Staff cuts feared in hospitals takeover

Doctors say they’re bracing for cutbacks in patient care after the takeover of one of the country’s biggest providers of private hospitals.

Healthscope runs 43 private hospitals around the country.

Doctors say they’re bracing for cutbacks in frontline patient care in the wake of the takeover of one of the country’s biggest providers of private hospitals by a Canadian private equity group.

Healthscope runs 43 private hospitals around the country and was subject to a takeover recently by the Canadian private equity firm Brookfield Asset Management.

Doctors’ and nurses’ unions say they’re concerned that a drive for high returns on equity could come at the expense of frontline care and changes to cleaning, food and laundering in Healthscope’s private hospitals.

Australian Salaried Medical Officers Federation of NSW president Tony Sara said Healthscope insiders had warned that “sharks were circling” and the union feared a drive for operational efficiencies would undermine staff rostering.

“The only way that a private equity firm can realise a return to shareholders in the short term is to drive down costs and/or staffing, which inevitably leads to an increase in risk for patient care,” Dr Sara said.

NSW Nurses and Midwives Association president Brett Holmes said the union was concerned that frontline nursing staff might be impacted.

“Our concern is that investors often have high expectations and therefore there would be no doubt pressure on private equity firms to deliver on those promises of higher-level returns,” Mr Holmes said.

“If you have a company that wants to cut costs it’s hard to believe that they won’t be looking very hard at those large cost components of hospitals like staffing.

“In the worst case outside of what I’ve seen in health, private equity has had a history of going into companies, stripping out their profits and then putting them back on the market when they think they’ve made it attractive for a public share float again.”

Healthscope vigorously rejected any suggestion of cost-cutting and said its nursing numbers had increased since the Brookfield takeover.

“These are thoroughly spurious claims with no factual basis,” a company statement said. “We totally reject any implication that private equity ownership of a hospital operator would drive detrimental outcomes on patient healthcare or working conditions for doctors and nurses.”

Australian Healthcare and Hospitals Association chief executive Alison Verhoeven said she was concerned that Healthscope’s profits were set to flow offshore, because the Brookfield-controlled entity, which was the ultimate holder of shares in Healthscope, was domiciled in the Cayman Islands.

“Private hospitals are subsidised very substantially by taxpayers, and I do have an issue with taxpayers funding the profit-making capabilities of companies which are quite happy to reside in tax haven,” she said.

Brookfield said in a statement it was committed to patient care in private hospitals.

“Our strategy for growth and business improvement will be achieved through investment in training, technology and tools to improve how healthcare is delivered and better inform decision-making, along with improvements in areas like procurement and supply chain that better leverage Healthscope’s national footprint,” the company’s statement said.