"The tragedy of our time is that the language of reason and science has been replaced by the rhetoric of the advertising agency. The art and wisdom of leadership has become victim to the art of the international corporate con man. Principles of democracy and concern for the citizen have been subjugated to the interest of corporate "stakeholders". The discourse of an integrated, caring and supportive society has been replaced with the interest driven language of competition. In this way the whole of a rich human civilisation is reduced to a self interested and vulgar market - all in less than a decade. That the market was an integral component of our balanced society is not disputed. It has served us well. When society and its members become servants of the market then the integrated value systems, which make the market work for citizens are removed. They are considered to be obsolete."
The problem addressed:- This page describes my efforts to confront a concerted effort by government to bring in a "provider/purchaser" managed care type of market model and change our health system from a patient centred service into a competitive corporate market centred one. During this period government went to extreme lengths to introduce market listed corporate and managed care systems into Australia. In their desperation they even tried to persuade the banks to act as managed care organisations. Although this was never explicitly stated it is clear that health was to be embraced within commercial globalisation service agreements such as those proposed for GATS and the WTO. Multinationals like Columbia/HCA and Sun Healthcare were essential for the success of government strategy.
The government have strongly supported corporate providers like Columbia/HCA, Alpha and Mayne Nickless, as well as corporate insurers like AXA which were seeking to make managed care type contracts.
The fundamentals of the system which was being imposed on the country were distinguishable from the fundamentals of the US system mostly by the vehemence of government denial and their assertion that what they were proposing was different. There was abundant evidence which showed that such a policy was entirely ideologically based and was socially untenable. This was ignored. There was no public discussion or debate about these issues.
Objective:- My prime purpose was to confront this policy with evidence and argument and to discredit it. It was essential that multinationals be prevented from gaining a firm foothold in the Australian health system. Much of my effort was therefore directed towards unseating Sun Healthcare, a company with a very poor international record.
Ideology:- Government thinking is well illustrated by the model promoted by Graeme Samuel the chairman of the National Competition Council (NCC). He described this in a talk to the world bank The same thinking was spelled out by Dr. Wooldridge the new minister for health in May 1996 - but without mentioning the words share market or corporate.
What has happened to health care in the last 5 years must be seen within the context of a government, insurance industry and corporate healthcare lobby all determined to introduce this system into Australia. To economists and market thinkers this was the logical answer to a difficult social problem. The inclusion of such a large financial sector would their theories indicated have a positive impact on the marketplace and the country's economy both locally and globally. There would be opportunities for the generation of wealth. There were clearly many problems in our current health system which was badly in need of reform. Market medicine would accomplish this. Market theory understood professionalism as self serving and socially dysfunctional. The problems and the need for reform is not disputed, but the simplistic monolithic economic interpretations and solutions are. The economists view was expressed by Dr. Wooldridge.
The basis for trade practices law is summed up by a quotation from Adam Smith: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices". Is health different? Should it be set apart? Adam Smith, quoted by Dr. Wooldridge in 1996
Opposition:- The economists approach has been vigorously opposed by groups whose orientation is humanitarian, social or community - those actually providing health and aged care. This includes the medical profession, the nurses, a number of socially conscious community bodies and a few individuals. To them the adverse outcomes which would result from these policies are only too obvious - but they cannot be argued within economic frameworks. The economists see these arguments as contrived and the discontent as self interest or fear of change - a set of rationalisations built into market theory as was so clearly demonstrated by Dr. Wooldridge's quotation.
These groups have been unimpressed by the economic logic of the proposals. They have been acutely aware of what has happened in the USA where the same arguments and a similar system have prevailed at considerable economic and social cost. They have used this material to show how the market fails when it is applied to contexts where the necessary conditions for a functioning market do not exist.
There is a rapidly growing volume of evidence to support the critics position, and show that adverse social and individual outcomes outweigh any economic advantages. At the same time it is clear that a marketplace system has not produced the promised economic benefits, nor has it produced the stability and flexibility required to meet the complex and varied needs of individuals and communities. So called economies of size have generated rigid formula's and economic levers which are incapable of addressing the nuances and complexities of individual societies nor the cultural differences between societies.
Has the battle been won?:- The government has had only limited success in introducing its policies. In September 2001 Dr. Wooldridge abandoned his political ambitions and announced his retirement from politics. Whether this will bring with it a more balanced health policy or whether a new or the same government will find a more aggressive and determined economic rationalist to replace him remains to be seen. Nations across the world are following these policies and the global pressures on Australia to try again are very strong.
Addressing fundamentals:- The medical profession has demonised managed care and labeled the minister's policies "managed care" which is only partly correct. I played a relatively low key role in attacking the catch phrase "managed care" maintaining that it was simply a particularly dysfunctional market system. I supplied large amounts of managed care material but kept the thrust of my arguments to the more fundamental problem created by the share market and marketplace competition. I felt that if we were to develop new and better ways of providing care then attention should not be diverted from fundamentals. Most of this material was sent by email.
Processing the issues:- By May 1997 I was in possession of a large amount of information about Tenet/NME, Columbia/HCA, Aetna, Kaiser and other groups. My email since then has been filled with much more new material about aged care, managed care and a variety of corporate excesses than I could handle. The evidence against corporatised health and aged care was overwhelming.
My past actions had been validated by massive criminal convictions and fraud investigations involving the companies I had objected to in Australia. The same thing was soon happening to Sun Healthcare. In the past I had addressed individual corporations and used them to develop concepts which explained the marketplace. I now adopted a much broader strategy arguing the issues surrounding market care using these concepts while addressing specific alleged misconduct and Sun Healthcare within that context. Only occasionally did I broaden the argument to include other humanitarian services and broader social issues as in the quote at the top of this page.
I had a collection of email addresses for federal politicians and a number of other responsible groups. Over the 4 years covered by this web page I flooded their email boxes with documents, with summaries and with arguments against corporatisation. I also wrote many letters canvassing the issues and making the case against corporate care. A selection of these can be read from links on this page. I have been only one voice among many. There is no means of knowing what impact if any I have had individually and I am not claiming that I have had much. It is simply a record of endeavour.
This page describes some of my efforts during
this period but particularly those relating to Sun Healthcare. Many
of the letters I wrote make the arguments in more detail. This page
provides links to the text of a selection of the letters and some of
the responses.
Sun Healthcare entered Australia in 1997. I had previously been involved in attempts to remove or block the entry of Tenet/NME (1991-96), Generale de Sante Internationale (1996), Parkway Holdings (1996), and Columbia/HCA (1997) in Australia. I had also been concerned about Mayne Nickless. I had lodged objections and written extensively to the Foreign Investment and Review Board (FIRB), politicians, state regulatory authorities and professional bodies about these companies.
During this period and subsequent to Columbia/HCA's withdrawal from Australia I continued to use this material and the continuing revelations of Columbia/HCA's practices to press the issues against the corporatisation of health care. I had argued against the use of market forces and economic competition to drive the health care process.
During most of this earlier period documentation was photocopied and mailed, a costly and cumbersome process.
The entry of Sun Healthcare in May 1997 followed on these previous matters. This page takes up the story at this point and deals primarily with my efforts to block Sun's admission, control Sun's expansion, limit the introduction of its dysfunctional cost cutting management practices and eventually force it out of Australia.
By this time the volume of material arriving
by email had become almost unmanageable. Even after careful selection
I had large volumes. Fortunately with email I was able to circulate a
larger amount of material to a larger number of people. At the same
time I was restricted to those politicians and bodies whose email
addresses I possessed. Many state and other bodies did not disclose
their email addresses. The events described on this page were
accompanied by a steady stream of email documentation to a targeted
group of individuals and organisations.
The form of dissenting material:- There are two strategies in dealing with politicians and government departments. The first is to present them with precise summaries of key concerns and not to flood them as this turns them off. This is what politicians like but they are busy and single short submissions are not easily verifiable, are easily discredited by ideologists, and are only too readily archived and forgotten. This is particularly when, as in the case of health care your submission challenges accepted government ideology and you are vulnerable to labeling strategies.
I adopted the opposite strategy and deliberately flooded politicians with far more detailed material than they could handle or would read. I was aware that most would go straight to the trash can. I relied on the clear impact of the headings and the volume itself to drive the message home. Introductory remarks regularly reminded them of the issues and my arguments were repeatedly confirmed - this I pointed out whenever I could. It was a battle about credibility. I was attacking corporate credibility and boosting mine. The documents I supplied were the tools. To keep the pot boiling I attempted to send out emails every 1-2 months.
In most instances I put the key messages in a short paragraph or item list at the top of the email. I followed this with my assessments and comments and then with a short summary or set of abstracts from each article sent. The full documents were attached with an invitation for staff to verify the accuracy of my assessment. The matters were topical and of vital interest to their electorates. Although some remonstrated very few asked for their names to be removed from my list. They risked being accused of disinterest in matters, which were of serious import for Australia and for every member's electorate. My prime concern was that no one should be able to claim later that they were not fully informed or told of the likely consequences of their policies.
Meeting an establishment response:- A challenged establishment destroys the dissenter by discrediting them and their ideas picking on any weakness. I was particularly vulnerable because of my personal involvement and my conflict with Tenet/NME. I had been fobbed off before. I had been accused of lacking objectivity or promoting conspiracy theories on a number of occasions. By this time the accuracy of my assessments of Tenet/NME and Columbia/HCA was established and the material I was providing was overwhelming. None of the concerns based on suggestive associative evidence (e.g. Yeldham's 1993 decision for Tenet/NME) which involved politicians and the judiciary and which were labeled as "conspiracy theories" had been investigated.
Playing a role:- I was not of course taking the role of an objective arbiter. By now I was convinced of the validity of my position. I was marshaling the evidence against corporate health care and making the arguments as forcefully as I could. I was acting for the many thousands of citizens who would not read all the material in my possession or understand many of the intricacies and problems in providing care. It was not my role to argue for corporate interests. They already had the ear of politicians and the credibility given by size, wealth and ready access to the media.
Soliciting a response before presenting evidence:- In dealing with government departments I find it useful to get them to state their position and likely justifications in response to a preliminary inquiry before lodging material and a formal complaint. It can be useful to withhold material, choosing the right time to disclose it. This gives you a considerable advantage. You can often discredit their position and justifications with your evidence - putting them on the defensive. If you submit the material first they are given the opportunity to develop a position and a set of rationalisations to justify discounting your evidence.
Defensive departmental staff don't always
fall for this and many departments adopt a strategy of not responding
at all. You may need powerful allies or else some cunning to create
an embarrassing situation to force a response. Departments can be
extremely understanding and helpful and one should not try to play
games with them. One should be aware that this will often not be the
case and be prepared to deal with the situation. Being paranoid does
not help, but putting a nonresponsive department in an embarrassing
position by placing an adverse interpretation on their behaviour may
do.
Corporations will seize every opportunity to
silence dissent by commencing litigation which is pressed but never
prosecuted. They will use documents out of context. I therefore
adopted the strategy of including my reasons for making the material
and arguments available, my defense and repeating much of the
supporting documentation within the original material. While this
made the material bulky and cumbersome to read I could make it more
widely available more safely. This constraint is reflected in some of
the material on this web site.
In 1995 I was looking for information about Tenet/NME's performance in the UK. I corresponded with unions in Europe. They had recently investigated a number of US health care corporations expanding into the UK. They were far more concerned about the way Sun Healthcare operated than about Tenet/NME. They had supplied me with a summary of their findings which included information about the federal fraud investigation, the disturbing behaviour of some directors, the massive salaries they received and a survey that had documented poor standards in Sun's facilities.
When Sun Healthcare's plans to enter Australia were announced in May 1997 I did not have any contacts in the nursing home industry and found it very difficult to get information about the fraud or about the care provided in their nursing homes. I was limited to the dated UK material, and to the matters which Sun was forced to disclose to the US Securities and Exchange Commission (SEC). These are published on the Edgar web site. There was limited material about the 1994 federal inquiry into aged care available on government web sites. This did not name offenders.
I was aided by a stroke of luck. Because of
these web pages I am frequently contacted and have brief periods of
correspondence with people who appear from the mists of the Internet
because they know of corporate misconduct, have been mishandled or
believe that they have fallen foul of one of the corporations. I was
extremely fortunate that soon after Sun's announcement one of these
contacts indicated that they could get me copies of court documents.
I supplied this person with the forced disclosures made by Sun
Healthcare to the SEC and within a month I was in possession of the
court numbers and a month later with a representative
number
of court documents. These quoted
extensively from the company's own documents and disclosures as well
as from evidence given to government investigators by company staff
who spoke out about the alleged fraud. Many of the concerns about the
company were described. The large
number of allegations were disturbing
and were given added weight in that Sun had settled a number of
consolidated actions for US $24 million.
The context:- Sun's planned entry into Australia was documented in the media at the beginning of May 1997 and I first became aware of this on about 20 May 1997. I doubt that either Columbia/HCA or Sun Healthcare would have entered Australia without carefully exploring the political climate and if possible meeting with ministers. It is plausible conjecture that Columbia/HCA and Sun Healthcare, the Pacmen of health and aged care respectively would have met with and sought the approval of federal and state ministers at about the same time in late 1996. It is clear that they would have been given red carpet treatment by the government and people like Wooldridge and Samuel.
It is even possible that state and federal politicians had been selling the Australian health system to multinationals, much as was done for other markets - for example at the Olympic games where large sums and facilities were set aside for politicians to entertain visiting businessmen. It is clear that company officials had the ear of government and government departments. Both Tenet/NME and Sun international executives were able to fly to Australia, meet with officials and offer explanations in person to smooth things over when faced by complaints. This was a privilege not accorded the Australian citizens who were their critics.
During 1996 the NSW company Alpha Healthcare adopted the same model of diversification, integration and expansion which had made Sun and Columbia/HCA so successful. The government were energetically pursuing their planned market reform policies in health care. These ideas would have been music to their ears. One speculates whether federal or state governments had gone head hunting for corporations to operate in the health and aged care markets they were creating - identifying and liaising with local operators and offering these multinational megacorps support and even inducements. This is the sort of conduct which Ron Williams predicted in 1992.
It is certainly common political practice for politicians to go touting for multinational businesses. Our state premiers act as roving ambassadors offering financial inducements to bring corporations to their states. They boast of their success in inducing multinational (e.g.. Virgin Airlines) to set up in their states. This makes it very difficult for them to police the conduct of these corporations and prosecute them if they subsequently transgress. Instead they have bent the rules and prevented departments from enforcing the clauses of contracts (e.g. coal mining corporations in Queensland) in order to propitiate these groups and prevent them from taking their investment elsewhere.
Conspiracy theory:- The support given by Australian governments to the health care multinationals in the face of overwhelming evidence of widespread misconduct should be seen in this context. It should also be seen in the context of developing marketplace globalisation. Economic think tanks in which our politicians have participated were pressing for the global liberalisation (i.e. removal of regulations and opening of markets) of all areas of government and community activity. Globalisation policies were evolving behind closed doors and Australia was positioning itself as an active participant and supporter.
During 1996 the government had imposed a market based health system on a resistant medical profession and had aroused public ire by the marketplace "reform" of aged care. There were few Australian corporations with the necessary resources to provide the competitive private market based care the government wanted, or the power to take on the medical profession, the nursing unions, and disenchanted sections of the community. Columbia/HCA and Sun Healthcare would have promised them the sort of market based competitive health care reform which their economic beliefs indicated was required. These companies had the resources as well as experience in stamping their authority on dissenting groups.
I believe that we have no choice but to consider the possibility that our politicians went out and induced highly undesirable and even criminal organisations to come to Australia, and knowingly disregarded or at least conveniently turned a blind eye to readily available information indicating quite clearly the sort of people they were dealing with. I certainly had this possibility in mind when I attempted to block Columbia/HCA and Sun Healthcare. If this is conspiracy theory then a little conspiracy theory is healthy for Australia at this time.
It is obvious that this is exactly what those
Australian businessmen who brought Columbia/HCA and Sun Healthcare
into Australia did. They had a primary responsibility to maximise
profits for shareholders and their lack of interest in the sort of
people they were inviting to the feast or the consequences for sick
citizens is understandable. Politicians have a prime responsibility
to citizens. They have been elected to act for citizens and protect
them. What is so worrying is the possibility that they behaved in
this way.
When I learned of Sun's entry I immediately included a brief paragraph outlining concerns about Sun in a letter I was writing to FIRB dated 22 May 1997 and faxed it to FIRB. I was reminding them of past problems in their approvals and warning that other groups with similar dysfunctional track records were eyeing Australia. After the experiences of Tenet/NME and Columbia/HCA it was most unlikely that any health care corporation would publicise their entry before they had secured FIRB approval and I was getting in first.
On the 23 May I posted a letter with the material already in my possession. Both these letters pointed out critical problems in the provision of care primarily for profit. I wrote to the minister for Health in NSW where Alpha operated on 26 May and enclosed copies. A month later I had tracked down 10 court cases in the New Mexico Federal Court but did not have copies. On 22 June I wrote urging the FIRB to obtain copies. It seems that Sun did not disclose these matters to FIRB voluntarily, nor that it was the subject of a criminal investigation.
At this time there was strong pressure to introduce managed care into Southern states. I was concerned that a US multinational would be brought in and on 27 June I wrote to FIRB again opposing managed care and supplying information and documentary support from the USA. I pointed out than Sun had managed care subsidiaries. I prepared two papers outlining the conduct of Australian companies and of corporate companies which had threatened Australia in the recent past. I argued against corporatised care. I made collections of documents. I wrote to ministers of health and the heads of departments in all states about Sun, Kaiser, and Vista. I enclosed a selection of documents relating to each. I asked that these be considered in assessing applications for hospital licenses. I wrote to politicians.
A common response to warnings was that we were different and these things could not happen here. I prepared a critical review of Columbia/HCA's recently exposed practices and then cited a number of examples where very similar conduct was documented in the Australian marketplace.
On 21 July I supplied further information to FIRB about additional FBI raids on 35 Columbia/HCA facilities and additional information about Kaiser. I indicated that I would soon have Sun court documents. I appended a US press release showing that the US department of justice had terminated its criminal investigation of Sun Healthcare but a civil investigation was ongoing. I urged caution in accepting this as exoneration.
On 29 July I faxed FIRB that I had the court documents and that these allege conduct very similar to that of the other large problem corporations. The next day I posted an outline of the matters revealed by the court documents. I lodged an objection to hospital licenses with New South Wales. On the 2 August I sent the court documents with a covering letter detailing the failures in our system in regard to Tenet/NME and Columbia/HCA and analysing the behaviour of politicians. I stressed the importance of the FIRB process. I wrote again pressing the issues on 16 August. I wrote a criticism of the way politicians ignored evidence and looked the other way when ideology was challenged.
During this period I wrote to a senator who took the matter up with the minister for health. The FIRB had also written to the minister's department twice asking for input. The response on each occasion was very similar. The minister and the department denied jurisdiction on the basis that hospitals were a state responsibility - even though Sun was purchasing laboratories and planned to enter aged care, both licensed by the ministers department.
I learned that a decision had been made and
wrote on 14
September asking that I be notified
and also supplied with the information, which exonerated Sun of the
accusations.
I received a faxed letter from FIRB dated 22 September thanking me for my assistance and advising me that the Assistant Treasurer and not FIRB had made the decision to allow Sun's entry. This was on the basis that Sun's proposal did not raise "issues of sufficient concern that would warrant its rejection as being considered contrary to the national interest". In this letter and subsequent correspondence FIRB were at pains to stress that they were only an advisory body and the decision was made by the deputy treasurer. They were subsequently very generous in disclosing information under Freedom of Information. Much of their final advice to the treasury was obliterated from the material released to me but it is clear that they made a concise recommendation. My gut feeling is that the minister disregarded the FIRB's recommendation but I have no specific grounds for this impression. I lodged a request for the release of documents under FOI on the same day. In a subsequent letter dated 24 September justifying my request I pressed the points and the important issues at stake. At the same time I wrote to NSW and reaffirmed my objection to licenses for Alpha Healthcare setting out the concerns about probity.
I made a collection of material on corporate
medicine and wrote
a review warning of the likely
consequences for Australia. I attached this as an appendix and sent
it to the chairman of a number of hospitals including those owned by
Alpha early in October
1997. In November I wrote to the
Australian Council on Healthcare Standards, which accredits
Australian hospitals warning them about US multinationals including
Sun Healthcare and enclosing US reports describing US health
corporate misdeeds.
I have little doubt that Mr. Tan would have realised that I had made the objections. His hospital in Singapore had lodged a SLAPP defamation action against me in 1995. I had written to him at the time and we had spoken on the phone. On 14 November 1997 I received a letter from FIRB indicating that other parties wanted to know the identity of the person making the request. On 17 Nov. 1997 I refused their request explaining the risks of a punitive SLAPP court action, and asking that they identify themselves if they wanted me to consider the request again. In a separate letter the same day I enclosed articles describing the recent enthusiasm in the USA for international expansion. I related this to the intense pressure on US corporations by the FBI's fraud crackdown "Operation Restore Trust" and the backlash against managed care. I urged extreme caution in assessing any new applications.
On 12 December I received faxed notification of an FOI request seeking disclosure of the correspondence regarding my FOI request. This was clearly another attempt to identify me and I responded accordingly on 26 December explaining my reasons, enclosing additional documents, complaining about corporate confidentiality when the interests of the community are at stake and criticising a number of other matters.
I received a further request for the same documents on 31 Dec 1997 and reaffirmed my objection on 9 January 1998. I also thanked Mr. Hinton for his personal interest and attention to the matter.
I received the FOI documents from FIRB on 11 December 1997. Some documents were delayed because they were consulting with the other parties who were being given an opportunity to appeal before releasing them.
These documents revealed that the Federal
Police had been asked to investigate but their findings were not
released. New South Wales, the state where Sun would operate had
objected to Sun's entry but was overruled. The Health Department and
Dr. Wooldridge had both been asked for comment and both had declined
on the basis that the purchase and licensing of hospitals was a state
matter and they had no jurisdiction. A recommendation had been made
by FIRB but it was deleted from the documents released.
To keep the pot boiling I wrote to NSW and other state health departments again on 9 Jan 1998 objecting to licenses for the Moran/Sun facilities. The FOI documents had revealed that Sun had purchased 51% control of 7 Moran hospitals in a separate deal.
I made a collection of press reports, material about Sun Healthcare from the USA and copies of FOI documents which showed the manner in which Sun had been brought into Australia over an objection by NSW. I made a summary with critical comments. I also wrote an attack on Sun Healthcare and the politicians who had brought it into Australia. For legal reasons these were long documents which included my defense. I wrote a 2 page overview referring to the other material and used this more widely. I used these to attack what was happening and the FIRB outcome. Later in the year I put them on to this web site.
During 1997 and 1998 government were attempting to introduce managed care into Australia using Mayne Nickless, the French Insurance Giant AXA, and even the banks. The AMA was resisting and urging doctors not to enter into contracts. At the same time Queensland was revising its hospital licensing regulations. Sun Healthcare was only one of the problems. I wrote to doctors in targeted hospitals, to medical groups, and to ministers and health departments supplying information about these groups and the US system. I urged a strengthening of our regulations.
I had sent reviews and large numbers of documents to AMA offices. I wrote a note to doctors and hospitals telling them of this material. I corresponded with independent senators in the Australian parliament, with opposition politicians, with aged care organisations and with consumer groups. I sent them copies of documents. I sent a full set of documents to a few members of each major party and sent others short outlines referring them to this material. I tried to get press and television coverage of the issues without success.
I had sent large amounts of information to Queensland Health Department and was asked to meet with them. In a letter on 1 Feb 1998 I accepted and set out many of the matters of concern in my letter.
It was clearly important to put pressure on the federal minister for health in regard to the government and his own conduct in dealing with the FIRB process - also to increase surveillance on Sun and prevent its expansion into aged care. On 11 January 1998 I sent very similar letters to the department in the Health Insurance Commission licensing the pathology laboratories purchased by Sun and to the aged care licensing section of the Department of Health and Family Services. I objected to licenses for laboratories and nursing homes. Both were within the brief of the federal health minister and he had ignored this in his reply to FIRB.
Neither replied and a month later I sent letters by registered mail asking for confirmation that the material had been received. On 3 March the manager of the pathology section of the Health Insurance Commission (HIC) acknowledged the documents which had been sent to their "Professional Review Division which is responsible for investigations by the HIC". He confirmed that Alpha had licenses to operate laboratories.
In February 1998 the FIRB FOI process released a letter from Alpha to FIRB dated 5 August 1997. This was a remarkable letter in which Alpha praised Sun's expertise and indicated the benefits, which Sun would bring to Australia. They clearly indicated their intention to use this expertise and also to exploit Sun's experience in aged care. They promoted Sun's expertise in subacute care and the need for this in Australia. In December 1997 Wooldridge had announced his plan to revolutionise aged care by using step down hospitals, a Sun specialty. I wrote a criticism of Alpha's letter and used it to attack Wooldridge's conduct. I wrote again to the federal nursing home licensing authority on 22 February 1998. The letter was not acknowledged.
During this time I wrote to state parliamentarians and state licensing departments again sending documents. In 1993 and 1995 I had taken up the issue of deficiencies in FIRB regulations. I collected documents about all of the health care companies which had come to Australia describing how they entered Australia despite serious problems in the way they operated. I made copies of the previous correspondence. I wrote again to the Senate Community Affairs Reference Committee on 3 March 1998 reminding them of previous correspondence. I suggested that the government had deliberately used a loophole to which I had drawn their members attention to bring Sun into Australia. I wrote a criticism of the FIRB process and attached to it the letters I had written in 1993 and 1995 urging attention to serious deficiencies in FIRB and state regulations. I wrote to FIRB on 2 March 1998 thanking them for their courtesy and drawing attention to the conduct revealed in their FOI documents and the problems their decision caused in Australia.
I also gathered together my spare hard copies
of material about Tenet/NME, Columbia/HCA, Kaiser and Sun sending a
set to a member of each party likely to be interested. I advised
others that they possessed these documents. At this time the minister
was putting a special bill through parliament to make Mayne Nickless'
proposed managed care contracts with doctors legal. I wrote to
members about this and addressed the issues surrounding Mayne
Nickless and also the ministers past conduct, particularly with FIRB
and Sun Healthcare.
I was out of the country for several months in 1998 but continued to pick up email, sort material and pass it to those who needed this information. When I returned in July 1998 I put a large selection of the documents which had accumulated on to floppy discs and sent them to state health ministers, shadow ministers, health departments and the Australian Council on Healthcare Standards among others. I included brief summaries of the material.
There was much talk about health care rationing and I had responded to an editorial in the Medical Journal of Australia making points about the danger that care might be rationed to generate profit. This was published in June 1998.
On 5 August 1998 I wrote registered letters to the pathology and nursing home licensing agencies again pointing out that they had had 7 months to address the issues and the aged care agency had not yet acknowledged my letter and the documents. I wrote a few days later when the US Department put its civil investigation of Sun on hold and asked them not to accept this at its face value but to find out details.
After Mayne Nickless' Barry Catchlove was made chairman of the HIC by Dr. Wooldridge I wrote to them again supplying more information about Sun and also information about Mayne Nickless past criminal convictions urging staff to resist corporate pressures. On 13 August I received a reply from the HIC pathology division noting that I had not received any feedback from their PRD committee and promising to follow this up. I wrote again on 10 September giving information about Sun's deteriorating financial position and about court settlements. The pathology section of the HIC replied on 12 October indicating that it had gone to their Professional Review division (PRD) and they had been asked to respond to me. Aged care ignored it.
When I learned that Alpha had won the contract to build the Mildura Hospital in Victoria I wrote again to the hospital licensing body in Victoria on 19 September 1998 reminding them of my previous correspondence with them about Tenet/NME and Columbia/HCA as well as about Sun Healthcare and my objection to licenses. I enclosed copies of material and a floppy disk containing a large number of documents including those about Sun Healthcare. None of the material about Sun Healthcare had been acknowledged.
I had corresponded amicably with the Minister
for Health in Victoria. He was obviously genuinely committed to
market reforms and wrote at some length to me justifying what they
were doing. He believed that the sort of practices which I was
describing would be controlled by the contracts he was negotiating
and that he could enforce them. I did not believe that the contracts
were any more enforceable than the laws and regulations which were so
ineffective in the USA. My assessment of the marketplace was that
even if the most extreme practices were controlled this would be
little more than window dressing. They would have no impact on the
development of a dysfunctional ethos and culture in market listed
corporations. This was clear from the US experience.
I did not know about the June 1997 federal investigation and hearing into the misuse and neglect of nursing home residents in homes operated by for profit chains in California. Following this investigation the aged care crisis in the USA had mushroomed. Similar problems of neglect, and elder abuse in nursing homes had emerged in other states. Vast numbers had suffered needlessly and died prematurely as a consequence. Citizens groups and nursing unions had become far more active and more determined to expose what had been happening. Sun Healthcare was at the centre of the problems in California, Massachusetts and Connecticut. I did not know all this.
A 1993 investigation in Western Australia had found that Victoria was the only state whose regulations governing hospital licenses gave the department the powers needed to deal with multinationals. When I learned that Alpha Healthcare had been chosen to build and run the Mildura Public Hospital I renewed my efforts to find contacts in the USA. By now it was much easier to find them as many citizens were very angry. I was soon linked to individuals and groups who were pursuing these issues politically, industrially, in the media and through the courts in the USA.
Like so many American's these people were extremely generous of their time and their material. I was flooded with vast amounts of information, not only about Sun Healthcare but about all of the other large corporate groups. I received copies of several television programs as well as footage from hidden video cameras placed in nursing homes to document what was happening. Apart from the press reports I received transcripts of evidence from inquiries and copies of court documents. I received a steady stream of information about every development within days of its occurrence and sometimes before. This continued until Ramsay Healthcare took over Alpha in May/June 2001 when I asked them to stop sending.
This material was particularly revealing of corporate practices and their consequences. This material formed the basis of the analysis of aged care in the USA in these web pages. It enabled me to analyse multiple companies and show that the problems were a consequence of the share market and competition. References to and quotes from this material are given in these web pages. I was now able to mount a strong attack on Sun Healthcare based on the standards of care in its US facilities.
Groups in Canada were monitoring the health system in the USA and were alarmed at attempts to corporatise their Medicare system. They responded to my web site and I soon started receiving a selection of their material. This embraced health care corporations including Columbia/HCA, managed care and also the fight for a patient's bill of rights to protect citizens from being misused by managed care corporations.
I was able to select from all this material
and send a batch to politicians and to a number of other groups by
email on a regular basis during this period. This supplemented the
material about Sun Healthcare and was used to show that Sun was
simply representative of the consequences of the sort of system that
was being imposed on Australia. The material was conclusive and no
prominent politician could now claim that they did not know or were
not warned.
I printed out and copied a collection of the new documents related to Sun's activities. I wrote to the federal aged care and pathology licensing agencies again on 17 October 1998 advising them about the closure of substandard facilities and of a ban on new operations in California. I gave information about court actions and Qui Tam actions taken on behalf of government. I was sending everything by registered mail. The labour opposition in Victoria was opposed to the privatisation of public hospitals and they were among those supplied with information. They made their own inquiries. They took up the matter in state parliament and there was intense opposition from sections of the community in Mildura.
I had sent copies of some if not all my letters to the department and to the Kennett government's Minister for Health. I had little hope that the Victorian Department of Health under Kennett would address the issue of probity and this was reinforced by their failure to acknowledge correspondence - very different to the responses about Tenet/NME in 1994. I nevertheless sent them a letter on 18 October 1998 setting out the issues and enclosing the new material. I did so again on 3 November with a copy directly to the minister.
I was anxious to limit any further expansion of Sun in Australia and wrote to FIRB again on 30 Oct 1998 enclosing documents. I wrote to the federal aged care licensing and HIC licensing sections again on 2 November enclosing more material and a copy of the videotape from the USA. The Pathology section again acknowledged the material. I wrote to a senior federal member with an interest in and responsibility for health care of each of the major parties enclosing material. I wrote to state ministers, health departments, and shadow ministers as well as professional, consumer and aged care groups enclosing material for them to assess. I sent more material to the department in Victoria. I wrote directly to the Professional Review Division (PRD) of the HIC to which all my material had been referred on 6 November.
The labour opposition in Victoria had been citing the fraud investigation in Connecticut, instances of poor care and the actions of regulators in regard to Sun's facilities in the Victorian parliament. The government were forced into setting up a formal probity review on 11 November. I sat on the phone trying to trace my complaint until I reached the secretary of the body doing the probity check. She was courteous and receptive to information. They did not have the material I had sent. It was eventually found pigeon holed in another department. I now had an email address. All material I received relating to Sun's activities was promptly sent on to the committee evaluating Sun's probity.
Faced by an adverse probity check Sun and
Alpha withdrew from Victoria abandoning the contract awarded for the
Mildura hospital on 23 December 1998. They blamed everyone except
themselves.
I believe that what happened in Victoria was the turning point which spelled the end of Sun's Australian venture but as in the case of Tenet/NME this would take a long time to work itself out. No one wanted to disrupt the building of the new Westmead hospital which was badly needed. However from here on it was steadily downhill until the takeover by Ramsay in June 2001 - soon after the Westmead Hospital started admitting its first patients.
What had happened in Victoria put other licensing authorities in Australia in a defensive position. As Victoria had shown probity is not an attribute localised by state or national boundaries. In January I collected a large amount of material about Sun and other US corporations on to floppy discs. On 7 January 199 I sent this to nursing home and pathology licensing authorities describing what had happened in Victoria and urging them to take up and complete the investigation. I also wrote similar letters to state licensing authorities, to aged care associations and to FIRB. The covering letter was an analysis of the developments in Victoria and an objection to Sun's presence in Australia.
The aged care department's failure to respond or to acknowledge correspondence and material relating to Sun healthcare for more than a year was now embarrassing for them and I needed to force a response from them. I had previously taken up the question of aged care with the Minister of Health in Queensland and she had asked the federal minister for aged care to address my concerns. I had not sent material to Wooldridge as the AMA had earlier undertaken to pass my material to him and take up the issues with him. I had sent material to members of Wooldridge's health committees instead. This made it easier to criticise him - while knowing that he would be kept informed of the issues I was raising from both sources. I now wrote to both the ministers for health and aged care about their department's failure to respond. I wrote to the president of the Australian Medical Association (AMA) and asked him to take up the matter with the minister on my behalf and he agreed. Senator Bob Brown, leader of the Greens had offered to put questions in writing to government ministers on my behalf and I dealt with his staff in writing these - although they were not submitted until very much later and so had little impact.
By late late January 1999 I had copies of some of the material being used by the Connecticut Authorities to prosecute Sun Healthcare. I had also received and summarised the common features of a number of typical court actions taken against Sun Healthcare by patients in California. Instead of sending this material to the federal aged care licensing department again I wrote to the minister for aged care on 13 January asking her to whom I should send the material in the light of past experience of the department. I was forcing a response.
I wrote to FIRB on 19 January about the court cases by patients and the documents I possessed from the Connecticut fraud inquiry which I knew was soon to be settled. I sent a short summary of the patient cases but I did not send them the original documents indicating that I would send them if they were doing anything about Sun Healthcare's presence in Australia. At the time the Productivity Commission was examining aged care. In my letter I pointed out the human problems of basing a health service on corporate productivity and efficiency. I also wrote to the aged care nursing home licensing division on 20th January indicating that I had the both patient care and Connecticut court documents. I sent my summary but withheld the originals that they would need. If they failed to ask me for the documents they would compromise their position further. I made a number of points about the human aspects of care which are compromised in the corporate environment. I sent a version of this letter to the pathology licensing authority at the HIC. I wrote along the same lines to aged care groups and to state licensing authorities with copies to ministers. With the exception of NSW all state health departments promptly acknowledged documents, often with thanks.
Letters to FIRB on 4 February 1999 and 19 February 1999 warned that Aetna, the giant US managed care group was exploring opportunities in Southern states and also responded to newspaper reports suggesting that Mayne Nickless was a takeover target and Columbia/HCA a purchaser. John Ralston Saul had spoken critically in Australia about aspects of globalisation. I was also in possession of a tape recording he had given in Canada critical of the corporatisation of health care. I commented on these talks and made copies of the tape available to interested people. I sent a copy of the tape to a key member of each of the major federal political parties. They were opportunities to press the issues in a broader context and provide updated information.
On 24 February I received a response assuring me that "FIRB would welcome input (about Columbia/HCA) from you which addresses the question of the national interest" if Columbia/HCA proposed a takeover. I responded on 9 March pointing out that US health care multinationals would no longer telegraph their arrival and asking how I might find out which corporations were entering Australia. I made the point by asking whether Quest Diagnostics had applied to FIRB and asked about its involvement in operation labscam. Corning was one of the US companies heavily fined for laboratory fraud. It then spun off these laboratory operations as Quest Diagnostics. Quest purchased SmithKline Beecham's (also paid a US $325 million labscam fine) laboratory division and so came to own clinical laboratories in Australia. I criticised the FIRB process and used Sun Healthcare as an example. I included reports describing the fraud settlement in Connecticut and asked FIRB to take steps to restrict Sun and get it out of Australia. I did not receive a reply to my questions.
Sun and the Connecticut attorney general had reached a US $8.4 million settlement of the fraud investigation without Sun admitting guilt. Sun claimed that the settlement was for only a fraction of this and denied guilt. The attorney general was scathing about their conduct and described it as an open and shut case. I possessed the state government auditor's reports. I made these reports available to state licensing authorities and to aged care groups on 12 March. In the letter to aged care groups I outlined the critical importance of Australian probity requirements and my suspicions that they had been removed during the 1996 "reforms". It was 15 months since I had first written to the laboratory licensing section of the HIC. I had not had the promised feedback. My letter to them on 17 March was therefore very pointed about corporate influence on them.
On 16th March 1999 I notified FIRB of reports that Sun Healthcare planned to take a larger stake in Alpha, a stake which would give it a majority of the shares. I reminded them of the scathing comments made by the Connecticut attorney general.
On 2 March 1999 I received a response from the Minister for Aged Care's chief of staff. It was a response to my letter dated 10 November 1998 to the Queensland Minister of Health - which she had forwarded to the federal minister for attention on 3 December 1998. There was no mention of the other two letters to the minister. The letter from the federal chief of staff assured me that groups in which Sun was involved were not licensed to run aged care facilities in Australia. The information I had provided would be assessed if they applied. It made much of the government's "Aged Care Reform Package" of July 1996 and the heavy reliance placed on accreditation practices. There was no mention of probity requirements in the letter.
I responded on 9 March 1999 by referring to my other letters to the minister and asking for an assurance that issues of probity were still an important component in the assessment. I asked whether the material referred to was that sent to the minister or the large volume I had supplied to her licensing division. I asked to whom I should send material. I went on to describe the failure of accreditation and similar practices in the USA and the reasons for this. I wrote to the federal shadow minister for aged care and members of the minor parties on 16 March about my concerns that the probity requirement had been removed from federal regulations. I enclosed a relevant article from the Medical Journal of Australia.
An aged care group had suggested that I ask the Australian Federal Police to investigate Sun's conduct as this was an international matter. I was not convinced that they had been of any use in 1997 when they had been asked by FIRB to investigate. I wrote to them on 14 March and again on 12 April sending material about Sun. They replied that their responsibility was the investigation of offenses against Commonwealth criminal laws and these matters were outside their responsibility. They advised me to contact state authorities or FIRB. One wonders why they were involved by FIRB in 1997! I was clearly getting the run around.
The Northern Territory (NT) had contracted with a private agency to develop a blueprint for health care and the premier started promoting it. A review of this by academics from Sydney University was very critical of the plan and it was subsequently abandoned. During this dispute I phoned the NT Health Department and had a long discussion with someone with whom I had had amicable dealings in the West Australian Health Department during the Tenet/NME years. I learned that the original plan had been changed. I subsequently sent material and a letter on 12 April 1999 challenging some of his market prescriptions particularly his understanding of Case Mix funding.
On 16 April 1999 I wrote to FIRB about the acquisition of Smith Kline Beecham's Diagnostic laboratories by Quest Diagnostics. This included facilities in southern states in Australia. Dow Corning and Smith Kline Beecham (US $325 million fine) were two of the prime targets of the US operation labscam. After settling these charges Dow Corning spun off their several laboratory facilities, involved in this fraud as a new company "Quest Diagnostics". I supplied FIRB with documentary evidence relating to these matters. I sent a similar letter and the same material to the HIC's pathology division.
Also on 12 April I wrote to aged care groups, state health departments, federal hospital licensing departments and the Australian Council on Healthcare Standards. I told them that Sun was in a position to assume a controlling interest in Alpha and that Sun was in trouble in the USA. Its shares had fallen 95% from US $20 to US $1 and it had fired thousands of staff. There was concern about the consequences for patients. I expressed concern that Sun might reduce staffing in Australia to buffer its US losses.
On 14 April I received a reply to my earlier letters to the minister for aged care. This reiterated many of the points in the previous letter and gave me the address of a new section formed to deal with license applications. They once again carefully avoided the probity issue but I received a short letter dated 21 April 1999 to assure me that "the Commonwealth is very concerned that only suitable persons are approved under the Aged Care Act 1997 to provide aged care".
As I recall I phoned to confirm that the documents I had sent had been referred to the new section evaluating licenses. On 23 April I wrote to this section summarising my concerns about Sun and enclosing more material. I indicated my concern that the probity requirements had been removed and made my objection under the financial and management requirements I had been given.
It seemed increasingly clear that the probity requirement had been removed from the regulations. I deliberately challenged my original respondent on 27 April suggesting that the probity requirement had been removed to bring health into line with free trade agreements. I did not receive a reply. I received another letter on 7 May which referred to my submission of 23 April. It did not refer to the direct challenge on 27 April.
The letter also referred to extensive inquiries relating to the suitability of the persons which included "their record of financial management and the applicants ability and experience in providing aged care". Once again the Commonwealth was "most concerned" that only suitable persons are approved to provide aged care, and the approved provider criteria in the Aged Care Act 1997 have been developed to ensure only suitable persons are approved". I was not sent a copy of the section. If the appointment of a director of Mayne Nickless to chair the HIC is a guide then the government's idea of a suitable person might differ quite markedly from that in the community. Since then I have deliberately asserted on many occasions that the probity provisions were removed and no one has tried to disagree. I did not think that I was splitting hairs by insisting that the removal of the terms "probity", "fit and proper", and "of good standing" from the regulations was a serious omission.
Probity is a difficult concept for economists, market advocates and globalisation proponents as it places the interest of the community above the interests of the market. For them it seems to limit legitimate business activity. It is seen to be an obsolete "obstruction" and in need of "liberalisation".
I wrote again on 26 June enclosing a disk full of material and complaining that I had no means of knowing who was applying for licenses so did not know what to send.
On 8 June I received the feedback I had been promised from the pathology division of the HIC nearly a year earlier. It was a positive letter expressing interest and outlining the department functions. Once again there was no mention of the word probity. It indicated that the information was interesting "but it is general in nature". It asked for specific details on activities or the entities involved. It did not tell me that all of Alpha's pathology holdings had been sold 6 months earlier. This probably had more to do with Alpha's debt than any probity concerns by the HIC. I knew that some had been sold. I responded on 25 June raising the issue of probity and asking for a copy of the relevant section of the regulations. I quoted the World Medical Associations requirements should a doctor become aware of circumstances which might adversely affect patient health. In retrospect I should have reflected more and modified it before posting.
On 25th June I supplied more information to FIRB and to NSW Health. I advised NSW Health of Sun's financial problems and the way it was cutting staff, raising the possibility of their doing the same thing in Australian facilities. I wrote to the chairpersons of the medical committees of hospitals advising them of Sun's problems in the USA and the possibility that Sun might attempt to cut staff to unacceptable levels in Australia too.
On 25 June 1999 I supplied a floppy disc containing vast numbers of reports about US Health care corporations pointing out that Sun was now in dire financial trouble in the USA.
On 15 December a US videotape documenting what was happening in US nursing homes was circulated to key people involved in health and aged care.
On 6 March 2000 I wrote of a rumoured break up of Mayne Nickless and the possibility of a multinational buyer. I wrote about Sun which was now bankrupt and about Aetna which was in trouble in the USA.
Sun was Alpha's major backer and Alpha had looked to Sun to fund its new empire. By 1999 Sun was in trouble. Without Sun Alpha was in serious trouble. In 1999 Alpha had started selling off those facilities which it had earlier claimed would be the foundation of its integrated empire and the managing director who had promoted this policy resigned. Despite claims that Sun's bankruptcy would have no impact on Alpha it is clear that this was the end of Alpha's grand plan to be a major player. During 2000 it continued to sell off or sell and lease back most of its physical assets in order to raise capital. The major threat for Australia was a foreign takeover - or that Sun would spin off its foreign empire, possibly under Turner and build a new empire based on its international operations. Turner had considerable resources.
On 29 April 2000 I advised FIRB of information I had which suggested that Andrew Turner would leave Sun Healthcare and form another company to take over and manage Sun's international operations.
On 3 May 2000 I wrote to FIRB again about a rumoured takeover of Mayne Nickless by a consortium of local and international operators. I used this as an opportunity to write again about the problems in a corporatised health care marketplace.
On 14 August 2000 I advised FIRB that Turner had resigned from Sun and had formed or joined a number of other companies which were targeting Sun's international operations. I attached to this a list of 12 points describing what was happening in health and aged care in the USA, Canada and Australia. I sent a similar letter to the minister for health in NSW.
On 3 October 2000 I sent FIRB information about Ballantrae Healthcare and Rehabilitation which Turner had joined, taking many Sun staff with him. I pointed out that Sun's independently owned hospitals in Australia were in receivership.
On 18 December 2000 I advised FIRB that Turner had formed Enduracare and was recruiting former Sun staff.
On 7 January 2001 when Shell was attempting to buy Woodside Petroleum I sent information describing fraud settlements reached by the US Dept. of Justice in the USA. Over half were health care. Other major areas included petroleum companies. Shell figured prominently among these. Two of the health care companies in Australia have managing directors who once worked for Shell.
