Western suburbs likely to lose its only private ICU in order to save embattled Western Hospital

A glossy sales pitch to sell the embattled Western Hospital would see its loss-making ICU turned into a lucrative high dependence unit, as well as another big switch.

Secret plans for the embattled Western Hospital to entice buyers include dumping the only private intensive care unit in the western suburbs and transforming its loss-making hybrid surgical theatre into a money-spinning orthopaedic unit.

Documents obtained by The Advertiser show the 54-bed private hospital’s fall into financial strife resulting in voluntary administration was accelerated by health insurer BUPA changing its policies.

They also reveal the plan to turn the loss-making ICU into a profitmaking high dependency unit, as part of the rescue strategy laid out to entice buyers.

The ICU was losing up to $2.4m per year and was a “significant driver of underperformance”.

“Removing the ICU and replacing it with an HDU is estimated to improve Western’s profitability by approximately $1.8m (per year),” the dossier states.

The Advertiser previously revealed the hospital was trading insolvent “from as early as October 2019” and its board of directors may face legal action if claims of insolvent trading are sustained.

Western Hospital at Henley Beach. Picture: Brett Hartwig

A new buyer is being sought for the hospital after it ran into financial trouble. Picture: Brett Hartwig

The sales pitch includes turning the hybrid theatre, which is losing $1.2m a year, into an orthopaedic theatre, noting another theatre used for orthopaedic procedures generated $7.3m in revenue the previous financial year.

The ICU lost $8.2m from July 1, 2021 to December 31, 2024 and lurched into crisis from February 2021 when insurer BUPA changed its criteria for funded admissions.

“From then onwards, in order for an ICU admission to be funded, patients needed to present with two of the following interventions while in the ICU for six hours or more per day,” the documents notes.

The interventions were assisted ventilation; haemodynamic pressure monitoring; renal replacement therapy; intra-aortic balloon pump and intracranial pressure monitoring. Each of these on their own are considered life-threatening conditions.

These changes saw ICU admission revenue plummet from $1m in 2022-23 to just $72,000 in the six months to December 31, 2023.

A BUPA spokesman said: “We understand some of our members may be concerned with Western Hospital going into voluntary administration. It is important for our members to know there are no immediate changes and Bupa members remain covered under their policy at Western Hospital.”

“We have a longstanding relationship with Western Hospital and in 2021 we mutually agreed to a new hospital contract, including the funding of ICU arrangements. Our ICU admission funding arrangements we have with Western Hospital is consistent across Australia with other private hospitals.”

On January 29, EY was appointed as voluntary administrators and are seeking offers to acquire the business and/or assets of the hospital, which is in federal Health Minister Mark Butler’s Hindmarsh electorate.

A potential buyer has been found, with a meeting planned next month to permit time for completion of the sale expected to see the GP clinic, oncology clinic and cafe sold separately and part of the premises leased.

Planning Minister Nick Champion rejected a petition signed by 11,134 people and tabled in parliament by Liberal MP Matt Cowdrey requesting the site be rezoned for health care.

He confirmed current zoning allowing low-medium density residential housing up to two storeys could see the private landowner submit a housing development application.

However a zoning change could see this allow high-density development up to 15 storeys and see it sold as mixed use including housing, hospitality, entertainment and retail as well as health, as “there is no current zone in our planning system that would limit the land use solely to a hospital”.

Originally published as Western suburbs likely to lose its only private ICU in order to save embattled Western Hospital