian Financial Review 28 July 2000

Mayne Nickless said yesterday it did not negotiate with the AMA.

The company's chief operating officer, Bill Kirk, said the offers were made to individual doctors.

Under the offer, doctors were given the choice of either being retained by the government or Health Care of Australia, and being paid per session or on a fee-for-service basis.
The AMA branch's former president, Rosanna Capolingua-Host, said it had not intended to breach competition laws.
``These discussions were held to facilitate doctors being attracted to the new campus as the Health Department had experienced significant difficulties in the past,'' Dr Capolingua-Host said.

``The Health Department, AMA and Mayne Nickless had round-table talks to streamline the process of change.

``When the association became aware there may be a breach of the new competition laws, it sought legal advice and, based on that advice, it advised HCoA it was withdrawing from the agreement.

``It also advised the Health Department and Minister for Health. The AMA then formally contacted the ACCC.''
AMA, Health Giant Facing Fines, The Age 28 July 2000

The individual offer to each doctor was based on the option of being retained by the Government or by Health Care of Australia and either being paid on a fee-for-service basis or paid on a sessional basis.
Hospital Operator Denies Price Fixing, The West Australian 28 July 2000

The AMA had pleaded guilty to the charges but Mayne Nickless, joint operator of the 365-bed health campus, has denied it engaged in price fixing and will defend the case at a later date.
A spokeswoman for the WA branch of the AMA, Dr Rosanna Capolingua-Host, said: ``We have cooperated with the commission and certainly there has never been any intent to be in breach of trade practice.''
AMA To Be Fined Over Fees, The Age 7 November 2001

The Federal Court has ordered the Australian Medical Association (WA) to pay $285,000 in fines for price-fixing - the first time a profession has been caught out breaching national competition policy.
"If a doctor chooses to work as an independent or sole practitioner then his or her business decision of setting fees or negotiating contracts must be made on an independent basis, not by
agreements with competitors."
WA - AMA WA fined over price fixing for Perth hospital services.
AAP News 24 December 2001

The ACCC's proceedings continue against the remaining parties to the proceedings, Mayne Nickless, Mayne Health former general manager Martin Day and former Joondalup chief executive Ian MacDonald, who are defending the case.
AMA fined over pay deal at Joondalup, The West Australian 27 December 2001

The AMA's WA president, Dr Bernard Pearn-Rowe, said the ruling dealt with an agreement struck six years ago, which had been ``reached in good faith, not being aware that we were in breach of the act''.
Doctors Attack Ruling In ACCC Price-fixing Case, Australian Financial Review 28 December 2001

Other Privatisations and colocations

A web site I accessed in 1998 and probably written in 1996/7 refers to Mandurah hospital as a public/private hospital run by Health Solutions and Bunbury as a public/private hospital run by a not for profit group. Albany hospital and Kalgoorlie hospital are described as being in the tendering process but I am not sure whether for privatisation or colocation.

As early as 1995 plans to privatise the Sir Charles Giardner hospital were abandoned on a pretext. Tenders were called for the Armadale privatisation in 1998 but when those who had tendered started dropping out the project was abandoned.

I have no information about other privatisations and colocations in Western Australia, nor what happened to these.

Western Australian Health Minister Graham Kierath has backed away from plans to privatise the management of Sir Charles Hospital claiming two tenders, Healthscope Ltd and Ramsay Health Care failed to meet stringent requirements
SCGH privatisation plans shelved The West Australian December 20, 1995 ABSTRACT Australasian Business Intelligence

Health Minister Kevin Prince has announced that Australian Hospital Care, Futuris Corporation, Health Care of Australia, Mercy Health Care Australia and Ramsay Health Care had been asked to tender for the Armadale Health Service. (West Australia)
Private Firms To Bid For New Health Service The West Australia

A THIRD company's decision to abandon its bid to redevelop Armadale-Kelmscott Memorial Hospital (West Australia) left the Government's tender process in tatters, the State Opposition said yesterday.

Of the five original bidders, only Futuris Corporation and Ramsay Health Care remain in the race.

A spokesman for Futuris confirmed its joint venture partner - Australian Hospital Care - had pulled out of the tender process. The spokesman said Futuris would continue its bid.
Hospital Sale In Doubt The West Australian October 7, 1998

The Western Australia Opposition has attacked plans by the Armadale Health Service to close eight hostel beds. The beds are for psychiatric patients. The criticism came as the Western Australia (WA) Government ended the tender process for redeveloping and running the Armadale public health service.
Beds for mentally ill to shut The West Australian October 21, 1998 ABSTRACT: Australasian Business Intelligence

Enthusiasm dies

Privatisation of public hospitals has failed to meet unrealistic government expectations and in addition it has caused problems across the country with increasing evidence that care has or is being compromised. As in other states there has been a change of government and there have been no further privatisations. Planned projects in WA have been abandoned. The early criticisms of privatisation have been shown to be well founded, yet this has hardly touched the ideologists whose faith renders them blind.

Last week, a private sector contract for the management of two West Australian hospitals was cancelled.
Feeling your purse before your pulse, The Weekend Australian 1 February 97
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This page created February 2002 by Michael Wynne
Some more extracts added July 2005