The New South Wales government is considering buying back the public hospital component of Northern Beaches hospital, as its private owner, Healthscope, faces a looming financial crisis.
The government said on Thursday it had been notified of a proposal by Healthscope seeking to have the hospital returned to the NSW public system.
“I note the owners of Healthscope are engaged in a market process potentially seeking to exit the business,” the NSW treasurer, Daniel Mookhey, said.
But agreeing terms could be difficult.
Moohkey said Healthcope “should not expect to walk away from the Northern Beaches hospital with a profit” after “the way it has managed this partnership” and that the NSW government would be “watching to ensure that no one is trying to make a windfall gain at the expense of the people of NSW”.
Healthscope said it expected to be paid in accordance with the terms of the deed it signed with the previous government.
The hospital was built by a private company, Healthscope, and is run as a public-private partnership. It is the only major hospital operating this way in NSW. Under an agreement, a private company provides both private and public beds, including services such as the emergency ward.
But some staff have raised fears that the model may lead to profits being put before care. A number of recent incidents, including the death of a toddler who presented to emergency and the death of a newborn, have heightened concerns about the level of care at the hospital which serves 270,000 people on Sydney’s northern beaches.
In recent months, Healthscope, which in turn is owned by private equity firm Brookfield, has revealed that it is $1.6bn in debt. It defaulted on lease payments and has been seeking to urgently renegotiate with its lenders, while closing other smaller private hospitals and seeking buyers for others.
The Northern Beaches hospital arrangement was put in place by the previous NSW Liberal government.
“We have always made clear that we do not support public-private partnerships being imposed on our state’s acute hospitals,” the NSW health minister, Ryan Park, said.
“We will carefully consider any proposal regarding Northern Beaches hospital. We can assure the community that Northern Beaches hospital will continue to operate without interruption during any discussions.”
The Healthscope chief executive, Tino La Spina, said the public scrutiny on the hospital in recent months had created uncertainty about its future and put a strain on the hospital’s staff and operations.
“We believe it is best for the patients, staff and the northern beaches community that it is returned to NSW Health, if that is the government’s preferred outcome,” La Spina said.
“In the current circumstances, we believe NBH will operate more effectively as part of the public hospital system and its future is assured.”
No details were available about the possible sale and whether Healthscope would seek to retain private beds at the hospital.
The cost to taxpayers of the public-private partnership, which included building the hospital and running it until 2038 was put at $2.13bn when the details of the contract were finally revealed in 2015.
The independent MP for Wakehurst, Michael Regan, welcomed the announcement.
“The northern beaches community deserves access to a truly public hospital. However, I don’t want to see Healthscope let off the hook or seek to invoke clauses to maximise a financial return, with NSW taxpayers footing the bill,” Regan said.
“The NSW auditor general’s report is imminent and they must remain accountable.”
