‘Over my dead body': Fight to keep Healthscope's hospitals alive just getting started
Canadian investment firm Brookfield is a global financial giant with a trillion dollars under management, yet it could not save Healthscope and decided to walk away with a $2 billion loss.
In simple terms, it paid too much using too much debt, and sold off the land for many of these hospitals to landlords under deals that allowed them to charge too much for rent.
As an interesting contrast, unlike Healthscope, Ramsay owns most of its hospitals and the land they sit on.
It means Healthscope lenders who are owed $1.6 billion, including Australia's Big Four banks, will also wear massive losses once the proceeds of the sale are divvied up between them. The good news is that this will ensure the business is transferred with zero debt in any sale.
Landlords will also be wearing a lot of the pain to help many of these hospitals become financially viable for a new private owner. The alternative is closure if state governments don't step into the breach.
Healthscope's hospitals would be empty if doctors lost faith and moved their elective surgeries to private hospitals nearby.
This explains why Healthscope reached its own abyss well ahead of its rivals, and faces a much larger challenge just to get back to the abysmal state the sector as a whole faces.
Separate to this is the immediate challenge that La Spina faces in running the day-to-day operations at the hospitals, and it explains why his fireside chat came with so much heat: Healthscope desperately needs to keep faith with the many specialist doctors and surgeons who actually generate its revenue.
Around 70 per cent of elective surgeries in Australia take place in a private hospital.
La Spina knows that the last thing they want is Healthscope in the hands of a private health insurer, who could dictate how much a hip replacement should cost.
Loading
Healthscope's hospitals would be empty if these doctors lost faith and moved their elective surgeries to other private hospitals. If this business flows out the door, it doesn't matter what happens to its rent bill and debt levels.
La Spina may not like it, but the truth is BUPA is almost certainly among the parties interested in buying either all of Healthscope's operations or parts thereof, and there is nothing he can do about it.
His immediate priority is to keep the day-to-day business running while the lender-appointed receivers from McGrathNicol kick off the sales process next month, with as many as 30 parties interested in Healthscope as of this week.
The receivers have one job, maximise the sale price and return as much money as possible to the lenders.
Loading
To this end, they are expected to focus on a single transaction involving all of Healthscope's assets - if possible. The price will be determined by the receiver's delicate dance with landlords over how much financial pain they are willing to endure to give potential suitors confidence they are buying a viable business.
If the rent concessions are too low, the hospitals won't find a buyer and their staff could be out of a job.
The success of any sale is also heavily dependent on whether all potential white knights are allowed to come to Healthscope's rescue.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News.com.au
17 hours ago
- News.com.au
NSW government seeking power to terminate Northern Beaches Hospital contract
The NSW government will have power to terminate the operating contract of the embattled Northern Beaches Hospital as if a default had occurred under proposed legislative amendments, following the tragic deaths of two children. Two-year-old Joe Massa and newborn Harper Atkinson both died at the Sydney hospital in unrelated incidents since September, leading the government to ban any future public-private partnerships (PPPs) for acute care hospitals. The state government will next week introduce amendments to a bill by Wakehurst MP Michael Regan, which would allow the government, if required, to terminate the contract of operator Healthscope as if a default had occurred. It comes after receivers were appointed to Healthscope's parent entities – which the NSW government considers a default – with the bill giving Health Minister Ryan Park power to issue a termination notice if an agreement is not reached. Treasurer Daniel Moohkey would also be empowered to ensure that compensation negotiations occur in a 'reasonable time frame' and that an independent person would be appointed to determine compensation if an agreement is not reached. Mr Moohkey said the decision was not taken lightly. 'We are now in a position where the Liberal's privatisation mess means Healthscope's receivers are negotiating the future of the Northern Beaches Hospital,' he said. 'While an agreed exit from this failed PPP contract remains my preference – I must ensure the government has the right to step in and protect the Northern Beaches community from this dragging on.' Mr Park said the state government had 'made it clear from the very beginning that we don't support this sort of arrangement. 'This is a complex contract but the community deserves certainty. 'The other mob may have created this mess, but we are going to be the ones to clean it up.' Healthscope is the country's second-largest hospital operator, with a network of 37 hospitals across Australia. Thousands of staff and patients were left in limbo last month after Canada-based Brookfield Asset Management offered to hand control of the company to lenders. Despite an $100m funding lifeline by Commonwealth Bank and Westpac last month amid the search for a new owner, Healthscope's future remains in doubt. Earlier that month, Wakehurst MP Michael Regan introduced a private members bill to ensure no compensation would be payable on behalf of the state if the contract for the Northern Beaches Hospital was voluntarily terminated. With trilateral talks ongoing between Healthscope, its receivers, and the Northern Beaches Hospital Taskforce, the state government remained hopeful of a productive outcome, but reserved the right to commit to a voluntary termination. At the time of the receivership, Healthscope CEO Tino La Spina said the hospital network would 'continue to operate as normal' and that the appointment of receivers 'ensures a stable path to a sale, with no impacts on any hospitals, staff or patients' 'There is no interruption to the outstanding care we provide,' she said. 'The receivers and management share the same goal of maintaining our market leading standards of patient care and protecting the business, the hospitals and our amazing people.'
Perth Now
19 hours ago
- Perth Now
Bold plan for crisis-ridden hospital
The NSW government will have power to terminate the operating contract of the embattled Northern Beaches Hospital as if a default had occurred under proposed legislative amendments, following the tragic deaths of two children. Two-year-old Joe Massa and newborn Harper Atkinson both died at the Sydney hospital in unrelated incidents since September, leading the government to ban any future public-private partnerships (PPPs) for acute care hospitals. The state government will next week introduce amendments to a bill by Wakehurst MP Michael Regan, which would allow the government, if required, to terminate the contract of operator Healthscope as if a default had occurred. It comes after receivers were appointed to Healthscope's parent entities – which the NSW government considers a default – with the bill giving Health Minister Ryan Park power to issue a termination notice if an agreement is not reached. Receivers were appointed to Northern Beaches Hospital operator Healthscope's parent entities in May. NewsWire / Max Mason-Hubers Credit: News Corp Australia Treasurer Daniel Moohkey would also be empowered to ensure that compensation negotiations occur in a 'reasonable time frame' and that an independent person would be appointed to determine compensation if an agreement is not reached. Mr Moohkey said the decision was not taken lightly. 'We are now in a position where the Liberal's privatisation mess means Healthscope's receivers are negotiating the future of the Northern Beaches Hospital,' he said. 'While an agreed exit from this failed PPP contract remains my preference – I must ensure the government has the right to step in and protect the Northern Beaches community from this dragging on.' Mr Park said the state government had 'made it clear from the very beginning that we don't support this sort of arrangement. NSW Treasurer Daniel Mookhey said the decision was not taken lightly. NewsWire / Nikki Short Credit: News Corp Australia 'This is a complex contract but the community deserves certainty. 'The other mob may have created this mess, but we are going to be the ones to clean it up.' Healthscope is the country's second-largest hospital operator, with a network of 37 hospitals across Australia. Thousands of staff and patients were left in limbo last month after Canada-based Brookfield Asset Management offered to hand control of the company to lenders. Despite an $100m funding lifeline by Commonwealth Bank and Westpac last month amid the search for a new owner, Healthscope's future remains in doubt. Earlier that month, Wakehurst MP Michael Regan introduced a private members bill to ensure no compensation would be payable on behalf of the state if the contract for the Northern Beaches Hospital was voluntarily terminated. Health Minister Ryan Park would have power to issue a termination notice if an agreement is not reached. NewsWire / Nikki Short Credit: News Corp Australia With trilateral talks ongoing between Healthscope, its receivers, and the Northern Beaches Hospital Taskforce, the state government remained hopeful of a productive outcome, but reserved the right to commit to a voluntary termination. At the time of the receivership, Healthscope CEO Tino La Spina said the hospital network would 'continue to operate as normal' and that the appointment of receivers 'ensures a stable path to a sale, with no impacts on any hospitals, staff or patients' 'There is no interruption to the outstanding care we provide,' she said. 'The receivers and management share the same goal of maintaining our market leading standards of patient care and protecting the business, the hospitals and our amazing people.' McGrathNicol Restructuring had been appointed to work with Healthscope management to complete the sale.
The Advertiser
a day ago
- The Advertiser
'Concerning': COVID and flu cases rising, as NSW Health issues warning
COVID cases have risen by 22 per cent and influenza cases by 32 per cent in a week in Hunter New England, health data shows. "The upswing in COVID has come at the same time as influenza is on the rise," a NSW Health statement said. COVID cases had increased since early May. "Concerningly, the rate with the largest increase is in people aged 90 and over," the statement said. The latest NSW Respiratory Surveillance Report, released on Thursday, said "COVID and influenza vaccinations are especially important at this time for people who are at risk of severe disease". The report showed weekly counts of unplanned emergency department presentations for COVID had spiked to about 400 statewide. Hospital admissions had risen to more than 100. For influenza-like illness, these figures were about 500 and less than 100 respectively. In NSW, 3475 people in NSW tested positive for COVID in the week ending June 14. This was a 10 per cent rise on the previous week. "Most people with COVID do not test for the virus, so the latest figures represent a small proportion of all people who have the virus," the statement said. Dr Jeremy McAnulty, of Health Protection NSW, said COVID was "circulating at moderate levels in the community and is likely to increase". "While most people have already received their primary course of COVID vaccinations, we're urging people - especially those aged 65 and over - to get a booster to protect themselves," Dr McAnulty said. "Boosters are recommended for people 75 and older every six months, and those 65 and older at least every 12 months. "COVID is a serious illness and can cause hospitalisation and death, especially in people who are older, have other risk factors or are immunocompromised." He said people with COVID aged 70 and older, or those with other risk factors, were "eligible for a course of antivirals, which can prevent serious illness" if taken early enough. "These people should make a plan with their doctor about what to do if they do get sick, including what test to take, and how to access antivirals quickly." The Newcastle Herald reported last month that the Hunter's health network recorded 882 COVID deaths from 2019 to 2023. The data, which included New England and Central Coast, was similar to flu and pneumonia (829) and liver disease (863). Canadian research, published in Nature Communications this month, examined frequent COVID vaccination in vulnerable people. The report said there had been concerns that repeated boosters may contribute to "T-cell exhaustion", which could "negatively affect the quality of immune protection". T-cells help protect the body from infection. The study found repeated COVID vaccination was "not associated with increased T-cell exhaustion in older frail adults, immunosuppressed individuals or healthy adults". University of Melbourne research, released this week, said "catching common respiratory viruses raises your short-term risk of a heart attack or stroke". "Common viruses, such as those that cause flu and COVID, can trigger them," the study said, adding that vaccination could help reduce this. COVID cases have risen by 22 per cent and influenza cases by 32 per cent in a week in Hunter New England, health data shows. "The upswing in COVID has come at the same time as influenza is on the rise," a NSW Health statement said. COVID cases had increased since early May. "Concerningly, the rate with the largest increase is in people aged 90 and over," the statement said. The latest NSW Respiratory Surveillance Report, released on Thursday, said "COVID and influenza vaccinations are especially important at this time for people who are at risk of severe disease". The report showed weekly counts of unplanned emergency department presentations for COVID had spiked to about 400 statewide. Hospital admissions had risen to more than 100. For influenza-like illness, these figures were about 500 and less than 100 respectively. In NSW, 3475 people in NSW tested positive for COVID in the week ending June 14. This was a 10 per cent rise on the previous week. "Most people with COVID do not test for the virus, so the latest figures represent a small proportion of all people who have the virus," the statement said. Dr Jeremy McAnulty, of Health Protection NSW, said COVID was "circulating at moderate levels in the community and is likely to increase". "While most people have already received their primary course of COVID vaccinations, we're urging people - especially those aged 65 and over - to get a booster to protect themselves," Dr McAnulty said. "Boosters are recommended for people 75 and older every six months, and those 65 and older at least every 12 months. "COVID is a serious illness and can cause hospitalisation and death, especially in people who are older, have other risk factors or are immunocompromised." He said people with COVID aged 70 and older, or those with other risk factors, were "eligible for a course of antivirals, which can prevent serious illness" if taken early enough. "These people should make a plan with their doctor about what to do if they do get sick, including what test to take, and how to access antivirals quickly." The Newcastle Herald reported last month that the Hunter's health network recorded 882 COVID deaths from 2019 to 2023. The data, which included New England and Central Coast, was similar to flu and pneumonia (829) and liver disease (863). Canadian research, published in Nature Communications this month, examined frequent COVID vaccination in vulnerable people. The report said there had been concerns that repeated boosters may contribute to "T-cell exhaustion", which could "negatively affect the quality of immune protection". T-cells help protect the body from infection. The study found repeated COVID vaccination was "not associated with increased T-cell exhaustion in older frail adults, immunosuppressed individuals or healthy adults". University of Melbourne research, released this week, said "catching common respiratory viruses raises your short-term risk of a heart attack or stroke". "Common viruses, such as those that cause flu and COVID, can trigger them," the study said, adding that vaccination could help reduce this. COVID cases have risen by 22 per cent and influenza cases by 32 per cent in a week in Hunter New England, health data shows. "The upswing in COVID has come at the same time as influenza is on the rise," a NSW Health statement said. COVID cases had increased since early May. "Concerningly, the rate with the largest increase is in people aged 90 and over," the statement said. The latest NSW Respiratory Surveillance Report, released on Thursday, said "COVID and influenza vaccinations are especially important at this time for people who are at risk of severe disease". The report showed weekly counts of unplanned emergency department presentations for COVID had spiked to about 400 statewide. Hospital admissions had risen to more than 100. For influenza-like illness, these figures were about 500 and less than 100 respectively. In NSW, 3475 people in NSW tested positive for COVID in the week ending June 14. This was a 10 per cent rise on the previous week. "Most people with COVID do not test for the virus, so the latest figures represent a small proportion of all people who have the virus," the statement said. Dr Jeremy McAnulty, of Health Protection NSW, said COVID was "circulating at moderate levels in the community and is likely to increase". "While most people have already received their primary course of COVID vaccinations, we're urging people - especially those aged 65 and over - to get a booster to protect themselves," Dr McAnulty said. "Boosters are recommended for people 75 and older every six months, and those 65 and older at least every 12 months. "COVID is a serious illness and can cause hospitalisation and death, especially in people who are older, have other risk factors or are immunocompromised." He said people with COVID aged 70 and older, or those with other risk factors, were "eligible for a course of antivirals, which can prevent serious illness" if taken early enough. "These people should make a plan with their doctor about what to do if they do get sick, including what test to take, and how to access antivirals quickly." The Newcastle Herald reported last month that the Hunter's health network recorded 882 COVID deaths from 2019 to 2023. The data, which included New England and Central Coast, was similar to flu and pneumonia (829) and liver disease (863). Canadian research, published in Nature Communications this month, examined frequent COVID vaccination in vulnerable people. The report said there had been concerns that repeated boosters may contribute to "T-cell exhaustion", which could "negatively affect the quality of immune protection". T-cells help protect the body from infection. The study found repeated COVID vaccination was "not associated with increased T-cell exhaustion in older frail adults, immunosuppressed individuals or healthy adults". University of Melbourne research, released this week, said "catching common respiratory viruses raises your short-term risk of a heart attack or stroke". "Common viruses, such as those that cause flu and COVID, can trigger them," the study said, adding that vaccination could help reduce this. COVID cases have risen by 22 per cent and influenza cases by 32 per cent in a week in Hunter New England, health data shows. "The upswing in COVID has come at the same time as influenza is on the rise," a NSW Health statement said. COVID cases had increased since early May. "Concerningly, the rate with the largest increase is in people aged 90 and over," the statement said. The latest NSW Respiratory Surveillance Report, released on Thursday, said "COVID and influenza vaccinations are especially important at this time for people who are at risk of severe disease". The report showed weekly counts of unplanned emergency department presentations for COVID had spiked to about 400 statewide. Hospital admissions had risen to more than 100. For influenza-like illness, these figures were about 500 and less than 100 respectively. In NSW, 3475 people in NSW tested positive for COVID in the week ending June 14. This was a 10 per cent rise on the previous week. "Most people with COVID do not test for the virus, so the latest figures represent a small proportion of all people who have the virus," the statement said. Dr Jeremy McAnulty, of Health Protection NSW, said COVID was "circulating at moderate levels in the community and is likely to increase". "While most people have already received their primary course of COVID vaccinations, we're urging people - especially those aged 65 and over - to get a booster to protect themselves," Dr McAnulty said. "Boosters are recommended for people 75 and older every six months, and those 65 and older at least every 12 months. "COVID is a serious illness and can cause hospitalisation and death, especially in people who are older, have other risk factors or are immunocompromised." He said people with COVID aged 70 and older, or those with other risk factors, were "eligible for a course of antivirals, which can prevent serious illness" if taken early enough. "These people should make a plan with their doctor about what to do if they do get sick, including what test to take, and how to access antivirals quickly." The Newcastle Herald reported last month that the Hunter's health network recorded 882 COVID deaths from 2019 to 2023. The data, which included New England and Central Coast, was similar to flu and pneumonia (829) and liver disease (863). Canadian research, published in Nature Communications this month, examined frequent COVID vaccination in vulnerable people. The report said there had been concerns that repeated boosters may contribute to "T-cell exhaustion", which could "negatively affect the quality of immune protection". T-cells help protect the body from infection. The study found repeated COVID vaccination was "not associated with increased T-cell exhaustion in older frail adults, immunosuppressed individuals or healthy adults". University of Melbourne research, released this week, said "catching common respiratory viruses raises your short-term risk of a heart attack or stroke". "Common viruses, such as those that cause flu and COVID, can trigger them," the study said, adding that vaccination could help reduce this.
