Healthscope's problem was private equity
As the US experience demonstrates, PE and hospitals are a terrible mix.
Dozens of corporate, government and legal luminaries will be busy scrubbing their resumes this week of any reference to involvement in the 2019 acquisition of Healthscope Hospitals by private equity buccaneers Brookfield. Healthscope's collapse into receivership on Monday – and the damage done to one of the key pillars of the national hospital system – was utterly predictable and utterly preventable.
The first line of blame for the disaster rests with the Foreign Investment Review Board and then treasurer Josh Frydenberg. FIRB and free markets Josh waved through the Canuck bid for Australia's second-largest provider of private hospital beds like a hotel concierge ushering in an A-list regular.
Alarm bells should have been ringing inside FIRB and Frydenberg's office. Serious and respected American medical journals had already been raising questions about the serious deterioration in health outcomes, and unseemly increases of costs to insurers and government, whenever private equity purchased a hospital in the United States. By 2019, it was accepted as gospel in the US that private equity and good health outcomes were incompatible.