26 May 1997
The Hon Dr Andrew Refshauge MP
Minister for Health
73 Miller Street
Alpha and Sun Healthcare enter NSW
I attach two letters I have written to the Foreign Investment and Review Board. You may not be aware of these matters and not fully informed. I write to you lest your health department unwittingly agrees to Sun's entry into Australia without insisting that the FIRB properly evaluate its track record of probable dysfunctional behaviour, fraud investigations and poor standards. It has behaved very like Columbia/HCA expanding from only 7 facilities to over 400 in just 8 years and can be characterised as the PACMAN of subacute care, rehabilitation, nursing homes and aged care. You should be particularly concerned that they are coming in by the back door in association with Singapore/Malaysian groups.
The prime concerns here are
1. The control of Alpha by Sun Healthcare which has two managed care subsidiaries. I do not have access to all of the documents or updated information on the business practices, fraud investigations and legal actions. My sources are mostly concerned with acute care and psychiatry.
2. Alpha's adoption of US style business practices similar to Mayne Nickless and Columbia/HCA. They are buying up GP clinics and radiology and pathology services. This puts them in a position where they can control doctors and divert patients to their hospitals and make money by providing services. The US giants and Mayne Nickless have shown that this is a lucrative exercise and market pressures are forcing those companies which might like to provide ethical and caring medicine to comply. Alpha's hospitals according to one report initially ran at a loss. It seems that it has learned the lessons from the marketplace. Corporate market forces have proven to be severely dysfunctional for patients. They encourage understaffing, poor standards, fraud and the exploitation of the trusting and defenceless.
3. The nexus of directors, financial backers, companies and banks linked through the USA and Singapore. There seem to be links between the Tan family, Parkway Holdings, Alpha, US bankers and Singapore. Parkway had some sort of a management contract with our old friend Tenet/NME which I heard was for 2 years and this expires shortly. You will remember that our newspapers reported that Brown was to return to Singapore to run the company. I made noises about this in Singapore and they tried to scare me with a second court action. Brown is now in the USA where some concerned citizens are having trouble with him.
It is therefore interesting that at this time the old NME international Singapore team has been reconstituted in Singapore as the new company Vista Singapore. Five of the seven directors can be directly linked to NME's past activities in Singapore including the president and vice president of NME's international division, our friends Michael Ford and Carl Stanifer. Other directors have past or present links with Parkway organisations. Five of the seven directors are US citizens and the major backer is a US registered company in New York, about whom there is little information. I do not know if there is any link planned between Alpha, Parkway or Vista but I believe that we should be very wary. Corporate mergers are the flavour of the day. Close associations if they exist raise the possibility that there may be some collusion. I foresee a situation where marketplace competition will produce exactly what we have in the USA. It is about marketing, dominance, control and market share rather than care or cost. Mayne Nickless may be the target, unless of course its investors are the same major banks. I have not checked.
Our federal government is encouraging Australia's involvement in the supposedly lucrative pacific rim health care market (eg Indonesia). Mayne Nickless is our rather tarnished standard bearer. The Alpha/Sun/Tan/Parkway conglomerate will have much more influence in Indonesia. I foresee a situation where an attempt to control Alpha/Sun's operations in Australia will be countered by action restricting Mayne Nickless in Indonesia. Our minister is likely to follow the mad cow solution and sacrifice the health of Australians to the financial interests of a few corporations like Mayne Nickless. I believe that the best way to deal with this potential problem is to single out Sun Healthcare as a US company very similar to Columbia/HCA with the same unsavoury record. This should be done very specifically right at the beginning and it should be made clear that these predatory US corporations are not acceptable.
I will be sorting out the most relevant documents about all of these corporations in order to lodge objections with the various ministers and health departments in regard to Sun, Kaiser and Vista being fit and proper under the terms of the regulations. These are all US corporations. Your health department will receive these within the next week or two.