Public money given to private providers, and patients pay
The NSW government has announced it is making a $190 million offer to return Northern Beaches Hospital to the public healthcare system. This follows the tragic and preventable death of a toddler—Joe Massa—in late 2024 due to inadequate care in the hospital’s emergency department. The public outcry about this case, and broader discontent about the performance of the hospital, have prompted strong criticism of the hospital’s management and the public-private partnership model it was controversially founded on.
The government’s offer is $190 million too much. It has already contributed $600 million to build the hospital, part of the $2.14 billion it committed to give the private provider in a contract signed in 2014. The provider, Healthscope, has demonstrated it is not capable of operating a hospital properly and that this incompetence represents a danger to the public; it should be being sanctioned, not compensated. Workers are not compensated when they underperform at their jobs, and corporate executives shouldn’t be either. Meanwhile, Healthscope currently operates 37 hospitals across the country.
The NSW government argues that buying Northern Beaches Hospital is about getting rid of public-private partnerships, but the details look a little murkier. It wants to make the hospital a “fully public operation with private services”, but hasn’t provided any further detail about the operating model and partnerships with private providers.
A parliamentary inquiry into the hospital has just begun. During its first day, the chair of the committee, Dr David Jollow (who is also the director of Women’s Health at Northern Beaches Hospital), has cautioned against losing the 20,000 private surgeries that occur there each year, echoing concerns voiced by private doctors. Professor Keith Burgess, president of the medical staff council at the hospital, put it like this: “In the private sector, you can do what you like, and so a number of higher level procedures have been carried out, like cardiothoracic surgery ... that will be proscribed if it’s a completely public hospital”.
Regardless of what implication the line “in the private sector you can do what you like” carries for the safety of patients in such facilities, concern is couched in terms of lost services for patients, and the long wait list for elective surgery in the public system. But it’s hard not to think it has more to do with defending the lucrative business model that doctors operating in the private system sense is threatened by a public takeover. And people shouldn’t have to rely on private hospitals for timely elective surgery. A properly funded public system could and should provide it.
To most people, a public hospital with private services sounds like a contradiction in terms, but, strange as it sounds, privatising services within a nominally public hospital is not that uncommon in NSW. For example, cancer patients at the Royal Prince Alfred Hospital in Camperdown have, since 2013, been treated at the private Chris O’Brien Lifehouse (COBL) centre at a cost to the government of $16.7 million per year. The private provider operates rent-free on the hospital’s grounds and has also been given $180 million of federal government funding. In 2016, the Sydney Morning Herald revealed that public patients being treated by the private provider had been told they would have to pay for these services, although COBL later claimed this was a “mistake”.
Randwick’s Prince of Wales Hospital likewise has a privatised vascular surgery department. It also houses the Eastern Heart Clinic, which provides interventional cardiology services. If you go to the hospital with a heart attack, you might end up on one of their tables having a a stent put in your coronary arteries. Bizarrely, one (geographical) half of the intensive care unit is also privately run.
There has been a long-term commitment by both major parties to propping up private health care in Australia. In fact, the entire industry is unviable without public subsidies: every medical service delivered in private hospitals has an associated Medicare code and subsidy. In 2022-23, the Australian government spent $7.6 billion on private hospitals, which represents 36 percent of their total funding.
Neoliberal market worship is not just about making donations of public money to private providers; it also underpins the funding model used for public hospitals. This model is called Activity Based Funding (ABF), and it remunerates hospitals not for what it actually costs to treat a certain “type” of patient, but what it would cost an efficient hospital, as decided by the boffins over at the Independent Health and Aged Care Pricing Authority.
ABF is meant to drive efficiency via arbitrarily decided price signals, but what it does in practice is intensify the exploitation of healthcare workers, provide perverse incentives for local managers to game the system and further commodify public health care. It also doesn’t take into account the individual circumstances that can make individual patient care more complex, violating the much touted aspiration of modern healthcare systems to deliver “person-centred care”.
Health care should be a right, not a commodity. Privatised health care is dangerous and unfair. All privatised healthcare services should be brought into the public system without compensation, starting with all of the hospitals operated by Healthscope. But at the moment, the plan from Healthscope’s administrators is to re-brand as a charity (PurposeCo) and steal their remaining employees’ tax benefits. They are hoping this will be enticing to potential buyers. What a circus.
Instead of wasting money propping up the private system or, worse, building nuclear submarines, the health system should get the funding boost it needs so that quality care can be provided to all. Without a fight, this won’t happen not at Northern Beaches Hospital, or anywhere else.
