One of Australia’s largest private hospital owners Healthscope has gone into receivership after its lenders voted to end their support for the current owner, Brookfield, which has been unable to pay to keep facilities open, including Sydney’s embattled Northern Beaches Hospital.

Receivers have been appointed from McGrathNicol with the Commonwealth Bank and Westpac, two of the lenders owed $1.6 billion, providing additional funding for both receivers’ sales process, and working capital for the hospitals to ensure the hospital operations continue as normal.

Healthscope has 38 private hospitals – including Sydney’s Northern Beaches Hospital, Holmesglen Private Hospital and The Melbourne Clinic – which house 5000 beds and employ 17,000 staff across the country.

Brookfield, which has more than $1 trillion of assets under management and paid $4.4 billion for Healthscope in 2019, has been unable to find a buyer for the business and attempted to hand control to the dozens of parties which made up the debt syndicate, including Australia’s Big Four banks.

The issue came to a head this year when Healthscope had to reach an agreement with its lenders to delay payments on $1.6 billion worth of debt, and was unable to pay all of its rent.

Brookfield’s plans to be a long-term owner of Healthscope, and profit from long-term trends like the growth of healthcare needs of an ageing population took an immediate hit with COVID, which forced the shutdown of elective surgery which is its core business.

After the pandemic, Healthscope’s revenue was squeezed by an acceleration of the trend to at-home treatment for services that previously required a lengthy hospital visit. While the rate of lucrative multi-day admissions to private hospitals have dropped over the past five years, expenses have soared because of staff shortages and rising wages.

Sydney’s Northern Beaches Hospital has become a flashpoint for perceived problems in the private ownership of the hospital operator.

Doctors at the hospital warned a parliamentary inquiry last week that chronic understaffing and a dysfunctional patient record system pose significant risks to patients, piling further pressure on the state government to take control of the troubled hospital.

The Australian Salaried Medical Officers’ Federation (ASMOF) NSW said the hospital’s private operator “prioritises profit over safety” by rostering minimum staff on weekends, relying on lower-paid junior doctors and failing to update its outdated electronic medical records (EMR) system.

A Healthscope spokesperson said the inquiry would be an opportunity for the community to understand the services provided at the hospital, and the company’s “aspiration for it to be a leading health facility, serving the northern beaches community”.

On Monday, Wakehurst MP Michael Regan said he had received assurances from NSW Treasurer Daniel Mookhey that essential public services remained operational during this time of upheaval.

“This is such an uncertain thing, and we are keen to ensure the community that health services - particularly emergency, surgery and maternity - will run as normal,” Regan said.

NSW Health Minister Ryan Park said the government had been constantly negotiating with Healthscope’s owners to return the hospital’s public services to government hands.

“That is a complex negotiation and a complex contractual issue that we need to work through,” Park said.

Park said the government was considering Regan’s public member’s bill to legislate an end to the private-public partnership at the hospital without compensation.

Elouise Massa, whose two-year-old son Joe died at the hospital in September 2024 after a series of critical failures, said: “Healthscope’s move into receivership marks the end of a disastrous attempt by Canadian private equity firm Brookfield to profit from the care of sick and injured Australians.”

Massa said the moment presented the NSW government with a renewed opportunity to return Northern Beaches Hospital to public hands.

“We continue to place our trust in the government to act in the best interests of the community and deliver this outcome as swiftly as possible,” she said.

Health Services Union NSW secretary, Gerard Hayes, said the “sorry episode” proved there was no place for private equity in public health, and Northern Beaches Hospital must be the last such arrangement.

“This is why we have had absurd situations like the maternity ward at Northern Beaches Hospital being rented out as a film set,” Hayes said.

With Angus Thomson

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