In documents filed to the Australian Securities and Investments Commission (ASIC),Healthscope directors said they expected the company would be able to pay its debts but “significant doubt” would be cast over its ability to do so if it failed to improve its performance and generate enough revenue from its hospitals.
Healthscope has a contract with the NSW government to run the public wing of Northern Beaches Hospital until 2038.Nick Moir
Chief executive Greg Horan wrote that the rates paid by private health insurers had not kept up with the rising cost of providing healthcare and that the company was taking steps to “ensure that the long-term viability of the business is addressed”.
The hospital is operated by Healthscope but its revenue,assets and costs are lodged to ASIC via a holding company.
Healthscope charged the holding company a $260 million management fee which it says includes “employee expenses and other costs” it incurs operating the hospital.
The company’s total debt,most of which is owed to its parent company,is about $283 million,far exceeding the $79 million it has in cash and other current assets.
In their audit of the financial documents,independent accountants from consulting firm Deloitte said that these conditions,along with the financial constraints highlighted by Healthscope itself,“indicate that a material uncertainty exists that may cast significant doubt on the[Northern Beaches Hospital holding company]’s ability to continue as a going concern”.
Asked if the northern beaches community should be concerned about the auditor’s report,a Healthscope spokesman said:“As detailed in the accounts,the large majority of the NBH holding company’s current liabilities are from intercompany loan of $280 million,provided by the Healthscope group.”
“Healthscope’s absolute priority is providing high quality and safe clinical care for patients in our hospitals,” the spokesman said. “We are taking actions to address underfunding now,to be able to maintain the highest standards of care into the future.”
The financial statement to ASIC is the first look at the hospital’s finances since news emerged that Healthscope and its owners,Canadian investment giant Brookfield,were attempting to cut a deal on the $1.6 billion it owes to its lenders,which include Australia’s big four banks and overseas investors.
Healthscope earned $163 million in 2023 from private patients at Northern Beaches Hospital,an increase from $149.6 million the previous calendar year.
The company also has a contract with the state government to run the public arm of the Northern Beaches hospital,where it made $183 million from publicly funded patients last year.
NSW Health Minister Ryan Park said that,while the financial position of the hospital was a matter for Healthscope,the government’s priority was “to ensure the northern beaches community continues to have access to safe,high-quality care at the hospital”.
Hospital management last month,which include halving the number of full-time nurse unit managers on mental health wards.
The NSW audit office has told local politicians and community members it has commenced its performance review of the hospital,first flagged after the state government after Healthscope said it could not fulfil a commitment to build a specialist youth mental health unit.
Healthscope won the contract to build and operate the $600 million hospital in Frenchs Forest in a unique public-private arrangement with the former Coalition government.
A parliamentary inquiry in 2020 for future hospital projects after a plagued the hospital’s first year.
The wider Healthscope group tumbled to a $649 million loss last calendar year,writing almost $1 billion off the value of its business as rising costs slashed profits across the private hospital sector.
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