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Content Australian
section James
Hardie
The many extracts on these pages are from
copyright material. They are owned by the reference
given or its owner. They are reproduced here for
educational purposes and to stimulate public debate
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
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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
James Hardie the large Australian multinational at
the centre of the Asbestosis scandal became
enthusiastic about profits from health in the 1980s
investing in American Medical International,
founding Health Care Corporation (HCC) and
investing in health in the USA. It did not prosper
and struggled to get out of health care selling HCC
into Alpha Healthcare and then struggling to get
out of Alpha without losing too much
money.
and
Health Care Corporation
(1985 to 2001)
CONTENTS
James Hardie was Australia’s largest building material empire. It had a poor humanitarian track record as it had been one of the prime companies responsible for the continued use of asbestos in building materials long after its dangers were recognised. The liability resulting from the steady rise in the number of employees with asbestosis and mesothelioma dogged it for years and cut into its profits. More recently it became notorious when it attempted to escape the growing demand for compensation by moving out of Australia. One must ask whether these are the sort of people we should be trusting with our health. We should not blame them. They were of only fulfilling their fiduciary duty to protect the profits of their shareholders as best they could.
In the mid 1980s James Hardie was caught up in the wild enthusiasm for corporate medicine and the promised profitability.
Health Corp of America (HCA) and American Medical International (AMI) had entered Australia a few years earlier. Both were required by the Foreign Investment and Revue Board (FIRB) to find local partners for their health care projects. There was little enthusiasm in the local marketplace. The Americans set out to sell the legitimacy of modern market medicine and the possibility of big profits and did so very successfully.
The government owned Australian Industrial Development Corp. (AIDC) came to HCA’s rescue and took up 35 % of HCA.
Three of Australia’s biggest businesses were persuaded to diversify into health care. The boom of the 1980’s undoubtedly fueled the enthusiasm.
Transport company Mayne Nickless bought into and eventually took control of Hospitals of Australia (HOA). It bought HCA in 1991.
Building material giant James Hardie and building giant Leighton Holdings were caught up in the enthusiasm. James Hardie took up 35% of AMI. James Hardie and Leighton Holdings together founded Health Care Corporation (HCC) in 1986. James Hardie was so enthusiastic about the US system that like Ramsay Healthcare it bought into a health care company in the USA.
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 The role models
HCA: A Staging Post For A Healthy Industry Australian Financial Review April 26, 1985
The managing director of James Hardie, Mr David Macfarlane, said yesterday the investment (in HCC) was a significant extension of the company's involvement in the health care industry.
1986 HCC founded
New Team To Operate Hospitals Australian Financial Review April 21, 1986
The $2 million investment in Houston-based Community Health Systems is slightly less than James Hardie has typically put into nine other US companies as development capital.
1987 Investing in US health care
-----------------------------
Hardie has equity in Health Care Corporation and American Medical International, which are both involved in operating private hospitals in Australia.Community Health Systems owns or leases eight hospitals and two nursing centres in the US and the company plans to grow through increasing the market share and profitability of existing facilities as well as selective acquisitions.
HARDIE STAKE IN US TECHNOLOGY CLIMBS TO $56M Sydney Morning Herald January 1, 1987
The boom was soon over and with the increasing popularity of Medicare the number of privately insured patients was in free fall. Mayne Nickless retained its faith in the profitability of hospitals. It used its vast resources to build itself into Australia’s largest hospital operator and largest diversified health corporation. It struggled on into 2003 when it gave up and sold all its hospitals.
Hardie's and Leighton's in contrast rapidly became disillusioned and grew tired of waiting for the promised government relief. They sold their holding In AMI but were unable to find a buyer for HCC.
It was not until 1997 that a buyer for HCC was found. Struggling Alpha Healthcare bought out Leighton's 20% but Hardie’s 80% was more than it could swallow even with a $38 million injection of funds from the US company Sun Healthcare which bought a dominant holding in Alpha Healthcare at this time. Hardie accepted a $10 million loss, lent Alpha about $13 million and took a 9.5% stake in Alpha. When large Malaysian investors in HCC sold their holding in Alpha, Hardie became the second largest shareholder.
Alpha did not prosper and serious problems in Sun Healthcare's US operations impacted on its probity and standing in Australia. Alpha was dependent on Sun Healthcare's financial support and it had borrowed from Sun. When Sun failed a probity review in Victoria and then entered bankruptcy in the USA followed by Australia the writing was on the wall.
Hardie finally cut its losses. It joined with Sun Healthcare’s receivers in secretly selling its debt to Ramsay at a markedly reduced rate and then selling its share holding to Ramsay. Alpha’s remaining shareholders were trapped. Ramsay could close Alpha down at any time. Remaining shareholders had no choice but to accept what Ramsay offered for the company - much less than they thought it was worth.
The association of Hardie with AMI is described on the American Influence page. The sale of HCC to Alpha and the sell out to Ramsay are described in the Alpha pages.
Investors in
HCC
Health Care Corporation was founded by James Hardie and Leighton
Holdings in 1986. Hardie later put more money into it to keep it
viable. Incredible as it seems today government in the form of the
Health Insurance Commission (HIC) took a 10% stake in the company.
The HIC regulates Medicare and polices fraud. The HIC was paying
Medicare and Medibank refunds for services in its own hospitals.
There were some concerns that this was the first step into managed
care.
James Hardie Industries Ltd and Leighton Holdings Ltd have teamed up for a new venture into private hospitals and health care services.
1986 HCC founded
The new company, called Health Care Corporation Pty Ltd (HCC), will initially operate three hospitals in Sydney - at Seven Hills, Greenacre and Mosman - and one in Wollongong.
James Hardie will hold 50 per cent of the company and Leighton Holdings 20 per cent, with the remaining shares to be held by the vendors of the hospitals and senior management.
----------------------------------
AMI will provide technical assistance to HCC.
New Team To Operate Hospitals Australian Financial Review April 21, 1986
In a move which raises serious questions about conflicts of interest, the Federal Government statutory authority which administers Medicare has bought a major slice of a high-tech private hospital chain.
1987 The HIC invests in HCC
The Health Insurance Commission, through its Medibank Private health insurance fund, has purchased 10 per cent of the shares of Health Care Corporation Pty Ltd for an undisclosed sum.
Health Care Corporation, which runs five private hospitals around Sydney, is probably the third-largest hospital chain in Australia.
A senior executive of the Health Insurance Commission has taken up a position on the board of Health Care Corporation following the purchase during the past week.
------------------------------------
But the industry's major concern is that Medibank Private and Health Care Corporation could be given preferential treatment to operate a new alternative form of health insurance called health maintenance organisations.The Federal Minister for Health, Dr Blewett, has made it clear in recent months that he favours the introduction of HMOs into Australia.
An HMO, with doctors and hospitals under contract, provides "one-stop"health care for its members in return for an annual payment.
CANBERRA INVESTS IN PRIVATE HOSPITALS Sydney Morning Herald February 17, 1987
During the 1990-91 financial year, further loans were made to the 50 per cent owned Health Care Corporation Ltd, which had borrowed $34.2 million as at March 31.
1991 Lending HCC money
JAMES HARDIE, CSR SEE LITTLE CHANGE TILL '92 Australian Financial Review July 5, 1991
Colocated
Hospitals
HCC grew slowly. It was enthusiastic about what are now called
colocated
private hospitals. It won the
contract to build the new colocated Westmead
Private Hospital and was the
preferred operator for the Royal
North Shore hospital. It could not
find the funding to build the Royal North Shore colocation which
later went to Ramsay. Westmead was temporarily put on hold. It was
left to Alpha to fund and build the Westmead Private hospital - and
Ramsay to run it as the Westmead contract went with successive
takeovers.
Private hospital groups - including Health Care Corporation, Hospital Corporation Australia and Hospitals of Australia - are all believed to be actively involved in plans for private hospitals.
1987 Plans for private hospitals
PUBLIC HOSPITALS LAUNCH BID FOR PRIVATE FUNDING Sydney Morning Herald March 31, 1987
Dr Spring said Royal North Shore had been considering submissions for the development for more than two years. It had selected Health Care Corporation, a company that operates private hospitals in the Illawarra region and western Sydney and day surgery centres, as the preferred operator of the new centre.
1988 Royal North Shore colocation
NEW HOSPITAL NEXT TO RNS Sydney Morning Herald July 2, 1988
The private hospital group Health Care Corporation announced yesterday that it was seeking one or more property investors for a 210-bed private hospital development adjacent to Sydney's Royal North Shore public hospital.
1989 Looking for money
NSW HOSPITAL PLAN MAY ATTRACT INVESTORS Australian Financial Review October 10, 1989
Another operator, Health Care Corporation, half-owned by James Hardie Industries has had attempts to move forward on new private hospital developments stymied so far by a lack of investment capital.
1991 No investors found - proposes selling
Hardie has put its stake in HCC on the market, impatient for the rationalisation which it had hoped would improve returns in the industry.
Hardie's group planning manager, Mr David Luke, who is also acting HCC chairman, emphasised the company was not an active seller of the HCC shareholding but said Hardie was not a long-term player in the industry.
He said the delay in any rationalisation was a factor in Hardie's decision, as the company was only just breaking even on its investment.
HEALTHY PUSH FOR PRIVATE HOSPITALS Australian Financial Review March 15, 1991
The company which wants to build Northern Private alongside Royal North Shore was also given a financial infusion last year when James Hardie lent HCC $34 million.
1992 Still looking for money
------------------------------
The market is suspicious about James Hardie's commitment to HCC, believing it may offload its stake completely, as foreshadowed by company executives last year.HCC also has the right to develop a private hospital on land it has owned for four years adjacent to Westmead Hospital, but this project has been put on hold indefinitely, Dr Ruscoe says.
PRIVATE LESSONS Sydney Morning Herald October 17, 1992
The Western Sydney Area Health Service will conduct a feasibility study into co-location at the Westmead Hospital, in order to reduce its $A15.5m budget deficit; - - - - -
1996 Westmead colocation revitalised
HEALTH FUNDING MALADY PUSHES PUBLIC HOSPITALS INTO PRIVATE HEALTH SERVICES. Business Sydney September 30, 1996 ABSTRACT BY Business Intelligence International Pty Limited, My Money Group
Parramatta City Council has approved a building application for a $A50m Westmead Private Hospital. The hospital is expected to be operating towards the end of 1998. Health Care Corporation (HCC) says the hospital will reduce the public health burden
1997 Westmead gets go ahead
------------------------------
The council rejected HCC's application in September 1995 saying the hospital was "out of character" with the residential area and its existence would increase traffic problems.
Council approves $50m hospital for Westmead. Business Sydney March 31, 1997 ABSTRACT BY Business Intelligence International Pty Ltd
Wanting to sell
HCC
HCC did not prosper. Within 2 years Hardie had sold its stake in AMI
and was talking about getting out of health. Leighton’s also
wanted out. No one wanted to buy.
A statement to the Australian Stock Exchange said the sale (of AMI) was "consistent with James Hardie's policy of divesting peripheral businesses".
1988 trying to sell
JAMES HARDIE SELLS MEDICAL INTERESTS Australian Financial Review March 8, 1988
Prime candidates for sale are Hardie's 23.7 per cent in amusement park Australia's Wonderworld and the 50 per cent stake in Health Care Corporation.
1990 Still looking
BAPTISM OF FIRE FOR HARDIE BOSS Sydney Morning Herald July 2, 1990
Health Care Corporation reported a lower profit in 1994, with one off gains in the prior year not being repeated.
1994 Profits down
JAMES HARDIE INDUSTRIES LIMITED: NEW RELEASE RE:P.F.S. (Part A) Australian Stock Exchange Company Announcements June 9, 1994
Alpha buys
HCC
Alpha Healthcare came to the party in 1997 but Hardie virtually
bankrolled its own sale by taking nearly 10% of Alpha in payment and
lending it money. Instead of being stuck with HCC Hardie was now
stuck with Alpha which too was soon in trouble. The story of how it
finally got out by selling its debt and its shares without regard to
the interests of smaller investors is told on the Alpha
web pages.
Building materials company James Hardie Industries Ltd said it would book a 10.5 million (S8.10 million) after tax loss from the sale of its 80 per cent stake in private hospital operator Health Care Corporation (HCC).
1997 The sale to Alpha Healthcare
James Hardie said it has agreed to sell HCC to listed Alpha Healthcare Ltd for around 38 million (S29.33 million) with the sale expected to be completed by June 30.
------------------------------
The spokesman said James Hardie has been in negotiations to sell its Health Care stake, acquired in 1986, for about three years but offers were not satisfactory.
JAMES HARDIE TO POST S8.10 MLN LOSS FROM HOSPITAL SALE ASIA PULSE May 21, 1997
The rest of the Westmead privatisation story is told on the Alpha and Ramsay web pages.
Web Page
History
This page created October 2005 by
Michael
Wynne
