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

Premier Gladys Berejiklian cut the ribbon at the Northern Beaches Hospital on a Monday afternoon last November. Hours later, the hospital’s anaesthetists were demanding the private operator Healthscope fix staff shortages, equipment shortages, drug shortages.

They declared it unsafe to perform surgery.

Doctors told patients to go elsewhere. They threatened to strike – which is a big move for people paid more than half a million dollars a year. “Hiccups” said NSW Health Minister Brad Hazzard. “Teething problems” said the premier.

Then the hospital’s head of medical services resigned, besieged by angry doctors. She was followed by the head of anaesthetics who walked out in disgust.

Fast forward three months and it turns out the government is desperately trying to suppress this story that the private operator is selling out to a shadowy company in the Cayman Islands. A tax rort.

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

Profits from the sick people of Sydney’s Northern Beaches are to be funnelled to George Town, Gran Cayman, along with whatever cash can be ripped out from another 42 Australian hospitals.

Questions to Healthscope and the financiers from Brookfield, its takeover suitors, have consistently gone unanswered, for weeks. On Monday however, thanks to rising concern about this story on social media, we were contacted by a government PR operative who asked for a correction over an ambiguous detail in the story.

Presumably, the PR game-plan is to discredit the story – it’s a bit complex – as the work of a “blogger” who has his facts wrong. This is what PR does. Indeed it is also what sources in parliament have confirmed. They need to shut the story down, keep it out of the mainstream media, push it through the FIRB (foreign investment) approval process before the election.

Healthscope Ltd

So we agreed to correct the story if the government were to provide evidence that a correction was needed. That has failed to materialise. These are the questions put to local health authorities and the office of Health Minister Brad Hazzard:

1. What amendments to the contract have there been (since Sean Nichols’ story in 2015)?
2. How much have costs/cost estimates risen?
3. Have other costs been incurred outside Health and RMS?
4. What is Healthscope actually selling? Is it the future cash flows from patients and health funds it will book as operator?
5. How much is the land valued at? What did NSW govt pay to acquire the land?
6. Who owns the land now and who will own the land post-transaction?
7. Who owns the buildings now and who will own the buildings post-transaction?
8. The transaction involves a spin off of land/buildings to a US REIT and a Canadian investor called NorthWest. Which of these are involved or will own NSW originated assets and NBH assets?
9. Who owns the carpark now and post transaction?
10. Could you please comment on the public interest aspects of building a hospital which, shortly after the ribbon was cut, is sold (or certain rights or cashflows were sold) to an entity in a tax haven?

Nothing yet. The main answers are likely to be that the hospital (the bricks and mortar) are not being sold but the future cashflows of the hospital – that is the profits from the patients and health funds – are being sold.

Further, the real cost of the transaction is likely to be much higher. It is in the public domain that the hospital cost $600 million to build and there were a further $400 million in costs from roadwork which were borne by the department Roads and Maritime Services.

Then there is the $2.1 billion “total payments to the private operator” figure which was confirmed by the former Health Minister. What is this figure? What does it mean? Will the real cost of the transaction be far higher once this business ends up in the Caribbean?

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Since publication there has been a response by a spokesman for the Northern Sydney Local Health District:

Northern Beaches Hospital (NBH) will continue to provide quality healthcare services under the 20-year contract with Northern Sydney Local Health District (NSLHD). The recent takeover bid of Healthscope by Brookfield does not affect the contract in place.

The contract allows for the public portion of the hospital to be handed back to the NSW Government at no additional cost.

The operator then has, under the contract, a further 20 years to provide services to private patients before the remaining part of the hospital is returned to the State at the contemporary standards of the day.

The $600 million Northern Beaches Health Service redevelopment includes the construction of Northern Beaches Hospital and three community health centres.

The NSW Government retains ownership of the land and the project deed (contract) between the NSW Government and Healthscope provides various protections and mechanisms for the State in consideration of a sale process.

We await a response from the Office of Health Minister Brad Hazzard who was approached two days ago for comment. So far, the government response has been overwhelmingly meaningless. There is no detail of the transaction. It is taxpayers’ money on the hook, not to mention the peoples’ health.

BPIH Pty Ltd