Government asks the now-closed McLaren Vale Hospital for $1.1m

SA Health advanced a southern suburbs hospital nearly $3 million and is now asking for a refund for services which were never provided.

SALHN’s new CEO, Dr Kerrie Freeman. Picture: Supplied

The state government is trying to clawback almost $1.1m advanced to a community hospital which subsequently closed.

It follows the government effectively writing off a $1m loan to prop up the struggling Western Hospital before it went into voluntary receivership.

The debt is owed by the McLaren Vale and Districts War Memorial Hospital which shut suddenly last year – that decision by the board is now being challenged in the Supreme Court by the Save McLaren Vale Hospital group amid allegations of vote stacking and a breach of the hospital’s constitution.

Southern Adelaide Local Health Network chief executive Kerrie Freeman has written to hospital board chairman Chris Overland noting the network and hospital had a long and successful working association which included quarterly upfront payments for services provided by the hospital.

“At the conclusion of the service agreement SALHN completed an analysis of acquittals for the financial year 2022-23 and determined a total sum of $1,096,938 (GST excl) had not been accounted for in terms of services provided by MVH,” Dr Freeman’s letter states.

“Accordingly SALHN seeks a refund for this sum at your earliest convenience.”

It is understood moves are underway to try to have the huge debt waived.

Mr Overland confirmed the matter had not been settled and the board is “negotiating certain aspects” of the contract but declined to comment further until the matter is settled.

A SALHN statement says the contractual agreement is being finalised by Dr Freeman and representatives from the hospital.

The audit shows the hospital was paid $2,621,582.73 for the 2022-23 financial year but the value of work done was $1,524,643.77, leaving a discrepancy of $1,096,938.96.

The hospital closed on June 30 with the board citing costs outstripping income.

Henry Davis from the Save McLaren Vale Hospital group, who is also an Adelaide City councillor. Picture: Supplied

State MP for Mawson Leon Bignell. Picture: NCA NewsWire / Kelly Barnes

A vote saw 86 per cent of the hospital’s association members in favour of transfer of the property to the James Brown Memorial Trust, to be used by neighbouring not-for-profit aged care group Kalyra and the site expanded into a larger aged care precinct.

However critics of the decision claim more than 600 votes were proxies, after a surge in membership since an earlier meeting rejected a similar plan.

Hospital association member Henry Davis, an Adelaide City Councillor involved in the Supreme Court challenge to the closure, said the hospital’s constitution requires the site to be retained as a health centre.

“It was making a $500,000 annual profit and suddenly it is shut amid a ramping crisis,” he said.

“We want it retained as a health centre – if this board can’t run it they should step aside.”

State MP Leon Bignell made a speech in parliament last month supporting the board’s decision to close the hospital, suggesting critics of the decision were in a land grab for “a prime site in the middle of town.”

“They (the critics) said, ‘Oh, we can run a hospital there’,” Mr Bignell said.

"We did not come down in the last shower, this was just an opportunity to get in and take this land and maybe develop it for housing in the future.”