A review of the corporate scene and an account of the manner in which Australia dealt with the problem posed by NME which had purchased a controlling interest in a local company, and by GSI which attempted to enter Australia.

Contents

Economic rationalism in Australia
Ron Williams predictions come true
Being "fit and proper" in WA
Being "fit and proper" in NSW
Closed minded behaviour
Another Multinational gets approval
Australian Corporations follow the US lead
Accreditation in Australia
The Australian Level Playing field and Columbia/HCA

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Part 4 : Columbia /HCA's Business Practices
References - (Best opened in a separate window)

[Top] - Ron Williams predictions come true:- ^{1, 6, 7, 46} The dominance of ideology over common sense and the use of closed minded strategies is well illustrated in Australia's response to National Medical Enterprises (NME).¹⁵² Ron Williams who obtained his doctorate studying the US health system analysed the forces at work in Australia. In his 1992 book, "Remission Impossible" he predicted that our politicians would find the US corporate system of health care irresistible. He was very pessimistic about the outcome indicating that care of the patient would be replaced by care of the corporation. The president of the Australian Medical Association (AMA) described his predictions as "dystopian" at the time. Williams' predictions were soon proven to be soundly based. National Medical Enterprises (NME) received approval to buy hospitals in Australia from the Foreign Investment and Review Board at a time when it was facing charges of fraud and the abuse of the basic rights of patients in Texas. This information had been given to the Australian Securities Commission and published in a major newspaper. No investigations were done. The Foreign Investment and Review Board did not investigate. Health departments granted licenses over the objections of human rights groups after sending a man going to a wedding to visit corporate hospitals and meet managers who took him on a guided tour.

[Top] - Being "fit and proper" in WA:- ⁴⁸ Australian state hospital licensing regulations, unlike those in the USA require that the owners of hospitals be of good character as defined by the term "fit and proper". By 1993 departments of health in Western Australia and NSW were in possession of damning documents describing NME's conduct. WA Health department concluded that NME posed a serious threat to our health system. They advised that a process be set up to remove licenses. The minister did not implement the recommendation which was not made public. It was released under FOI legislation nearly 2 years later.

[Top] - Being "fit and proper" in NSW:- ^{8, 9, 47, 152} It became clear that NSW Health department would not grant further licenses when NME applied to build the St. Georges hospital in Sydney. NSW Health were persuaded that they had a conflict of interest and a retired judge Mr. Yeldham was delegated to make the decision. ³⁹ Yeldham had retired in 1990 at a time when the Independent Commission Against Corruption (ICAC), a government body was investigating his sexual preference for young males. When he retired the investigation was abandoned because he was a private citizen. The same government was in power in 1993 and approved his appointment. At the time his conduct was widely known in the police force, in the legal profession and probably in business circles. The police were selling information about prominent citizens to businessmen. Yeldham granted licenses in September 1993 over the strong contrary advice of the health department. Yeldham committed suicide in 1996 when revelations at the Woods Royal Commission revealed that he had exposed himself to "improper influence". The ICAC has been asked to investigate the circumstances of his 1993 decision. (Note that the ICAC considered the matter and refused to do so)

[Top] - Closed minded behaviour:- ¹⁵² By this time NME had paid over US $ 200 million to settle fraud related allegations and a doctor had given evidence in Singapore alleging that Australian staff had attempted to buy patient referrals from him. Ron Williams predictions were now vindicated. The determination to introduce corporate medicine into Australia took precedence over common sense. Businessmen and politicians ignored the consequences of introducing NME's documented practices into Australia and both supported their expansion. Australian banks made large loans to NME. These were conditional on continuing an agreement for access to NME's business expertise and the employment of an NME executive to run the hospitals. The West Australian minister attempted to direct public hospital pathology services to NME's pathology group. The Australian Industrial Development Corporation, a federal government body went into partnership putting taxpayers money into a joint venture to buy the Greenslopes Veterans Affairs hospital in Queensland. NME's involvement was hidden by a new name. Veterans Affairs short listed this consortium, even though they were ware of NME's conduct and its involvement. At the same time NME bought in Victoria. The labour governments and the health departments in Queensland and Victoria stood firm. When there were further revelations from the USA NME sold up and left Australia.

[Top] - Another Multinational gets approval:- ⁵² FIRB immediately approved the entry of GSI, a French multinational to purchase NME's holding without undertaking any investigations. Inquiries by members of the public revealed that the company had adopted a money making "factory approach" to providing care in the United Kingdom, that an audit had revealed serious deficiencies, that the Woodley report had been highly critical, that whistle blowers had been threatened and that the deaths of several young patients were being investigated. FIRB rushed ahead and refused to confront this information.

[Top] - Australian Corporations follow the US lead:- NME's Australian holdings were finally purchased by Mayne Nickless a company with two convictions in 1994 and again in 1996 involving price fixing and fraud. Mayne Nickless immediately adopted the financially successful US corporate strategies. It switched the main thrust of its business to health care. The senior executives running the health care arm were offered massive bonuses linked to profits and not care. The company has followed the US lead in establishing fast food style corporate clinics and employing doctors to work in them. Health departments have been asked to consider whether a company with two criminal convictions and which is employing those corporate strategies which gave rise to the fraud and dysfunction in the USA can be considered to be a fit and proper organisation within the terms of the regulations. None of the health departments in Australia have confronted the issue. A report by the NSW Auditor-General is very critical of Mayne Nickless activities in the provision of health care to public patients in a contracting out agreement with the NSW government.

The revelations about the corporate culture in Mayne Nickless during their 1994 $7.7 million guilty plea are disturbing. They display the same sort of closed minded rationalisations evident in NME documents and the same sort of denial after exposure. The racket was described as "orderly marketing" and "détente". Staff who objected were met with aggression and dogmatic assertions. The company was described as "arrogant".

[Top] - Accreditation in Australia:- The Australian Council for Health Care Standards has been supplied with information about corporate conduct and the failure of the expensive accreditation processes in the USA where the accrediting bodies have been heavily criticised.¹¹⁴ It has been drawn to their attention that their accreditation processes are even less likely to act as a break on corporate activity. A satisfactory response addressing the concerns has not been received.

In the USA accreditation bodies are funded by hospitals run by companies like Columbia/HCA and Tenet/NME. They assess the outward form and structure of hospitals but not the actual care provided. Columbia/HCA like other corporations has used their success in demonstrating an ability to do well in the accreditation process in their marketing activities. This gives the impression that accreditation is a guarantee of high quality care. ⁵ The US congress is now moving to regulate accreditation bodies to ensure their independence from corporate influence.¹¹⁴

[Top] - The Australian Level Playing field and Columbia/HCA:- ^{4, 44} Columbia/HCA is moving into Australia. It is the largest and most successful of the US corporate medical giants. In May 1996 the current minister for health spoke at a meeting in Canberra organised by the AMA. He indicated his view that doctors should be allies with the corporate giants, in this case insurance companies. He used typical corporate jargon to extol the virtues of a level playing field and the rights of consumers to choose. He totally ignored the plight of the large majority of patients, those groups who were defrauded in the USA. They will be seeking care on a totally unregulated playing field where corporate might and market share dominate. The minister is in open conflict with the medical profession in regard to managed care. He is likely to welcome a corporation like Columbia/HCA into Australia. Not only has Columbia/HCA been enormously successful financially on an unregulated playing field but it has brought the medical profession to heal. What a powerful ally it appears to be.

On 21/3/97 the minister indicated his wish to further privatise the public system in Australia through contracts with private operators. Columbia/HCA has indicated its intention of pursuing such contracts. ¹¹⁶ The minister is pursuing this policy in the face of mounting evidence that corporatisation has been a failure in the USA and that contracting hospitals to corporate medicine has not been successful in South Australia, Western Australia and New South Wales. ^{118, 119, 120} The Auditor General is particularly scathing about the outcome for care and costs in NSW.

Our politicians and regulators are following the US example and putting their heads in the sand as regards the problems in corporate medicine and in driving humanitarian endeavours such as health with financial incentives and disincentives. Those who are now confronted with the problems in San Diego admit that the impact had "largely been ignored" and "Everyone hoped it would go away." ¹²² The co-chair of the council set up to sort out the problems stated "If you incentivize health care you can tip the playing field away from the 600,000 uninsured in San Diego County, a number that's rising in a growing economy. That sends a chill down my spine." ^124a A US senator referring to the complexity in regulating health stated " _ _ government agencies trying to protect the public interest are too often 'out-gunned' by corporate interests that can avoid control or scrutiny." ^124b Another senator expressed concern that what for profit firms call 'efficiency' will translate to cuts in care for indigent's. All this seems to echo Ron Williams unheeded warning to Australia and raises serious concerns about the privatisation of public hospitals in Australia. Strong public forces in the USA are forcing a response to corporate medicine. These pressures are generating a move towards government regulation and a single payer system which eliminates insurers. Instead of learning from their experiences Australia seeks to follow the failed US path. ^{100, 102, 140}

Dr. Peter Arnold, chairman of the Federal Council of the Australian Medical Association warned "The government should not assume the professions resolute adherence to ethics in the face of economic loss." and "Such competition is lethal for standards; it is not in the public interest. It is this message that the medical profession must clearly convey to patients." ¹⁵⁰

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LINKS TO MAPS
Central Map ..... Initial Map ..... USA Map ..... Australian Map ..... International Map ..... Corporate Practices Map..... (to print)

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Path
Home Page .... US Corporate Page .... Access to Columbia/HCA

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Overview 1 (1997) ... Overview 2 (2000) ...Overview 3 (2003) ... Patients ... I told you ... Licenses

Columbia/HCA submission pages
Background--The USA--Australia--Business Practices--Mayne--Conclusion--References

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Last modified October 1998 J.M. Wynne
Checked and minor formatting changes August 2003