Healthscope's ills point to unhealthy connection between public patients and private profit

Sydney Morning Herald

27-05-2025

Merging hospital services with for-profit businesses, creating a quasi-capitalistic-socialistic entity, is a complex task. We see this in the financial difficulty facing Healthscope and its 38 hospitals, now under receivership. This stumbling business is causing every Australian government; Commonwealth, state and territory, acute problems.
But the NSW government has the extra problem of a failing Healthscope business – the Northern Beaches Hospital (NBH) – which is meant to provide public hospital services for Sydney's northern coastal suburbs.
The NBH money problems were foreshadowed in the NSW Audit Office report of April 2025. Healthscope, operator of the $500 million for-profit, public hospital, needs to transfer the hospital to the government, well before the contract's 2038 end date.
The current NSW government, while opposed to privatised public hospitals, is reluctant. But before exploring this dilemma, a review of private participation in public services sets the background.
Beginning in the 1990s, Australian governments were fixated by illusions of savings through privatising traditionally-provided government functions. Some wanted 'to throw the private sector a (profitable) bone or two' as the late NSW premier John Fahey would say. Others wanted to reduce government debt by shedding responsibilities to the private sector. But governments also wondered whether private sector firms were inherently more efficient.
The Howard federal governments turned aged care and childcare into profit-seeking industries. They privatised government IT systems, employment services and government buildings and they replaced public servants with thousands of contractors. Led by NSW governments, state governments allowed private toll roads, privately-run prisons, private water desalination plants, public schools built and maintained by private firms, the sale of government occupied buildings; they also authorised for-profit public hospitals.
Loading
Governments mostly managed this outsourcing incompetently. Taxpayers nearly always paid more, billions more, because of these privatisations.
In 1994 the Fahey government, the owner of the newly built Port Macquarie Hospital, authorised Mayne Nickless to operate it as a for-profit public hospital. So troubling and costly was the deal that the responsible minister, Ron Phillips, declared the Coalition would never do another. It was left to the Carr government to pay a reported $35 million in 2004 to buy out the contracts.