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.

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This page describes the steady rise of Australian Hospital Care (AHC) between 1979 and 1998 to become the second largest for profit hospital owner in Australia. Eighteen months after a very successful float in 1996 market pressuresimposed their rigour on a company that believed the illusions of the ideology but did not understand its nature. Losses and miscalculations left it in a parlous state. It quickly succumbed to a takeover in 2000.

Australian section     

Australian Hospital Care (AHC)
(1979 to 2000)





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Australian Hospital Care was formed in 1979 by Dr. Mark Bryce and he remained its CEO and its driving force until 2000, six months before the ailing company was taken over by Mayne Health. It became the second largest corporate hospital group in Australia.

Bryce seems to have had a blind but genuine belief in the markets ability to function better than other systems in health care and also to provide high quality care. Expansion of AHC was tempered by a policy of upgrading and improving existing hospitals. My impression is that one of Bryce's problems was that he invested more in staffing, care and services than could be justified by any additional revenue generated by this investment. He believed that money spent on providing better care improved profitability - something the market would not tolerate because care competes with profit for the same dollars. For them this was inefficiency.

Bryce also had a blind belief that his for profit company could provide the same services far more cheaply and efficiently than either not for profit groups or governments. This led him to purchase rehabilitation hospitals from government, bid for privatisation of public hospitals and contract for colocated hospitals without a realistic assessment of the likely returns.

Unlike other companies Bryce did not rush to float his company. He formed a partnership with local and Malaysian investors who gave him a free hand. When the partners did float the company to raise capital for growth they floated only a quarter of the company and to the end Bryce retained nearly one quarter himself.

The company prospered while trading conditions were good but did not survive a downturn in the market and intense competition. The acute hospitals failed to generate the profits needed to match the investment. The rehabilitation hospitals did not meet their profit targets. In addition the privatisation of the LaTrobe public hospital which was to be so profitable proved a millstone losing about $6 million a year. The colocation in Hobart added another $3 million in losses.

The company tried frantically to reverse its economic mistakes by restructuring, reducing staff, deskilling and reducing the services supplied in the LaTrobe public hospital. The company found itself with $170 million in debt and insufficient profit. Bryce resigned and his successor did further restructuring. He persuaded the government in Victoria to take back the LaTrobe hospital.

Investors were now so disillusioned that the share price remained low. The company which had listed with such good prospects in 1996 and doubled its share price in only 6 months welcomed the "hostile" takeover only 4 years later accepting rather less than the float price.


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Dr. Mark Bryce

Australian Hospital Care (AHC) was established as a private, personally owned company by Dr. Mark Bryce in 1979 with the purchase of Mitcham Private Hospital. AHC grew slowly. The purchase of Australian Health Resources in 1988 added 500 beds in 5 hospitals. Healthscope and Nova had small hospitals which were not really viable when they floated. AHC's larger hospitals were more viable.

Bryce remained CEO and guided the company through its many alliances with large commercial entities and its float on the share market. For a long period it was the second largest for profit hospital group in Australia, behind Mayne Health and ahead of Ramsay Healthcare. It was only when the industry was under competitive pressure that Bryce's policies finally came unstuck. He was replaced in a corporate reshuffle in June 2000. By then the company was beset by debt and losses. The remainder of the company was taken over by Mayne Health five months later. Bryce remained a major shareholder throughout.

It is clear that Bryce, a doctor initially placed a high priority on care and service. However when the company came under pressure the market got its way. When AHC was losing $6 million a year from the Latrobe hospital, services were reduced. There were allegations suggesting practices which compromised services to the community and standards of care. As the pressures on the company increased, the market had its way. AHC fired large numbers of staff and reports indicate that it deskilled the health care work force to reduce costs.

It is to his credit that in spite of large commercial partners Bryce was able to maintain services and care for many years while keeping the company profitable. The dominance of market pressures ultimately asserted itself. I t was lean years in the competitive 1990s that rendered AHC vulnerable to the consequence of Bryce's policies.

I suspect that he had spent far too much money on improving services and care. Good care is sadly not competitive in the corporate marketplace. The returns on this investment in care were not commercial and crippled the company. They did not generate the income needed to service loans and shareholders.

It is likely that Bryce was unhappy about the course he was forced to follow in 1998 and 1999. He would have been happy to resign in favour of someone who would do what was required to satisfy the market.

Bryce was highly regarded and served as president of the Australian Private Hospitals Association. Like Paul Ramsay he maintained a dominant shareholding in the company he had founded, something that would have helped him keep corporate pressures at bay until his performance faltered too much.

Bryce's failing was his unfaltering belief that a competitive business could run health care projects more efficiently than anyone else. He ultimately came unstuck because of it.

1996 Dr. Bryce

Dr Mark Bryce, our Managing Director, purchased the first private hospital at Mitcham in 1979 and that became the foundation building block for this enterprise. Through his skilful management and creation of a first class loyal and dedicated management team, Australia has a truly competitive hospital company which has taken its place in the private hospital industry. He and his team have focused very heavily on good staff relationships and relationships with medical specialists and practitioners, in a service industry of this type, those relationships are everything if the right customer service standards are to be achieved.
ASX-Australian Hospital Care Limited (AHX.AX) Chairman`s Address. Australian Stock Exchange Company Announcements 30 October 1996

1988 Austr Hosp Resources

Australian Hospital Care Pty Ltd has bought five private hospitals in Melbourne from Australian Hospital Resources Pty Ltd in a deal estimated to be worth at least $50 million.

The companies said yesterday the deal made Australian Hospital Care, controlled by Dr Mark Bryce, the largest unlisted operator of private hospitals in Australia.

The five AHR hospitals included 408 registered beds and permits for another 70 beds, giving AHC a total of 914 registered beds in three States when combined with its existing facilities in Victoria, Tasmania and on the Gold Coast.
CARE, RESOURCES IN $50M VIC HOSPITAL DEAL Australian Financial Review June 30, 1988

1996 Aware of communty values

Dr Bryce admits that a potential problem is that operators should not be seen to be making too much from the misery of their customers or from the inability of governments to provide a service. The risk then is that, like the gaming industry, politicians will step in to cap the flow of funds.

"There has to be a balance in the system in relation to what people pay and what they get," Dr Bryce says. "We must offer the best possible care for the lowest possible price."
A Private BONANZA Australian Financial Review September 11, 1996

1997 Focusing on "customers"

Australian Hospital Care Limited (AHCL), operator of 16 private hospitals across Australia, was judged the best in the nation in a competition that does not always find companies good enough to win.
The award recognised that AHCL had moved beyond customer surveys to developing an intimate understanding of customers' needs, continually changing to meet the demands shown by the research.

AHCL will represent Australia at the Enterprise Symposium on Global Best Practice in St Charles, Chicago, next month to compete for the world title in customer satisfaction.
Group rethink wins award The Australian October 16, 1997



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Corporate Partners

Health Insurance

Bryce seems to have been a true believer in the universal applicability of the marketplace. In the 1980s insurers were mostly mutual not for profit organizations. Bryce clearly thought that they were inefficient and too costly. He also suspected that they encouraged their patients to go to hospitals where fees were less, rather than seek treatment at HCA's for profit hospitals. A number of similar for profit insurers entered the market at this time.

AHC entered into a 50/50 arrangement with "Switzerland Insurance Company" to found "Health Australia" in 1987.

John Bundy, a flamboyant free spender with a flashy life style was put in charge. He was to develop a reputation for large losses in everything he touched. When he went bankrupt himself in 1993 there were allegations that qualifications in his curriculum vitae could not be confirmed. The reports indicate he lost only $22 million over the 3 years Health Australia operated, a moderate loss for him.

Health Australia went on an aggressive marketing campaign offering low cost insurance. It claimed a high recruitment rate. It set out to undercut existing insurers and offer much cheaper insurance. A turf battle ensued with the older insurers. Angry accusations went both ways and there were several law suits. Health Australia was taking all of the younger fitter patients and leaving other insurers with the more costly. Government ultimately stepped in to stop this.

Health Australia was accused of giving doctors' families discounted insurance rates with the un-stated implication that this was to secure referrals.

By 1989 there was unhappiness in the hospital industry because Health Australia was charging a service fee of 6% which patients were not expecting. There were also complaints of delayed payment to hospitals and unhappiness about the way previous illness and theatre fee clauses in agreements were interpreted. Some hospitals started charging Health Australia's patients up front fees.

The extent to which the business was in trouble is not clear but the joint ownership of competitive insurer and hospital provider was always going to be a problem in a market setting. AHC sold its half of Health Australia to its Swiss partner in May 1989. There was some immediate restructuring but in spite of this it was acquired by Medibank Private in 1990 - being described as a "casualty".

Nov 1987 Cheap Insurance

Sceptics in the industry wonder how long Health Australia's low contribution rates can be sustained - the rates are 46.5 per cent cheaper than HCF's rates for basic hospital cover and 38.6 per cent cheaper than HCF's top cover. Health Australia appears to provide by far the best deal for medical and hospital cover.

Nov 1987 Insurers avoid AHC

But, according to Dr Mark Bryce, and his team at Australian Hospital Care Pty Ltd, the existing funds seek to avoid sending their members to private hospitals like his because it costs them too much.
PROFITS HELP THE HEALTH INSURERS Australian Financial Review November 25, 1987

Apr 1989 Denies discounts to doctors

CANBERRA: Mr John Bundy, the general manager of the rapidly growing new private health fund Health Australia, yesterday strongly denied that his fund was selling discounted health insurance to doctors on a large scale.

May 1989 Problems develop

PATIENTS insured by Health Australia, a controversial newcomer to the insurance industry, may find they are asked to settle their bill in full on discharge if private hospitals are unable to solve their problems with the fund.
Mr Greenman also questioned the need for the 6 per cent service fee: "Why have it? Patients think they are covered for X-amount and then discover it has been reduced by the service fee.
Unlike most of the older, non-profit health funds, Health Australia is a commercially-run fund which targets the younger market sector.
COUNTING THE COST OF A CLAIMS DISPUTE Sydney Morning Herald May 31, 1989

Aug 1989 AHC sells

  Private health fund Health Australia is now wholly owned by the Switzerland/Federation Group after Australian Hospital Care sold its half share.
SWISS/FED BUYS REST OF HEALTH AUSTRALIA Sydney Morning Herald August 15, 1989

Jun 1991 Taken over

There have already been some casualties. Health Australia, a largely Victorian-based fund, was absorbed by Medibank Private last year, and two other funds have disappeared.
HEALTH SYSTEM IN CASH CRISIS Sydney Morning Herald June 28, 1991

Aug 1993 Bundy bankrupt

John Frederick Bundy has the knack of sitting at the helm of prosperous businesses while their profits turn into outright losses.
It would seem that Mr Bundy, 46, has enjoyed the fast-life. His past has been a tale of planes, racing cars and mistresses. But his fortunes appear to have turned sour.
His education is a mystery. Newspaper reports on St Luke's say that when he applied to the hospital his curriculum vitae boasted a commerce degree from Melbourne University and said he was an associate of the Australian Society of Accountants. But the reports said his claims and official records failed to coincide.
In 1987 Mr Bundy became the general manager of the country's newest health fund, Health Australia, which reportedly lost $22million in the three years it operated.
Accusations Fly As Fortunes Turn Sour The Age August 28, 1993


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Jamison Equity

The corporate takeover of the Australian health system occurred during the 1990s. The small for profit groups which had been formed during the 1980s needed capital to expand and most did this by floating on the share market. Bryce and AHC instead entered into partnership with large commercial investment groups. In November 1991 Jamison acquired 50% of AHC. The Malaysian group Peremba bought into AHC in April 1996 reducing Jamison's holding to 25%.

Jamison Equity was a commercial group closely associated with some of the most aggressive market focused businessmen in Australia. It was described as a vulture group, supposedly because it preyed on distressed companies. It denied that the term described its behaviour.

Jamison became part of Chris Corrigan's Lang corporation when a large multinational split up. Corrigan's shared Bryce's views about the ability of business to run hospitals more cheaply and better than any one else. He sets out the myths and the rationalisations publicly. He provided strong support.

Corrigan ultimately became disillusioned with Jamison. He did a complex restructure in preparation for his controversial government supported attack on the waterfront unions. He backed out of AHC because it was not profitable enough to justify his time and effort. By doing so he made a tidy profit on his investment instead of the loss he would have sustained had he stayed.

The banks and large institutional investors now took a far larger holding in the company. The Malaysians become the largest shareholders.

Nov 1991 Jamison buys 50% of AHC

The Sydney-based cashbox Jamison Equity has taken up 50 per cent of the private hospital group Australian Hospital Care Group for an undisclosed sum.

The founding shareholder of the group and executive chairman of Australian Hospital Care, Dr Mark Bryce, has retained a 50 per cent shareholding, and management will remain under his control.
Dr Bryce said 1991 had been a year in which corporate and institutional interest in the private health sector reflected expectations of strong growth in the field as well as a shift from the public sector.
Jamison Buys Into Health Group The Age November 13, 1991

Dec 1991 Corrigan and Lang

Mr Corrigan will be the chief executive of Lang Corporation which will be a spin-off of AFP Group PLC and will own the Australian investments, being the 36 per cent of Tyco Investments (Aust) Ltd and 40 per cent of Jamison Equity Ltd.
CORRIGAN LOOKS FOR MORE SCOPE FOR INVESTMENT Australian Financial Review December 2, 1991

Jun 1992 Corrigan the new authiority on health gives his views

Jamison Equity shares the vision. Mr Corrigan says: "The area was attractive to us because although it was dominated by government and charity organisations, it seemed the private sector could manage it more efficiently. Where the Government is finding it increasingly difficult to fund inefficiently run hospitals, the private sector, which can run them efficiently, will find more and more opportunities.'' He says private hospitals need to be more efficient just to compete with their Government-run and charitable counterparts, which do not pay tax and do not have to satisfy shareholders with profits.

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 morale.

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. "Private hospitals survive on their quality of service. You're competing for patients, in much the same way a restaurant is competing for customers.''
Business Homes In On Health Care Investment The Age June 13, 1992

Jun 1993 Vulture fund

Jamison Equity is Lang's other major asset. It is a vulture fund, established several years ago to buy distressed companies at rock bottom prices. Lang has management control and sway over operations
LANG CORP'S PERPLEXING PRICE Australian Financial Review June 7, 1993

Aug 1996 Frustrated wirth Jamison

But he has since grown frustrated with the strictures of managing Jamison's diverse portfolio of investments, all of which need close management attention. These businesses include Patrick, the cold-storage and logistics group TDG, Macquarie Textiles and the private-hospital group Australian Hospital Care.
Corrigan's Bid To Change The Wharves Business Review Weekly August 26, 1996

Oct 1996 Will sell off AHC

LANG Corporation has offered to buy the remaining 75 per cent of Jamison Equity Ltd to increase its concentration on stevedoring and distribution.
Before the move Jamison will disburse proceeds of its interests in Freedom Furniture, Australian Hospital Care and Macquarie Textile Holdings to its equity holders.
Lang to take all Jamison. Daily Telegraph October 5, 1996

Oct 1996 Jamison's last AGM

Jamison Equity is represented here today by David Vaux and Sam Kaplan, but I should also acknowledge Mr Chris Corrigan, Jamison Equity's founder for his major role in the earlier years.
ASX-Australian Hospital Care Limited (AHX.AX) Chairman`s Address. Australian Stock Exchange Company Announcements 30 October 1996


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Malaysian groups

It is not only US corporations that have entered Australian health care. Malaysian groups have bought into Alpha Healthcare and also AHC. Peremba Group bought one third of AHC in April 1996. AHC floated on the share market in August the same year. Its holding was acquired by another Malaysian group "Landmarks Hotels St Realty Sdn Bhd" a year later. Landmarks soon became the dominant share holder.

These investors were hailed as a coup by AHC because it opened opportunities for Asian expansion, particularly into Malaysia. There were many plans for local and Asian expansion. The company was restructured in order to foster growth.

Malaysia was to be a major focus for growth but it never happened. This was partly because of the Asian crash, partly because of AHC's own financial difficulties, and partly because of Landmarks' financial difficulties.

Apr 1996 Peremba

The Australian Hospital Care Group has its sights set on expansion into South-East Asia after a $50 million capital injection from the Malaysian-based investment company the Peremba Group.

Peremba has acquired one-third of AHCG, Victoria's biggest and Australia's third-largest private hospital operator, with the view to developing Malaysia's private health sector.

AHCG's director of corporate affairs, Mr Gerry Bullon, said yesterday that the group would seek joint-venture partners to build private hospitals and other health-care facilities in Malaysia. It had also held discussions with the Malaysian Government and Peremba about privatising some of the country's public hospitals.
Malaysian Boost For Hospital Group The Age April 2, 1996

May 1997 Landmarks

On 9 January 1997, Landmarks Hotels & Realty Sdn Bhd@ a wholly owned subsidiary of Landmarks Berhad, entered into a Share Sale Agreement with Permodalan Peremba San Bhd in relation to the acquisition of all of the issued share capital in Peremba Healthcare Sdn Bhd ("Share Sale Agreement").

Peremba Healthcare Sdn Bhd owns, via a number of wholly owned subsidiaries, all of the shares in Westbourne Ventures Limited which in turn owns 33,182,333 ordinary shares in the Company. This represents 26.34% of the issued shares in the Company.
ASX-Australian Hospital Care Limited (AHX.AX) Notice of Extraordinary Meeting & attachments. Australian Stock Exchange Company Announcements May 7, 1997

Jun 1997 Plans for Asia

Managing director Mr Mark Bryce said he planned to identify four or five Asian markets in which AHC could extend its hospital operations and information technology activities.
ASX To Introduce Health-care Index Australian Financial Review June 5, 1997

Jan 1998 Landmarks' problems

AHC's major shareholder since mid-1996 has been Landmarks Berhad, which now holds 23.9 per cent of the capital. The Malaysian company has had a rather volatile past year, with its shares ranging between $S2.74 and 17cents before a recent recovery to 31cents Singapore, at which price it is on a single-figure multiple.
Hospital Group Glows With Health Australian Financial Review January 31, 1998

Feb 1998 Asia abandoned

  Australia's second biggest private hospital group Australian Hospital Care Ltd is on the prowl for acquisitions, but any move into Asia - once the logical next step for a group with plans to be a global private health care player by 2010 - is now on the back-burner.
But no money has been spent in the region so far, although more than 60 opportunities have been investigated and rejected, and AHCL now intends to invest the $75 million capital it raised last year in Australia rather than in Asia.
Hospital Group In A Fit State Australian Financial Review February 6, 1998


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Becoming a public company

The coalition government elected in 1996 was promising major changes through privatisation. These would help the struggling hospital industry. Hospital groups needed capital to exploit the opportunities.

Aug 1996 A new government

"The privatisations in the next 10 years are going to involve $20-25 billion of funds being pumped in by the private sector," Dr Bryce said.
AHC Opens Offer Of 32m Shares At $1.25 Sydney Morning Herald August 5, 1996


When AHC finally floated on the share market in August 1996, 17 years after it was founded, it was a Clayton's float - the float you have when you are not really having a float. Bryce, Jamison and Peremba retained over 75% of the company so that initially outside shareholders contributed capital but had little control. However Jamison unloaded it's holding soon after. Large bankers and investment groups then became significant holders. The changing lists of top shareholders reveals the pattern.

AHC had been upgrading and enlarging its hospitals as well as buying strategically. It was therefore well positioned to succeed on the share market. Unlike other hospital companies which listed on the market and then stumbled, its issue price of $1.25 increased steadily to $2.50 within 6 months.

Jul 1996 The float

Leading private hospital operator Australian Hospital Care group is gearing up for a stockmarket float to expand its portfolio of hospital assets and exploit the prospective boom in private health care.

- - - - - - - appointed SBC Warburg to underwrite and canvass institutional support for a $40-million partial float of the company.

The issue comes at a dynamic time in the hospital business. The Coalition Government is expected to deliver private health cover incentives in next month's Budget and Australia's largest private hospital operator, Mayne Nickless, is on an aggressive expansion drive.
Post-listing Jameson will have around 25 per cent of issued shares, Dr Bryce around 22 per cent, Peremba 25 per cent and the public and institutions the rest.

AHC has a portfolio of 13 hospitals, 11 of which are in Melbourne's eastern and south-eastern suburbs. There is one in Tasmania and one on the Gold Coast.
AHC Ready For Float If Health Care Booms Sydney Morning Herald July 18, 1996

Aug 1996 Privatisations and growth

Governments had started to contract out the management and ownership of public hospitals, he said. AHC was keen to take advantage of this, along with the rationalisation of the private hospital sector.
Dr Bryce said AHC decided to go public to pursue growth that was substantially outside its existing portfolio.
AHC Opens Offer Of 32m Shares At $1.25 Sydney Morning Herald August 5, 1996

Aug 1996 Doctors offered discounted share prices

  - - - - - - particularly strong demand from doctors, allocated 5 per cent of the shares. Hospital employees - also entitled to 5 per cent - bought in at the discount price of $1.15 a share.
Hospital float in demand. Daily Telegraph August 17, 1996

Aug 1996 Listed on stock market

  Australian Hospital Care, which listed yesterday, made a solid debut to open at $1.55 before closing 5c higher at $1.60.
All ords soars on blue-chip rampage. The Australian August 29, 1996


Note below that Medical Ancilliary Services is Dr Bryce, Plzen is a Jamison subsidiary and Westbourne Ventures was owned by Malaysians, Peremba and then Landmarks.


Name - - - - - - - - - - - - - -Percentage

  • Medical Ancilliary Services Pty Ltd - - - - - 24.59
  • Plzen Pty Ltd - - - - - - - - - - - - - - - - - 24.59
  • Westbourne Ventures Ltd - - - - - - - - - -24.59
  • Westpac Custodian Nominees Ltd - - - - -3.15
  • Permanent Trustee Australia Ltd- - - - - - 1.72
  • Sandhurst Trustees Ltd - - - - - - - - - - - 1.60
  • Caledonia Investments Ltd - - - - - - - - -1.23
  • Potter Warburg Nominees Pty Ltd - - - - -1.01
  • ANZ Nominees Ltd - - - - - - - - - - - - - - 0.78
  • Queensland Investment Corporation - - -0.61
  • IOOF Australia Trustees (NSW) Ltd - - - -0.53
  • National Nominees Ltd - - - - - - - - - - - 0.39
  • Citicorp Nominees Pty Ltd- - - - - - - - - 0.37
  • Divsplit Nominees Pty Ltd - - - - - - - - - 0.37
  • Barclays Australia Custodian Services Ltd - 0.33
  • Norwich Union Life Australia Ltd - - - - - - -0.33
  • Suncorp Life & Superannuation Ltd - - - - -0.28
  • Australian Mutual Provident Society - - - - 0.27
  • Suncorp Insurance & Finance - - - - - - - - 0.26
  • Legener (Australia) Pty Ltd - - - - - - - - - 0.25
  • Total - - - - - - - - - - - - - - - - - - - - 87.25



    Name - - - - - - - - - - - - - -Percentage

  • Westbourne Ventures Ltd - - - - - - - - - - - - - - -23.92
  • Medical Ancillary Services Pty Ltd - - - - - - - - - 19.01
  • Westpac Custodian Nominees Ltd - - - - - - - - -7.43
  • Chase Manhattan Nominees Ltd - - - - - - - - -- 6.18
  • Permanent Trustee Australia Ltd - - - - - - - - - -5.99
  • ANZ Nominees Ltd - - - - - - - - - - - - - - - - - - -3.38
  • Danesworth Pty Ltd - - - - - - - - - - - - - - - - - - 3.00
  • Australian Mutual Provident Society - - - - - - - -2.83
  • SAS Trustee Corporation - - - - - - - - - - - - - - -2.46
  • BT Custodian Services Pty Ltd - - - - - - - - - - - 2.22
  • Perpetual Trustee Company Ltd - - - - - - - - - -1.97
  • The National Mutual Life Assoc of Australia - - - 1.78
  • Queensland Investment Corporation - - - - - - -1.30
  • Caledonia Investments Ltd - - - - - - - - - - - - - 1.20
  • Citicorp Nominees Pty Ltd - - - - - - - - - - - - - - 1.03
  • National Nominees Ltd - - - - - - - - - - - - - - - - 0.74
  • IOOF Australia Trustees (NSW) Ltd - - - - - - - - 0.73
  • Commonwealth Custodial Services Ltd - - - - - - 0.71
  • Victorian Workcover Authority - - - - - - - - - - - - 0.58
  • Transport Accident Commission - - - - - - - - - - 0.56
  • Total - - - - - - - - - - - - - - - - - - - - - - - - 87.02.

    TAKEN FROM :: ASX-Australian Hospital Care Limited (AHX.AX) Top 20 shareholders as at 30/10/97 Australian Stock Exchange Company Announcements November 3, 1997

In 1998 Landmarks investment vehicle Westbourne Ventures disappears from the top 20 list and is replaced by Citicorp Nominees and BT Custodial Services Ltd. Reports during the sale of AHC to Mayne Health in 2000 indicate that Landmarks was still the largest shareholder and owned 24% of AHC. It must have done so through these two commercial vehicles.


NAME - - - - - - - - - - - - - - - - - - - Percentage

  • Medical Ancillary Services Pty Ltd - - - - 18.70
  • Citicorp Nominees Pty Ltd - - - - - - - - -16.08
  • BT Custodial Services Ltd - - - - - - - - -12.16
  • Westpac Custodian Nominees- - - - - - - 6.39
  • Permanent Trustee Australia Ltd - - - - - 5.45

    TAKEN FROM :: ASX-Australian Hospital Care Limited (AHX.AX) Annual Report/Top20. Australian Stock Exchange Company Announcements September 29, 1998

In spite of its experience with for profit health insurance six years earlier, AHC and its backers seemed to have lost none of their faith in the superiority of the marketplace.

AHC ultimately failed more because its judgement was biased by its ideological misconceptions than from its growth strategy.

Oct 1996 Faith in the market

Australian Hospital Care Ltd intends to access the challenges presented and play its part in developing truly efficient competitive healthcare services which will advantage our society. We believe that our participation will not only improve those services - - - - - - .
AUSTRALIAN HOSPITAL CARE LIMITED (AHX.AX) CHAIRMAN`S ADDRESS. Australian Stock Exchange Company Announcements October 30, 1996


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Before the float in 1996

AHC had been steadily adding more beds and building up its hospitals as well as steadily enlarging its portfolio in the 17 years prior to its float. My impression from the press reports was that it was spending to improve its services and please the patients whom it considered its customers. It was under the misconception that money spent increasing quality of care would result in greater profitability. Insurers were the real customers and they were interested in cost not quality. When it floated it owned 13 hospitals, most of them in Melbourne.

The company was also aware of the need for size and leverage in negotiating with insurers if it was to be profitable. An attempt to form a negotiating block with its competitors attracted the attention of regulators.

Aug 1992 Investing in existing hospitals

With Australian Hospital Care, the aim has been to expand the size of its hospitals to help them reach optimum efficiency. About $20 million has been invested in boosting bed numbers and updating equipment.
Jamison No Vulture, Says Its Chief The Age August 17, 1992

Nov 1994 Investing in existing hospitals

Over the past two years, investment of $60 million by the group has meant a new maternity unit at Northpark Private Hospital in Bundoora, the refurbishment of Dorset in Pascoe Vale, Masada in East St Kilda and Delmont in Burwood, and the redevelopment of the maternity unit at Mitcham Private Hospital.
New Programs Aim For Lower Costs And Better Service The Age November 2, 1994

Aug 1995 Regulator concern

Meanwhile, Professor Fels also said he would look at a recently formed private hospital alliance, created partly to bolster its bargaining position with private health funds. The alliance includes the Australian Hospital Care Group, Cabrini and the Freemasons Hospitals and accounts for 35 per cent of the private- bed market in Victoria.
TPC Talks Tough On Health Changes The Age August 31, 1995

Apr 1996 Expansion

Australian Hospital Care Group has expanded rapidly in a short time. Established in 1979 with the purchase of Mitcham private hospital, the group now owns 13 hospitals with assets of $230 million and annual turnover of $130 million.Malaysian Boost For Hospital Group The Age April 2, 1996

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After the float in 1996

The conservative coalition government elected in 1996 had promised to introduce measures to increase private health insurance. Corporate hospital managers were predicting a recovery with increased profitability. Everyone was talking about opportunities and growth.

Aug 1996 Promise of more patients

A rise in the Medicare levy surcharge for those with higher incomes is expected to fuel greater demand for private health cover and a consequent increase in demand for providers of health private services such as Mayne Nickless, Australian Hospital Care, Alpha Health Care and Healthscope.
Markets Cool On Costello's 'coup' Sydney Morning Herald August 21, 1996

Insurers and government were also talking about short stays in hospital and using "step down care" facilities in order to keep down costs. This enthusiasm led the federal government to bring the disturbing Sun Healthcare (which claimed to be an expert in this field) into Australia in late 1997. This was in spite of concerns about its practices and the objections of the state where it was buying. This undoubtedly acted as a stimulus to local companies.

Privatisations and collocations were still very much part of the belief system.

AHC set up birthing services to cope with short stay midwifery. The Herald Sun published three very similar glowing advertorials at monthly intervals. It expanded its rehabilitation beds, and continued to upgrade its larger hospitals to seize the opportunities presented by these changes. It bid for several privatisations and collocations but was not very successful. It acquired the last of the Veteran's Affairs hospitals in Australia. The Herald Sun helped with another advertorial.

Feb 1998 Rehabilitation

A key feature of this six month period has been the expansion into Rehabilitation Medicine as a niche area for the Company. Australian Hospital Care Limited now offers 241 Rehabilitation beds on five campuses and has strategically positioned itself to provide for the changing nature of healthcare delivery and the demographics of Australia's aging population.
ASX-Australian Hospital Care Limited (AHX.AX) Half Yearly Report & ASC accounts. Australian Stock Exchange Company Announcements February 18, 1998

Sept 1998 Maternity

WHEN new parents make one of their biggest decisions before the birth - choosing a hospital - they must ensure peace of mind.
Mitcham Private, Northpark Private, South Eastern Private, Knox Private and Masada Private pride themselves on their professionalism and level of service.

All are members of Australian Hospital Care Group.
Comprehensive services, including childbirth education, ultrasonography, breast feeding clinic, pathology services, pre-natal and post-natal physiotherapy, home support and liaison with the maternal and infant-welfare nurse are available.
PUT HOSPITALS TO TEST. Sunday Herald Sun September 27, 1998

Oct 1998 Maternity

Five hospitals under the Australian Hospital Care Group umbrella - Mitcham Private, Northpark Private, South Eastern Private, Knox Park Private and Masada Private - provide exceptional care, but all have something different offer.
IN GOOD HANDS.EXPECTANT mothers deserve the best. Sunday Herald Sun October 25, 1998

Apr 1999 Veterans

Australian Hospital Care Ltd, the largest provider of private health service in Victoria, cares for more than 11,000 veterans and war widows each year.

It has established many initiatives to assist in their co-ordinated care when patients are at any one of the company's 16 hospitals.
SERVING A SERVICEMAN. Sunday Herald Sun April 25, 1999

AHC raised $75 million from the market to fund growth. In spite of this and all the talk about growth in Australia and Malaysia, AHC's expansion was moderate. In an attempt to drive its acquisitions in Asia and Australia it restructured its management.

May 1997 Restructure

Australian Hospital Care Limited (AHX) today announced a senior executive restructure to enable the company to pursue an aggressive growth strategy.

The formation of an acquisition team and a re-alignment of senior executive responsibilities and delegation levels will allow AHX the flexibility to focus both on growth and consolidation of its business activities simultaneously.
"We already have tenders running for hospitals in three states* as well as other significant targets in Australia and offshore and it is appropriate to gear up now for the period of significant growth coming in the next few years" said Dr Bryce.
AUSTRALIAN HOSPITAL CARE LIMITED: Company Administration - Other (Part A : Section 01 Of 01) Australian Stock Exchange Company Announcements May 30, 1997

Aug 1997 Raising money for acquisitions

AUSTRALIAN Hospital Care saw a 138 percent surge in 1996-97 profit to $14.5 million and announced a $75 million raising to feed its strong appetite for acquisitions. AHC said it would launch a renounceable one for five rights issue to raise about $50 million and $25.2 million from a share placement programme.
AHC profit surges COURIER-MAIL August 29, 1997

AHC bought the Allamanda hospital on the Gold Coast, as well as the Avenue and the Masada private hospitals in Melbourne. It spent money enlarging and improving these and other facilities. It closed the small Bryson Private Hospital, which was no longer viable.

The Allamanda hospital illustrates a common problem for care seen also in the USA. Founded by Mr Pelerman in 1979 was thrown into the market vortex in 1996 after 16 years of relative tranquillity. Over the next 9 years it was owned by AHC, then briefly by Mayne Health, followed by the Thynne family's HCA company. HCA became part of Nova Health which was soon in trouble. It was acquired by Healthscope.

Staff must have struggled to cope and provide care as the hospital rotated through a succession of managers, each paying service to a new master and new corporate strategies. Then there must have been changes associated with restructuring as successive companies experienced financial difficulties and sought to squeeze more money from care. Similar management instability has been one of the major problems for doctors and patients in US corporate hospitals. This is not the context within which good care is fostered. Stability is desirable.

AHC secured the Sydney's Lady Davidson rehabilitation hospital from Veteran's Affairs and the Victorian Rehabilitation Centre (VRC) from the Transport Accident Commission. Both of these were government run facilities. AHC's belief system would have expected large profits from efficiencies in these hospitals. By 1999 it was revealed that even after a 10% reduction in staff these facilities were not meeting their profit targets. Their attempts to deskill services for patients in order to reduce costs ended in an industrial dispute.

Jun 1997 Rehab hospital from Vet Affairs

The hospital (Sydney's Lady Davidson rehabilitation hospital) is the last of the repatriation hospitals owned and managed by the Federal Department of Veterans Affairs, which announced its intention to divest more than a year ago.
AHC Wins Hospital Bid Australian Financial Review June 26, 1997

July 1997 Rehab hospital from TAC

This 50 bed specialist rehabilitation hospital (Victorian Rehabilitation Centre -VRC in Melbourne), which was built in the early 1970s, has been successfully operated by the TAC and has an extensive range of both inpatient and outpatient programs.
ASX-Australian Hospital Care Limited (AHX.AX) Acquires the Victorian Rehabilitation Centre. Australian Stock Exchange Company Announcements July 4, 1997

In addition to the Latrobe privatisation in Victoria AHC won the contract for the colocation at the Royal Hobart Hospital in Tasmania.

By February 1998 the talk was still about plentiful opportunities and government contracts but there was little specificity to this. The Asian collapse had closed those opportunities. Early experience with privatisations soon turned all parties off. Most colocations were abandoned before they got off the drawing boards. The market was not investing in hospital growth.

By February share prices were falling and it is likely that the company was under pressure - something it denied. Four months later it announced a profit downgrade and the purchasing of new hospitals ceased. It was all downhill from then on.

Feb 1998 Still positive

After adding two new hospitals in the first half, AHCL will remain on the lookout for acquisitions in the second half, with a swathe of government tenders, co-locations and other opportunities expected to arise over the year.
Illness Puts AHCL In Better Health Australian Financial Review February 19, 1998


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AHC was far more successful after its float than companies like Healthscope and Nova. It had larger hospitals providing more sophisticated care and they were very profitable. For the first 18 months it made large profits and regularly exceeded its projections. Its share price doubled to $2.50 then settled back at about $2.

Feb 1997 Exceeds projections

Victorian and South Australian hospital group Australian Hospital Care Ltd has exceeded all forecasts and financial targets for the December half year, its first as a listed company.
AHC Eclipses All Forecasts Australian Financial Review February 28, 1997

Mar 1997 Share value doubles

The private-hospital operator Australian Hospital Care, floated in August 1996 at $1.25, has moved effortlessly to $2.48.
Choosing A Floating Target The Age March 3, 1997

Jun 1997 More profit

Speaking at a presentation made to institutional investors in Sydney yesterday, the director of corporate affairs, Mr Gerry Bullon, said profits would be higher than forecast, even without the benefit of earnings from new acquisitions.
AHC Nurses Improved Net Profit Australian Financial Review June 27, 1997

Aug 1997 Increased earnings

All consolidated occupancy and utilisation figures either met or have exceeded forecasts set for the full year, underpinning an increase in Earnings per Share to 11.68 cents.
ASX-Australian Hospital Care Limited (AHX.AX) Preliminary Final Report and placement. Australian Stock Exchange Company Announcements August 28, 1997

Feb 1998 Jump in profits

Australia's second-biggest listed hospital group, Australian Hospital Care Ltd, yesterday posted a significant jump in interim net profit as it continued to achieve above-industry-average occupancy levels at its 16 hospitals.
Illness Puts AHCL In Better Health Australian Financial Review February 19, 1998

The market seemed to know something that even the company did not know. AHC's share price started slipping in about September 1997 and in March 1998 (after its profits had increased) they dropped even more rapidly, to reach $1.75. This prompted an inquiry from the stock exchange. The company responded by saying it expected a substantial lift in earnings.

Their credibility was badly tarnished when only two months later they announced a profit downgrade, which they claimed had developed during that period. The share price plunged to $1.15, forcing the company into a buy back to support the stock.

Jun1998 Downgrade

But he said yesterday the profit downgrade was necessary because AHCL had been severely affected over the past two months by the continuing fall in numbers of patients with private health insurance and lower than usual patient volumes at its hospitals.
AHCL Revises Forecast Australian Financial Review June 5, 1998

Jun 1998 Buy back

Hospital operator Australian Hospital Care Ltd launched an on-market share buyback yesterday in an effort to reverse the negative sentiment which has hounded the group for almost nine months and pushed its share price to a series of all-time lows in the past three weeks.
Shares have fallen from $2.15 in January to the latest record low of $1.15 set two days ago, and are well down from their $2.57 high of two years ago.
Share Slump Prompts AHCL Buyback Australian Financial Review June 25, 1998

Much of the optimism about the company came from the much-hyped privatisation in Latrobe but this hospital was not commissioned until July 1998. The collocation in Hobart would not open until 1999.

It is not clear from the material whether the market's flight from AHC was due to the company's existing hospitals coupled with a general malaise in the market affecting all hospital corporations (eg Mayne Health).

Perhaps someone had done some proper costing of the Latrobe privatisation and leaked that information. If so then it was not disclosed to the market as it should have been.

Share prices continued to fall. Winning the LaTrobe privatisation had been a coup that had pushed AHC's share price up before Jamison sold out its share at a large profit. It became a disaster. Opposition parliamentarians claimed that the real beneficiaries of the LaTrobe privatisation were the big and by then very unpopular businessmen, Corrigan and his mates.

Apr 1998 LaTrobe profits

The Opposition's health spokesman, Mr John Thwaites, said yesterday a company controlled by Mr Corrigan and Mr Scanlon stood to gain a $30 million profit from the deal to run the La Trobe Regional Hospital.

"Which company is it that made the windfall gain out of the Government's monopoly deal? It is Jamieson Equity, the sister company to Lang Corporation, controlled by Peter Scanlon and Christopher Corrigan - the Government's competition heroes," he said.
Patrick Pair In State Deal: MP The Age April 23, 1998


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AHC's downfall came from its blind belief that the market could do everything much more cheaply than others. The truth is that efficiencies that do not compromise care or services are limited. There are additional costs and resource implications to the business of competition. These and the profits demanded by its shareholders have to come from the limited funding for care. Bryce appears to have had a commitment to standards of care and this made it difficult for him. He probably really believed that the better the care the greater the economic success.

As a consequence of its faith in corporate management AHC had unrealistic expectations for both privatisations and collocations. It bid too low for privatisations. Private patients live in upmarket suburbs and like to have their care nearby. Most public hospitals are situated in poorer suburbs and the advantages from colocation do not offset this limitation.

AHC may well have survived had it stuck to private hospital care and left the public system to do what public systems have done best for many years - look after the vulnerable and needy with the limited resources that can be squeezed from government.

From soon after AHC floated it boasted of its success in securing the contract to build and run the public hospital at LaTrobe in Victoria. It clearly expected large profits from this when it came on line in mid-1998.

The privatisation of LaTrobe proved a disaster for HCA and losses reached $6 million a year. When the Hobart collocation came on line it added another $3 million to this annual loss. It was not sustainable. Share prices fell and fell as investors fled.

AHC secured the privatisation of the Lady Davidson rehabilitation hospital in Sydney in 1997 but this does not seem to have become a problem for them.

AHC had tendered for the Armadale privatisation in Western Australia but it pulled out of that in October 1998, only a few weeks after LaTrobe came on line. No one on the East Coast noticed and the hype about privatisation was still in full voice.

A year later privatisations were over. No one wanted them. The experiment failed because the underlying premise was false.

Aug 1997 The promise of LaTrobe

The construction of the new 257 bed Latrobe Regional Hospital, which the Company will manage and operate for the Victorian Government, is presently ahead of schedule and is expected to be completed in mid 1998. This facility is expected to contribute significantly to the group's earnings in the 1999 financial year.
ASX-Australian Hospital Care Limited (AHX.AX) Preliminary Final Report and placement. Australian Stock Exchange Company Announcements August 28, 1997

Apr 1997 proving critics wrong

"We've got to prove to government that we, as the private sector, can do it well, then they'll feel confident to give us existing facilities," said Mr Gerry Bullon, director of corporate affairs at AHC.
Health industry in the pink -- and the black Australian Financial review April 7, 1997

Oct 1998 The first back off

A spokesman for Futuris confirmed its joint venture partner - Australian Hospital Care - had pulled out of the tender process (for Armadale in Western Australia).
"It's about time the Government took heed of what people in the Armadale community are saying - they don't want a hospital developed by a private company." (opposition parliamentarian)
Hospital Sale In Doubt The West Australian October 7, 1998

Oct 1998 It doesn't create any ripples

The private hospital system is trying to cut back on its dependence on private health funds by embarking on joint projects with public hospitals, and contracting out its services.
Australian Hospital Care Ltd, together with the Mayne Nickless affiliate Health Care of Australia, Ramsay and the fourth-ranking Alpha Healthcare Ltd, are vigorously pursuing opportunities to provide public hospital services on contract and secure co-location projects, providing a private hospital alongside, or sometimes inside or on top of, a public hospital.
Funds Crisis: Private Hospitals Now Thinking Public Australian Financial Review October 14, 1998

Oct 1999 The penny drops a year later

We don't know what's happening yet, but it looks like we will have to re-examine our strategy over the next few weeks,'' one private operator said. It looks like a lot of the states have gone a bit soft on hospital privatisation.''
In the short term, we see this as mildly positive as recent privatisations have not been substantial profit generators for the private health-care companies,'' one analyst said. The three main listed health-care providers, Mayne Nickless, Australian Hospital Care and Ramsay, have suffered share-price slumps due to poor returns.
Health Boom On Hold The Age (Melbourne) October 20, 1999

The interesting story of the privatisation at LaTrobe is described on a separate page. The saga of the colocation in Hobart and the series of corporations that tried to make it profitable are described on the Tasmanian page.

CLICK HERE for the privatisation at LaTrobe

CLICK HERE for the colocation in Hobart


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Restructuring and struggling

By August 1998 share prices were down to 69 cents. The company responded by cutting staff and costs and in typical corporate doublethink it linked these to providing better care. It divided its hospitals into business clusters for closer administration. The familiar rhetoric suggested it had employed business consultants who knew little of health care. As always efficiency (meaning taking money from care) was the solution. It also did another share buy back in September 1998. It was repeatedly seen as a possible target for a US or other predator, but LaTrobe was the poisoned pill no one wanted.

AHC was forced back on to the competitiveness of its core private hospitals. The GST and the 30% private insurance rebate introduced by the re-elected coalition government in 1998 gave for profit groups a leg up, and made them more competitive against not for profit services but this was not enough.

AHC had expected profits from LaTrobe and Hobart to make up for the fall off of admissions to its private hospitals when they came on line. Instead they dragged the company down even as the government's legislative assistance improved the situation in other hospitals.

Jul 1998 Restructuring and reducung staff

AHX will focus on achieving enhanced and integrated services for Rs customers while simultaneously reducing costs. This will be achieved by substantially reducing Head Office and hospital costs with some restructuring and by integrating the Company's hospitals into geographic and product clusters. This will further enhance the high quality, and range, of services able to be provided to the Company's clients throughout Australia.
A new senior management team has been formed.
In conjunction with these enhanced responsibilities the Company is reviewing its performance management system to ensure that the business strategy is aligned with measurable outcomes throughout the organisation, and with personal performance of all senior managers. This process will be progressed through all executive positions over a two year period.
ASX-Australian Hospital Care Limited (AHX.AX) AHX launches new business strategy. Australian Stock Exchange Company Announcements July 31, 1998

Aug 1998 Restructuring

The continuing exodus from private health insurance yesterday prompted one of Australia's largest private hospital operators, Australian Hospital Care, to announce sweeping changes to its business strategy and management structure.
A spokesman for Australian Hospital Care, Mr Gerry Bullon, said the changes were about boosting efficiency. "It's been prompted by a need to respond to what's happening in the market. We have got this margin pressure coming through the health funds, who are facing a decline in membership, and you have this increased contestability with the public sector."
Hospitals Firm Looks For Tonic The Age August 1, 1998

Aug 1998 LaTrobe to offset other losses

Dr Bryce said the contribution from this facility (LaTrobe) was expected to offset the impact of lower numbers of patients with private health insurance and lower patient volumes in hospitals, which contributed to dragging down profits in the six months to June. The company's Hobart private hospital is due to come on stream in November next year.
Recovery Plan For Hospitals Group Australian Financial Review August 1, 1998

Aug 1998 Bryce reassures market

Managing director Dr Mark Bryce said the results, while more modest than originally expected, laid the foundations for further healthy profit growth this financial year.
The group has been plagued by negative market sentiment for most of the year, largely fuelled by concerns over the Asian crisis and its potential impact on AHCL's Malaysian major shareholder, Landmarks Berhad, which controls about 24 per cent of the stock.
AHCL Looks To Healthy Improvement Australian Financial Review August 28, 1998

Oct 1998 The Cargo cult - looking to government

The Coalition's introduction of a 30 per cent rebate on private health insurance will lead to a welcome rise in privately-insured patient numbers, and as a result, AHCL will be able to progress more rapidly with the introduction of simplified billing, case-based payment, and the bundling of various elements of care to allow for a total episode of care.
The net effect of the tax reform package will be to level the playing field between our hospitals and the not-for-profit sector, as well as to improve the outlook for the private healthcare sector overall.
ASX-Australian Hospital Care Limited (AHX.AX) Chairman`s Address to Shareholders. Australian Stock Exchange Company Announcements October 29, 1998


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Reducing Costs and Care

In spite of Bryce's promises profits continued to fall. AHC followed the standard practice of cost cutting. The largest costs are staff - the same staff who had once been courted by the company. By mid-1999 large numbers of nurses were leaving. This is usually due to so much pressure on them so that the work ceases to give satisfaction. If so then this backfired. AHC ended by using increasing numbers of costly agency staff.

AHC had reduced rehabilitation staff and then set about deskilling its rehabilitation units in order to meet a 22% profit target. Bryce seemed to have bowed to the bean counters and probably AHC's business advisors. Profits were put first.

If both insurers and hospital corporations expected a 22% profit then that would leave about 56% of the money set aside for care. Add to that the costs of central administration, of marketing, of the business of competition and there would be much less than 50% left to actually provide that care - a very different sort of inefficiency in a system whose legitimacy is based on claims to efficiency.

The other point here is that like Tenet Healthcare and Columbia/HCA the company had started setting profit goals for hospitals and managers and then attacking care when they were not met. The hospital wasn't losing money. It simply was not profitable enough.

The share price kept falling and in June 1999 there was another share buy back.

Mar 1999 More losses

The Directors of AHX today announced that the Company's operating profit after tax but before abnormals for the year to 30 June 1999 was expected to be below last years operating profit result.
ASX-Australian Hospital Care Limited (AHX.AX) Operating Profit Outlook. Australian Stock Exchange Company Announcements March 23, 1999

Apr 1999 Nurses

This positive turnover trend was offset by severe margin pressure largely through higher wage costs where agency nursing services were increasingly used due to increasing departures of nurses from nursing altogether or into agency employment.
REVIEW - AUST HOSPITAL CARE (AHX) $1.03. Your Money Weekly April 8, 1999

Jun 1999 The old TAC rehab hospitalk not profitable enough

The Australian Health Professionals Association's branch secretary, Ms Kathy Jackson, said since the centre was privatised, staff numbers had fallen by 10 per cent.

"They want to replace specialist staff with less experienced, but cheaper staff,'' Ms Jackson said.

"If they expected rehabilitation to be a cash cow when they bought the centre from the TAC then they didn't do their research properly because rehabilitation is labor intensive.

"The staff here aren't prepared to forego the quality of the service to increase profits for shareholders.''

The staff changes were revealed in April during the enterprise bargaining process between the association and Australian Hospital Care.
In a statement tendered to the Industrial Relations Commission, the centre's finance director, Mr Bernard Byrden, said the centre had failed to provide an "adequate return for some time'' and staff costs would have to be reduced and billing time increased.

Mr Byrden's statement said the centre would have a 5.8 per cent operating profit for the current financial year, but the Australian Hospital Care Group's benchmark is 22 per cent profit.
Parents Slam Profit Drive The Age June 24, 1999

Latrobe was now losing heavily. The share price fell as low as 57 cents. Reports suggest that services and care were compromised.

Oct 1999 LaTrobe losses and reducing services

As a consequence of the losses at Latrobe the Company's performance for the first half of the year will be significantly impacted. In the meantime the Company is reluctantly taking steps to reduce services for the balance of the year pending satisfactory resolution of the current discussions with the Department and new Government.
Australian Hospital Care Limited(AHX.AX)Chairman`s Address to Shareholders. Australian Stock Exchange Company Announcements October 25, 1999

Oct 1999 LaTrobe failures in care

VICTORIA'S first privatised public hospital is failing to cope with health needs in the Latrobe Valley, according to local doctors.

Bed shortages and surgical waiting lists are expected to grow because services are being cut at Traralgon's Latrobe Regional Hospital to get it out of the red.
But local surgeons claim the company failed to understand the needs of the community when it submitted its tender to build and operate the new hospital.

The complaints contrast with the picture AHC chairman Lawrie Willett put to this week's annual meeting
After one surgeon found his week's list of elective cases cancelled and an emergency case refused admission, he told AHC management: "I have had more cancellations in the last 11 months than I have had in the previous five years at the old hospital."

A leaked copy of his blistering July 11 letter adds: "It seems that the shortage of beds is having a major impact on the delivery of proper surgical care in the Latrobe Valley."

Several medical registrars similarly complained about the administration of intravenous drugs, poor communication between departments and an apparent lack of staff professionalism.

More extracts from the above article and other extracts addressing the the issues of depleted services and quality of care at LaTrobe can be found on a separate page describing the LaTrobe hospital privatisation.


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It gets worse and Dr Bryce is replaced

In September 1999 a further 36% drop in profits was announced and share prices were down to 73 cents. The company acknowledged that LaTrobe was in trouble and they were asking the government for relief. It offered a comprehensive range of excuses. By May 2000 the share price was 55 cents and in June the company announced that profits would be even lower than already expected pushing the price to 48 cents. The colocation in Hobart was not doing well.

Bryce's policies were in tatters and his commitment to maintaining care and staffing was compromised. He had failed so resigned and was replaced by Dr Stanford.

Sept 1999 Profit down further

MARGIN pressure and disruption to hospital rebuilding sent Australian Hospital Care's annual net profit plunging by 36.4 per cent despite a 26 per cent increase in sales.
Chairman Lawrie Willett warned that operating conditions were unlikely to improve this financial year, leaving little hope for a higher dividend.
Hospital group has ailing profit. The Australian September 10, 1999

Oct 1999 Gloomy forecast

Australian Hospital Care Ltd (AHCL) said the current unsatisfactory level of return for shareholders would not improve significantly until the repositioning of the hospital group was completed.

AHCL chairman Lawrie Willett said the repositioning could take a further two years to implement fully, but said some positive benefits were expected this year.
Aust Hosp Care says repositioning could take two years. Australian Associated Press October 25, 1999

Oct 1999 LaTrobe blamed

Australian Hospital Care Ltd has warned that its first-half results will be significantly hurt by losses brought about by inadequate government funding of the Latrobe regional hospital in Melbourne.
Govt Blamed For Hospital Shortfall Australian Financial Review October 26, 1999

Mar 2000 Still bad

Australian Hospital Care Ltd (AHCL) has suffered a 73 per cent fall in first half profit, with losses by its Latrobe Regional Hospital in cutting into its bottom line
Latrobe hospital drags down AHCL's interim profit. Australian Associated Press March 9, 2000

Jun 2000 Share prices

The share prices tell the story. Australian Hospital Care listed at $1.25 in 1996 and climbed above $2.50 before beginning its downward journey to trade around 47c.
Dollarectomy / Your private dollarectomy. The Australian June 17, 2000

May 2000 Bryce resigns

Australian Hospital Care Limited Chairman, Mr Lawrie Willett, announced today that Dr Mark Bryce intends to retire as the Australian Hospital Care Limited Chief Executive Officer.

Mr Willett said that Australian Hospital Care Limited had appointed Dr Michael Stanford as the new Managing Director and Chief Executive Officer effective from 5 June 2000
Australian Hospital Care Limited(AHX.AX)New CEO appointed. Australian Stock Exchange Company Announcements May 8, 2000


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Making AHC an attractive target

Profits were down and significant debts had to be serviced. Stanford was a business manager and he did what businesses do. He set out to cut costs, extract more money from insurers, and ditch the LaTrobe hospital. The problem for him was that shareholders had lost faith in the company and would not believe anything they said. As a consequence the share price did not reflect the value of the company making it a target for a hostile takeover. AHC was the second largest for profit hospital operator in Australia behind Mayne Health and in front of Ramsay.

Insurers were refusing to pass on the gains from an increased uptake of private insurance. AHC had leverage on the Gold Coast where not for profit MBF was the main insurer. It challenged MBF and in this instance the not for profit insurer blinked. AHC won the day. It was a very different story two years later when Healthscope tried to emulate this success using the same strategies and the same arguments. It took on the hard-nosed multinational BUPA in South Australia.

Aug 2000 MBF confrontation

Members of the Medical Benefits Fund (MBF) may face reduced benefits from their fund if they seek treatment at two of the Gold Coast's largest private hospitals from mid-August.

Australian Hospital Care Limited (AHCL), owner of Allamanda and Pindara Hospitals on the Gold Coast, has advised MBF that MBF's refusal to increase payments to AHCL was no longer acceptable and has given notice that it will terminate its agreement with the fund on August 15.
"MBF has frozen our payments since 1997. We co-operated then, at a time when the entire private health sector, and the funds in particular, were under pressure," Dr Stanford said.

"But with the huge increase in membership due to Lifetime Health Cover, worth hundreds of millions of dollars to MBF, it is unconscionable in our opinion for MBF to insist on a further two year freeze.
This could affect a particularly vulnerable group of patients, the elderly, who make up a large proportion of all patients on the Gold Coast," he said.
MBF members to face reduced benefits at Gold Coast hospitals Australian Stock Exchange Company Announcements August 7, 2000

Aug 2000 MBF confrontation

What may appear to be a minor skirmish amid contract negotiations brings into the open the looming battle as the private hospital companies attempt to grab some of the $1 billion in new premium income going to the health funds this year.
The hospital owners, of course, have themselves to blame for what has been a poorly conceived investment binge in recent years and now they are crying poor.
Battle For Medi-money Hots Up Australian Financial Review August 8, 2000

Oct 2000 AHC wins

The first of these is to take a more vigorous approach to health fund negotiations. Some of you may be aware of the strong stance we took with MBF in Queensland which attracted significant local and national publicity. Our two hospitals and three joint venture or managed day surgeries on the northern part of the Gold Coast gave us a strong regional presence. - - - - - - - - .

I am pleased to say that as a result of this action, MBF did agree to increasing payment to our facilities, and that more broadly we have been successful over the past few months in securing improved agreements with all the other major health funds.
AUSTRALIAN HOSPITAL CARE LIMITED: Chairman's Address To Shareholders Australian Stock Exchange Company Announcements October 26, 2000

In September 2000 AHC wrote down its assets to give it a $79.5 million loss. LaTrobe and Hobart were bleeding. AHC saved $1.6 million by cutting staff. It started selling some of its hospitals and its radiology services.

Sep 2000 Losses at LaTrobe and Hobart

Group EBITDA fell by 33.7 % to $24.7 million, largely due to reductions in contributions at Latrobe Regional Hospital of $7.5 million and $3 million at Hobart/St Helens.
"Our biggest problem remains Latrobe Regional Hospital and, to a lesser extent, the Hobart Private Hospital co-location, and these two facilities have significantly impacted on our overall result.
Australian Hospital Care Limited (AHX.AX) Media Statement/Preliminary Final Report. Australian Stock Exchange Company Announcements September 7, 2000

Sep 2000 Selling hospitals and ? LaTrobe

But AHC chief executive Michael Stanford said today that the company would be happy to walk away from Latrobe, which made a $6.2 million operating loss in 1999/2000.
Dr Stanford also announced plans to divest three of its smaller hospitals.

"We've now got a clear strategy about which hospitals we wish to be involved in. We have, as a result of that, decided there are three businesses we in that we don't want to stay in, so a process has commenced for those," he said.
He said the plan to divest the businesses was part of a strategy to focus on large and niche operations, which it had found to be the best performers.
AHC hopes Vic government will let if off Latrobe hook.
Australian Associated Press September 7, 2000

Sep 2000 Large write down

Australian Hospital Care's new chief executive has elected to take $92 million in charges on the chin, sending the health-care group deep into the red and forcing the abandonment of a final dividend.
AHC warned in early June, three days before Michael Stanford replaced Mark Bryce as chief executive, that its profit was "likely to be below current market expectations'', but few would have expected the $100 million reversal in fortunes that has occurred.
He has taken the scalpel to the business, slicing $1.6 million from head-office costs through redundancies, and the more aggressive stance with the health funds and governments is expected to pay dividends.
Cashflow statements for AHC also show that while debt grew by an additional $23 million, it has made no repayments, leaving it with gross borrowings of $170 million.
$79m Loss Pains AHC Bottom Line The Age September 8, 2000

Sep 2000 Hospital and radiology sales

AUSTRALIAN Hospital Care is looking to unload three medium-sized hospitals in Victoria (South Eastern, Masada and Dorset Private) and focus its business on large facilities and specialist hospitals.

AHCL, Australia's second largest private hospital operator, is also talking to radiology players such as Sonic Healthcare about the value of it radiology arm, with a view to a sale or an alliance.
AHCL wants to get big or get out
The Australian September 11, 2000


There was more reorganisation and restructuring. Steps were taken to more closely cost clinical services and adjust policy accordingly.

Oct 2000 Tighter internal controls

In order to better manage costs, we have implemented a range of tighter internal controls on staffing and capital. We are also rolling out a clinical costing system which will give us a better understanding of the areas of the business which provide us with high margins and which in turn will enable more informed dialogue with the funds.
AUSTRALIAN HOSPITAL CARE LIMITED: Chairman's Address To Shareholders Australian Stock Exchange Company Announcements October 26, 2000

When the government agreed to take back the LaTrobe hospital AHC predicted that it would become profitable again. Share prices rose to 75 cents. This was half its value when it floated 4 years before.

Oct 2000 Government takes back LaTrobe

Australian Hospital Care Limited (AHCL: AHX) today announced that the operation of the Latrobe Regional Hospital would be transferred back to the Victorian State Government on 31st October 2000. The in principle agreement is subject to due diligence and final documentation.
Australian Hospital Care Limited (AHX.AX) Transfer of Latrobe Hospital to Government. Australian Stock Exchange Company Announcements October 23, 2000

Oct 2000 Predicts profits

AHC chairman Lawrie Willett said that the group expected a nine per cent improvement in earnings before interest, tax, depreciation and amortisation (EBITDA) for core private hospitals to $24 million.
Aust Hosp Care expects improved result in first half. Australian Associated Press October 26, 2000

Nov 2000 Impact of giving LaTrobe back

In October, he (CEO of AHC) handed La Trobe Regional Hospital back to the Victorian Government, cutting short an expensive legal battle with the Government, putting a stop to operating losses, and allowing AHC's management to concentrate on other areas.

La Trobe Regional Hospital - one of the former Kennett Government's privatisation initiatives - was a problem for AHC from the start. The hospital lost $6.2 million in 1999-2000 and, according to Stanford, the contract AHC had with the Victorian Government meant the company was unlikely ever to make a profit from running the hospital. The formula for funding the hospital was set at such a level that, even operating at full efficiency, it was unlikely to make money.

Stanford says: "The outcome will have an immediate positive impact on the company's profitability, eliminating any further operating losses at La Trobe, directly improving after-tax profit by $2.4 million in 2000-01 and $3.8 million in the following year." The settlement includes a $6.6-million payment for transfer of property rights.
Private Hospitals In Recovery Ward, Business Review Weekly 17 November 2000


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Mayne captures AHC

Investor sentiment about AHC had not recovered and Pacman Peter Smedley had assumed control of Mayne Nickless. The abandonment of the money losing Latrobe contract made AHC attractive. After examining the radiology business and the hospitals Smedley decided to have the whole company instead. He initiated a successful takeover.

Landmarks forced Mayne to increase its offer and the ACCC only agreed to the takeover when Mayne agreed to sell a number of hospitals including the Allamanda on the Gold Coast.

Nov 2000 Interest in AHC hospitals

MAYNE Nickless is one of several healthcare companies interested in three Melbourne hospitals being sold by Australian Hospital Care.

Mayne is undertaking due diligence on the hospitals and there is market speculation it may launch a takeover bid for the entire listed hospitals group.
Healthy interest in sale of hospitals. The Australian November 16, 2000

Nov 2000 LaTrobe a risk

"La Trobe was seen to be a major risk in HCA's portfolio, and with that out of there you'd certainly be looking at it in a different light," the analyst said.
The company had expected Latrobe to have a significant impact on its first half performance, but said the disposal would have an immediate positive effect on profitability.
Mayne Nickless may bid for Australian Hospital Care, AAP News 20 November 2000

Nov 2000 Mayne launches takeover

Just four months to the day since he slipped his feet under the big Mayne desk still warm after Bob Dalziel's swift removal the great consolidator has lobbed a takeover bid worth about $330 million.
AHC has just begun the painful recovery from past mistakes when two major shareholders Malaysia's Landmark group and founder Mark Bryce are open to offers.

Landmark is in the throes of a big divestment program in order to reduce debts.

While private hospitals are part of Landmark's core business at home, it has found the Australian scene breathtaking. Literally.

And as for Bryce, it's probably fair to say that owning shares in the company he founded is less appealing today than it was. In June Bryce was replaced as managing director by Michael Stanford.
Smedley's Form Makes Mayne Move A Good Bet Australian Financial Review November 21, 2000

Nov 2000 Mayne launches takeover

The market had been expecting big things from Mr Smedley after his appointment as chief executive officer in July, and last week's $380 million bid for Australian Hospital Care has seemingly turned the company from a perennial underperformer to a company leveraged to an industry in the early stages of development.
Healthy Prognosis For Mayne Nickless Australian Financial Review November 25, 2000

Nov 2000 AHC will get the Smedley treatment

Once Mayne Nickless's Peter Smedley has wheeled Australian Hospital Care Ltd into his operating theatre, anaesthetised it and performed a headofficectomy, his next job will be to persuade a few surgeons to give up golf or at least to play during the week instead of weekends.
Smedley's Prescription For AHC Australian Financial Review November 25, 2000

Dec 2000 Landmarks holds out

Two AHC directors representing Malaysian group Landmarks, which holds 24.4 per cent of AHC, stated in the target statement released yesterday that the bid did not reflect fair value.

Landmarks is understood to have bought into AHC at a price above Mayne's cash and scrip alternative bid for the Melbourne-based group.
Dissenting Duo Stalls Mayne's Bid For AHC Australian Financial Review December 21, 2000

Jan 2001 ACCC objection resolved

Today Mayne declared its offer for AHC unconditional, after the Australian Competition and Consumer Commission (ACCC) announced it had accepted an undertaking from the private hospital operator to sell four hospitals

Mayne is to sell four hospitals within 12 months - Allamanda on the Gold Coast, Queensland, and Northpark, Mitcham and South Eastern private hospitals in Melbourne - reducing the number of its hospital beds in Melbourne by 308.
Mayne's offer also comprises $1.15 cash per AHC ordinary share or one Mayne share for every 4.3 AHC shares.
Mayne's success leaves market and industry players cautious AAP News January 30, 2001

Aug 2001 What was paid

Having made these divestments, he launched a successful and largely scrip bid for Australian Hospital Care. It was $200 million in scrip and $175 million in assumed debt to further build on the hospitals business.
Stockhunt Shares Magazine August 1, 2001

It is interesting to note that the experience in AHC did not dim the faith in the market of some of its senior staff including Peter Wilkinson who went on to become Managing director of another failure, Nova Health, a hotchpotch of small hospitals floated in 2002.

David Vaux, who was part of Jamison, made a lot of money when Corrigan sold Jamison's holding in AHC. He went on to join the aged-care and radiology company DCA Group

May 2003 Wilkinson

Still, if anyone knew the Allamanda asset it was Wilkinson, who worked for some time at Australian Hospital Care before Mayne Nickless bought it in 2001 after successive profit downgrades.

He went on to advise the Brown and Thynne families when they were looking at buying it from Mayne.
Pass the money bags - Nova needs transfusion. The Sydney Morning Herald May 12, 2003

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Web Page History
This page created June 2005 by
Michael Wynne
Minor addition September 2005