This was a follow up letter including
documents after Sun Healthcare's planned entry to Australia was made
public. The letter includes material about other corporations and
discusses broader issues including attempts by the Fench insurer AXA
to introduce managed care into Southern
23 May 1997
Mr A Hinton
Foreign Investment and Review Board (FIRB)
The Treasury Building
Parkes Place Your fax 06 263 2940
Dear Mr Hinton,
US corporations move into Australia
This letter is supplementary to my fax dated 22 May 1997 and encloses the promised documents. I understand that Alpha is purchasing Healthcare Corporation Pty, a private company owned by manufacturing interests. Sun Healthcare is contributing $15 million. I have heard that Sun has control of Alpha, but do not have documentary confirmation. If so then this purchase will give Sun control of a large number of hospitals in Australia. It will be the second largest operator of hospitals in NSW. My information is that like Columbia/HCA, Tenet/NME and Mayne Nickless, Alpha is in the business of buying up and building medical centres. The secret of US style corporate financial success is their ability to form relationships with doctors by offering financial inducements in one subtle form or another, by getting control over the profession, by controlling their income and by using coercive measures to ensure that doctors conform to corporate objectives and do not blow the whistle on corporate practices. This enables them to interfere in the treatment given to patients and ensure that corporate financial interests are given precedence over the health interests of the patients. Corporations have a fiduciary duty to make profits for their shareholders and the US experience has shown that this is accomplished by exploiting patients. This is hardly surprising as care and profit compete for the available insurance dollar. Managed care companies make profits by restricting care. One way of doing this is by restricting beds like the AXA (French) controlled managed care companies are doing in Victoria and South Australia. It is no coincidence that all of the companies except AXA which does not operate in health care outside Australia, but including Sun either have criminal convictions or are being investigated. Such groups work within market paradigms which allow them to ignore the outcome for patients. In a marketplace driven by competition and the deliberate destruction of professionalism which is seen to be obsolete, such groups will succeed at the expense of ethical and caring groups.
I will continue to receive information and I trust that you will not make any rash decisions until such time as you are fully informed and have made your own inquiries. The decisions which you make now will have a lasting impact on the lives of large numbers of Australians for many years to come. I enclose documents relating to
1. Kaiser Healthcare:- I draw your attention to the consequences of using profit for shareholders as the driving force in humanitarian endeavours such as health care.
2. Sun Healthcare:- The documents and information from the USA confirm the information from the UK. I have not supplied my original source as draft documents fell off my fax. They have not yet been vetted by lawyers. I have no reason to doubt that the thrust of the documents are accurate. Note that Sun's chairman and CEO, Andrew Turner received his training in National Medical Enterprises hospitals at the time when NME owned Hillhaven. Hillhaven and NME shared directors including Eamer and Cohen who were forced to resign when NME's criminal activities were exposed. Hillhaven was spun off as a separate company but with the same directors shortly before the revelations of NME's practices. It was not investigated and escaped media attention. I am aware of allegations subsequently made about its practices but do not have details. Senator Cohen conducted a US Federal Government investigation of fraud and abuse of trust. The conclusions were highly critical. I do not have this report and do not know what it found in regard to Sun and Hillhaven. I suspect that effective action based on this report was subverted by the corporate lobby. The non profit US "Centre for Integrity" made a study of corporate lobbying and media campaigns to influence legislators in 1994. Health care had been targeted at a cost and in a manner vastly exceeding any other issue in the recent past.
Sun Healthcare has been the Columbia/HCA of the aged care, nursing home, subacute care and rehabilitation sector. Like Columbia it started with 7 hospitals only 10 years ago. It has displayed the same Pacman tendencies and Columbia/HCA expanding rapidly to control over 420 facilities in several countries. The enclosed published interview with Turner reveals the same Macdonald and Walmart approach to care and economic rationalist attitude to "fat in the system". Others might consider this fat to be the staffing and time required to care for people, the humanitarian component. Sun was rated very poorly in a study conducted by "Consumer Reports". Note that it had to obtain its information from government reports. As far as I am aware no healthcare corporation has ever permitted an objective outside clinical evaluation of its services. When I stressed the need for this to an NME hospital administrator in 1991 he indicated to me that it was not corporate policy to allow outsiders access. Medicine has attempted to be a professional endeavour driven by objective scientific research. Information was not subject to any sort of secrecy provided individual confidentiality was preserved. Corporations are now going to extreme lengths to control knowledge by controlling research, and preventing the dissemination of objective scientific information which might impact on profit. (see New England J of Medicine Apr 17, 1997 pg 1176 "The Messenger Under Attack - Intimidation of Researchers by Special-Interest Groups")
3. Vista Healthcare, Parkway Holdings, Tenet/NME and Alpha healthcare:- Note that Vista is controlled by past NME staff, some of whom failed to contest allegations that they indulged in NME's criminal and unethical practices. It has an unknown US backer. I sincerely trust that you will not let it into Australia. Please note the complex of companies all linked by association, activity and staff. Parkway's arrangements with Tenet/NME - - Parkway and Alpha share directors -- Vista Healthcare directed by staff previously associated with Tenet/NME, Parkway and probably US banking interests - - Alpha's joint venture with Sun Healthcare. Could these be cooperative ventures? What has happened to the competition which is supposed to regulate practices to ensure quality at a low cost on a level playing field. While the medical profession's humanitarian mission is weakened as they are forced to compete, corporations may be quietly colluding.
Corporate shareholder driven medical services
Professionalism and the market:- Professional paradigms were developed in order to confront the conflict between profit and care or service. These conflicts are inherent in the provision of humanitarian services within a capitalist society driven by market forces. Professionalism and humanitarian structures are essential in controlling dysfunctional pressures generated within capitalist societies. They make capitalism the preferred system under which to live. In humanitarian services "customers and "clients" have difficulty in assessing the quality and value of the service they are receiving. They are often distressed or otherwise incapacitated and not able to exert their rights in the marketplace. People in these situations want the best for themselves and their families. They are receptive to misleading marketing and understandably are mislead into equating increased cost with higher standards of care. Trust rather than market forces determine their actions.
The abuse of trust:- When humanitarian services become market driven rather than professional practice then it is inevitable that the unscrupulous and those able to turn a blind eye will succeed at the expense of the conscientious and caring. Competition becomes about marketing, market share, dominance and control. Shareholder interest dominates. Trust is abused and decisions are based on economic rationalist principles rather than the human needs of the "client".
The case of National Mutual:- I draw your attention to the case of the Australian company National Mutual which is controlled by the French multinational AXA. Previous not-for-profit Health groups such as HBA and National Community of SA were driven by the need to provide services for their members. They have been turned into "for profits" accountable to shareholder's profit expectations. This is something which I am sure members were not told about. Their contracting policies in Victoria have resulted in the closure of almost half of the rehabilitation facilities in that state. With fewer beds and long waiting lists National Mutual will be better able to ration and limit the care its clients receive. Information about the consequences for standards of care is not available and experience from the USA indicates that objective outside case reviews will not be performed to evaluate the outcome. Corporate PR tactics will be used to persuade staff that what they are doing is providing "quality care". Hospital accreditation will be used among staff and in advertisements to claim high quality care. Accreditation has failed in the USA and legislators in the US Congress are trying to patch the system. National Mutual are now adopting the same practices in acute care hospitals in South Australia. To survive hospitals will have cut their tenders to the bone in order to obtain a contract. The US experience shows that they will now be forced to make extra savings. This will be by cutting the quality of services. Untrained people and agency nurses replace teams of well trained coordinated staff. In an acute care hospital this costs lives.
Corporate profit generating strategies:- A classical example occurred in the Mount Hospital in Perth when it was controlled by Tenet/NME. A prominent lawyer, who was a patient in an intensive care unit was accidentally given an overdose of a sedative drug which suppressed his respiration. The coroners conclusions as reported in the press suggest that several staff stood around and watched him die. Hopefully most well trained first aid trainees would have administered artificial ventilation in some elementary form and saved his life. This was an intensive care ward where staff are specifically trained to deal with emergency situations.
The mind of the managed care corporations:- To see the future of managed care in Australia we must look at its prime advocates and the way they attempt to implement the policies. The first step taken by US Healthcare one of the largest was to make contracts with doctors which prevented them from giving patients independent advice. The enclosed documents relating to Kaiser reveal the approach adopted in patient care. Our Dr Wooldridge can give all the assurances he likes and like the US congress pass a plethora of laws to stop these outward manifestations of corporate thought processes. These will do nothing to contain the underlying patterns of thought and this is what will determine the nature of the service which patients will receive.
The mind of managed care in Australia:- The ethos of the multinationals and their willingness to ride roughshod over the sensibilities of individuals and the local community is well illustrated by events in Western Australia. National Mutual/AXA went on an aggressive advertising campaign to secure members in Western Australia. It then simply closed its Perth office and walked out on those people who had believed their advertisements. They have to contact the office in Melbourne, an office with a 3-4 hour different time zone by phone. Quite minor economic interest has caused National Mutual to ignore the interests of the local community and its proclaimed commitment to them. Medical care depends on well developed social capital, an ethic of care and trust. What sort of care can Australians expect from people like this. Eva Cox in her 1995 Boyer lectures suggested that an emphasis on financial capital was destructive for social capital but that an increased emphasis on social capital was productive for financial capital. This is a good example.
The banking world and health:- Almost all of the large health care organisations are funded by banks and investment groups which spread their investment portfolios over several companies. Intense competition would lower profits and investors have no interest in this. Corporations consequently frequently work together and may share directors with banks and the stock market. They often merge and cooperate in central organisations which are well funded to protect the interest of all corporate members. The Federation of American Health Systems, based in Washington acts for corporate medicine protecting all members, advertising, marketing campaigns and lobbying politicians. Vast amounts are spent in order to frustrate legislation which would control corporate practices. While claiming to be competitive on a "level playing field", corporate practices are anticompetitive and the playing field becomes a hunting ground for corporate predators. The competitors and/or victims are the clients, individual providers, the caring and the non-profit oriented groups which exists in order to serve members and the community.
Social control of multinational misconduct:- Multinational shareholders are not aware of adverse publicity in a distant country. Adverse publicity has little impact on share values. Multinationals can use their corporate might to ride roughshod over local sensibilities, and to secure political support. A recent review by the Public Services Privatisation Research Unit in London listed large numbers of instances where large multinationals had behaved criminally or unethically. Increasingly the media is owned and controlled by multinational giants who have multinational commercial interests. Local matters of humanitarian concern are stifled when they reflect on business activities which these owners perceive to be legitimate..
- . overview of my information.
- . News reports PR Newswire 31/3/97, New Mexico Business Journal, Apr 1996
- . The Privatisation Network - Extract from report by PSPRU in London
- . U.K. Community Care & U.S. Healthcare by the PSPRU in London
- . Can we defuse the NHS timebomb -- Article Business age Feb 1996
- . Composition of Special Committee on aging -- US 104th Congress
- . Report on committee report - British Medical Journal Apr 1, 1995 pg 823
- . Extracts from Quarterly reports to US Securities & Exchange Commission 15/5/96, 14/8/96, 14/11/96 and 15/5/96
I do not have the following documents. I believe that it would be appropriate for the FIRB to use Australian federal agencies in the USA to obtain these.
- . Federal Bureau of Investigation, Search Warrant and Affidavitt dated 25 July 1995. US District Court, Western District of Washington, Case #95-277-m
- . Complaints filed and settlements of the shareholder and other court actions.
- . The US Securities and Exchange quarterly reports from Jan 1995 to May 1996.
- . Information in regard to the progress or outcome of the FBI investigation.
- . Report of US Congress Committee on Aging
- . Modern Healthcare reports April 21, 1997 p28 and April 28, 1997 p12
- . Report from Texas Department of Insurance March 3, 1997
Vista Healthcare and Tenet/NME
- . Tenet release 23 Apr 1997 re Michael Ford
- . List of Directors and shareholders of Vista Healthcare
- . Modern Healthcare 5 May 1997
- . Curriculum vitae Ford, Focht and Scott Brown
- . Extracts Singapore case number 122 of 1993 referring to Ford and Dennis Brown
- . Newspaper reports re Tenet/NME from USA and Australia
- Other directorships of Vista Healthcare's directors showing past associations with Tenet/NME's facilities and operations in Singapore and with Parkway Holdings