Private hospital seeks state support

Privately owned Bethesda Hospital in Claremont, chaired by former health department boss Neale Fong, has approached the state government to assist with a financing package to buy back its land and property from The Bethanie Group Inc.

Bethanie, chaired by former KPMG partner Barry Honey, took security over the hospital land three years ago, after it refinanced the hospital’s debts.

The hospital board has been seeking to reverse that position and is understood to have made an offer to pay out Bethanie and recover title over its land.

WA Business News has been told Bethesda was seeking up to $12 million from the state government to assist that process.

When asked if the WA government “has agreed to gift $12 million to Bethesda”, a spokesperson for Health Minister Kim Hames simply said no decision had been made yet.

Dr Fong confirmed he had been talking to the government, but said the $12 million figure was not correct.

“We’re not putting our hands out for anything like that,” he said.

“We’re talking to them about the potential for assisting us to put a finance package together.

“We’re confident that we’ll get the right arrangement.”

Bethesda and Bethanie were established as the commercial arms of the Churches of Christ.

Bethesda’s 104-bed hospital sits on prime riverfront land next to Christ Church Grammar School, with uninterrupted views over Freshwater Bay. Bethanie operates nursing homes and develops social housing.

Until last year, the two not-for-profit businesses had several common directors.

That changed when Dr Fong and fellow director Ric Leaver resigned from the board of Bethanie to run the hospital.

At the same time, Bethanie directors Helen Drury and Jill Downie stepped down from the board of Bethesda.

Bethanie’s board has engaged Azure Capital to help it with the commercial negotiations with Bethesda.

The current issue stems from a major hospital upgrade that started in 2003.

Building company Doric was appointed to manage the upgrade, which was budgeted to cost $13.4 million but is believed to have cost a lot more.

Faced with higher costs, Bethesda ran into difficulties servicing its debt with Bankwest.

Bethanie then became the hospital’s financier and later took title over its land and buildings.

The property was leased back to Bethesda for a period of up to five years and the hospital is seeking to reverse the earlier refinancing.

Writing in Bethanie’s 2010 annual report, Dr Honey said: “It was hoped, initially, that Bethanie and Bethesda might develop a co-ordinated business plan where the activities of each incorporated association are carried out in a complementary way.

“Unfortunately, the two organisations have not been able to achieve this objective.”