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Content Australian
section The American
Influence
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given or its owner. They are reproduced here for
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about the provision of health and aged care. I
consider this to be "fair use" in the common
interest. They should not be reproduced for
commercial purposes. The material is selective and
I have not included denials and explanations. I am
not claiming that all of the allegations are true.
The intention is to show the general thrust of
corporate practices as well as the nature and
extent of any allegations made.
Central
Initial
USA
Australian
International
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Australia
Austr
Hosp Companies
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Entry
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Privatisation
Privatisation
Background
Australian
states
Gen.
Pract. Corporatisation
Affinity
Health
Alpha
Healthcare
Austr.
Hosp. Care
Benchmark
Healthscope
Hosps
of Austr (HOA)
Insurer
hospitals
James
Hardie & HCC
McGoldrick's
comps
Markalinga
& AME
Mayne
Health &
HCoA
Moran
Healthcare
Nova
Health
Ramsay
Hlth Care
US
grps HCA &
AMI
Small
Hosp groups
The two US hospital multinationals, HCA and AMI
operated in Australia between 1978 and 1991. While
neither was successful they had a profound
influence on political and business thinking. They
laid the foundations for the corporatisation of
health care in Australia.
HCA and AMI
(1978 to
1991)
CONTENTS
Two giant US hospital multinationals had a profound influence in Australia. Hospital Corporation of America (HCA) entered Australia in 1978 calling itself Hospital Corporation of Australia. American Medical International (AMI) probably came soon after.
For a start, Hospital Corporation Australia Pty Ltd represents a new style of hospital management with emphasis on ordinary business principles which is still rarely practised in either private or public hospitals in Australia.
1985 HCA style
More importantly, it signals an increase in big business investment in the fragmented private hospital industry which is still largely run by doctors and property developers at a time when the control of the cost of health care is becoming paramount.
--------------------------
HCA is the largest profit-seeking private hospital operator in Australia. The groups sees its competition coming from Consolidated Health Care, Hospital Affiliates, the Wenkhart Group, Australian Hospital Care and the Ramsey group.
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 26, 1985
Australia's largest private health care group, Hospital Corporation Australia, has set up a division to provide management expertise to private hospital owners.
1986 Spreading Corporate Culture
The new division, HCA Health Management Services, will offer the corporate skills and purchasing power of the HCA group through a system of management contracts.
HCA To Counsel Hospitals Australian Financial Review November 5, 1986
It all began in the late 1970s, with the advent of big US-owned groups such as Hospital Corporation of Australia (HCA), which revolutionised the hitherto cottage-like local industry by amassing large portfolios of private hospitals and introducing modern management techniques.
1992 Looking back
HCA prospered, and the involvement of the US chains inspired local punters. Many paid inflated prices, raked up debts, ran foul of their bankers and ultimately tainted the industry's reputation.
Business Homes In On Health Care Investment The Age June 13, 1992
Local investment requirements
Both American companies were welcomed by authorities as a modernising
influence but both were required to find Australian investors to meet
government requirements for 35% local investment in the companies.
HCA boasted of its management skills and offered to manage hospitals
for others. This was at a time when PACMAN
takeovers and joint ventures were
growing rapidly in the USA. This policy would have facilitated the
spread of marketplace culture through the health system, including
the not for profit hospitals in Australia.
It is no coincidence then that HCA sees a major growth area in managing hospitals for others, particularly churches and charities. In the United States, Hospital Corporation of America owns more than 200 hospitals outright and manages another 200.
1985 The US PACMAN
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 26, 1985
American ways not welcomed
At that time the brash commercial approach to medicine did not
resonate with the community or with the profession in
Australia.
HCA's public image got off to a bad start in Australia. Its "US-style" entry in 1978 was flashy and was greeted with howls of dismay at the prospects of an American takeover of the hospital system, something that it still finds difficult to live down.
1985 A bad start
Then followed a period of "duck and cover" when it came to relations with the press and the community.
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 26, 1985
Gradual marketplace interest
The two US companies do not seem to have prospered. HCA in particular
adopted a policy of diversification and went into wellness medicine
for corporate customers. It targeted occupational health, as well as
drug dependency, hoping to generate a clientele who would use their
hospitals
HCA was unable to find an Australian partner and after HCA twice missed deadlines the government owned Australian Industrial Development Corp. (AIDC) invested the required 35% in 1986.
James Hardie were persuaded that there was money in hospitals and shifted its focus to health care. It took up a 35% holding in AMI’s Australian venture and also formed Hospital Care Corporation (HCC) which had an arrangement to access AMI’s expertise.
By the end of this month, HCA expects to have finalised arrangements for its 35 per cent divestment. It will soon announce the $20 million sale to a large unlisted company.
1985 HCA : AIDC invests
HCA has spent $58 million in Australia since its establishment in 1978 - $38 million on the purchase of private hospital beds and $20 million on upgrading their facilities.
----------------------------------
Twice in the past four years the deadline for HCA's divestment has come and gone, with the company to move because it just hasn't been making enough money. In the meantime, Treasury vetted its acquisitions, blocked one and kept a close eye on its growth, Mr Sheraton said.
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 26, 1985
Hospital Corporation Australia announced its long awaited localisation move yesterday, linking with Australian Industry Development Corporation in a deal worth $16 million. This is by far the largest equity deal that AIDC has concluded.
1985 HCA : AIDC invests
-----------------------------
Both the HCA deals are subject to approval by the Foreign Investment Review Board.
----------------------------
The sale of 35 per cent of its stock to AIDC is HCA's first step towards floating on national exchanges, although this is still several years away.
Hospital Company To Localise In $16m Deal Australian Financial Review June 19, 1985
If things go according to plan for James Hardie Industries Ltd over the next two weeks, it could acquire a significant foothold in the private health care industry. While the company is playing down its moves, its private hospital investment is crucial, being an important break away from its building product base and giving it an entree into an industry which, as in the United States, is growing rapidly.
1985 AMI : James Hardie invests
-----------------------------------
But that 35 per cent interest in American Medical International (Aust) Pty Ltd was worth about $10 million and AMI is mid-way through negotiations that could see its number of beds double in the next six months, contingent on approval from the Foreign Investment Review Board.That would give the diversified building products group an interest in one of the largest private hospital groups in Australia.
James Hardie Moves Towards Health Care Australian Financial Review March 21, 1985
James Hardie will hold 50 per cent of the company (HCC) and Leighton Holdings 20 per cent, with the remaining shares to be held by the vendors of the hospitals and senior management.
1986 AMI to assist Hardie's HCC
-------------------------
AMI will provide technical assistance to HCC.
New Team To Operate Hospitals Australian Financial Review April 21, 1986
Australia's biggest companies invest in
health
The profession and the public may not have warmed to the Americans
and their commercial focus. In contrast the rhetoric about
consolidation and diversification, and the profits made in the USA
had persuaded large businesses and politicians that this was the way
of the future. Both Mayne Nickless which later bought HCA and James
Hardie switched their focus to health care.
The reason for James Hardie's interest was the rapid growth of the private health care industry in the United States, something that it hopes will be mirrored in Australia.
1985 Hardie's interest in AMI
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 16, 1985
Hospitals certainly appear to be a newly fashionable investment area with Oceanic Equity launching a trust which evidently has attracted strong support already, with the biggest subscriber to date evidently being a leading listed company, and the second biggest one of our top institutions.
1986 Business interest in health
Ginger And Blinky Release A Bonus Australian Financial Review February 14, 1986
Public hospital administrators become
enthusiastic
At the same time the public system was overcrowded, underfunded and
overly bureaucratised. The promised freedom from bureaucracy and
access to resources was very appealing to medical administrators in
the public system. They left to join or form their own private
companies in droves.
Dr David Adler is one of the bright young stars of the New South Wales health care industry. Adler, 31, spent four years as assistant medical administrator at Prince of Wales Hospital and Prince Henry's Hospital, the state's biggest teaching institutions. He is now a medical director for the Hospital Corporation of Australia. The meat in the sandwich situation was one that affected him and other administrators in New South Wales, particularly during the Medicare dispute. He says public hospital administrators were caught in a conflict that was not theirs - it was between doctors and the government.
1987 A new vision for hospital administrators
Adler says some people have left the public sector with sour grapes, but says he left for positive reasons. "The thing I find most exciting where I am now, is being at the cutting edge of development, facing new challenges and opportunities constantly," he says.
New Strength For Private Hospitals Business Review Weekly May 15, 1987
The promise not fulfilled
As a consequence of Medicare, by the end of the 1980’s private
insurance in Australia was falling and private hospitals were empty.
Prospects were not good. HCA and AMI were both having problems in the
USA . Both sold up in Australia. They had made the corporatisation
and the primacy of profit legitimate in health and aged care. Their
legacy remains and the pot of gold at the end of the health care
rainbow remained enticing.
Hospital Corporation of America (HCA) called its Australian company Hospital Corporation of Australia (HCA). This was acquired by Mayne Nickless becoming Health Care of Australia (initially HCA but later HCoA). HCoA became Australia’ largest corporate owner of hospitals. It later changed its name to Mayne Health.
HCA has spent $38 million on the purchase of 11 medical, surgical, obstetric, rehabilitation and psychiatric hospitals in Australia and a further $20 million on upgrading these facilities. It employs 1,500 people..
1985 HCA's hospitals
Hospital Company To Localise In $16m Deal Australian Financial Review June 19, 1985
Its parent company owns and manages 458 hospitals worldwide.
1986 A global operator
HCA To Counsel Hospitals Australian Financial Review November 5, 1986
The largest is the mainly US-owned Hospital Corporation of Australia, which operates 1,196 beds in 13 hospitals in NSW.
1987 Size
BALANCING ACT BETWEEN COST AND QUALITY Australian Financial Review November 13, 1987
Spreading the culture : targeting
corporate customers
HCA focussed on managing hospitals for others. As another part of
its diversification strategy HCA went into occupational health,
absenteeism and drug abuse. Its customers were the corporate sector.
In the USA companies paid employees health insurance. Employees of
corporations dominated among privately insured patients. Although
Australians insured differently HCA targeted corporate customers.
HCA's medical director Dr Brown wrote a series of advertorials for
the Australian Financial Review.
HCA also jumped into One Stop 24-hour medical centres taking care to distance itself from other questionable entrepreneurs such as Edelsten and McGoldrick. Being both a provider and an insurer had become popular in the USA. HCA set out to enter the health insurance business in Australia, securing licenses. At that time this was not seen as a conflict of interest. In both countries health insurers owned hospitals to provide care for their members. HCA eventually abandoned this venture.
One of the most obvious options open to HCA, if it wants to broaden its services, is hospital management.
1985 The era of diversification
It is also considering involvement in home care, diagnostic services, occupational health, hospital consulting and, if it can get cheaper product to its hospitals, in medical and surgical supplies.
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 26, 1985
A private hospital group, Hospital Corporation of Australia, is to spend over $3 million in setting up a nation-wide network of occupational health centres aimed at reducing work absenteeism, workers compensation costs and improving productivity and lifestyles. The plans were revealed following the announcement that Hospital Corporation had purchased 80 per cent of shares in HCA Health Evaluation, a company that, coincidentally, had a similar name.
1986 Targeting corporate customers
Hospital Corp's managing director, Mr Bob Sheraton, said the centres, known as HCA Medicorp, would work with employers and employees in developing both preventative, rehabilitation and occupational health programs for companies.
$3m Occupational Health Centre Plan Australian Financial Review July 17, 1986
Executive health evaluation should be comprehensive and include a problem-orientated medical consultation and thorough medical examination. Other features should include lung function assessment, flexibility and abdominal strength measurement, body composition and body fat assessment, comprehensive pathology testing of blood and urine, resting electrocardiograph, exercise electrocardiograph, fitness assessment on a treadmill, health risk profile, counselling, and discussion of results with our preventive medicine physician.
1987 Health screening and promotion
Checking Out The Individual : Executive Health/ Les Brown Australian Financial Review August 28, 1987 (Dr Brown is the medical director of the health management division of HCA Medicorp.)
The size of the problem means that there is no easy answer, but the HCA Medicorp's Chemwatch program provides a structured approach to chemical abuse in the workplace, designed both to maximise the identification of those in need of help and to obtain the best results possible in their rehabilitation.
1987 Chemical abuse
Chemical Dependency: The Major Drain On Resources : Executive Health/ Les Brown* Australian Financial Review August 28, 1987 (Dr Brown is the medical director of the health management division of HCA Medicorp.)
SYDNEY has a new 24-hour medical centre, the first of its kind in Australia, where patients can, under the one roof, have teeth and prescriptions filled by their own dentist and chemist, see the family GP, have X-rays and get results of specimen tests.
1987 Medical Centres
The $4.5 million Castle Hill Medical Centre, opened on September 28, treated more than 1,000 patients last week.
"Without doubt, it's the best medical practice in the country," said Dr David Adler, Medical Director of the Hospital Corporation of Australia (HCA), which set up the centre.
--------------------------------
"We have been distancing ourselves from other 24-hour medical centres. Ours offers a personalised service, quality and convenience."
NEW'ALL-IN' MEDICAL CENTRE FOR SYDNEY Sydney Morning Herald November 19, 1987
Private hospital chains such as the Hospital Corporation of America, Humana, American Medical International and National Medical Enterprises have begun to offer health insurance in an effort to attract more patients.
1985 Offering Medical Insurance - a US trend
Now Even Doctors' Organisations Are On Side In The US Australian Financial Review October 4, 1985
According to Health Benefits 2000 the beginning of major life office interest in health insurance business started with Capita when it applied for the Hospita health insurance licence in conjunction with the Hospitals Corporation of Australia.
1990 HCA moves to insurance then pulls out
HCA eventually pulled out of the venture - - - was sold to National Mutual - - - - - - .
NATMUT LEADS WAY IN HEALTH FUNDS Sydney Morning Herald November 9, 1990
HCA struggles to sell in Australia
By 1988 HCA was in some difficulty in the USA and its chairman and
co-founder Thomas Frist led a management buyout taking the company
private. It tried to sell its Australian venture which was not doing
well.
Because of the popularity of Medicare the prospects for private hospitals were not good at this time and other companies were selling too. HCA had some difficulty finding a buyer prepared to pay what it wanted and meet its conditions. Mayne was all set to buy then dropped out. A second group of financiers were announced as the purchasers but this too fell through. Mayne finally bought HCA in 1991
Hospital Corporation of Australia's US parent has just undergone a leveraged buy-out and there is speculation the new owners of the US company will sell its 70 per cent stake in HCA.
1988 Problems in the USA
MALAISE HITS PRIVATE HOSPITAL BOOM Australian Financial Review December 12, 1988
Hospital Corporation of America, another hospital chain that completed a management-led leveraged buy-out earlier this month, did not attract any outside bids after it put up the "for sale" sign.
1989 Little US interest in hospitals
COMPLICATIONS IN RAID ON US HOSPITAL GROUP Australian Financial Review March 31, 1989
Eleven private hospitals owned by the Sydney-based Hospital Corporation of Australia (HCA) are likely to be sold, and the Melbourne-based Health and Life Care Ltd is about to sell seven private hospitals in a shake-up in the private hospital industry.
1989 A gloomy outlook
Smaller hospitals will be amalgamated with larger groups, especially those that have poor bed occupancy rates.
-----------------------------
But there is gloom in the industry where bed occupancy rates now average only about 52 per cent.
--------------------------
But it (Medicare) had had the effect of reducing the percentage of privately insured Australians from 68 per cent to 46.2 per cent. One lot of research suggested it would fall to 40 per cent by 1991.
SHAKE-UP FOR PRIVATE HOSPITALS Sydney Morning Herald July 13, 1989
The purchase of HCA from the Australian Industry Development Corporation and US-based Hospital Corporation of America would lift Mayne's total number of private hospital beds to 1,800.
1989 Mayne interested in HCA
MAYNE TO PAY $106M FOR HCA Sydney Morning Herald July 20, 1989
But HCA's 70 per cent shareholder, Hospital Corporation America, early this month terminated Mayne Nickless' exclusivity agreement for the purchase.
1989 HCA rejects Mayne
---------------------------
HCA's parent company decided to rationalise its Australian operations partly because it underwent a leveraged buy-out at the end of last year, but also in anticipation of further tightening in the industry.
MORE SUITORS EMERGE FOR HOSPITALS CORP Australian Financial Review September 14, 1989
A number of listed and unlisted private hospital companies have been making losses and there has been a rush to off-load the more unprofitable assets.
1989 HCA was not a success
------------------------------------
HCA was not able to crack the Australian hospital market despite a solid track record in the US and other countries where it had hospital operations.
------------------------------------
However, the minority partner, the Australian Industry Development Corporation, said it decided to sell at the same time because, after four years, it had not received the level of return on the investment that it had expected. Others in the industry add that, despite its best efforts, HCA also was not satisfied with the hospitals' profitability.
A HEALTH INDUSTRY IN THE THROES Australian Financial Review November 8, 1989
Hospital Corporation of America has agreed to sell its Australian assets to Sydney construction industry consultants, Cleland Mainwaring Group, following the collapse of earlier negotiations with Mayne Nickless Ltd.
1989 A buyer is found
HCA SOLD TO CLELAND MAINWARING Australian Financial Review November 16, 1989
Mayne Nickless said it would pay shareholders Hospital Corporation of America and AIDC Ltd $106.3 million in cash for HCA, including a loan of $27.5 million owed to the US parent company.
1991 Mayne buys when previous deal falls through
MAYNE BUYS HOSPITAL GROUP Sydney Morning Herald February 2, 1991
AMI was the smaller venture with only two hospitals in Australia and a plan to build a private hospital in Mildura - a new venture which later lost money.
AMI, whose parent operates 160 health care centres world-wide and has operating revenues of $US2.4 billion, is one of three bidders for the 150-bed Melbourne Clinic, a well recognised Victorian psychiatric hospital.
1985 AMI's operations
----------------------------------
At the same time, AMI is building a private hospital at Mildura which will cater for 40 patients and 10 day patients. The hospital, due for completion in September, will have two operating tables for major surgery and a separate day theatre.AMI already owns two private hospitals in Melbourne, the 122-bed Avenue Hospital in Windsor and the 72-bed Peninsula Private Hospital in Frankston.
James Hardie Moves Towards Health Care Australian Financial Review March 21, 1985
AMI performs poorly and sells
AMI was not doing well in the USA or in Australia and James Hardie
soon lost its enthusiasm. Hardie sold its interest back to AMI and
AMI sold its three Australian hospitals.
A rapidly growing private hospital group will purchase Mildura Private Hospital for an estimated $6 million. The change of ownership of the hospital, which is losing money, continues the rationalisation of the health-care industry in Australia.
1986 AMI sells its Mildura Hospital to a group which became Healthscope
The 50-bed hospital was built and previously operated by American Medical International (Australia) Pty Ltd.
Hospital Group Expands Australian Financial Review September 5, 1986
James Hardie Industries Ltd announced yesterday that it would sell its 35 per cent interest in American Medical International (Aust) Pty Ltd to American Medical International (Aust) Holdings Pty Ltd, which holds the remainder of the shares.
1988 James Hardie sells its interest
The sale is conditional on AMI Holdings' completing its sale of two Australian hospital interests, Melbourne's Avenue and Peninsula hospitals to a third party.
-------------------------------
A statement to the Australian Stock Exchange said the sale was "consistent with James Hardie's policy of divesting peripheral businesses".
JAMES HARDIE SELLS MEDICAL INTERESTS Australian Financial Review March 8, 1988
AMI's problems in the USA and sale to
Tenet Healthcare
AMI was not prospering in the USA. One of its major shareholders Dr M
Lee Pearce attempted a buyout. It put itself up for sale but it was
not until the end of 1994 that the recently convicted of fraud,
National
Medical Enterprises (NME) bought AMI
and renamed the combined group Tenet Healthcare. Dr Pearce became a
major share holder.
Dr Pearce was so disenchanted with the Barbakow team that was managing Tenet Healthcare that he formed a subgroup of investors which unsuccessfully attempted to oust Barbakow’s management team in 2000. Pearce claimed that Tenet would be better run by health care professionals rather than investment bankers. After the second fraud scandal broke in 2002, Pearce and his group became one of Tenet’s strongest critics.
American Medical International Inc says that it has received a $US1.7 billion buy-out proposal from a group including its largest individual shareholder and that it is also considering a separate restructuring plan.
1989 AMI in trouble in the USA
--------------------------------
The buy-out offer, which would result in American Medical's becoming privately owned, was made by a group including Dr M.Lee Pearce, a member of the company's board and owner of 9.4 per cent of its shares.
------------------------------
The two proposals come after eight months of upheaval at the company and speculation that it would be sold, liquidated or restructured.
AMERICAN MEDICAL: $1.7BN BID Australian Financial Review March 28, 1989
Miss Vignola doubted that other players would emerge, because American Medical had been up for grabs for three years with no takers.
1989 Little interest in buying AMI
-------------------------------
All of which could mean that Dr Pearce, a Florida physician and attorney who owns about 10 per cent of American Medical's stock and sits on the company's board, is the only ready buyer.
COMPLICATIONS IN RAID ON US HOSPITAL GROUP Australian Financial Review March 31, 1989
National Medical Enterprises, Inc. (NME) today completed its acquisition of American Medical International, Inc. (AMI) and simultaneously unveiled the combined company's new name: Tenet Healthcare Corporation. The $3.3 billion acquisition makes Tenet the second largest investor-owned healthcare provider in the United States with 83 acute care hospitals and numerous related businesses in 13 states and four foreign countries.
1995 Tenet Healthcare buys AMI
AUSTRALIAN MEDICAL ENTERPRISES LIMITED: RE: NATIONAL MEDICAL ENTERPRISES (Part A) Australian Stock Exchange Company Announcements March 2, 1995
Pearce, 66, owns 250,000 shares of Tenet stock and is a former director of American Medical International and OrNda Health Corp., both now owned by Tenet. In South Florida, Pearce founded North Ridge Hospital in Fort Lauderdale, American Hospital in Miami and Golden Glades in North Miami.
2000 Lee Pearce
Miami Beach doctor challenging Tenet American City Business Journals September 22, 2000
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Michael
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