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What will Happen?

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This is the final section of my submission to Justice Yeldham in Australia in June 2003. It is so prophetic about what would eventually happen that I put it up in 2003 after the 2002 scandal


This is the final section of the submission I made to New South Wales Health Department and Mr. Yeldham in June 1993 objecting to a hospital license for Australian Medical Enterprises (AME) to build the new St. George's Private Hospital. The company is now called Tenet Healthcare. This was just before I went to the USA to collect more material.

The submission was a 109 page review of all the information available about National Medical Enterprises (NME) in Australia at that time. Here is the final section which attempts to counter every possible justification for granting a license and concludes by predicting what would happen. The comments are prophetic in the light of Yeldham's decision, the second scandal involving Tenet in 2002, and even the comments about cardiac disease as a potential problem area. Tenet has paid US $500 million to settle allegations that it performed vast numbers of unnecessary cardiac procedures and operations, some on normal people. Many of these are people who came for cardiac screening because of family history etc.


What will happen?
June 1993

There can be no doubt that were Australia's health system healthy and were its private hospitals financially viable, then NME's application would have been scrutinised carefully. They would have been unable to show that they were "fit and proper". They would have been found to be of poor standing and unfit to run hospitals in Australia. Everyone would have approved. This is not the situation in Australia today. There are enormous pressures from many sources to upgrade the private sector but the money is not there and hospital's low profits have not tempted investors. There would be no debate were this not so and were NME not offering to help solve acute short term problems. No one asks how they will accomplish this when others have failed. They accomplished this in the USA by bribery, by dishonest advertising and by buying and selling patient referrals. The likely long term consequences for Australia are profound.

The arguments made in this document to date are intended to force those responsible to confront the issues and prevent closed mind activity. When the social situation is considered, when the examples of other bodies are considered and when my concepts are employed, health authority responses can be predicted. Despite protestations to the contrary they, like lawyers are products of the society they live in and are as subject to societal pressures as the rest of us. They cannot isolate themselves from the community.

In New South Wales and Western Australia there is a crying need for these private hospitals. While in essence very simple the issues have been made very complex by the vast numbers of documents and allegations. The matter has been compounded by closed mind arguments by vested interests. Most people are confused and only partly informed. There is room for all sorts of rationalisation. As a consequence there are strong pressures from politicians, business men, the profession and the public. NME executives will be manipulating these groups. The larger culture wants these hospitals. There will be an outcry by politicians and businessmen if the hospitals are deregistered. Those responsible will be criticised and pilloried. It will require great courage to deregister these hospitals.

Unless there are individuals in NSW Health with great courage, personal integrity and determination, it can be predicted with a degree of certainty that NSW Health will succumb to this indirect pressure and will use closed mind techniques to explain their actions. They will strongly deny that they have been influenced by outside pressures and in one sense they will be correct. We are however all influenced by pressures generated from the society we live in and there is no doubt about the direction of these pressures here. Large numbers of people are demanding a decision. In granting registration NSW Health may claim to have adopted a pragmatic approach. This is the common rationalisation employed today when confronted by reasoned argument. I will deal with the likely explanations that will be offered. The first two have already been advanced. No doubt more will be developed.

1. The inquiries and concerns relate only to psychiatric hospitals and therefore cannot be extrapolated to other hospitals.

This is firstly untrue and secondly psychiatric patients are ill people who are more vulnerable and more easily abused than other patients. This is a greater indictment

2. Australian review bodies and laws will prevent similar abuses.

Australians can't even make up their minds about the extent of current fraud, let alone police it. Every doctor knows that the system can be milked. Only ethical conduct by the majority of those in the system makes it work.

3. AME is an Australian company and there are no complaints about its activities. We can only deal with problems that have occurred here and what happened overseas is not relevant here.

AME is in bondage to NME which has baled it out when it was becoming bankrupt. NME has appointed its own administrators and its board members dominate. In 1994 NME will buy a controlling interest and it will be an American company with NME holding over 50% of shares. For practical purposes this is NME's Australian arm. NME has abused patients and defrauded them. They have bought and sold them like any other commodity and then maximised their profits by exploiting this resource without concern for the welfare of ill individuals. Health authorities are responsible for protecting the public from people like this. The wording of the act as "fit and proper" indicates this.

4. This is all a storm in a teacup created by the sensationalist press. NME has never been proven guilty of any activity.

The allegations have been made by reputable newspapers. They have been constrained by libel laws and have not published all the information they have. When dealing with the wealthy, newspapers are very careful. NME have not taken action against any major newspapers. The reports are substantiated by witnesses in evidence before government inquiries.

5. The allegations are being made only by a few with an axe to grind. They are biased.

NME's policies have antagonised and upset many people. It is not surprising that they are disgusted and complain forcefully. In the modern selfish world only those who have suffered complain! The number of people complaining is vast and there are very few who deny that these things have happened. Even the private psychiatric hospitals own association and the medical associations did not contest the facts.

6. The problems were due to the business approach adopted by one or two founding directors. They have been removed and it will be OK now.

This was a contributing factor but the consequence has been a vast community of staff who have absorbed the culture and financial practices espoused by NME. You cannot spend years indoctrinating people and then expect them to suddenly change and deny the things they have spent years doing, a vast investment of many peoples lives. They are unsuitable and nothing can now make them suitable.

7. The American system was flawed and as a consequence these aberrant practices were adopted by many of the hospital groups. NME is not unique. This is a social phenomenon and not NME's fault. The Australian system is different and these things would not occur here.

There is some truth in this but this is only one side of the equation. Certain character types will only flourish when circumstances are optimal. It is a case of the right (or wrong) person for the times. Examples are Carl Marx and Hitler. The factors which gave rise to the NME phenomenon are of interest only. The fact is that a large group of highly deviant hospital administrators have been developed and they will follow similar paths and use similar solutions to their problems. Australian government and regulatory bodies, politicians and businessmen have shown themselves to be gullible and inept. The disastrous situation and the scandals in many states attests to this. We are not equipped to handle people like this. Our response is to overregulate and this is ineffective. We need to foster integrity and ethical behaviour at every level. NME has undermined and destroyed the ethical basis for medical care in the USA. Their entry into Australia will destroy any pretence that we might make to an ethical and caring service. It will rubber stamp deviance and give the green light to others.

Medicine is moving out into the community. The emphasis is moving from hospitals where some monitoring of services is possible. The shift is to preventive medicine with screening clinics for heart disease, all sorts of cancers, women's diseases etc. etc. This trend will continue and gives organisations with NME's background enormous scope. The area is ill defined and difficult to control. Advertising can be accomplished under the guise of health promotion. The opportunities to place agents in these screening services or to form financially advantageous relationships with them is endless. It is only a short step to needless investigation and treatment.

8. NME have not been convicted of any offence and legally are not guilty of any wrongdoing. They cannot be considered as not being "fit and proper". If deregistered they would appeal to the high court. NSW Health and the public would be involved in a costly court case which they might not win.

"Fit and proper" indicates a company which exhibits integrity. It does not specify convictions. A "fit and proper" company would contest court cases in order to clear its name and would proceed against newspapers which had defamed it. NME has avoided both. The prime responsibility of the health authority is to protect the public. In its application NME must satisfy the authorities that it is fit and proper and that its track record shows that it will provide a satisfactory service to Australian patients. This NME could not have done without misrepresenting the cases in the USA. The legal emphasis is shifted from the rights of the individual company to the protection of the public. NSW Health does not have to show that NME is not fit and proper. NME must show that it is fit and proper and must bring acceptable and credible affidavits to this effect. The reason that NME has not been convicted of wrongdoing is because it elected to pay massive damages to avoid confronting witnesses. Twenty six permanent court injunctions were imposed to contain NME's aberrant practices. The case against NME has been prepared by others and they would help. Documents and witnesses are available. There would be no difficulty in resisting NME's appeal as all these witnesses could be brought to testify. NME would be subjected to extensive adverse publicity and have to pay large expenses. It simply requires courage and determination. I do not believe that NME would take the matter to court, although it would go through the motions.

NSW Health, WA Health and the Foreign Investment and Review Board (FIRB) have created the problems for themselves. They were all advised that NME were facing court cases relating to fraud. None took the trouble to require NME to produce the court documents and satisfy them that the charges were not such as to render NME unacceptable. They failed to carry out their duty effectively and as a consequence have placed themselves in a difficult position. It is crucial that they confront the issue and take the necessary steps to redress the situation and protect Australians.


I predict that social processes will triumph over the integrity and concern of individuals and that NME will be rewarded for its financial success. It will not be penalised for its deviant practices. The evidence will be talked away. Australians have developed a political and administrative system based on the form of activities rather than the substance. They will once again undertake an elaborate process to manipulate concepts into patterns and create meaning systems which will permit them to respond to short term pressures. NME's deviance will be rewarded by encouraging them to expand their operations in Australia. It is likely that they will attempt to do this rapidly in order to bolster their US operations which are under pressure. Once they have enough hospitals they will exert a controlling influence and dictate the pattern of health care in Australia. They will exert a profound and lasting influence on patterns of thought and the way the business of medicine is conducted in Australia. Disregard for ethical considerations and personal integrity by health care providers will be met by further ineffective attempts at control and regulation. These will be expensive but largely ineffectual because the main problems do not lie with the regulatory system but with the integrity of individuals and the patterns of thought which they are willing to adopt.

What is required is a commitment by our culture to personal integrity, a value which should be highly prized. Individuals and organisations which do not display this value should be sanctioned and not rewarded. The form of activities needs to be closely linked to their substance. We should be constantly alert to the practice of objectifying activities within narrow patterns of thought which address only a small part of the equation, particularly when the arguments come from a group whose perspective is peripheral to the major activity involved. Health care workers and their individual patients are the two groups at the coal face of medicine. The point of articulation of these two groups is the focus of care and any plans for a medical service must start and end here. Administrators, financiers and politicians are all too frequently removed from the coal face of medical care. They see medicine within a framework which bears little relationship to this point of articulation and their goals are their own. Because they are in positions of power and influence they are particularly prone to manipulate the form of activities to accomplish their goals without attention to the substance of the activities. The temptation to use closed minded explanations and social strategies in order to justify political or organisational goals is considerable.

Update comments 2003 and 2007

What happened was that Yeldham granted licences with conditions which were ineffective and confirmed the status quo. He was later found to be at risk of improper influence. Governments then rushed to support the company with contracts and partnerships. It attempted to expand rapidly ahead of new revelations from the USA. These attempts were blocked by citizens and state health departments. It vacated Australia at the end of 1995.

In 2002 the company was involved in a second massive scandal. One component was vast numbers of needless operations and procedures performed on patients who did not have heart disease. Many had been recruited by marketing screening programs. The company settled this with the government for US $54 million in 2003. It then settled with the patients for US $395 million.

CLICK HERE -- to go to the other Tenet and NME pages.

CLICK HERE to go to the story in Australia


Added 2007 :- Out of a total of US $2 billion in settlements eventual paid by 2007, US $500 million related to unnecessary cardiac surgery at Redding hospital in California, and US $30 million to complications from unsafe surgery at Palm Beach Gardens hospital in Florida. The CEO in Australia in 1993 was one of those dealing with the doctors where the unnecessary surgery occurred.

Also please note that in spite of my comments about them above, the NSW Health Department behaved extremely well. They pressed the judge very hard to reject the license application claiming that the company was not a "fit and proper person", that the judge did not have the powers to impose the conditions he proposed, and that they would be unable to enforce them. Yeldham ignored them and even allowed the company to change the content of the conditions he imposed. The politicians and the business community did what I had predicted and so did Tenet/NME but by then it had left Australia.


Web Page History
This page set up I think in July 2003 by
Michael Wynne
Comment added in 2003 and July 2007