Banks step in to keep Healthscope running as bills pile up and $1.4bn debt revealed, Health Minister rules out bailout

Taxpayers won’t bail out embattled private hospital operator Healthscope after it collapsed into receivership, owing about $1.4bn to creditors, federal Health Minister Mark Butler says. The company, which is Australia’s second largest private health care provider and has 19,000 staff, was placed into receivership under McGrath Nicol on Monday, with chief executive Tino La Spina promising things would be “business as usual” for patients and staff. The company operates 37 private hospitals across Australia and is responsible for about 70 per cent of all elective surgeries, plus about one in four births. Mr Butler said the government had been in contact with Healthscope since the announcement and said the “interests of patients and hardworking staff” would be the highest priority during the transition. “I want to be clear I expect to see an orderly sale process eventuate from this decision to any owner with no impact on patients and hardworking staff,” he said. He stressed there would be no taxpayer bailout throughout the sales process, and said Healthscope had given its assurances that its hospitals would continue operating. The company has also confirmed patients with booked elective surgeries will go ahead. “There’s already very significant taxpayer support that goes into the operation of the private hospital system,” he said. “Many of these hospitals have been operating in communities for decades … and are a very important part of their community, and I’m confident will remain so into the future.” While Healthscope will now seek a new buyer, Commonwealth Bank has said it would contribute $100m in new credit to the company, with Westpac also set to work with the group’s 20 lenders to ensure continued operation. Speaking separately in Melbourne on Monday, Mr La Spina repeatedly said Healthscope had already received “10 non-binding indicative offers” and believed the business would be bought “as a whole”. “I want to be absolutely clear in any of our facilities, it is business as usual. There will be no hospital closures, no redundancies,” he told reporters. “Our patients, doctors, people can expect to come to our facilities and provide or receive this same amazing care they do always.” Mr La Spina said while lenders and landlords of the hospital sites may be asked to “take a hair cut,” staff, doctors and nurses will not be affected. He blamed the company’s troubled on the business’ secured debt and the “too high” rental costs of the hospital sites. The “industry structure” of private health insurers squirrelling “billions of dollars over the last few years and not putting it back into the private sector” was also a factor. McGrath Nicol said its intention was to transition all hospitals to new ownership, with no plans for hospital closures or redundancies. McGrath Nicol partner and appointed receiver, Keith Crawford said he wanted to “make it clear the subsidiaries that own and operate Healthscope’s network of hospitals are not affected by our appointment to the shareholding companies”. “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,” Mr Crawford said. More than 19,000 people work for the healthcare provider across the country, according to its website. The Australian Nursing and Midwifery Federation said it was in discussions with state and federal governments to avoid closures, and wanted a say in who would control the company.