Royal Adelaide Hospital facility manager Spotless reveals it’s facing $93.8 million loss by 2022
THE Royal Adelaide Hospital contractor responsible for patient food and other services is facing a loss of more than $90 million on the project — triggering State Government talks to renegotiate the public private partnership contract.
- Spotless loses contracts to Flinders and Modbury hospitals
- A $240m SA Health budget blowout envelops RAH
ROYAL Adelaide Hospital facility manager Spotless is facing a loss of more than $90 million on the project, triggering State Government talks to renegotiate the public private partnership contract.
Spotless’s parent company, Downer EDI, on Thursday morning predicted after-tax operating losses of $93.8 million by the five-year anniversary of its RAH operations, in September 2022.
In response, Treasurer Rob Lucas said the State Government was working cooperatively with RAH operator Celsus and its subcontractor Spotless, “as part of a formal process to explore the feasibility of resetting the operating model” because of “well-known challenges” in operations.
The Advertiser in April revealed Spotless had been losing up to $6 million per month on its RAH operations, since the $2.4 billion hospital opened last September.
In its annual report released on Thursday morning, Downer said formal “standstill discussions” had started on June 20 to “address the various commercial and operational issues” affecting RAH service delivery.
Downer chief executive officer Grant Fenn said there was “good progress” on the RAH project and the group’s cash performance remained strong, despite the RAH’s “negative cash impacts”.
Mr Lucas said the State Government had inherited significant problems and accused the former Labor government of incompetence and mismanagement of the RAH project and associated contracts.
The Advertiser last week revealed private advisory firm KordaMentha had been engaged in a bid to rein in a $250 million budget blowout blamed on the RAH and first detailed by The Advertiser in April.
“Sadly, it is another part of the financial mess which the new Government will have to clean up,” Mr Lucas said.
“The Government confirms that it is working cooperatively with Celsus and Celsus’ subcontractor Spotless as part of a formal process to explore the feasibility of resetting the operating model at the Royal Adelaide Hospital as a consequence of the well-known challenges associated with the hospital’s operating environment.”
“The parties are working together to progress resolution of the various operational matters in order to best utilise the capacity of the hospital. Some progress has been made to date.
“Since the new Royal Adelaide Hospital opened just under a year ago in September 2017, there is now a greater understanding of the actual operating requirements of the new facility and its constraints.
“All parties are committed to finding solutions that provide better outcomes for patients and ensures a sustainable commercial arrangement going forward.”