23/07/2013 - 15:12

Private struggle for public beds

23/07/2013 - 15:12

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Competition between private hospital operators in Western Australia is set to heat up, as two rival groups set their sights on the Peel region.

In the space of less than 20 years, Ramsay Health Care has grown its portfolio from 11 hospitals, all based in Australia, to 117 facilities across five countries.

Ramsay is now Australia’s largest private health care provider, with an enterprise value of more than $7 billion and a growing presence as a public hospital operator.

Ramsay operations manager for Western Australia, South Australia and Indonesia, Kevin Cass-Ryall, said the company remained on the lookout for new prospects, driven by the philosophy of billionaire chairman Paul Ramsay.

Paul Ramsay’s personal view is if you’re not growing, then you’re going backwards,” Mr Cass-Ryall told Business News.

“So as a company, we’re always looking for opportunities.”

One such opportunity to emerge in recent times was at Peel Health Campus, which Ramsay bought from Health Solutions WA in May.

Peel Health Campus had been the subject of an independent review, commissioned by the state government late last year, into alleged misconduct in the running of the hospital.

However, Mr Cass-Ryall said the timing of Ramsay’s takeover wasn’t linked to the inquiry.

“We approached the then-owners to see whether they were interested and that was before all the media hype that was occurring; it was really nothing to do with contract management or anything,” he said.

“We talk to people all the time about possibilities; sometimes they come off and sometimes they don’t. The timing looked as though this was being initiated because of the challenges (facing Health Solutions) but it was nothing to do with it.”

Ramsay’s contract with the state government to operate Peel Health Campus runs until 2018 with a further five-year extension option, which Mr Cass-Ryall said he expected Ramsay would secure given its record running public hospitals such as Joondalup Health Campus.

“We run four public hospitals now in Australia so we see that there’s no issue for the next 10 years,” he said.

“What happens after that we’ll have to wait and see, but certainly up until 2022 we see that we’re there and we’re going to provide fantastic care and service to the local community.”

Ramsay plans to expand the hospital’s capacity in the coming years and aims to build a separate private facility on the Peel site to service local demand.

It remains to be seen what this means for private operator St John of God Health Care, which earlier this year awarded design and project management contracts for a 75-bed private hospital adjacent to Peel Health Campus.

St John of God did not respond to requests for comment.

Mr Cass-Ryall said private health care providers would be better placed to operate public facilities as the rising costs of health care put a strain on government budgets.

“The public system does a great job and I don’t think anyone should be critical of the public system but I don’t think efficiency is one of its strengths,” he said.

“If private operators were running public facilities I’m sure that the taxpayer and the government would get more value for money than they’re currently getting.”

A 2009 Productivity Commission report found that the efficiency of public and private hospitals was, on average, similar based on multivariate analysis of hospital data.


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