The Guardian • Issue #2043

Privatisation inquiry call

Cayman Island owners pay no penalty for Australian hospital failures

Northern Beaches Hospital. Photo: Cabrils – Wikimedia Commons (CC BY-SA 4.0)

The Sydney public hospital now controlled in the Cayman Islands is not subject to penalties for healthcare failures. Michael West reports on calls for a public inquiry into the privatisation and performance of Northern Beaches Hospital.

Built at public expense, should the Northern Beaches Hospital (NBH) have been privatised and sold to a bunch of tax-avoiding financiers in the first place?

There is a youth mental health epidemic on Sydney’s Northern Beaches fuelled by drug and alcohol abuse. Yet even after a private criminal prosecution of the Northern Beaches Hospital and even after authorities vowed to inject $11m to help address the critical shortage of beds and youth mental health capacity, the father of deceased 14-year-old Joshua Gill says nothing has been done.

Josh Gill died in tragic circumstances in August 2021. His father Andrew Gill brought the action against the hospital operator Healthscope – which is controlled by an entity in the Cayman Islands – and it was settled confidentially in February 2022. Gill received no money from the settlement but following the lawsuit there was an agreement by health authorities in June 2023 to lift funding for youth mental health.

“$11.4 million to boost Northern Beaches youth mental health services,” said the press release.

Despite the pledge however, and despite numerous phone calls and emails with the Northern Sydney Local Health District (NSLHD) Gill says the capacity to address the youth mental health crisis has still not been delivered.

Gill is calling on the government to hold an inquiry into the conduct of the hospital and its secretive financial arrangements. A lawyer and former banker, he believes public hospitals should not be privatised and sold to foreign private equity players. Healthscope and its 42 hospitals were sold in a takeover to Brookfield.

Critical health infrastructure should remain in public hands, says Gill. The interests of shareholders are not the same as the interests of patients. As part of his investigation into the secretive Public Private Partnership (privatisation) process which led to the sale of Northern Beaches Hospital, he found the hospital operators are not penalised for negligence even though the Project Deed stipulates that there should be financial penalties for negligent care and incidents necessitating Serious Adverse Event Reviews (SAERs).

“It seems there … no matter how bad the service, they (the hospital operators) still get paid the full price. When you are dealing with healthcare – when a private company is providing the service – that makes no sense at all.

“In my view, it incentivises the private company to provide substandard care.”

In correspondence with the NSLHD, which Gill says is described as the “Client Representative under the Project Deed” he says there is an “intractable conflict of interest” between the local health authority (NSLHD) and the hospital it is supposed to regulate.

“Under the Project Deed, the NSLHD pays monthly invoices for services rendered by the NBH (public portion). The NSLHD also has responsibilities including conducting SAER investigations into the performance and quality of service delivery by the NBH, noting again for the record that medical professionals employed by the NBH were on the panel of investigators who considered the SAER held regarding the death of our late son Joshua Gill.

Any adverse finding of such SAER or other enquiries would be made after any invoice has been paid (by the NSLHD); but as per the Project Deed, the NBH must have already advised the NSLHD of any adverse event so that payments to the NBH could be abated to reflect any substandard and/or negligent care.”

“The NSLHD and the NBH are in an intractable position of conflict because if the NBH has not advised the NSLHD of an adverse event, and the NSLHD uncovers an adverse event ex post (but has not been informed about it) then the payment of the invoice has been improperly made. Where are the incentives to improve the quality of care?”

“I also confirm that I requested you (the NSLH) to provide the amounts paid to the NBH by NSLHD in your role as Client Representative for the care provided to my late son by the NBH. The NSLHD denied this request.”

Secrecy the problem

Gill told Michael West Media (MWM) the local health authorities appeared to be protecting the hospital operators by withholding financial information and information about breaches. He says that the publicly available financial statements of the NSLHD appear to show payments of $52 million to the Operator to provide health services at the NBH but it was unclear whether it was $52 million per year or $52 million per month.

Gill believes that the figure is a monthly figure. He says, “It seems that after the COVID pandemic, monthly payments to the NBH rose from around $22 million to $52 million per month. If this is correct, this would mean that NSW taxpayers are now paying a Cayman Island related entity around half a billion dollars a year to operate our ‘local’ public hospital.”

Gill says that if this is the case, it is a “breathtakingly deplorable state of affairs, considering that the taxpayer paid to build the hospital and the operator pays $1 per year in rent to occupy the hospital buildings.”

The state spent $1.2b building the hospital and surrounding road networks but the PPP documents have redacted the relevant financial information so it is not possible to find out what the private operators Healthscope paid the state for the private hospital.

The National Mental Health Survey revealed the annual prevalence of mental ill health in 16 to 24-year-olds had surged from 26 per cent in 2007 to 39 per cent in 2020-21 – an unprecedented increase of 50 per cent in 15 years.

Yet, according to Gill, “the Northern Beaches Hospital was opened without having one dedicated bed for acute youth and adolescent mental health care despite the Northern Beaches being home to around 50,000 kids.”

Michael West established to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences.
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