Making profit a central motive can distort traditional relationships. To quote a commentary in the New England Journal of Medicine (August 5, 1999), ``Our main objection to investor-owned care is not that it wastes taxpayers' money, nor even that it causes modest decrements in quality. The most serious problem with such care is that it embodies a new value system that severs the communal roots and Samaritan traditions of hospitals, makes doctors and nurses the instruments of investors, and views patients as commodities.''
Why The Mater's Afraid Of The Political Wolf by David Henry, Sydney Morning Herald 18 January 2000
- Political history
- Federal and state responsibilities
- The impact of Medicare on corporate hospitals
- Plundering taxes
- Economic Pressures
- Political seesaws
- Contracting public care and colocations
- Social capital, values and humanitarian activities
- The criticisms
- The corporate response
- Wishful accounting and corporate failures
- A reversal of political power
- Colocated private hospitals
- The gloss goes off privatisation and colocation
It all began in the late 1970s, with the advent of big US-owned groups such as Hospital Corporation of Australia (HCA), which revolutionised the hitherto cottage-like local industry by amassing large portfolios of private hospitals and introducing modern management techniques.
Business Homes In On Health Care Investment, The Age 13 June 1992
Corporate for profit hospitals (as contrasted with private hospitals) started in Australia in the 1970's when US groups like HCA commenced operations here. The corporate health care industry started in the USA in the 1960's and was still young. In both countries not for profit patient centred medicine set the frames of understanding through which private health care was provided. Pure marketplace recipes were frowned on.
During the subsequent years socialism lost ground and the vacuum was filled by right wing free market theories which saw government as inherently bloated and inefficient. At the same time the rights and entitlements of the individual to personal fulfilment were increasingly valued above the rights of the community and citizen's responsibilities to the community. There was a progressive swing towards smaller government and towards shedding community services by contracting them to the more self centred private corporate sector.
Self interest steadily replaced the notions of pride in work, professionalism and service to community as the dominant driving force in human activity. Market forces increasingly replaced social consciousness as the prime regulator of behaviour. These older ideas were considered obsolete. This market view has been argued most strongly in health care where the professionalism that embodies these notions of community and service posed the greatest threat to profit. Traditional values and the professionalism in which they were enshrined have been attacked and discredited.
Market advocates have openly claimed that health care is a business like any other and that ideas and values which have protected citizens for over 2000 years are obsolete. They have ridiculed claims about profit pressures compromising standards of care.
(Catchlove indicated) In this respect running a hospital is no different from running any other business. With a focus on bottom-line returns, success is achieved through measures such as effective marketing, efficient organisation of human and capital resources, and high staff
The fear is that in minimising costs and maximising profits, private operators will compromise on the quality of service. But Mr Corrigan says the fear is unfounded.
Business Homes In On Health Care Investment, The Age 13 June 1992
The logical extension of these market theories is to international trade with the establishment of a global free trade marketplace. Health, aged care and other humanitarian services are on the list for liberalisation. This involved the removal or downgrading of regulations which inhibit free global trade in health services but protect citizens. Australian probity requirements in health care have been ignored and in some instances quietly removed from regulatory requirements.
The concern on this web site is not about the benefits of trade or of sensible economics. It is about the generalisation of market theory to embrace and restructure every facet of our society, whether these are best suited to the market or not. Economic theory has become an unchallengeable ideology extended way beyond the limits where economic theory can reasonably be applied.
It is clear that the activities which create most conflict and where the rigid application of ideology is most damaging are the humanitarian services provided by the community for citizens whose ability to act effectively in the community is impaired. They are most vulnerable to exploitation and most in need of legislative protection. The consequences are clear from the US experience but ideologists are deaf.
The group (called Health Care of Australia since 1992), is catching the wave of the 1990s as state hospital sectors, desperately short of capital funds, offer joint ventures of all kinds to well-managed private hospital chains.
The private hospital business is still a minefield of government regulation and local politics. - - - - Since Medicare was introduced in 1984, the proportion of the population with insurance has fallen from 50% to 37.6% as at last March; it is projected to fall to 30% by 1998 unless the Government tackles the numerous contradictions of health-funding policy.
MAYNE LIMBERS UP FOR A PRIVATISED HOSPITAL SYSTEM, Business Review Weekly 20 June1994
Nowhere has the tension between conservative ideology and political pragmatism been greater than in health policy, - -
Is Welfare a Social Health Risk? --- The side-effects of a rationalist prescription by Mike Steketee in "Future Tense ::: Australia beyond Election 1998". Griffin Press Adelaide 1999.
In the early 1970's the Whitlam labour government overcame strong opposition to establish a universal government funded health insurance system called Medibank. The 1975 coalition government emasculated and privatised it. Health Insurance was handed to private companies.
The labour government when they regained power reintroduced universal publicly funded coverage in 1984 calling it Medicare. The coalition maintained their opposition but Medicare was so popular that Howard was forced to promise not to dismantle Medicare 3 days before the 1996 election which he won. This was 20 years after universal health insurance had been introduced into Australia and had won almost universal approval. The coalition has hung on to federal power since. While it has remained silent on its Medicare thinking market maverick's like Victoria's former coalition premier still call for the removal of Medicare.
Economic rationalist policies have formed the backbone of the coalition's program. It has downsized government, privatised most government services including welfare, and has contracted those it retains responsibility for to the private sector. The country has performed well economically and the coalition claims this is a consequence of their responsible policies. They may be correct and voters, distrustful of labours past economic performance have given them borderline approval.
Breaking the promise about Medicare would have generated a savage backlash and this is one of the electoral promises the coalition have not broken. They have however steadily underfunded the public hospital system and diverted funds to entice Australians to take out private health insurance and go to private hospitals. They gave large subsidies to privately insured citizens and severely penalised those who only took out insurance when they were older and so more costly. The latter measure was particularly effective and the insurance rate which had fallen from over 50% to nearly 30% increased again. The tired mantra of competition increasing efficiency and reducing costs was trotted out.
This increased private cover would, the
government claimed take the pressure off the public system. Studies
have convincingly confirmed the claims of critics that this money
would have bought more effective health care more cheaply (ie the
efficiency claimed by government) had it been used to provide those
same services publicly. The insurers and subsequently the corporate
providers all flourished, but not the general practitioners whose
struggle to maintain Medicare payments in line with the cost of
living had provided a whipping horse which had been so politically
Governments have gone looking for capital to grow private health care. They have encouraged multinational corporate health care providers to enter Australia and then supported them here. They have been unsuccessful. This was largely because of unconscionable corporate crime and misuse of patients in the USA by the companies they welcomed. Australians have a highly developed sense of probity and this was unacceptable. This sense of probity is well illustrated by their response to the alleged links between the covering up of paedophilia in the Anglican church by Australia's governor general when he was Archbishop of Brisbane.
Governments have continued to support and facilitate corporatisation of health care by Australian groups. They have struggled to introduce the sort of managed care system, so unpopular in the USA here - but have so far failed. Corporate officials have been appointed to senior government positions in spite of glaring conflicts of interest.
Federal and state responsibilities
Universal coverage was re-established under Medicare in 1984. It proved immensely popular. A fatal flaw in the system was that the federal government funded services and got all the credit for keeping taxes down. They assumed responsibility and paid directly for out of hospital services. The states were funded by the federal government to provide the more costly hospital services. They got all the blame when they could not meet the community's needs. They could not raise taxes themselves. Not surprisingly there were endless conflicts between state and federal bodies. States adopted every possible strategy to shift costs back to the federal government. This did nothing to improve services and created many problems for patients.
The impact of Medicare on corporate hospitals
During the 1980's the costs of health care were steadily climbing and the private system could not compete with the high quality free public system. There was a steady decline in the level of private insurance. This eventually fell from over 50% to almost 30%. Prospects for profit were not good. US groups like HCA sold to Australians. The Australian market was luke warm about investment and there was no capital to built new competitive modern private hospitals. The WA company Markalinga was almost bankrupt and when The US multinational National Medical Enterprises - NME (now Tenet Healthcare) bought control and promised a large capital injection its glaring misconduct was ignored and it was strongly supported.
The Medicare levy failed to meet the rising costs of care and no government would front the need to raise it. Instead health took an increasing slice of the tax budget. Political parties cynically went to the electorate promising both tax cuts and improved health services - something which they could not deliver.
The new economic thinking swept all before it during the mid 1980's. By encouraging private health care taxes could be kept down even though the overall costs of health care would spiral and the community would be short changed.
LIKE a patient waiting for surgery, the NSW private health sector is about to be wheeled into theatre for a major operation.
While the exact detail of the new legislation is not yet known, it is almost certain to include some form of deregulation of the industry which could spark a new boom in private hospitals.
The new legislation is likely to affect small private hospitals with 20 to 30 beds which will close or be amalgamated into larger private hospitals with between 120 and 200 beds. Exceptions will be made for smaller hospitals providing highly specialised care.
HEALTHY FUTURE FOR PRIVATE HOSPITALS, Sun Herald 9 October 1988
Private health care had largely been provided by small cottage hospitals of well under 100 beds run by doctors or community groups. It was not safe for patients or economically viable for modern high technology medicine to be provided in this setting. This was a particular problem in New South Wales. Where large modern well equipped private facilities existed (eg Brisbane) they were run by not for profit, mainly religious groups. They did not have the deep pockets of the share market and they were not part of the ideological agenda. Their activities were a cooperative community effort that did not fit into the ideological mould. To fit the model they had to be turned into aggressive competitors. Predatory corporations would force them to conform. The local sharemarket was less than enthusiastic and still unwilling to invest in health care corporations.
The well-documented overcrowding and underfunding of Australia's public hospital system should have offered the private hospitals a great opportunity to fill the gap.
Instead the private sector is hamstrung and seems unable to relieve the pent-up demand and reap the financial rewards.
PLANNING for these changes is hampered by a shortage of investment capital.
The NSW Government awarded contracts for four private hospital developments near big public hospital sites in July 1988, two of which went to Health Care Corp. But a lack of investment capital has prevented any of the four projects getting anywhere to date.
HEALTHY PUSH FOR PRIVATE HOSPITALS, Australian Financial Review 15 March 1991
Health care corporations undoubtedly took part in the debate. They lobbied the government and were very credible. They had close political contacts so had no need to do so publicly. Corporate advocates had a strong influence on government policy - playing on political pain and offering corporate solutions.
The APHA (Australian Private Hospitals Association) is the peak body representing private hospitals nationally.
Its principal activity is to engage closely with government in the business of formulating and developing policies for the healthcare of Australia.
"We see ourselves not just as being an organisation pushing a vested interest barrow, but a body which is very closely associated in partnership, in collaboration, with government in getting about the task of formulating policies," he (executive director) said.
PUBLIC DEMANDS CHANGES, THE AUSTRALIAN, October 16, 1997
With strong government support the market became more involved. As in the USA advocates claimed that market forces would result in improved care.
Catchlove has to overcome local opposition to hospital privatisation that often borders on the fanatical. A popular view lingers that running a hospital for profit is reprehensible. He has won New South Wales and Victorian government approval for some ambitious privatisation exercises, and he hopes the improved quality of service will speak for itself.
MAYNE LIMBERS UP FOR A PRIVATISED HOSPITAL SYSTEM, Business Review Weekly 20 June 1994
But Mayne Nickless, Jamison Equity and National Medical Enterprises Inc have each targeted the Australian health care industry for investment.
The increasing strain on the public purse of providing health care to an ageing population, the growing level of cooperation between the Government and private health care providers, and the prospect of changes in health care funding policies, have alerted mainstream investors to new opportunities in the once maligned private hospital sector.
"And thirdly there is a worldwide trend for the role of governments in health care to shift from being the providers to the purchasers. That means more opportunities of involvement in what were previously public services.'' The theory has proved right for Mayne Nickless, with its HCOA subsidiary now contributing $200 million in annual revenue.
Mr Catchlove says that by applying modern management and business principles, private operators can run hospitals more efficiently. Lower operating costs rather than higher charges or lower standards of service provide the profits.
Business Homes In On Health Care Investment, The Age 13 June 1992
Companies like Mayne Nickless banked on a
conservative win in 1996 and when this happened they looked to the
government to meet its promises to them. It was not until they won a
second term in 1998 that the government were able to do so and these
measures only generated profits two years later. There were further
lean years - years which in 2000 almost proved fatal for
We don't know if the underfunding of the public system at a time when Australians were wealthier than they had ever been was purely ideological or a deliberate strategy to put pressure on state governments. State governments were left without the capital needed to meet the increasing medical and technological needs of the population both in refurbishing, in rebuilding and in building new hospitals. The pressures to tap into the money pits of the corporate sharemarket were considerable. By contracting out public health care the government also escaped an onerous responsibility and was no longer directly responsible for poor services. They could blame the contractors. Private Health insurance was at an all time low and the federal government had not yet mounted a successful rescue package. Corporations were eyeing the money spent on the public sector.
Australian private hospital operators are being driven to reliance on public funds as private health funds shrink.- - - Australian Hospital Care Ltd, Mayne Nickless subsidiary Health Care of Australia, Ramsey and Alpha Healthcare Ltd are pursuing co-location joint ventures with public hospitals to gain greater access to private funds. - - - - - public hospitals need investment to redevelop so are looking to arrangements with private providers.
Funds crisis: private hospitals now thinking public, The Australian Financial Review October 14, 1998 ABSTRACT by Australasian Business Intelligence
A sombre Bob Dalziel told analysts and the media - - - - - the company's operating performance had been "less than satisfactory".
- - - - - the next six months would see a large proportion of the company's developing hospitals under pressure to perform, and the stress on margins was "unlikely to improve".
Margins squeezed at Mayne Nickless, The Australian 25 February 1999
Australian citizens have displayed skill in balancing political power. The minor parties are regularly given control in the senate and states elect the federal opposition party to govern. During the late 1980's and early 1990's a federal labour government had to work with state coalition governments. In the later half of the 1990's the situation was reversed.
By the end of the 1980's coalition state governments were targeting health care for privatisation and corporatisation. They wanted the private sector to build hospitals and relieve them of the thankless task of running them. Corporations had realised that private hospital care was not going to be the bonanza they had predicted for some time at least. In addition to diversifying into pathology, radiology, primary care and other health care activities they targeted the public hospital dollar and Medicare in two ways and the government responded positively. By 1994 governments had come to the party.
In recent years, the health care group's rapid growth was generated by acquisitions. While we continue to seek appropriate acquisitions, HCOA is also setting the pace in developing agreements with government for the provision of services to public patients.
MAYNE NICKLESS LIMITED: ADDRESS BY MANAGING DIRECTOR (Part A), Australian Stock Exchange Company Announcements 8 November 1994
Contracting public care and colocations
Co-location is the latest buzz word in the hospital business. The chief executive officer of National Capital, Stephen Horton, says co-location is the way forward because of the huge costs of infrastructure.
The origins of the concept lie in the Catholic hospital system. Indeed Calvary is a good example of two hospitals, one public and one private, sharing facilities. But co-locations, involving profit-making businesses are verydifferent.
MAKING PRIVATE ARRANGEMENTS, The Canberra Times July 27, 1998
Collocated private hospitals are seen by all the major private hospital providers as exceptional opportunities to develop new private facilities with both the opportunity to benefit from shared infrastructure and the ability to offer higher level tertiary services due to the support available at and provided from and to the host public facility. As such, all collocation tenders are hotly contested and AHCL is very pleased to have been successful in Hobart. ASX-Australian Hospital Care Limited (AHX.AX) Hobart Contract Finalised. Australian Stock Exchange Company Announcements June 30, 1998
The first strategy was the contracting out of public hospitals and the care of public patients to corporations and the second was the idea of co-located hospitals where corporations bid for the right to build private hospitals on public hospital campuses. This gave them access to the large number of privately insured patients who attended state emergency departments as well as those who elected to go privately when they learned how long they would have to wait. There were also advantages in the sharing of expensive resources like MRI scanners purchased by the private sector. It reduced duplication.
My criticism is not of co-location or delegating the care of public patients but of the marketplace and of corporate market listed providers. My own hospital is held up by Australian proponents of corporatised care as a well established precedent for privatisation. A church group, it has for many years run three public specialist hospitals, funded by government as well as a private hospital on the same campus. This worked well. The service and caring ethos of the religious order exerted a strong humanising influence. Until economic performance (in response to government pressure) became the driving administrative force, the administrative response to clinical and human needs was in my view vastly superior to government run hospitals. The argument is that the profit driven corporate influence will be exactly the opposite.
The criticism that certain procedures can not be provided in church run hospitals because of religious belief is a valid concern. I certainly had no difficulty in arranging for advice and procedures which conflicted with the churches religious beliefs. The patients right to objective advice and to have the procedure at a neighbouring hospital were never challenged and there was no stigma attached to their decision.
This successful model is one of cooperation between public and not for profit community centred private care. Both are patient centred. This is what corporate advocates have used to counter criticisms that their profit centred approach will not compromise care or services. More comparable situations (eg the USA) indicated that it is very likely to do so. They never directly confront this comparison.
Social capital, values and humanitarian activities
I believe that one of the strongest arguments for not for profit services centres around the concept of "social capital". Social capital is the connectedness between people. People connect when they do things together. They give form to the community's values, by expressing them through action and communication. The values which are expressed and reinvigorated are tied to the activities of the community and the individuals who comprise it.
In a series of detailed studies Robert Putnam (see his book "Bowling Alone") has documented the decline in social capital in the USA since the 1960's. Eva Cox has written along the same lines in Australia in her Boyer lectures published as "A Civil Society".
Health and aged care provide a focus for the expression of our fundamental humanitarian values - our regard for others and our responsibility for one another. The way we deal with the misfortune of others is a reflection of the sort of people we are and the sort of society in which our children are growing up.
This is why the ruthlessness of the health system and the neglect of the aged in the USA must have a profound impact on the way the US community sees itself - what it means to be American.
The total delegation of humanitarian services to government bureaucracy does little for social capital except to salve our consciences. In most countries community involvement is fortunately still encouraged and the community identify with the system. The corporatisation of health and aged care not only excludes health and aged care from community responsibility, but builds and gives expression to values and patterns of behaviour which destroy the humanitarian values which are given expression and form through these activities.
I argue that involvement of the community in the organisation and provision of health and aged care services at every level is not only highly desirable but essential. It is a critical component in the evolution of our society and in the development of a interconnected global community of caring citizens - one in which the global community supports and fosters those in need. It is particularly distressing that both the USA and Australia are exerting pressure on the rest of the world to move in a direction that is destructive of this sort of society.
The criticisms:- The immediate criticism of corporate co-location is the criticism of corporate medicine and of the desirability of bringing a profit centred approach into our public and teaching hospitals which are still both patient centred.
The criticism of privatised for profit public hospitals is the pressure to short change care to boost profits, the difficulty of policing and enforcing care requirements, and the ability of corporations to squeeze ever more money from government in order to increase profit.
Corporations control the data on which assessments are based. In confidence commercial agreements shield the corporations from accountability. Citizens have no idea how much of the money paid from taxes for their care is taken in profit. This is well illustrated by Healthscope in South Australia and Mayne Nickless in NSW.
A number of conflicts flow from the provision of public and private care in the same corporate run hospitals or in colocated hospitals. There is always the possibility that pressures will be put on doctors in the public system to use the company's private hospital, radiology and pathology services rather than another - for instance by restricting public operating time or by strong social pressure, which is not illegal. This is a problem when the private facilities are substandard, as was suggested in Port Macquarie where Mayne Nickless had a monopoly. A specialist in Port Macquarie also suggested that pressure was applied to medical staff to transfer patients between hospitals. Pressures might also be put on doctors in their public work to induce them to enter into managed care type contracts with the company.
I again emphasise that the insidious hidden threat behind colocation is that it will enable corporations running these colocated complexes to force doctors into contracts where they will only have theatre time allocated if they are prepared to do both private and public patients under contract.
Mayne Nickless grabs another health enterprise, The Australian Surgeon December 1995
SERIOUS concerns over managerial and clinical issues have arisen at Port Macquarie Private Hospital after it was revealed its medical staff council had not met in eight years.
As well, one specialist has labelled the hospital standards accreditation process as "a joke".
Serious concerns at private hospital, Port Macquarie News 23 July 2001
Prompted by claims from a specialist that pressure has been placed on medical staff to transfer patients between the Mayne Nickless-operated Port Macquarie private and Port Macquarie base hospitals, Mr Oakeshott said he had demanded a review of the contracts.
Company town, says MP, Port Macquarie News 25 July 2001
(Added July 2005) The pressures to distort care by concentrating on more profitable services like routine simple surgery rather than chronic disorders or major risk prone operations can seriously distort the health service. Business sells a product and sees this as legitimate. A concerted move was made by Mayne in 2001 to boost profits by attacking care and medical input in order to improve profits, resulted in allegations of cherry picking, deskilling, understaffing, and administrative decisions which compromised care.
Often, the less-complex health services provide the highest returns. Ramsay Healthcare, for example, has struggled to make money from its North Shore Private Hospital, which offers treatments using the newest technology, whereas its rehabilitation hospitals have been extremely profitable. One of the complaints by doctors at Mayne's big hospitals is that they feel there is pressure to move away from complicated surgical procedures, which do not generate the high returns and margins available from rehabilitation services.
Healthy profits Business Review Weekly May 9, 2002
The corporate response
Angry corporate advocates indignantly front
these arguments by claiming they are self serving and ideologically
based and there is nothing to suggest that they will behave like
this. There is no evidence. I have no doubt that they are genuine in
their assertions but in the only fully established
competitive marketplace this is
exactly how market listed corporations have behaved and those who do
not behave in this way were unlikely to survive.
During the early 1990's public hospitals were
contracted out to private corporations under a variety of
arrangements across Australia. It flew in the face of the
sensibilities of large sections of the population. Hospitals were
contracted to private corporations in the face of bitter opposition
from local communities. State labour oppositions bitterly opposed
this but the federal labour government did not intrude. In NSW the
state government even disregarded a parliamentary majority vote in
which independents voted against the government. In South Australia
all parties refused to disclose material to a parliamentary committee
inquiring into the failure of the Modbury privatisation.
Wishful accounting and corporate failures
Government advocates had deliberately or unwittingly in their enthusiasm grossly biased their economic projections and claimed large long term financial benefits for the taxpayer. A more objective early evaluation by state Auditor-Generals in NSW in 1996 and subsequently in WA savaged these assessments. They concluded that the arrangements benefited the corporations at considerable additional cost to the taxpayer and at a potential risk to care. In South Australia government and corporation simply refused to disclose documents relating to disastrous failures to a parliamentary investigation. In Victoria a hospital was handed back to government when the corporation could not run it profitably.
These criticisms did not deter Mayne Nickless or the federal coalition government whose agenda was revealed in a leaked document. Despite the outcry by citizens in Port Macquarie the government believed privatisation of public hospitals was popular with patients - a reflection of their state of mind.
The NSW Auditor-General, Mr Tony Harris, has launched a scorching attack on the senior ranks of the State's public service for entering into grossly disadvantageous deals with the private sector.
"This inexplicable grant is additional to the significant fees paid by the private sector-provided hospital services. The Government is, in effect, paying for the hospital twice and giving it away."
NSW Bureaucrats Blowing Deals: Harris, Australian Financial Review 30 May 1996
Dalziel says the group will also increase its relationships with state governments through the management of public hospitals and the location of public and private hospitals on shared sites.
DALZIEL GIVES MAYNE NICKLESS NEW FOCUS , Business Review Weekly 9 Jun 1996
More public hospitals would be managed and operated by the private sector on contracts from State governments, under a strategy being considered by the Howard Government.
The Federal Government believes privatisation of public hospitals is cost-effective and popular with patients.
But privatisation recently received a damning assessment from the NSW Auditor-General, Mr Tony Harris, in a report, Financing Infrastructure: Private Profits from Public Losses.
More Public Hospitals To Be Run Privately, Sydney Morning Herald 21 March 1997
Private hospital operators are locked in an increasingly intense battle to win a bigger share of the $10 billion spent on public hospitals each year.
The catalyst for the battle is the commitment of most State governments to increasingly privatise their public hospital systems.
Health industry in the pink -- and the black, Australian Financial Review Monday, April 7, 1997
Health Care of Australia managing director Barry Catchlove said the changes would be tied to continuing dramatic change in the role of the private sector in the national health system,
"The little players, be they insurers be they hospitals, are a thing of the past."
Health care growing pool for big fish, says giant, Courier Mail 8 September 1997
HCoA's managing director, Dr Barry Catchlove, told The Australian Financial Review that Australia's largest private health-care operator hoped to snare at least 60 per cent of the health-care projects thrown open to tender by State governments in 1997-98.
At least 15 hospital privatisations, co-location projects - where private hospitals operate next to public ones - and the construction of new facilities in NSW, Victoria, Queensland and Tasmania are scheduled to be sold to the private sector this financial year.
Mayne player plans hospital spree, Australian Financial Review, Saturday, 18 Oct 1997
At home the spate of public hospital privatisations and co-location projects is continuing. HCA's strike rate in winning these tenders is running at 60%.
Under Doctors Orders, The Australian 9 January 1998
As the NSW Auditor General revealed: the cost of financing the hospital through privatisation was substantially higher than it would have been through the use of a public option.
The WA Auditor-General conducted a Performance Examination examining these claims in late 1997 - - - - - - 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.
It seems that the privatisation road is constructed from a belief in the benefits of privatisation, rather than any tangible empirical evidence.
Finally if we consider the impact of privatisation on public accountability it is clear that this has suffered. Commercial in confidence claims are consistently raised as an excuse for failure to provide detailed information about the costs and activities of privatised hospitals.
Measures such as the introduction of corporate governance mechanisms and abolition of community representation on hospital boards also point to an insidious shift to ideas which undermine the notion of citizenship.
Case Studies of Public Hospital Privatisation by Meredith Carter, Health issues Centre Journal September 1998
Problems in care were not apparent at this early stage. More recent reports indicate that problems in care are appearing. Angry citizens in NSW are calling for government to buy back the hospitals and run them. The labour government is sympathetic but the contracts with the corporations signed by the previous coalition government make the cost of this prohibitive.
A reversal of political power
When state labour parties came to power towards the middle of the 1990's they vowed not to privatise any more public hospitals. By this time the whole process was being heavily criticised. Despite extensive problems with the privatised public hospitals, leaked documents indicate that the federal coalition government still saw privatisation of public hospitals as the way of the future in 1998.
The federal coalition government continued to squeeze funds for state hospitals and divert resources to boost the private sector. The states struggled to provide the services which they had promised. They were heavily criticised for not meeting their targets. The NSW labour government which had been so strongly opposed to privatisation when in opposition struggled more than most and were blamed when waiting lists climbed and hospitals could not meet their financial commitments.
A federal senate inquiry into public hospitals in 2000 rapidly concluded that the privatisation of public hospitals had not been a success and that the practice should stop.
Public hospital privatisations should be abandoned after a number of problems with attempts in Victoria and South Australia, a Senate committee recommended today.
"It appears governments have embarked on the path of increased privatisation without the benefit of rigorous analysis of the benefits and costs," the committee said in its report.
"In view of the difficulties currently being experienced at several privately managed public hospitals, the committee recommends that no further privatisation of public hospitals should occur until a thorough national investigation is conducted and that some advantage for patients can be demonstrated for this mode of delivery of services."
Privatising public hospitals should be abandoned, AAP NEWSFEED 7 December 2000
Coalition state politicians challenged by the failure of privatised public hospitals have refused to indicate whether they plan to privatise further public hospitals when they regain power. It is clear that they will not.
An ideological war of words is brewing on hospital privatisation in NSW following comments by the Minister for Health, Dr Refshauge, that Port Macquarie Base Hospital was an "unmitigated disaster".
The Opposition spokeswoman on health, Mrs Jillian Skinner, said Dr Refshauge was "ideologically blinkered" on privatisation but she denied the Coalition would privatise more hospitals if it won government.
Private Hospital Takes On Minister In War Of Words, Sydney Morning Herald 18 November 1998
Colocated private hospitals
Colocated private corporate hospitals have been less strenuously opposed and the labour governments have been silent.. The nurses have strongly opposed colocation and privatisation. The Australian Medical Association has opposed privatised public hospitals but the profession has not been united in its opposition. The Queensland AMA opposed privatisation of public hospitals and corporate colocations. They were supported by doctors on the Gold Coast south of Brisbane where the existing public hospital badly needed upgrading, before building another hospital. On the Sunshine Coast north of Brisbane there was an urgent need for a public hospital and the local doctors welcomed the arrangement. They would get their hospital sooner.
The gloss goes off privatisation and colocation
The multiple economic and service failures as well as the costs and complexities of privatisations have turned governments across Australia away from the privatisation of public hospitals.
Corporations too have become disenchanted. Australia Hospital Care indicated that it was scarred by its experience in Victoria and would not bid for any more privatisations. Ramsay Health care has withdrawn from privatisations. It is clear that privatisation of public hospitals has been more costly and more complex than anticipated and they have not generated the expected profits. The adverse publicity about privatisations and community angst abut the consequences for care has undermined the corporate image and not been to their advantage. The empty promises to shareholders have come back to haunt them.
The colocation bubble has also burst. Government support for colocations has continued even with changes of government but corporations have lost their enthusiasm. Only those colocations in wealthy regions have proved to be profitable. Others have made large losses. The flow on of patients has not occurred and cooperation has not been as frequent as intended. This is hardly surprising when the difference in perspective and motivation are examined.
Ramsays has pulled out of several proposed colocations. Not for profits have also decided that some are not economically viable. In South Australia the Modbury hospital asked for a colocated hospital. The government contracted for the colocation but also privatised the public hospital awarding both contracts to Healthscope. The colocation was abandoned when it was clear that it would not be profitable. Citizens are now left with a privatised public hospital foisted on them by an ideologically blinkered government. This is not what they asked for.
CLICK HERE to examine the privatisation in each state and individual privatisations with references.