Jobs in limbo as Healthscope lenders vote to bring in the receivers

Healthscope employs about 18,000 staff. Picture: iStock.

Private hospital operator Healthscope is poised to enter receivership by Monday, leaving the future of its workforce of about 18,000 staff uncertain.

A meeting on Thursday night involving about 20 of its lenders owed around $1.4bn, voted for the move.

Healthscope is the country’s second largest private hospital operator and was purchased by Brookfield in 2019 for $4.4bn.

At the time, it sold its properties for about $2bn to fund the transaction. However, since then it has struggled with higher staff costs, compounded by its rent and debt payments, and claims that funding from private health insurers was not enough to cover its costs.

Brookfield last week handed the keys to the lenders after the company was unable to meet its debt payment obligations and it has defaulted on its rents.

It has also run a sale process through Moelis, and although consortiums have lined up to buy the hospitals, the understanding is that bidders were only interested if rents were reduced by about 10 to 15 per cent.

Some well-informed sources said only about six hospitals of the 37 operated by Healthscope were profitable. As of last week, the group had $110m of cash on its balance sheet for operating costs.

Its rent is not thought to be due until the start of next month.

Most expect that the hospitals will continue to operate while a resolution is sought.

An administration or receivership of Healthscope would be highly complex, as other lucrative contracts to the hospital operator would also be cancelled, but most expect that the business would continue to operate through a reorganisation of its affairs.

Compounding problems for Healthscope will be the high probability it will need to lift the pay for nurses after aged-care nurses won the right for wage increases.