Latest news with #BUPA
The Age
4 days ago
- Business
- The Age
‘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.
Sydney Morning Herald
4 days ago
- Business
- Sydney Morning Herald
‘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.
Scoop
05-05-2025
- Business
- Scoop
New Report Illustrates Tax System Failures
Press Release – Tax Justice Aotearoa The report focuses on the transparency of public funding in the aged residential care sector, and shows how our tax system allows multi-national providers to avoid paying the taxes that the public would expect them to pay, demonstrating this through … Tax reform advocacy group Tax Justice Aotearoa is calling on the Government and opposition parties to remedy the failures in our taxation system illustrated by a new report from the Centre of International Corporate Tax Accountability and Research, which looks at transparency and corporate tax issues in the heavily public-funded aged care sector. 'Instead of talking about the possibility of reducing our corporate tax rate of 28 per cent, the Government should be finding ways to increase financial transparency, and ensuring that multinational corporates pay their fair share of current corporate tax by reviewing the thin capitalisation rules,' says Glenn Barclay, Chairperson of Tax Justice Aotearoa. 'This is particularly urgent where public funds are paid to multi-national corporations delivering services on behalf of the government.' The report focuses on the transparency of public funding in the aged residential care sector, and shows how our tax system allows multi-national providers to avoid paying the taxes that the public would expect them to pay, demonstrating this through the example of UK-owned BUPA. BUPA had an average effective corporate tax rate over the past decade of only 4 per cent, much lower than the headline rate of 28 per cent, driven largely by tax-free capital gains. In addition, the company appears to have used inter-company interest payments on a substantial loan to an Australian-incorporated BUPA company, which may have reduced taxable income by around $151m over the decade, trimming tax revenue by as much as $27 million over that period. 'This ability of multi-nationals to set up loans between subsidiary companies in different countries and then claim tax deductibility on the interest from those loans is a major issue,' says Glenn Barclay. 'While entirely legal, this 'thin capitalisation' is an approach that most members of the public would find questionable. It also gives multi-national players an advantage over wholly New Zealand-owned companies in competitive markets.' 'New Zealand does have thin capitalisation rules that are supposed to prevent this kind of activity, but this example shows that they are simply not strong enough,' says Glenn Barclay. 'We note that Australia and the UK have introduced a 'fixed ratio' test for interest payments on related party debt which limits allowable interest deductions in any one year to 30 per cent of gross earnings and this is the kind of measure that we should also seriously consider.' 'On a related matter, we note that IRD is looking at relaxing the existing thin capitalisation rules for infrastructure projects as part of its work programme agreement with the Minister of Revenue. This could well be in the Budget and would be a big step in the wrong direction,' says Glenn Barclay. 'We urge the Government not to go down this route, but instead look at tightening this provision across the economy.' The report questions the tax exemptions in the sector for capital gains arising from revaluations of assets, which is significant given the amount of real estate that companies in the sector own. 'It seems that aged residential care providers are intentionally using the capital gains they make from selling both rights to occupy properties to new residents, and sometimes the properties themselves, as part of their income streams,' says Glenn Barclay. 'If this is true, then the current law, which says that capital gains on sales made intentionally for that purpose are taxable, should be enforced. If, for some reason, it is not enforceable, then the law should be clarified. A comprehensive tax on capital gains would resolve these issues in a much clearer way.' The report also raises questions about the level of funding for the aged care sector and the extent to which unaccountable multi-national and other private providers should be involved in service delivery. 'The report indirectly supports the need for more funding for aged care generally as the population ages and this is yet another example of a demand for services that only a more progressive tax system that properly taxes wealth can address,' says Glenn Barclay.
Scoop
05-05-2025
- Business
- Scoop
New Report Illustrates Tax System Failures
Tax reform advocacy group Tax Justice Aotearoa is calling on the Government and opposition parties to remedy the failures in our taxation system illustrated by a new report from the Centre of International Corporate Tax Accountability and Research, which looks at transparency and corporate tax issues in the heavily public-funded aged care sector. 'Instead of talking about the possibility of reducing our corporate tax rate of 28 per cent, the Government should be finding ways to increase financial transparency, and ensuring that multinational corporates pay their fair share of current corporate tax by reviewing the thin capitalisation rules,' says Glenn Barclay, Chairperson of Tax Justice Aotearoa. "This is particularly urgent where public funds are paid to multi-national corporations delivering services on behalf of the government." The report focuses on the transparency of public funding in the aged residential care sector, and shows how our tax system allows multi-national providers to avoid paying the taxes that the public would expect them to pay, demonstrating this through the example of UK-owned BUPA. BUPA had an average effective corporate tax rate over the past decade of only 4 per cent, much lower than the headline rate of 28 per cent, driven largely by tax-free capital gains. In addition, the company appears to have used inter-company interest payments on a substantial loan to an Australian-incorporated BUPA company, which may have reduced taxable income by around $151m over the decade, trimming tax revenue by as much as $27 million over that period. 'This ability of multi-nationals to set up loans between subsidiary companies in different countries and then claim tax deductibility on the interest from those loans is a major issue,' says Glenn Barclay. 'While entirely legal, this 'thin capitalisation' is an approach that most members of the public would find questionable. It also gives multi-national players an advantage over wholly New Zealand-owned companies in competitive markets.' 'New Zealand does have thin capitalisation rules that are supposed to prevent this kind of activity, but this example shows that they are simply not strong enough,' says Glenn Barclay. 'We note that Australia and the UK have introduced a 'fixed ratio' test for interest payments on related party debt which limits allowable interest deductions in any one year to 30 per cent of gross earnings and this is the kind of measure that we should also seriously consider.' 'On a related matter, we note that IRD is looking at relaxing the existing thin capitalisation rules for infrastructure projects as part of its work programme agreement with the Minister of Revenue. This could well be in the Budget and would be a big step in the wrong direction,' says Glenn Barclay. 'We urge the Government not to go down this route, but instead look at tightening this provision across the economy.' The report questions the tax exemptions in the sector for capital gains arising from revaluations of assets, which is significant given the amount of real estate that companies in the sector own. 'It seems that aged residential care providers are intentionally using the capital gains they make from selling both rights to occupy properties to new residents, and sometimes the properties themselves, as part of their income streams,' says Glenn Barclay. "If this is true, then the current law, which says that capital gains on sales made intentionally for that purpose are taxable, should be enforced. If, for some reason, it is not enforceable, then the law should be clarified. A comprehensive tax on capital gains would resolve these issues in a much clearer way." The report also raises questions about the level of funding for the aged care sector and the extent to which unaccountable multi-national and other private providers should be involved in service delivery. 'The report indirectly supports the need for more funding for aged care generally as the population ages and this is yet another example of a demand for services that only a more progressive tax system that properly taxes wealth can address,' says Glenn Barclay.
Yahoo
25-03-2025
- Health
- Yahoo
More than 4000 complaints about private health insurers
Poor customer service and protracted delays in processing claims by health insurers are frustrating thousands around the nation, a report has found. The Office of the Commonwealth Ombudsman received 4,241 complaints and over 1,600 enquiries about private health insurance from 2023 to 2024. Its 24-page State of the Health Funds Report said the number of complaints increased by nearly a quarter from the previous year. The most common issues were about how dissatisfied consumers were with the level of customer service, the amount paid for a claim and how long that process took as well as membership problems. BUPA and Medibank dominate over half of the market among 30 health insurers in Australia, but at a mere two per cent of the market share Defence Health was particularly called out for exasperating its policyholders It had the dubious honour of representing nearly a third of all complaints received by the ombudsman. A disastrous IT system overhaul in July 2023 has caused prolonged hiccups with premium payments, claim processing and transfer certificates triggered the ire of policy holders. Despite the stuff-up, it still was among the best for retaining members at over 90 per cent along with other profession-specific insurers such as Police Health and Teachers Health. BUPA and Medibank were also not spared scathing assessments with over a third of complaints concerning them both.
