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Caymans Privatisation: Northern Beaches Hospital limps into financial triage

by Michael West | May 21, 2024 | Finance & Tax, Latest Posts

The Sydney hospital privatised to Cayman Islands financial engineers is in strife, lending heft to calls for the hospital to be put back in public hands. Michael West reports.

Selling Australian public hospitals into private hands, especially Cayman Islands’ hands, was never a bright idea. The latest furtive disclosures regarding the privatised Northern Beaches Hospital make that clear. 

As does anecdotal evidence from health professionals associated with the hospital; reports of draconian cost cuts to medical staff and security staff. But following the money, the latest financial statements from NBH Holdco 2 Pty Ltd, which controls the hospital make for hairy reading.

Deloitte, auditor of the group that controls the hospital, has warned of the risk this company may not survive – given its working capital position and a large debt to another company in the maze of Brookfield’s financial engineering empire.

In the big picture, there is a conflict of interest between private operators making profits from hospitals versus delivering good health outcomes for the community. 

Source: NBH Holdco 2 financial statements

Source: NBH Holdco 2 financial statements

This was borne out in a comparison here where the available public disclosures (and transparency is not their strongest suit) show the foreign financial engineering group is charging the public 2.5x more per public hospital bed.

Royal North Shore Hospital charges $1m per public bed ($750m per year for 750 beds) and Northern Beaches $2.5m per bed ($600m for 250 beds). 

Caymans-owned Northern Beaches Hospital performs world-first “Headinthesandectomy”

The recently released NBH Holdco accounts for December record no cashflow in the cashflow statement or any tax position but they do show that, despite the hard times, Brookfield managed to get revenue up from $352m to $357m and snip only a marginally lower ‘management fee’ of $261m ($263m).

The cashflow squeeze is displayed in the net current liabilities of $283m, exceeding net current assets of $83m.

The notes appear to show Brookfield’s Healthscope favouring private patients over public patients. Revenue from public patients has fallen in almost every year of the NBH operation (from $190m to $184m for year-end 2023) albeit, in those same years, revenue from private patients has increased from $135 million to $163 million, a 20% increase.   

Public patient revenue 

The recognition of revenue from the provision of public hospital services occurs over time in accordance with the relevant agreement. Revenue is recognised on the date the services are provided.

If the consideration in a contract includes a variable amount, such as any amount that is currently the subject of negotiation, the Group estimates the amount of consideration to which it will be entitled. The Group does not recognise it as revenue until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.”  (MWM underlining). 

The underlined text reads seems to indicate NBH applies a downward adjustment factor to the revenue attributed to public patients. The amount of the downward adjustment has not been disclosed. It must be large given that private patient revenue has increased by 20% yet public patient revenue has fallen.     

Meanwhile to the regulator, which has rebuffed efforts for comment by MWM. The Northern Sydney Local Health District (NSLHD) accounts show an amount of about $600 million is being paid by NSLHD to the NBH.  

Perhaps the discrepancy is because the financial statements attached at pages 13 of the end year 2023 report refers to “revenue from contracts with customers” however NSLHD pays money to NBH Holdco 2 and 1 per the terms of the Project Deed which may not have been classified as ‘payments under contracts with customers’. 


“Since 18 December 2019, NBH Holdco 2 Pty Ltd and its wholly-owned subsidiaries NBH Holdco 1 Pty Ltd, NBH Car Park Operator Pty Ltd, and NBH Operator Co Pty Ltd have been part of a Deed of Cross Guarantee pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and are relieved from the requirement to prepare and lodge audited financial reports.”

From the Northern Beaches of Sydney to the Northern Beaches of George Town, Cayman Islands

“Material Uncertainty Related to Going Concern 

We draw attention to the working capital position disclosure in the financial report, which indicates that as at 31 December 2023, the Group’s current liabilities exceeded its current assets by $204.1 million. As stated in the working capital position disclosure, these conditions, along with other matters as set forth in the working capital position disclosure, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

The auditors appeared worried about the financial viability of the NBH.  They have recently announced staffing cuts to mental health care all round and no beds will be established to care for acute youth and adolescent mental health care needs, despite promises to do so. 

There are rising calls for the government to step in and take back control of the public portion of the hospital.

Saving the Deal: cover-up over Northern Beaches Hospital sale to the Caribbean

Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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