Port Macquarie’s privatisation debacle

“Less than seven years after the privatised hospital opened its doors things really began to unravel.” - Lynda Binskin
“Less than seven years after the privatised hospital opened its doors things really began to unravel.” – Lynda Binskin

CNS Lynda Binskin experienced the failed privatisation of Port Macquarie Base Hospital. Here she tells a cautionary tale with relevance to the new Northern Beaches hospital.

Twenty years ago the Port Macquarie Base Hospital opened. New hospitals open every now and again but this time it was different.

This was a hospital owned and operated by a private consortium that had been contracted to care for public patients.

Port Macquarie base remained under private operation for more than 10 years and that time was bad for patients, bad for the community and bad for the staff that worked there.

Originally a brand new, publicly-owned and operated hospital was promised to the people of Port Macquarie: $4 million dollars was spent in the planning.

Somewhere along the line the Liberal/National government decided that the public model was too expensive and a public private partnership was decided on.

The community was galvanised into action. There were public meetings and marches. Busloads of people made the trip to Macquarie Street to try to change the government’s mind. The local council held a referendum that delivered a strong ‘No’ vote against privatisation.

But all to no avail. A steering committee was formed and tenders were called. Before the community knew it, Health Care of Australia was announced as the private operator.

Service agreements and contracts began to be negotiated. There seemed to be lots of wheeling and dealing behind closed doors and the public was never sure of the details due to commercial sensitivity or commercial-in-confidence.

Plenty of promises were made by the government of the day and there was a huge publicity campaign to reassure the community.

We were told we would receive a state-of-the-art hospital. The people of Port Macquarie were told that there would be safeguards in place.

There would be a reporting system and clinical indicators such as pressure sores, medication errors and surgical wound infections would be monitored. An independent board was set up to oversee the operation of the hospital.

Problems became apparent early on. The structure was not built to Australian hospital standards, which meant smaller rooms, narrow corridors and fixtures that could be removed and used as weapons. The hospital leaked atrociously and there were ongoing issues with the air conditioning.

But structural issues were not the only problem. From the outset it was clear that profit was the driving force behind the privatised model. Staff members were indoctrinated into the structure of the parent company, Mayne Nickless, and advised how important it was to keep the shareholders happy.

This was a shock to nurses and midwives who are in the business of keeping patients happy, not shareholders.

Hospital management had Key Performance Indicators to meet and these had to be communicated to head office in Melbourne every day.

Over time, Health Care of Australia decided that registered nurses were too expensive to employ and a move was made to replace RNs with Assistants in Nursing.

Nurses, midwives and the public protested and held meetings on the road adjacent to the hospital. There were photos of protesting nurses in the local paper and on TV.

Staffing was cut to the bone and it wasn’t just nurses and midwives who bore the brunt. Port Macquarie Base was a 160-bed facility, yet Health Care of Australia saw fit to employ only one social worker.

Other allied health personnel such as physiotherapists and speech therapists were also thin on the ground.

Less than seven years after the privatised hospital opened its doors things really began to unravel.

The parent company underwent restructure with the operator changing names; Health Care of Australia became Mayne Health. CEOs came and went: six in seven years. The director of nursing left without explanation but with much speculation. Elective surgery waiting lists blew out to become among the worst in New South Wales.

None of this was good for patient care or staff sanity. There was no accountability and no transparency. The independent board set up to oversee the operation of the hospital became more of an advisory body.

What had happened to the pilot hospital that the rest of Australia was apparently looking to copy? It had been a dismal failure.

In 2005 the hospital was bought back by the Labor state government. This was not a clear-cut process. Pathology and medical imaging remain under private operation, with their contracts requiring regular renegotiation and review. The hospital had major headaches renegotiating doctors’ contracts.

The Port Macquarie privatisation experiment was bad for everyone. I believe the people of the Northern Beaches have a lot to be worried about.

There needs to be clear accountability for the care of our public patients. Profits should never come before care. Health care in this country is a right not a privilege.


History of a privatisation farce

In 1994 a Liberal/National coalition government led by Nick Greiner entered into a 20-year agreement with a private operator for the Port Macquarie Hospital to be built, owned and operated.

The initial operator was Health Care of Australia, which was taken over by Mayne Health, which in turn sold its hospitals to Affinity Health.

The state government took legal action against Mayne for breach of contract in relation to the proposed transfer of the hospital to Affinity.

Under the privatisation contract the government paid the private operator to treat public patients. The NSW Department of Health had to pay a monthly “availability” charge to the hospital for a period of 20 years, estimated to total more than $243 million, plus capital servicing and other service charges.

In 1996, the NSW auditor-general cited the hospital as an example of the public sector being left to shoulder burden and risk, saying: “The government is, in effect, paying for the hospital twice and giving it away.”

Problems that plagued the Port Macquarie hospital under private ownership included funding for elective surgery running out before the end of the financial year and very long waiting lists for surgery.

A Buy Us Back campaign run by a community-based action group and nurses and midwives lobbied strongly for a return to public ownership, which eventually happened in February 2005.