The deadly cost of privatising health care

Healthscope—Australia’s second largest private hospital operator—has entered receivership after accruing more than $1.5 billion in debt. The private corporation’s abject failure to provide quality care to patients mirrors horror stories coming out of the childcare, aged care and disability services sectors.

Healthscope has insisted that business will be maintained “as usual” in the hospitals that it runs. Business “as usual” in a Healthscope hospital—as evidenced by the inquest into the preventable death of toddler Joe Massa at Sydney’s Northern Beaches Hospital late last year—is a frightening prospect. Joe Massa and his mother spent nearly three hours in the emergency department waiting room while Joe’s condition deteriorated. In a bed with no staff present and no monitoring in place, Joe suffered a cardiac arrest. He died two days later.

The hospital, along with 36 others run by Healthscope across the country, operates to extract profit for its parent company, Brookfield Asset Management, a North American private equity firm. Healthscope was contracted by the NSW government to operate the Northern Beaches Hospital, which opened in 2018, as a public-private partnership at a cost of more than $2 billion to taxpayers.

Healthscope’s inability to turn a profit in part stems from the reorientation of health resources during the COVID pandemic, when elective surgeries were cancelled. Without this source of income, the company demanded more money from private health insurers—tearing up the contracts of insurers that refused to pay—and lobbied the federal government for a bailout. The operator fell behind in its rent payments, owed to the landlords of 22 hospitals it had acquired and subsequently sold to real estate and investment firms in order to rent the facilities back.

Even before the pandemic upended its business model, Healthscope’s mismanagement of the Northern Beaches Hospital attracted serious scrutiny. A Legislative Council report published in February 2020 found an extensive suite of issues, including junior medical staff working up to 110 hours a week to fill staffing gaps, late payment of staff salaries and a dearth of policies and guidelines to facilitate clinical decision making. The report also found that many supplies, including essential life-saving medications, were delivered and stocked using a just-in-time model, leaving staff incapable of accommodating any increase in demand. This is not ideal for the standard model of private facilities that operates around planned, elective admissions—but for a major hospital with an emergency department, it’s an absurd disregard for patient safety in order to save on costs.

It is not difficult to imagine how all of this could result in preventable tragedies, as with the case of Joe Massa.

So obvious is the dysfunction that in recent weeks the NSW Labor government has moved to prevent the future establishment of similar private-public hospital arrangements and is seeking to terminate Healthscope’s Northern Beaches Hospital contract, which runs until 2038. It has not, however, committed to placing the hospital in public hands and will likely offer Healthscope a hefty payout for terminating its contract.

Privately owned health infrastructure should not be bought back, forcing the public to cop the cost of a capitalist’s failed business venture. It should be taken over without compensation and utilised to provide the essential, high-quality care that the victims of the for-profit system were cruelly denied.

A scenario in which Northern Beaches Hospital is placed entirely under public control would be a welcome one. Profiteering in health care should be totally abolished. But the public system in NSW, run by successive Labor and Liberal governments with cost-cutting and anti-union policies, is in a crisis of its own. As has been extensively documented, the public system has suffered an exodus of nurses, midwives and junior doctors due to the pay discrepancy that makes us the lowest paid in the nation (while many live in the most expensive city), culminating in days of historic strikes and the mass resignation of many of the state’s psychiatrists.

A healthcare system that genuinely operates according to just and universalist principles cannot palm off much of its infrastructure to profiteering capitalists while subjecting its public arm to cuts and austerity.