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The Murdoch medihotel was meant to cost WA taxpayers $55 million. It’s nearly double that

By Hamish Hastie

The cost to run the Labor government’s first large medihotel has blown out by nearly $44 million for half the period the contract was initially expected to be signed for.

The cost jump has drawn criticism from Liberal leader and opposition health spokeswoman Libby Mettam, who called the long-promised concept “ill-conceived”.

In 2020, then-health minister Roger Cook said a four-year deal with Aegis Health to operate a 60-bed facility next to Fiona Stanley Hospital in the Murdoch health and knowledge precinct would cost $55 million.

The Murdoch medihotel was built by Aegis Health but will be run by the South Metro Health Service.

The Murdoch medihotel was built by Aegis Health but will be run by the South Metro Health Service.Credit: Hesperia

The midyear budget review released before Christmas shows the cost to run the now 80-bed facility had blown out to $98.6 million with the money allocated to “operationalise” it over the next two years.

No funding has been allocated beyond 2026, which was not addressed by Sanderson’s office when asked.

Despite nearly four years of negotiations with Aegis Health to bring it onboard as the operator the final contract relegated the company to a landlord.

Health Minister Amber-Jade Sanderson announced at the opening in July the state would lease the building Aegis and South Metro Health Service – which runs Fiona Stanley Hospital – would operate the medihotel.

The blowout and Aegis’ sidelining followed significant delays in negotiations and concerns about the contract from South Metro Health Service’s chief executive Paul Forden himself.

SMHS was removed from negotiations in June 2023 because of “difficulties” in negotiations between it and Aegis.

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A spokeswoman for Sanderson said the higher cost of the medihotel resulted from SMHS taking over operations – allowing the facility to take on patients with more acute health issues.

“This allows the medihotel to accommodate higher acuity patients, utilise innovative models of care, and facilitates better alignment with Fiona Stanley Hospital. Given the new management arrangement, and the change in patient mix, additional operational funding was allocated in the mid-year review,” she said.

“The medihotel is for patients who no longer need a tertiary bed but are not ready to be discharged home.

“They are patients who still require some level of monitoring or clinical care and are generally described as sub-acute.”

About 52 beds have opened at the medihotel so far with the remaining 28 expected to be opened by the end of January.

More than 1000 people have been discharged from the facility since it was opened.

The spokeswoman said it was standard practice for healthcare facilities to be opened in a staged manner.

Medihotels were a 2017 Labor election commitment, touted as a solution to the public hospital bed block crisis by removing patients from hospitals that still needed care but did not need to remain in hospital.

The Murdoch medihotel, built by WA developer Hesperia and connected to Fiona Stanley Hospital with a $5 million bridge, is the flagship facility from the concept as a promised Joondalup facility has been shelved.

Mettam said Cook’s solution to ambulance ramping had been a failure and left taxpayers footing an expensive bill.

“The proposed Joondalup medihotel has been shelved and the scope of the Murdoch facility has raised concerns with South Metro Health who have now been forced to run this facility,” she said.

“Everything WA Labor touches blows out – from the cost of their ill-conceived medihotel scheme, to elective surgery wait times, to ambulance ramping, through to Metronet.”

Mettam said Cook and Labor had treated households as cash cows, hiking household charges and squandering the boom on ineffective pet projects rather than undertaking strategic investment.

“Labor’s track record of cost blowouts is evidence they have no regard for taxpayers’ money,” she said.

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Original URL: https://www.brisbanetimes.com.au/politics/western-australia/the-murdoch-medihotel-was-meant-to-cost-wa-taxpayers-55-million-it-s-nearly-double-that-20250103-p5l1ze.html