Western Hospital placed in voluntary administration with Ernst and Young Australia

The future of the heavily indebted western suburbs institution is now in the hands of one of Australia’s largest administration firms – which says its main priority is to keep the hospital open.

The financially troubled Western Hospital at Henley Beach has been put into voluntary administration.

Ernst & Young Australia (EY Australia) have been appointed voluntary administrators of the large private hospital which comes after a $1m state government lifeline to help pay the rent.

The 53-bed acute care surgical and medical private hospital also has a separate day surgery unit and GP centre.

The Cudmore Tce centre offers a wide range of services — taking pressure off the public system — including intensive care, surgical services such as orthopaedics, and cardiology, oncology, dermatology, gastroenterology, ophthalmology, gynaecology, palliative care, pathology, physiotherapy, radiology and a pharmacy.

EY Australia released a statement announcing Colby O’Brien, Robyn Duggan and Adam Nikitins have been appointed Voluntary Administrators after “a challenging period for the hospital’s operator.”

“The Administrators’ primary objective is to continue operations whilst it secures a new operator for the hospital,” the statement says.

Former SA Health Chief Executive David Swan has been appointed by the Administrators to oversee operations during this period.

Mr Swan has achieved some of the largest transformational projects in Australian healthcare, including leading best practice financial and performance improvement, the EY statement says.

Western Hospital on Cudmore Terrace, Henley Beach. Picture: Brett Hartwig

EY told media on Tuesday morning it hoped to find a new operator within three months.

“Operations at Western Hospital will continue as we work to secure a new operator. Funding has been secured for the transitionary period and our primary objective is to ensure continuation of services and minimise disruption,” said Adam Nikitins, a partner at EY.

“We are committed to transparent communication with all parties throughout the administration process, to find the best possible outcome for the hospital, its staff, patients, doctors and the community.”

EY Australia notes it has a has a “significant and successful track record working with hospitals, health practitioners, and governments” and is backed by a highly experienced team across restructuring and health sectors.

The first meeting of creditors will be scheduled “shortly”.

Treasurer Stephen Mullighan told The Advertiser the government would be pragmatic about the status of the $1m loan and had not been asked for any more funding.

“While it is disappointing the existing management is unable to continue, it is a big relief the hospital doors remain open and its services available to the community while they go through the process of voluntary administration,” he said.

South Australian Treasurer Stephen Mullighan. Picture: NCA NewsWire / Naomi Jellicoe

Western Hospital chief executive Kathy Nagle. Picture: Supplied

“The loan technically remains an outstanding debt and while we don’t make loans or forgive them frivolously we need to be pragmatic — this is an important health precinct, we are more focused on making sure the hospital stays open than recovering the loan.”

Opposition treasury spokesman Matt Cowdrey has warned: “The closure of the Western Hospital could also have impacts on the broader health system, both on the QEH and the Royal Adelaide Hospital.”

The building is owned by Australian Unity and is run by a group of healthcare professionals who have been looking for another private operator to take over.

Last week hospital CEO Kathy Nagle told The Advertiser it was increasingly hard for the state’s small private hospitals to make ends meet but Western Hospital would find a way.

“The health fund rates provided to small private hospitals are approximately 15 per cent less than the corporate not-for-profit facilities (such as Calvary and Healthscope) … this is significant and we are not in a position to negotiate as a small hospital,” she said.

“We have been working for some time to invite a new investor/operator … to dilute the current ‘mum and dad’ shareholders and to ensure ongoing capital, equipment and aesthetic improvements (will) be funded well into the future.”