The indebted private healthcare provider Healthscope, operator of Sydney’s embattled Northern Beaches hospital, has fallen into receivership after its lenders withdrew support.
Healthscope, backed by global investment firm Brookfield, had been renegotiating its finances with lenders after accruing $1.6bn in debt and defaulting on various lease payments.
The private hospital owner said in a statement that its 37 hospitals would remain open and operating on a business-as-usual basis with no impact on staff, doctors or patient care.
The health minister, Mark Butler, called the development “highly distressing to the patients, staff and local communities that depend on Healthscope’s services”.
“While Healthscope have announced they will remain operating as normal with no change to patient care or staffing, this will still be difficult for the hospital’s employees and their patients,” Butler said on Monday afternoon.
He said the government had met with the administrator and the receiver to outline priorities and expectations, and that he expected “all parties to continue to put patient care and workers as their priority”.
“As the government has said all along, there will be no taxpayer bailout,” he said.
“We remain steadfast in our view that an orderly sales process that maintains the integrity of the entire hospital group will provide the best outcome for patients, staff, landlords and lenders.”
Restructuring firm McGrathNicol was appointed to sell the business. It was provided with a new $100m funding package by financier Commonwealth Bank to support operations during the sale process.
“Our immediate focus is to engage constructively with all key stakeholders to ensure uninterrupted operation of Healthscope hospitals and continuity of best practice standards of patient care,” McGrathNicol partner Keith Crawford said.
Receiverships are used by creditors to sell or reorganise assets to recoup debts.
Healthscope’s chief executive, Tino La Spina, said on Monday it was “business as usual”.
“There will be no hospital closures, there will be no redundancies,” he said.
La Spina said the company had received “around 10 non-binding indicative offers” and that a sales process would take up to 10 weeks.
Indicative offers are preliminary expressions of interest, which contain no guarantee they will turn into firm bids.
Concerns over patient care at the Healthscope-run Northern Beaches hospital sparked criticism of public-private partnerships in the health sector.
The company came under scrutiny following the death of two-year-old Joe Massa at the Northern Beaches hospital in September 2024.
The Australian Medical Association president, Dr Danielle McMullen, said the private health sector required better oversight.
“We welcome the commitments given as part of today’s announcement that the operation of Healthscope’s hospitals will continue as normal and that additional funding has been provided to support their operation,” McMullen said on Monday.
“We also welcome the receiver’s stated intention to transition all hospitals to new ownership, with no plans for hospital closures or redundancies.”
The Australian Nursing and Midwifery Federation said it had been working with members and stakeholders navigating the financial difficulties and uncertainty.
“For the nurses and midwives who care for patients in Healthscope every day, this is a very difficult and worrying time,” union official Phoebe Mansell said.
“The financial collapse of Healthscope is a stark and shocking reminder of the dangers of privatising essential healthcare services.”
