LINKS CORPORATE MEDICINE WEB SITE Disclaimer 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. Links to Site Maps Central Initial USA Australian International Corporate Practices (to print) Path to this page Home Australia Austr Hosp Companies Mayne access page Other pages Entry to Privatisation Privatisation Background Australian states Gen. Pract. Corporatisation General Practice/Pathology:- Sonic&Co . . Foundation Lifecare . . . Endeavour Primary . . Revesco&related Hospital Companies 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 Mayne Pages Mayne access page 1886-1994 - - - refs Collusion - - - refs 1995-2000 - - - refs Clippings 1998 Conflicts&Scan scam                         refs Privatisations 2000-2001 - - - refs Smedley - - refs Health Story 2002-2003 Purchasers Affinity Hlth & Citigroup 2004-2005 Break up Mayne Diagnostics Restrict Mayne Content The decision to sell off trucking and other businesses and switch to health care as the company's main business and theatre for growth. The promise of profits which never materialised culminating in Catchlove and Dalziel's departures in 2000 Australian section      The Dalziel/Catchlove Years 1995 to 2000

Contents

1. Introduction
2. Background
3. Dalziel the man
4. 1996
5. 1997
6. 1998
7. 1999
8. 2000

Introduction

Dalziel took over from Blythway and Weber in November 1995. This page describes the business practices of Mayne Nickless during the last 5 years of the century. Bob Dalziel and Barry Catchlove were the driving forces behind a failed revolution during the period. Mayne's focus was switched from a broad range of enterprises and centred on health care. Dalziel and Catchlove persuaded the market that a new golden age of corporate profitability could be found in health care. Mayne steadily sold off and divested its other operations and put all of its eggs into health care. This was unrealistic and impractical. It could not succeed without destroying the Australian health system and compromising care. Dalziel and Catchlove could not bring themselves to do this.

Mayne Nickless is one of the best examples of the way in which the sharemarket places intense pressures on corporate executives to compromise their duty to care for citizens. The page describes the pressures to which care was subjected during these years and the context within which it was provided. It is easy to forget that it is our health, the care provided to us when we are ill and vulnerable which is being buffeted by these forces and bargained about in this marketplace. The pressures were on Dalziel and Catchlove.

The page is not intended to be a personal criticism of either Dalziel or Catchlove. I believe that both performed much better than could be expected given the situation they were in. Had any of a host of others held their positions the outcome for patients might have been much worse - and the financial condition of Mayne Nickless much better. There were pressures in the Australian context which constrained corporate excesses in ways which did not occur in the USA. Nevertheless Dalziel and Catchlove's failure to deliver is in part at least a reflection of the sort of people they were.

I have used extensive quotes from the press in order to describe or illustrate the story. The statements made at the time illustrate what happened far better than any retrospective comments I make. This is all copyright material and I consider this fair use in the public interest. It should not be used in any other way. I have linked this to a page containing further references and the working extracts used as I prepared this page. This is for those who wish to explore the matters in even greater depth.

Background

The Australian transport industry has undergone a transformation in recent years, particularly in ownership. The former big trucking operators - TNT, Brambles and Mayne Nickless - have, over several years, discarded most of their general transport operations. Part of the reason was the change in the nature of competition in the early 1990s. - - - - - is estimated that between them, Mayne Nickless and TNT held 90% of the express-freight market between 1987 and 1991 Mayne Nickless to get off the road Business Review Weekly, 14 Sep 1998

The legacy:- The cartel which fixed prices and prevented competition was crushed and broken by the end of 1994. With Blytheway discredited and their transport empire now threatened by competitors Mayne Nickless was in trouble - one report described it as in "intensive care". It was not, as Bytheway had feared TNT which cut them to pieces but the smaller operators. With the cartel broken up small operators could now enter the market and compete. The other members of the cartel were in similar trouble.

Mayne had already sold off much of this empire and Dalziel would continue to sell most of the remainder. Mayne had invested the funds into Optus in the belief that telecommunications would boom, but this was essentially a passive investment, one, which they did not control. This investment did not please major institutional shareholders and was going nowhere. Mayne's problem was that it had too much capital tied up and institutional shareholders were demanding that it be put to better use.

After this? Industry watchers suggest that after debt reduction and a probable $1 a share capital return to shareholders, the health-care business is where the action will come. Analysts Stick With Mayne Despite The Lack Of Detail, Australian Financial Review 31 May 1996

Why Health:- Mayne desperately needed a market where they could generate more profit from their capital and there were few niches available. Health care was an unexploited market and they already had a significant holding. In the USA vast health and aged care corporate empires had been created and vast wealth generated for shareholders. They saw no reason why the same profits could not be made in Australia. Dr Barry Catchlove, the CEO of Mayne's Health Care of Australia (HCoA) was enthusiastic. Under his guidance Mayne had already expanded its health care holdings in Australia and this sector was performing well.

He (Mr Dalziel) described health care as a capital-intensive business which offered "exceptionally good" and stable returns over long periods. Mayne Switches In Bid For Added Value, Australian Financial Review 30 May 1996

The moral dimension:- It is critically important to understand the reason why Mayne decided to devote an ever increasing percentage of its resources to health care. They did this because they thought that they could squeeze more profits from the money provided for the care of the sick than from any other commercial activity. They could generate the growth which major shareholders were demanding.

There is not a word about the humanitarian or Samaritan aspects of care in the many reports to shareholders or in the business sections of our newspapers. Mayne is in health care to serve their shareholders, not the community. I would argue that the care of those incapacitated by age and/or illness is a Samaritan responsibility - something we owe to one another. As a society do we consider it acceptable to squeeze profits from the limited resources we are able to make available for this purpose? I argue that this is unacceptable in a moral society.

Health care success:- In eyeing the success of US giants, Mayne had either not done its homework properly or more likely simply did not want to look. Like Mayne Nickless own empire in transport almost all of the giant US health and aged care empires had been built by exploiting and defrauding the funding system, and by short changing care.

He cited continued strong results from Health Care of Australia and Interlink Express in the UK and of the Armaguard business in Australia as the half's operational highlights. Mayne Suffers 13.8pc Fall, Australian Financial Review 28 Feb. 1997

Health became Mayne's recipe for success and its sop for shareholders. Whenever profits fell Dalziel or Webber would emphasise that the health care sector had done well - suggesting that this was where the company's future lay.

Obstructions:- It was difficult for Mayne to follow the path of its US role models. Mayne's recent brush with the TPC placed them under regulatory surveillance. The health professions were well informed about corporate practices and not well disposed towards Mayne Nickless. Catchlove was a physician who had at one time been chairman of the Australian Council on Health Care Standards which accredits hospitals. Close links between accreditation bodies and corporations have been a major factor in rendering accreditation ineffective in the USA. Catchlove was under considerable pressure to increase profits.

Webber says the company expects a significant improvement in revenue and earnings from health care, Mayne Nickless Warns Of Profit Slip -- From Abstract :: Business Intelligence Australia --- Sydney Morning Herald 14 February 1996

Catchlove's dilemma:- On the one hand Catchlove's past experience and contacts in the accrediting body might be helpful in allowing HCoA to pass the letter of accreditation processes, without expending as much money on actual care. A US federal government investigation in April 1992 found that the accreditation body for psychiatric hospitals in the USA was once funded and controlled by the psychiatric corporate chains. It functioned as a marketing tool. On the other hand Catchlove's past experience would have made it much more difficult for him to turn a blind eye to the consequences of the sort of cost cutting which had been so financially successful in the USA.

With so much evidence from corporate medicine in the USA and a critical community of doctors there was little room for rationalisation. Much would depend on Catchlove's conscience, - his willingness to turn a blind eye - what I have called his open or closed mindedness. Perhaps Catchlove's inability to bend too far was the reason why profits from health care flattened and why he was progressively moved from the coalface in HCoA and finally resigned in February 2000.

Money and care:- Health and aged care are essentially bottomless pits - the more money the better the care which can be provided. In all modern states, including the USA health is largely funded by government. This means that reimbursements are capped in one way or another. There is continuous pressure to pay less and expect more. Medical advances ensure that providers can never catch up. It is simply a case of providing what you can to the most deserving with what you have got - this is rationing. Doing so efficiently helps but does not solve the problem. Diverting money, human effort and motivation from care to profit simply means less for care. I do not accept that the market is the only context in which resources can be used efficiently.

Economies of size and management efficiencies have limited potential for increasing profits and reducing costs. The costs of competing in the marketplace, and the diversion of time, mental effort, and personnel resources from care to the business of the market more than absorb these extra savings. The drive for efficiency, productivity and profit comes initially at the cost of those aspects of care which are not easily measured, particularly the human component. Next comes equipment and staffing, the adverse consequences of which are diffused. Measurable consequences are delayed. The consequences for citizens are multiple and diverse. They are not easily quantified.

Corporations control the data so that independent evaluations are seldom made. The limited studies of care in Australia compare private against public rather than for profit against not for profit. We are not comparing care primarily for shareholders against care primarily for the community and its members. This is the critical distinction.

If fraud and underfunding are restricted then the only source of funds is from shareholders. Sooner or later they will demand their money back with more interest than the health system can generate. You can bluff them for a time but not for ever. Bob Dalziel was the great salesman but eventually even he could not persuade shareholders.

Dalziel the man

As one shareholder said last night: "Bob's a larger-than-life character, and a very good people manager. But he doesn't know anything about transport, health care or communications ----------------------- Inside Coles Myer it is acknowledged that Dalziel - a physically imposing, charming and entertaining man - could probably sell sand to the Arabs. Dalziel's Leap Into The Unknown, Australian Financial Review 23 Nov. 1995

Bob Dalziel, has pledged to shareholders he will lift the company's performance to acceptable standards within three years; Dalziel Takes An Option On Better Times, From Abstract -Business Intelligence Australia -- The Australian 14 February 1996

From the reports it is clear that Dalziel was an outgoing and very sociable person. Everyone liked him. He seemed to be the ultimate "nice guy". He was very persuasive and as one contact put it could sell "sand to the Arabs". Mayne was in for a difficult time and shareholders would need to be repeatedly persuaded that better times were ahead. He was a good choice for this. His skills in selling the unsaleable would be taxed to their limits. He would succeed in keeping shareholders optimistic for 5 years in the face of repeated setbacks.

1996

Coming to grips with Mayne's problems:- Dalziel was appointed on 23 November 1995. He immediately set about visiting every sector of Mayne's empire and getting to know the staff. Very early on he visited Mayne's principle institutional shareholders. The clear message was that they didn't like the investment in Optus and that they were interested in investing for growth. The diversified model with a finger in many pies was no longer popular. "Core business" had become the buzz word.

A sudden change in direction:- As late as 1 March 1996 Mayne executives were publicly indicating that Mayne was "committed to staying as a shareholder" in Optus. Dalziel however promised to give the major shareholders what they wanted even though this alienated smaller shareholders who had invested in Mayne because of its Optus holding. To encourage him the board crafted a potentially massive incentive bonus linked directly to the share price.

Mayne Nickless set new standards in corporate governance this week when its shareholders unanimously endorsed what could prove to be a landmark share option scheme for new chief executive Mr Bob Dalziel. `The Mayne Link Between Incentive And Outcome, The Australian 17 February 1996

Bonuses linked directly to profits were the key to inducing staff to adopt money making practices dysfunctional for care in the USA. This was particularly so in Tenet/NME. One of the kety strategies used to motivate senior administrators to exploit patients was bonuses of up to 50% of salary linked directly to profits. Columbia/HCA had a similar system of bonuses as did all of the successful US corporations which indulged in fraud. Columbia/HCA subsequently acknowledged this as a key factor in their misconduct and abolished the practice. I raised the issue of the problem created by incentives in the USA and Mayne's use of them with Australian health authorities but was assured that this was a normal business practice!

Dalziel was under considerable pressure to grow and promised a blueprint for expansion by July 1996. However some of his statements suggest that he had some personal reservations about the buy buy buy growth philosophy.

Mr Dalziel also said Mayne Nickless would grow by "customer bridge building". "We don't believe we always have to buy businesses to grow," he said. "We are going to grow our business by moving into different markets as often as possible with existing clients." Mayne has eye on overseas targets, Sydney Morning Herald - 15 Aug 1996

A vision:- Mayne was performing poorly and Dalziel continued to sell off money losing assets. At the same time he promised a radical change in direction which would include selling Optus and revamping the company. He implied a grand vision, which would include core businesses like health. It seems likely however that the board had very early on set the general direction which Dalziel would follow and chosen his right hand man. In February 1996 it gave Dr Catchlove a similar if smaller incentive share option to Dalziel.

Selling Optus would mean forgoing about $500 million in potential profit. Dalziel and Catchlove were promising to do much better than this by focussing on health care - a brave decision.

Following a comprehensive review of the company's operations, Mr Dalziel said Mayne Nickless had developed a strategy based on four commitments: * to focus on three business streams - health care, time critical express and contract logistics; * to put priority on investing in the health care division over the next two to four years;  Mayne has eye on overseas targets Sydney Morning Herald - 15 Aug 1996

The big winner was Barry Catchlove, head of Health Care of Australia - Mayne's burgeoning health care division. This, it was decided, was where the company's future lay. Two-thirds of future expenditure would go into health. Mayne chief formulates his prescription, Australia's Business Review Weekly 18 Nov. 1996

When the vision was announced in August 1996 there were few surprises. Health Care of Australia (HCoA) and its CEO, Barry Catchlove were to be the big winners. Optus was to be sold and two thirds of the available proceeds would go into expanding health care. Potential takeover targets had been identified in France and Canada. Mayne promised to divest itself of its 25% ownership of Optus by the end of 1996. Promising international expansion is always a good placebo for distressed shareholders.

But an upbeat Mr Dalziel foreshadowed a strong turnaround over the next year, and said the company was assessing possible acquisitions in North America, France and Australia. ---------------------- ``We're looking at the 1997 year as being a very positive year for us.'' Mayne Looks Ahead To Strong Year,The Age 3 Sept.1996

Problems with Optus:- Dalziel's plans suffered a major setback when Channel Seven sued the remaining shareholders of Optus and refused to settle the dispute. Plans were put on hold until the matter was resolved. Dalziel was still being optimistic in October but by November prospects were bleak.

In fact, there is still a good chance that a listing of Optus won't go ahead this year at all, in which case it could drift years into the future. Tug Of War Over Best Time For Optus Float, The Age 4 Nov. 1996

Still no profits:- Despite repeated promises Mayne was forced to call off its sale of Optus shares in December 1996. Mayne was still performing poorly. The promises from Mayne executives kept coming and trusting shareholders did not desert this company which had served them so well in the past. The real reasons for its past prosperity were not considered.

Let me say at the outset that the Board and management believe that our profit performance for the last financial year was disappointing. Chairman's Address 26 Nov 1996

The planned $4.5 billion sharemarket listing of phone group Optus Communications was delayed indefinitely yesterday because of a potentially damaging legal action by Seven Network. Seven Action Delays $4.5bn Optus Float, Sydney Morning Herald 30 Nov. 1996

CLICK HERE for references and extracts which explore 1996 in more depth.

1997

The problem for European logistics operators is that they are beginning to witness the same problems the UK participants have been feeling for a while - increasing competition and dwindling margins. ----------------- But the success of health care, relative to the other two divisions, demonstrates that the tail is increasingly wagging the dog. And the market probably will react well to moves to increase the weighting towards health care. Optus float has been finally sunk, Sydney Morning Herald 28 Feb 1997

A slow start:- 1997 started on a very gloomy note after the collapse of the promised Optus float and a poor performance. Mayne was eternally optimistic and made a concerted effort to resolve the Optus Vision dispute with Channel Seven. A number of hopeful reports appeared in the press.

The year:- The year was characterised by the continuing sell off of existing businesses, by a ruthless restructuring with the replacement of a number of senior staff, by a concerted effort to grow its health care division and by continuing frustration over the proposed sale of its Optus holding. These were the things the market wanted and in the face of repeated setbacks Mayne tried to be upbeat about them.

Big Bob Dalziel has made a big difference. As he bellowed down a bleak video-conference line into Mayne Nickless's boardroom yesterday, he made no bones about what he thought of failed businesses. (Fulcrum), The Age, Wednesday, 03 Sep 1997

Ian Webber, the chairman resigned during 1997. He had guided Mayne through the very "successful" 1980's, the years during which Mayne ran its illegal price fixing arrangement with its competitors.

Health:- Health care was the one sector that was performing well. Mayne promised and during the year it made a concerted effort to expand health internationally and in Australia, generating as much positive publicity as it could from these efforts. It made much of its projects in Indonesia, its diversification into Pathology, the opportunities presented by the colocation and privatisation programs of the various state governments, and the steps the government was taking to increase the number of people taking out private health insurance.

Mayne was under performing and received a nasty scare in February 1997. The most ruthless and competitive health care corporation in the world, Columbia/HCA announced its plans to spend $1 billion expanding into Australia. Mayne responded with a public outpouring of a business policy not dissimilar to Columbia/HCA's MacMedicine, but they called it "One stop" medicine modelling themselves on a travel agent. Fortunately for Mayne and for Australia the FBI took time off from fighting drug trafficking and started raiding Columbia's hospitals instead. Faced by a barrage of criticism and probity issues arising from a massive fraud investigation in the USA Columbia/HCA abandoned their attempt to enter Australia.

Health care in Europe:- Things looked bleak when a further fall in profits were reported in February. Mayne responded positively by making a play for the French company Generale de Sante Internationale (GSI). GSI was the largest health care conglomerate in Europe and the fourth largest in the world. It was for sale. The purchase was to be funded from the sale of Optus. The conflict with Channel Seven over Optus Vision was resolved in March and Mayne planned to have the float by July - in time to pay the price.

The bid - tipped to be about $1 billion - is the first leg of Mayne's ambitious plan to build an international health care business centred on Europe. Mayne In $1bn French Bid, Sydney Morning Herald 1 April 1997

Mayne and Columbia/HCA were among the four short listed to buy the French giant. The medical profession in Europe and French authorities were both briefed about Mayne's recent $7.4 million fine for price fixing and the outcry surrounding Columbia/HCA in the USA. They received documents and were told of the FBI's raids on 28 March. By the 4 April both companies were off the short list. It is not known if knowledge of their misconduct was instrumental in this. Mayne made no further attempts to enter the European health care marketplace.

Optus:- Plans for the Optus float fell into disarray once again when there was a major shake up in Optus in June 1997. Dr Ziggy Switkowski and other senior management were dumped. Optus Vision was about to experience a loss of $340 million, rendering a float inadvisable. There were plans for a major change of control. The Foreign Investment and Review Board (FIRB) would have to approve the deal. Dalziel became acting chairman of Optus until it was all worked out.

This has been a horrible year for Optus and Mayne and one that has forced Dalziel to become a near full-time Optus dealmaker as crisis after crisis has forced difficult negotiation after difficult negotiation. Mayne Sees Daylight At The End Of Optus Tunnel, The Age 7 March 1997

Profits at last:- Things started to improve and in September Mayne announced a $100 million profit from the previous year. The "key driver" for these profits was health care. Dalziel stressed that he was not happy with this and wanted much more from health. His comments suggest that he intended to squeeze the system for more profit.

The key driver of the group's earnings was once again health care, which returned a 41.5 per cent increase in pre-tax earnings to $95.8 million with revenue up 38.3 per cent to $720.3 million. "We are unhappy with the returns but this is a young and immature business," Mr Dalziel said. Mayne Nickless is the world's sixth-largest health-care operator. Optus stake jams Mayne profit , Australian Financial Review 03 Sep 1997

Privatisation and colocation:- During the last third of the year various state government plans for colocated and privatised hospitals went to tender. There was an intense effort to popularise these changes to the system, by the state ministers and the corporations. The newspapers and particularly the Courier Mail in Queensland came on side. They reported glowingly about the prospects and the benefits - dismissing criticism as misguided.

Mayne Nickless Ltd has formed a high-level executive team to examine avenues for expansion of its Health Care of Australia arm and create a major international health-care group. Mayne to cut Optus exposure, Australian Financial Review, Tuesday, 25 Nov 1997

In late 1997 Mayne set up a special HCoA team to prepare for expansion during 1998.

CLICK HERE for references and extracts which explore 1997 in more depth

1998

Another bad start:- Mayne entered 1998 still burdened by Optus. In spite of its extensive sell off of money losing facilities and radical reorganisation it was still not making a profit. It was talking up growth when it couldn't generate profit from its existing operations. The excuses and explanations kept coming and Dalziel was as always persuasive. When in trouble health care corporations promise international expansion to keep their shareholders on side. US and Australian corporations have employed this strategy. It is interesting to note how Dr Catchlove claimed opportunities in private health care in a region without Medical Insurance in the midst of a massive slump

Mayne Nickless subsidiary, Health Care of Australia is moving to sieze the opportunity offered by the Asian slump, announcing plans to quadruple its investment in the region. Health Care to lift Asian investment, Courier Mail 5 Jan.1998

Haemorraging in parts of the health division, reduced profitability in the time- critical express business and lower margins in the armoured car unit hurt the groups earnings. Mayne share price slashed after posting $60m interim, Courier Mail 25 Feb. 1998

Subterfuge or Compartmentalisation?:- We get a glimpse into Catchlove's thinking, the promise of growth, and the positive spin the company is taking from an interview he gave to The Australian in January 1998. The interesting thing is that the interview rings true and seems to be genuine. Catchlove is saying what he really wants others to believe so that he can believe it himself. The article must be set against the views of analysts who describe HCoA's health care as haemorrhaging. Could Catchlove be compartmentalising and rationalising?

Catchlove is unenthusiastic about the prospect of empire building HCoA into a multinational concern. The group looked at and rejected some opportunities in Canada and is not too keen on Europe any more,- - - - - "I think it's a regional business". Under Doctors Orders, The Australian 9 Jan 1998

It is interesting to speculate as to whether the explanation of Mayne's sudden change of heart about empire building is rationalisation. Could it have anything to do with Mayne's rejection because of its 1994 $7.4 million price fixing conviction. There was intense opposition by groups in Canada and the French were well informed.

The pressures on Catchlove:- Mayne has set itself an ambitious agenda for increasing profits. The pressure is now on Dr Catchlove to squeeze these increased profits from the already squeezed health care division. Some reports suggest that it is already beginning to flag. The only way to increase profits to the extent demanded is to compromise on care. Catchlove has the support of Dalziel, the board and shareholders. If he fails to increase profit he will lose it.

Mayne Nickless has set itself an ambitious target of improving earnings by 10 to 15 percent every six months after unveiling a 37 per cent rise in December half profit. Mayne posts $59m earnings, sets its sights high, The Australian 26 Feb. 1998

If Catchlove does not buckle under and do this then the promised profits will not be realised. I have suggested on other pages that rationalisation and compartmentalisation are likely to occur in this situation and that people with closed minded traits or sociopathic tendencies are most likely to do so. How far will Catchlove allow it to go before he draws the line? This is a doctor who is well trained!

One analyst said Mayne "must sell something" to fund the capital expansion of its booming health-care operations, which are the engine room of the group. Mayne Need To Free Up Capital, Australian Financial Review 25 Feb. 1998

But directors vehemently rejected the reports insisting the company had adequate sources of funding expansion plans without the Optus proceeds. Mayne posts $59m earnings, sets its sights high, The Australian 26 Feb. 1998

There is a sharp contrast between the views of directors and outside analysts. Is it possible that directors, inspired by Dalziel have become so committed and enthusiastic that they are only seeing what they want to see? Failure in health care is now untenable.

Dalziel has followed the profit trail. With the completion of the Optus deal, 70 per cent of the company's focus will be on healthcare. - - - $6 + A Bob Is Worth Nearly $10, The Daily Telegraph 16 Sep 1998 --From Abstract by Australasian Business Intelligence

Making it all legitimate:- The article in the Australian praises Catchlove's prowess. He uses it as a vehicle for externalising his conflict and his rationalisations. To survive he must squeeze more profit from care and he embraces the tired justifications from the US marketplace to justify this. This is a forum that will uncritically accept his rationalisations, publish them and so give them legitimacy. He would not say the same things to a critical professional audience as his assertions would be strongly challenged.

The strategy is interesting. He first negatively discredits his critics - his previous medical and public system peers. He then obliquely aligns himself with the nuns, putting HCoA into the same bracket as the not for profit community groups, whose primary focus is service to the community.

Catchlove then trots out the same tired rationalisations about market medicine and quality that have characterised Tenet/NME, Columbia/HCA, Andrew Turner and many other once worshipped but now discredited giants in the US system. The evidence quite clearly shows that to increase profits and be competitive staff and services have been repeatedly compromised. There are good reasons for believing that this was the key to success. The next step in the tautology is to claim that because HCoA are making money they must be providing "quality" care. The article almost makes the claim but not quite!

A case could be made that the single most important public health asset Mayne Nickless has privatised so far is Dr Barry Catchlove, - - - -------------------- "There is a view in the public sector that that's where quality begins and ends and the private sector is just some greedy money-grubbers or misguided nuns or something." "But the reality is that if we don't provide a quality product were out of business. If we do an excellent job at what we do we will make money . . . because if you run your business efficiently and provide high quality you cannot help but make money." ------------------------ "Its my experience that that the good private sector is more committed to quality, to training staff, than the public sector. It's a much better employer." Under Doctors Orders, The Australian 9 Jan 1998(Quotes are by Catchlove)

Because care is a human service and involves humane conduct it is people intensive. Technology has not replaced human faces. The principle cost of care is salaries. The US market has shown that the key to corporate health care success has been a reduction in staff. This inevitably leads to a steady deterioration in services and care. A variety of rationalisations and forcefully expressed justifications have been used to stare down critics and justify deliberate understaffing. Catchlove follows the pattern.

One of its (HCoA) key performance measures is the number of hours devoted to every patient per day. Across the HCoA group the average is 11 hours a day, compared to 15 hours at many public hospitals. "If you increase that 11 hours by point-one of an hour, to 11.1 hours, it takes $2 million off our bottom line, that's how sensitive it is," He (Catchlove) says. "And when we've taken over (public hospitals) and reduced the average hours per patient to 11, there was no complaint about the quality or the service. So there are huge inefficiencies." Under Doctors Orders, The Australian 9 Jan 1998

What Catchlove is really saying is that patients in HCoA hospitals are getting 4 hours per day less care than similar patients in the public system. It is equally clear that Catchlove has turned a deaf ear to the flood of complaints emanating from the nurses and more recently the public in Port Macquarie, where HCoA runs the public hospital.

In the marketplace financial success is its own justification. If it makes money then it must be working.

HCoA is riding the crest of the wave. Posting a more than 40 per cent rise in pretax profits to almost $80 million in 1996-97 and an almost 40 per cent rise in revenue to $720 million. Under Doctors Orders, The Australian 9 Jan 1998

Catchlove's dilemma:- My own assessment of Catchlove's interview is that it is a reflection of the creeping doubt, which must be assailing him by now. That he chooses to express the economic theories in this way to this less informed audience suggests that he is struggling against these inner doubts - keeping them at bay.

Unlike the US executives Eamer, Scott, Turner and unlike Dalziel he has real experience of medicine, real experience in the public system, and real experience in accreditation. Deep down he must have major misgivings about the way in which pressures for profit impact on staffing levels and so care. How far will he go and how much will he tolerate? Could it be that he is becoming an impediment and is soon to be gently moved aside - and he is comfortable with this.

It is interesting to note the way in which he steadily moves from the coalface in HCoA . He enters the shelter of Dalziel's inner, circle which is blindly promoting the vision of a health care empire. He assumes responsibility for international expansion where he can sell his views in a less challenging environment. He is elevated to a senior position in the HIC. Here his views will be reinforced by Wooldridge and his equally blind economic rationalist administration.

Optus:- Problems with Optus continued. It posted a $83.6 million loss and fell short of its target when raising more money from shareholders. Mayne were still upbeat about unloading their 25% holding in Optus and using the proceeds to fund health care.

Management reshuffle:- There was a major management reshuffle in May 1998. Dalziel retreated further into the Mayne laager centralising power in a four person inner circle created to devise and set strategic direction and policy. It was to spearhead the planned expansion after the sale of Optus. It was also perhaps a group of true believers to shield Dalziel from criticism and reality.

Catchlove moved up from HCoA to join the inner circle and became the executive director responsible for acquisitions. Mayne was preparing for the float of Optus and being upbeat about it. After so much hype shareholders would expect massive profits from health care. Dalziel and Catchlove would have to deliver or go.

"I guess the fact that Barry Catchlove is the driver on the growth side of things is a pretty big hint that they are going to spend on healthcare." Mayne Nickless unveils new management roles, The Age 28 May 1998

Mayne Nickless managing director Mr Bob Dalziel says the four corners of his strategy for the group's emergence as an integrated healthcare and logistics service provider are in place. ---------------------- The group has reduced its portfolio of businesses from 23 to nine ----------------------- "They are significant savings and that frees you up to grow again . . . and we are now all about growth." Everything's In Place For The Mayne Man, Australian Financial Review 13 June 1998

The positive noises that an Optus float may be just around the corner - Mr Dalziel has targeted September - have not fallen on deaf ears since investment upgrades are starting to flow from sharemarket analysts. The Mayne thing's the right timing, Australian Financial Review 17 Jul 1998

Catchlove and Wooldridge:- Wooldridge, the federal minister of health had been a strong supporter of corporatised medicine and of Mayne Nickless. Wooldridge like his labour predecessor was determined to force doctors to enter into commercial contracts with corporate providers - the critical step in introducing managed care. Mayne Nickless came to the party entering into an agreement with the French insurer AXA and targeting doctors in its hospitals in Melbourne and Queensland. Legal advise taken by the Australian Medical Association was that the proposed agreements with doctors were illegal. Wooldridge promptly passed regulations to make them legal.

Wooldridge rewarded Catchlove by appointing him chairman of the Health Insurance Commission (HIC) in August 1998. The HIC was one of the most powerful departments in Dr Wooldridge's portfolio and responsible for policing fraud and also for licensing pathology laboratories, the sector most at risk. There was understandably an outcry about the obvious conflict of interest which both stared down. While Catchlove resigned from Mayne's board he remained a member of Dalziel's inner committee and kept his position as executive director of acquisitions. There was some irony in that Mayne acquired the heavily criticised Macquarie Pathology at the same time so claiming 20% of the $1 billion-a-year Australian pathology market.

Having a managing director at the heart of the political process was clearly of inestimable value. While Mayne's credibility was boosted by the appointment the close relationship between Catchlove and Wooldridge was to prove a poisoned pill when they were later implicated in the Scan scam.

Optus float fails again and Mayne sells more assets:- There was another flurry of speculation about the sale of Optus in August and September 1998. This reached a crescendo when the release of Mayne's annual results was delayed so that the sale could be announced. Unfortunately the US market was unstable and took a downturn at this time. Once again discretion dictated that the float be delayed again. Mayne's shares fell.

The company has withheld the results until the last possible moment in the hope that managing director Mr Bob Dalziel could simultaneously announce a long-awaited float of Optus Communications, in which it controls a 24.99 per cent stake, to the market. Great Expectations Dashed: Profit Forecasts To Plunge, Australian Financial Review 15 Sept. 1998

Instead Mayne made much of the sale of its poorly performing freight operations. This would release some capital. At the same time Mayne Nickless moved from the transport sector to the health care and biotechnology sector of the Australian Stock Exchange's All Ordinaries Index.

The century-old company is to quit the transport industry and concentrate on its health-care and logistics businesses. Mayne Nickless will cut the last links with its past when it announces the sale or closure of its Australian express-freight operations on September 15. Mayne Nickless to get off the road, Business Review Weekly, 14 Sep 1998

Profits are down:- Newspapers reported that profits were down by 56% but Mayne in its report to the stock exchange calculated them as 14% higher. This loss was largely overshadowed by news of the delay of the Optus float, the sale of its remaining transport businesses, its pathology acquisitions and its purchase of four hospitals from the Medical Benefits Fund. Catchlove had squeezed as much as he could from health care. He would by now be concerned about his ability to wring any more profit from health care. Mayne's predictions for future health care profit were cautious, but the market had by now embraced the myth of health care profits and did not listen.

Mayne Nickless also said that in the short term, margins in its expanding Australian health care sector would continue to be under pressure. Mayne Nickless says 98/99 to be a challenging year, AAP News 15 Sept 1998

Investors, delighted by news of an imminent Optus float, set aside disappointment over the size of abnormal losses and lower-than-expected organic growth in health care and logistics, to send Mayne Nickless shares soaring 52 cents to $9.02. Mayne profits halved, The Age, 16 Sep 1998

Despite Mayne's own cautious assessment the headlines reflected optimism for health care, for growth and for the sale of Optus. Dalziel's magic was still working. Headlines screamed "Mayne now poised for growth", "Optus stake float `this year'", "Health Care The Way Of The Future", "In the Mayne, prospects healthy". Only one or two were sceptical about the rubbery figures.

"It's (share prices) up on the Optus float and the increasing focus on healthcare, which is seen as a high-margin business and good growth prospect compared with the transport industry, which operates on much lower margins," one broker said. ---------------------- It has spent about $1 billion in the past seven years building its healthcare business, including the purchase yesterday of four hospitals from health insurance group MBF. In the Mayne, prospects healthy, Sydney Morning Herald, 16 Sep 1998

The obvious question to ask the likes of all four of the big banks, Lend Lease, Mayne Nickless and others who continually pile on abnormal losses and write down assets to make latter profits look better, is: what is so abnormal about the losses? ------------------- At the end of the day someone pays for abnormal losses and that someone is the shareholders. -------------------- While he is keen to get Optus off his books, it should also be noted that, once gone, Dalziel will have no excuses and will face a shareholder revolt if he even mentions the words abnormal item this time next year. What's abnormal about the losses?, Australian Financial Review, 18 Sep 1998

Optus floats away at last and Dalziel hedges his bets:- The float was finally announced on 30 September 1998. The messages coming from Dalziel about future plans were confusing and contradictory. He was going to grow health care but at the same time Mayne had no acquisition plans. This was despite its inner circle and Catchlove's role as executive director responsible for acquisitions.

Health was the focus for future profits but the prospects were guarded. In fact all of the health care corporations were performing poorly.

Far from providing opportunities as Catchlove claimed in January 1998 "the Asian economic crisis had already slowed further development". It is only because press reports are so numerous and memories so short that they can get away with such blatantly deceptive and contradictory statements.

Mayne Nickless Ltd's managing director, Mr Bob Dalziel, has big plans for the healthcare and logistics business now that he has finally been able to deliver on his promise of floating its 24.99 per cent stake in Cable & Wireless Optus. -------------------------- Mayne Nickless intends to use some of the proceeds to continue its expansion into the $1 billion-a-year diagnostics business, which covers the pathology and radiology services sector, and is looking at opportunities in aged care. Dalziel Unveils Mayne Strategym Australian Financial Review 1 Oct. 1998

"We are capable of making a large acquisition but we have no acquisition plans at the moment, it all depends on where the opportunities arise," Mr Dalziel said. Mayne's Healthcare Focus A Headache For Investors, Sydney Morning Herald 12 Oct. 1998

Trading conditions were expected to remain tough in all of Mayne Nickless's markets - health care, express freight, logistics and security - the company said in its annual report, released yesterday. Trading still tough: Mayne, Sydney Morning Herald - 22 Oct 1998

A property spin off:- Flush with capital from the Optus sale Mayne was still looking for more capital. In was planning to sell its $700 million worth of property, including hospitals to a separate property owning company and then lease them back. This is the strategy adopted by US aged care corporations to raise capital when they were short and the pressures for growth strong. Dalziel despite all his years of planning still did not know what to do with the capital he already had. He claimed the extra would also go to health care.

It (money from property) would focus on diagnostic services, the capital-intensive government privatisations and hospital co-locations - building private hospitals next to existing public hospitals. Mayne, with its listed rivals Australian Hospital Care and Ramsay Healthcare, had been conscious of investment-community concerns about the amount of capital tied up in health-care property that could be better used elsewhere. -------------------- Mayne Nickless, the largest private hospital operator outside the US, planned to double its hospital business to $2 billion in five years. Mayne Flagging Property Spin-off, The Age10/23/1998

A political gift:- Dalziel was gambling that the coalition government would be re-elected in 1998 as they had promised a 30 per cent rebate on private health insurance. They were re-elected. This bonus would, they believed reverse the declining number of insured patients and bring many more private patients to their facilities. Labour if elected would have spent the money more efficiently by supporting the crumbling public health system.

At the same time the election was a watershed for Australia's private hospital companies. --------------------------- This transforms the long term outlook of Australia's private hospital providers and vindicates the bold decision of Mayne Nickless managing director, Bob Dalziel, to quit Optus in favor of healthcare. As explained below, long term investors should include private hospital providers in their portfolios. GST: A Healthy Profit Outlook, Shares Magazine 1 Nov. 1998

A fear of predators:- It was now up to Dalziel and Catchlove to screw more money out of health care. Without Optus Mayne's share price was down. Unless it could be pushed up by increasing profits it would remain a potential takeover target for a multinational predator. In his elevated position Catchlove was further from the coalface and the real consequences of Mayne's policies. He could shield himself.

"The healthcare division is in pretty good shape, with good margins and returns well above the cost of capital," says one analyst who follows Mayne. "They have moved into radiology and aged care, and have a strong, integrated business. Mayne Nickless Life After Optus Shares Magazine 1 Nov. 1998

In its post-Optus form, the company will also seem a much juicier takeover target to foreign health-care companies seeking a presence in the growing Australian market. ------------------------ For this reason, the heat is on Dalziel and his team to get the share price above $9. ------------------------ "This is a dramatic shift for us," Dalziel says. "It is a philosophical shift. What we are saying to investors is, growth is going to come from health; that will be the real driver of the company." Old truckie gets a new health kic, Business Review Weekly 02 Nov 1998

Future directions:- Catchlove was holding co-located hospitals out as future growth areas. Interestingly he had now omitted public hospital privatisations from his list. A succession of negative reports from state auditor generals and other reviewers had turned them into a political no no. Hospitals were not being as profitable as hoped. Diversification and integration in health care were becoming buzz words again.

He (Catchlove) says the company is pursuing a strategy of diversification in health, and vertical integration of health products, to reduce the dependence on its free-standing private hospitals as a source of revenue and profit growth. The company has close to $100 million tied up in work in progress - projects that will not produce revenue for two or three years. Increasing its exposure to diagnostics will reduce reliance on revenue from health funds and will spread risk. -------------------------- Mayne has also moved into aged-care services with the purchase of Lilydale Community Hospital in Victoria. -------------------- It recently bought its first radiology business and it plans to open radiology operations in each of its hospitals. Old truckie gets a new health kick, Business Review Weekly 02 Nov 1998

Gloomy profit forecast for the immediate future:- In his address to shareholders in November 1998 the chairman predicted a $1.1 billion windfall from the sale of Optus. The company had withdrawn from continental Europe and the USA and operated only in the UK, Ireland and Canada. They had reduced their operations in Australia to health and logistics. They had established a beachhead in Asia where they plan to grow. There had been rapid growth and evolution in health care. The company nevertheless warned that profits were unlikely to increases in the first half of 1999. Competition in Australia and Asia was intense and expansion would be limited. Investers were dissapointed and share prices slumped.

 

"Operating profits in the first quarter have fallen short of plans, which were quite aggressive, and are generally below the prior year," he (chairman) said. Aust's Mayne Nick warns of tough first half in 98/99, AAP News 17 Nov. 1998

- - - - but has continued to disappoint the market with its expectation of flat to declining operating earnings to the year's end. Market Shows No Mercy After Mayne Forecast, Australian Financial Review 18 Nov 1998

Mayne Nickless shares were savaged for a second day in a row, - - - in stark contrast to the dizzying market performance of Optus shares ------------------ Later, the managing director, Mr Bob Dalziel, said the ``disappointing'' profit forecasts were triggered by ``just a couple of problems'' in the group's New South Wales hospitals, Mayne Shares Battered On Profit Forecast, The Age 18 Nov 1998

Macquarie Bank is understood to have downgraded its short-term view of the stock from "outperform" to "underperform", while continuing to believe it will outperform the market in the long term. Brokers Wind Back Mayne Forecasts, Australian Financial Review 20 Nov 1998

Mayne meets Smedley? At the end of the year Mayne and Colonial were engaged in talks aimed at establishing Fiji's first private hospital. One wonders if this was when Mayne and Mayne's next MD, Peter Smedley first sized each other up.

In December Mayne expanded further into diagnostic imaging purchasing Melbourne Diagnostic Imaging Group. Shareholders voted to give themselves a $350 million capital return from Mayne's Optus gains.

 CLICK HERE for references and extracts which explore 1998 in more depth

1999

Ratings agency Standard & Poor's Corp has revised the outlook for healthcare and logistics company Mayne Nickless Ltd from stable to negative as the future of the nation's health insurance sector remains uncertain. S&P Flags Mayne Downgrade, Australian Financial Review 6 Jan 1999

From bad to worse:- Mayne entered 1999 with falling profits and a bleak outlook for the immediate future. Standard & Poor revised its outlook from stable to negative.

It was a year which was destined to go from bad to worse. Catchlove and Dalziel's assurances and promises became less and less credible. Claims about international success were not matched with increases in profit.

Dr Barry Catchlove said the company experienced a "roller coaster" interim period in Indonesia, opening two more hospitals in a time of political and economic upheaval. The company continued to negotiate entry into India's health care sector, while opportunities in Thailand, the Philippines, Malaysia and South Pacific were also being considered. Mayne Nickless' interim profit flat on lower margins, AAP News 02/24/1999

Shareholders became more and more disillusioned. The views of Dalziel and his inner circle moved further and further from the views of its powerful shareholders. Dalziel progressively lost their support. The company behaved ever more erratically frantically selling off, buying, and repeatedly restructuring - perhaps more to keep shareholders hopeful than with much prospect of financial reward. They seemed bereft of ideas.

Mayne was seen as a takeover target. The reports suggest that a number of multinationals ran a ruler over the company but found it indigestible.

Probably the most striking feature of the year was the enormous pressure put on Dalziel and Catchlove to wring more profits from health care and from hospitals. It is to their credit that they resisted much of this pressure and profits from health care remained low.

The release of the company's reports in February and its predictions for the immediate future were met with a barrage of criticism and a further fall in the share price. Dalziel and Catchlove were directly in the firing line. The message was quite clear -- profits this year or else!

Mr Dalziel said despite HCoA's flat half year result, the company's commitment to health care was unaltered and further benefits would come from diversification, synergies and economies of scale. Mayne Nickless' interim profit flat on lower margins, AAP News 24 Feb. 1999

Mayne cited reduced margins in its health-care business during the half - particularly in its stand-alone private hospitals in NSW ------------------------- Analysts said it was becoming harder to recommend Mayne to institutional investors because the company was now in its chosen fields of operation and yet was still making excuses for a flat result. Mayne Records Drop All Round, Australian Financial Review 25 Feb. 1999

Analysts, however, were less sanguine about the result, saying assurances about positive future performance were starting to wear a little thin. Impatience hits Mayne Nickless, Sydney Morning Herald 25 Feb 1999

Shares in the health-care and logistics group Mayne Nickless were savaged for a second day yesterday as investors vented their spleen - - - - - - its core business of choice, health care, had reported lower earnings and that margins were unlikely to recover in the second half. Market Takes Knife To Ailing Mayne, The Age 26 Feb 1999

The critical reviews continued through the year with Mayne's decision to sell Optus, its focus on health care, its decision to be a two stream company, its bizarre accounting practice of calling losses "abnormals" all heavily criticised. It was suggested that it should separate its logistic division as a separate company - perhaps sell it, and that it should do the same with its more profitable Diagnostic Division. Dalziel adamantly refused but eventually agreed to the former.. Dalziel's plans to free up capital by forming a separate property trust were not welcomed and were never implemented.

- - - - has told analysts and institutional investors it is implementing strategies to enhance the value of its non-health-care assets, improve earnings and shore up its exit from transport and logistics. -------------------- In the interim, Mayne Nickless bowed to institutional pressure to dump its line about having two integrally related businesses (health care and logistics/transport), substituting it for the more palatable mantra about being in two distinct businesses. --------------------- In the meantime, those who applied pressure on Mayne Nickless to focus solely on health care are faced with the uncomfortable reality that health-care companies are doing it tough. ------------------- Mayne Nickless now earns 20 per cent less per share than it earned a decade ago, and its core business of choice, health care, is a capital-intensive business, heavily exposed to the malaise in private health insurance and government regulation. Wheels turn in Mayne's journey, The Age 1 Apr 1999

- - - - - - it would merge its contract logistics business in Australia, Malaysia, Thailand and southern China with PGA Logistics. - - - - - The merged entity was expected to eventually list on the Australian Stock Exchange Mayne Nick moves to spin off logistics operations, AAP News 23 April /1999

Mayne Nickless has made an estimated $120 million investment in its warehouse and distribution business in an effort to boost the division's value before spinning it off into a separately listed company. In a move disclosed in The Age earlier this month, Mayne Nickless will shift its primary corporate focus to health care industries. Mayne Gears Up For Corporate Shift, The Age 24 April 1999

Government to the rescue:- By mid 1999 the government had come good on its promises to do something about the failing private health system. The economic rhetoric used by Mayne is interesting. When competition was intense, as in transport in Australia and Europe Mayne exited the markets, which were no longer profitable because of competition. Getting more taxpayers money and support from government was welcomed as "making it more competitive"! With health insurers making more profit, the providers could demand a slice.

Slowly but surely Health Minister Dr Michael Wooldridge is making the changes necessary to make private health funds more competitive. Dalziel and Killen's predecessors at National Mutual have been knocking hard on Canberra's doors, pleading for someone to bite the bullet on health policy. A Shot In The Arm For Health, Australian Financial Review 12 May/1999

The marketplace screws are tightened:- The remainder of 1999 nevertheless saw a steady decline in the company's performance and its share price sank lower and lower. It reshuffled senior staff, purchased a radiology business and sold a business in Canada. It continued to assure a distrustful marketplace that the market had bottomed and that things were actually getting better -- tantalised it with reports of expansion in Asia. Dalziel promised extensive cost cutting implying in health care. He never once mentioned cutting nursing staff, the only way he could really cut costs.

Social Darwinism - will it operate? It is interesting to speculate whether there were prior undertakings or outside pressures from accreditation bodies, nurses and doctors that made drastic cuts in staffing impracticable. These groups were certainly watching critically. In the USA Turner and Scott could ride roughshod over their critics and ignore adverse publicity. Dalziel and Catchlove did not have the support from the market to withstand this sort of adverse publicity. It would need someone with far greater credibility.

Alternately Catchlove and Dalziel may actually have appreciated the consequences and have accepted that further staff cuts were morally untenable. I like to think that this was so - but this would be the exception rather than the rule.

Either way the theoretical frame, which I have used to analyse the US market system suggests that a process of Social Darwinism will now operate. Either Dalziel and Catchlove will be replaced by new executives, who will cut staff and generate profits, or the company will be taken over by a less scrupulous competitor, perhaps a multinational whose executives will do what Dalziel and Catchpole could not bring themselves to do. Neither will have the same credibility problems.

Healthcare and logistics group Mayne Nickless Ltd today unveiled a senior management reshuffle ahead of what is expected to be a disappointing full year profit result next week Mayne Nickless unveils executive reshuffle ahead of profit, AAP News 24 Aug 1999

"In addition, the diagnostic services division, now operating under a separate management structure and comprising pathology and diagnostic imaging, continued to enjoy growth in revenue and earnings, which was complemented during the year with further acquisitions. ------------------- The long-term dynamics of the health care industry remain attractive and it will continue to be the major area of investment," Mr Dalziel said. MAYNE NICKLESS LIMITED: Preliminary Final Report, Australian Stock Exchange Company Announcements 1 Sept 1999

However, analysts are sceptical of any immediate turnaround with two-thirds of its hospitals ranked as either under-performing or still in the development stage, and where costs seemed to increase faster than revenues. Prognosis poor as Mayne slumps 16pc., Sydney Morning Herald- 02 Sep 1999

Mayne Nickless is trawling South-East Asia in search of acquisitions and opportunities to bolster growth in both logistics and health care. In Low Gear And On The Prowl, Australian Financial Review 2 Sept 1999

Why wouldn't they cut costs? It is clear that Mayne Nickless did not cut staff in its health care division to the extent which was needed to make a profit and please shareholders.

As investors are leaving in droves from the private hospital market, the company's June half saw a 30 per cent decline in hospital earnings for the year with the cost of wages rising above the revenue from health funds. Mayne Nick loses in the sex appeal stakes, The Australian Financial Review 30 Dec 1999 From abstract by Australasian Business Intelligence

It is interesting to speculate whether there were prior undertakings or outside pressures from accreditation bodies, nurses and doctors that made drastic cuts in staffing impracticable. These groups were certainly looking critically for signs of impaired care. In the USA Turner and Scott could ride roughshod over their critics and ignore adverse publicity. Dalziel and Catchlove did not have the support from the market to withstand this sort of adverse publicity. It would need someone with far greater credibility.

Alternately Catchlove and Dalziel may actually have appreciated the consequences and have accepted that further cuts were morally untenable. I like to think that this was so - but this would be the exception rather than the rule.

Either way the theoretical frame, which I have used to analyse the US market system suggests that a process of Social Darwinism will now operate. Either Dalziel and Catchlove will be replaced by new executives, who will cut staff and generate profits, or the company will be taken over by a less scrupulous competitor, perhaps a multinational whose executives will do what Dalziel and Catchpole could not bring themselves to do. Neither will have the credibility problems, which now render Dalziel and Catchlove ineffective. The quotes below illustrate the pressures and the undertakings Dalziel was forced to give. The final quote reveals the power and threat posed by large institutional shareholders.

 

Its managing director, Mr Bob Dalziel, yesterday outlined a range of measures aimed at lifting returns - - - ------------------- - - - Health Care of Australia, slumped 30.4 per cent to $59million, following a deterioration in the second half - - - Mayne Seeks Remedy For Its Ills, Australian Financial Review 2 Sept 1999

The managing director, Mr Bob Dalziel, said yesterday the worse-than-expected margin pressures had bottomed and he announced an "aggressive'' cost-cutting and productivity drive. Mayne Pledges Operation Cost-cut, The Age 2 Sept 1999

This financial year is shaping as one of the most critical in Mayne Nickless's recent history. It should be the year that demonstrates the success or failure of the group's ambitious attempts to remake itself. Mayne Nickless is paying the price of unhealthy haste, The Age 02 Sep 1999

Investors have lost patience with Mayne Nickless Ltd's turnaround, yesterday selling the stock down as much as 5 per cent amid some earnings downgrades after this week's profit result. Market Scorns Mayne Over $111m Net Profit, Australian Financial Review 3 Sept 1999

Mayne has also been put on notice by Standard & Poor's, which has placed it on creditwatch with negative implications. ---------------- In particular, the extent of the fall in the hospital earnings before interest and tax from $84.7 million to $59million took analysts by surprise. Double Trouble For Mayne, The Age 3 Sept 1999

Now, after the company's decision to quit the telecom sector with the sale of its stake in Cable & Wireless Optus and its move into the private hospital sector, large shareholders are getting restless. --------------------- ``The structural pressures in the healthcare industry have shown up the flaws in its health-care strategy, which is now looking a little misguided,'' he said. -------------------- ``The share price fall is telling you that the market has lost all confidence in Mayne Nickless,'' one analyst said. ``Certainly, management has lost credibility because they don't seem to be able to work out how best to direct the company's capital.' Funds back away from ailing Mayne Nickless. Business, Sydney Morning Herald - 28 Sep 1999

A dismal ending to the year:- By the end of the year Mayne was in tatters. At the AGM in November 1999 and in subsequent statements the chairman and Dalziel could do little except acknowledge the problems and give the same tired promises and assurances. A number of sales and purchases created the illusion of actively doing something about the problems. In reality they were bereft of ideas and wallowing in the mess. Without the support of the major shareholders whom they had tried so hard to please they were paralysed. They were trapped by their own policies and beliefs. The title of an article in the Australian at the years end on 30 December sums up the situation "Mayne Nick loses in the sex appeal stake"

I am painfully aware that from the perspective of our shareholders, the fall in the Company's share price - from around $9.00 in the run-up to the record date for the C&W Optus share issue entitlement to around $4.30 in recent months - is even more disappointing. -------------------- In conclusion, ladies and gentlemen, your Board is quietly confident that, in the absence of economic or regulatory shocks, improvements in margins and thus in business unit operating profits will become progressively evident commencing in the current half year. MAYNE NICKLESS LIMITED: Chairman's Address To Shareholders, Australian Stock Exchange Company Announcements 9 Nov 1999

"We are optimistic that the steps that are either in place or being implemented will provide a solid for future growth and that the second half of the 1998/99 year will be seen as the low point in our cycle," he (chairman) told shareholders at the company's annual general meeting. Mayne Nick predicts solid platform for future growth. AAP News 9 Nov. 1999

Mayne Nickless says the performance of its troublesome hospitals division has improved and it believes the worst trading conditions are now behind it. `Mayne makes hospital recovery, The Australian 10 November 1999

- - - Mayne Nickless has hung a For sale sign on its Canadian armoured car business - - - Loomis Armoured Car Service --------------------------------- Mayne was looking at internal efficiencies at its hospitals, expanding its diagnostic operations and working with private health funds to correct the slide. Mayne to sell Canadian arm, Courier Mail 2 Dec. 1999

- - the acquisition of its first Queensland diagnostic imaging practice - - - - had signed to buy North Coast X-ray and Imaging for an undisclosed sum. `Mayne to buy Sunshine Coast radiology chain, Courier Mail 3 Dec. 1999

Shares in health-care and logistics group Mayne Nickless Ltd sank to their lowest level in more than 11 years yesterday, with investors continuing to shun the stock and private hospital margins still under pressure. Mayne Nickless plumbs 11-year low , Australian Financial Review 07 Dec 1999

CLICK HERE for references and extracts which explore 1999 in more depth

2000

Market thinking and Mayne Nickless:- That Australians prefer their excellent and much cheaper Medicare system to the private system is an ongoing frustration for the economic hard heads. That the medical profession oppose corporatisation is seen as cynical self interest and a desire to maintain power. The market sees the aging of Australia as creating an increasing "demand" for health care and endless opportunities for entrepreneurs with the ingenuity and ruthlessness to exploit it. The market fails to understand that health care is about "need" and not "demand". In health care "demand" is peripheral. The community pays either through some form of insurance or through taxes and it pays to meet the "needs" of their fellows when they are unable to function effectively. They are not going to pay for demands which are not needed.

A Samaritan ethic demands equity and basic taxpayer support. Neither government nor any form of community funded insurance will tolerate lucrative profits at the expense of the needy. Both will ramp up the financial pressures on the system. The potential for long term profit is therefore severely restricted and margins in the long term will always be tight.

The fact that a smaller number of workers will be supporting a larger number of aged people will increase the pressures on corporate providers rather than increase opportunities for profit. The USA has learned this the hard way. Australia is unlikely to permit a similar exploitation of vulnerable citizens and the same waste of resources for as long a period of time.

To succeed the corporations will have to so dominate the system so as to force out all other more appropriate options and create a situation from which there is no retreat. Corporate interests must so dominate the corridors of power that democracy as we know it is emasculated. This is the greatest danger we face.

Mayne Nickless experience during the Dalziel years illustrates the consequences of depending on government and insurer largesse. The industry may chaff at government regulation and oversight but the USA illustrates only too well the unfortunate consequences of giving the market free reign and of allowing it to impose its solutions.

Market theory will not accept that the market does not always work. As Kuttner comments if something does not work then the tautology into which the theorists have locked themselves insists that this is because it has not been sufficiently market-like. It must be made to conform to market processes and market forces more closely. Unsurprisingly this compounds the problems. There is little prospect that the lessons from Mayne's failure will be learned in the present political and global context - or that they will be examined within the context of the US experience.

Instead of examining Mayne's failure by studying the conflicts between the market and health care contexts the market will look for scapegoats. Dalziel and Catchlove are sitting ducks. The decisions had largely been taken by the market and Ian Weber before Dalziel assumed control. He was simply identifying with and executing the script he had been given. It was not his fault that it was faulty.

Despite a range of inducements (and threats) from the Federal Government, Australians are still proving to be reluctant buyers of health insurance. The insured population remains stuck around the 30 per cent mark, or just 5.7 million people. This is a long way from the 50 per cent insured level achieved in 1984, or even the 39 per cent of five years ago. Hardest hit, certainly when it comes to corporate pride, was Mayne Nickless. Not only did its profit dip but Moody's Investor Services added insult to injury by downgrading the company's credit rating. ----------------- An estimated $1 billion in capital investment over the past eight years gives an idea of how hard Mayne Nickless has driven into the health care industry -an investment built up from zero and all in pursuit of the growth that must (eventually) come from the ageing of Australia. Health stocks on the mend , Shares 1 Jan 2000

Mayne Nickless's Bob Dalziel was initially well regarded by the institutions for his plans in health but when he didn't deliver they marked him back. It will be a long haul for Mayne Nickless to restore its intellectual capital base rating. Star Power, Shares Magazine 1 Jan 2000

- - - - - - many an investment banker has crunched the numbers on Mayne, and there's a persistent view that if the board and management do not move to break it up, someone else will. The Prognosis For Health-care Stocks, Australian Financial Review 5 Jan 2000

Mayne at $A3.68 a share (as at 27 January 2000) is hovering around decade lows and feeling the pain of the private health insurance squeeze of private hospital operators. Mayne meanders, Sydney Morning Herald January 28, 2000 From Abstract by Australasian Business Intelligence

The pressure is building for radical surgery at hospital and logistics group Mayne Nickless after the stock slumped to new lows amid earnings concerns Mayne's diagnosis still poor, Sydney Morning Herald 07 Feb 2000

Mayne's share price has also come under pressure from moves in recent weeks by major shareholders Tyndall/Royal and Sun Alliance and Franklin Templeton to cut their stakes. Scalpels out as Mayne Nickless shares tumble , The Age 7 February 2000

Catchlove departs and the sharks circle:- Catchlove had been the driving force in persuading Mayne Nickless to put all of its eggs in the health care basket and in building up the health care empire that now threatened to destroy Mayne Nickless and cause it to fragment. Outside groups of investors and advisers were threatening to dismember the company and sell it off.

Less than 6 weeks into 2000 Catchlove departed amidst a suitable barrage of praise about his achievements and denials that his departure had anything to do with Mayne's problems or his involvement in the Scan scam. My assessment is that Catchlove, Mayne's hope for health care success had become its biggest liability. Dalziel could not do what the market required Mayne to do while Catchlove sat on their committees. He himself simply did not have the stomach for it. The market had acurately identified the problem and were already looking for someone to do what they wanted.

Ord Minnett analyst Wayne Gentle said the changeover removed "one of the investment obstacles that a lot of fund managers had considered were there". Smedley to tackle the Mayne pain, The Australian 27 June 2000

The market for more than a year has been begging for a leader prepared to take the tough decisions. Hearty welcome endorses Pacman's game, The Australian 27 June 2000

Mayne sold off its Canadian cash logistics business, Loomis Armored Car Service Ltd. It also bought out its partner in the new logistics business so that it was wholly owned. It seemed to be planning to sell or spin off this business as a separate company.

We are talking about a consortium bid for Mayne Nickless. ---------------------------- Salomons (Citigroup member) has been hatching a plan to break up Mayne. We have, according to Sources, an offshore healthcare player lined up to take the hospitals.. Pathology group Revesco is eyeing the pathoIogy operations. The walls have teeth, The Australian 3 Jan 2000

Dr Barry Catchlove had advised he will be leaving the Group in March 2000 ----------------------- Dr Catchlove will remain, in a non-executive capacity, on the board of Mayne Nickles' joint venture health care operations in the Asia Pacific Region. MAYNE NICKLESS LIMITED, Australian Stock Exchange Company Announcements 9 Feb. 2000

The architect of Mayne Nickless's push into health care and a political casualty of last year's ``scan'' scandal, Dr Barry Catchlove, will leave Mayne next month as its shares limp along at their lowest level since 1987. ---------------------- One of Mayne's subsidiaries had ordered six of the machines, but Dr Catchlove said he had no involvement in the decision. Mayne in pain as Catchlove departs / Catchlove quits Mayne, Sydney Morning Herald - 10 Feb 2000

Mayne Nickless Ltd's share price slump continued yesterday as the company moved to quell speculation of an imminent spin-off of its diagnostics division or divest underperforming hospitals. The health-care and transport group was also hit by the resignation of executive director and former head of its health-care arm Dr Barry Catchlove. ---------------------- Pressure is building on Mr Dalziel to arrest the fall in the group's share price, - - - - closing 9.3c lower yesterday at $3.307. Rumours, Resignation Hit Mayne, Australian Financial Review 10 Feb 2000

In just over a year under chief executive officer, Bob Dalziel, the group's shares have fallen by almost 70%, wiping out about $A2.2bn in shareholder value. Mayne on the wane, The Bulletin 29 Feb 2000 From abstract by Australasian Business Intelligence:

Mayne revealed a worse than expected 22 per cent fall in interim net profit before abnormals to $46.9 million, which saw some analysts begin to downgrade full-year numbers by as much as 10 per cent to around $100 million. Mayne Value Rests On Logistics, Australian Financial Review 2 March 2000

Dalziel slides down and down:- With Catchlove gone the full pressure was on Dalziel and the sharks circled closer and closer. The threats to dismember the company and the pressures on Dalziel increased dramatically.

Dalziel and his chairman continued to assure the market that the worst was over and that the future would be brighter. They set up a travelling circus, which travelled around the country holding meetings to reassure shareholders. They desperately sold off holdings in the UK and in Australia. Despite all this the share price which was over $9 before the sale of Optus and $5.75 a year before plunged to $2.95.

Even if Dalziel had the stomach and ruthlessness to cut the costs of care to the extent needed his lack of credibility rendered him ineffective and vulnerable to an onslaught of criticism about failures in care. Dalziel had steadily retreated into his inner circle and surrounded himself with supporters in his Melbourne bunker. He was now unable to move out of the frame of ideas with which he had driven his "radical reforms". Those around him were incapable of thinking outside this mould.

Speculation of a corporate play for healthcare and logistics group Mayne Nickless Ltd intensified as the shares plumbed a new low on Friday. It is understood Salomon Smith Barney (part of Citigroup) has approached potential buyers of the group's businesses in recent months in an apparent attempt to put together a consortium to push for a break-up. Meanwhile, sources said a United States healthcare company might be interested in Mayne Nickless's Health Care of Australia hospitals division Price Fall Puts Focus On The Mayne Game, Australian Financial Review 11 March 2000

MAYNE Nickless has reassured its long-suffering shareholders that the worst is over. This is despite the group reporting a slide in December 31 interim net profit to $46.9 million. The Mayne Nickless share price has been hammered since September last year, hitting alltime lows of $2.95 compared with $5.75 in May last year. Mayne predicts better days ahead, Courier Mail 2 March 2000

Mayne Nickless Ltd managing director Mr Bob Dalziel is under mounting pressure to outline new strategies to lift earnings and the languishing share price after Wednesday's worse-than-expected interim result. ----------------- It (Merrill Lynch) also expressed concern that the group's radiology business ``has now emerged as a new under-performer'', just as Mayne has put in place measures to improve lagging margins in its NSW pathology businesses. MayneNick's Dalziel Feels The Pressure, Australian Financial Review 3 March 2000

Out-of-favour health care and logistics group Mayne Nickless Ltd is to conduct a round of briefing sessions with small shareholders this month as pressure mounts on the managing director, Mr Bob Dalziel, to arrest the slide in the group's share price. Mayne Talks Aimed At Calming Holders, Australian Financial Review 8 March 2000

Before throwing the meeting open to questions, I would like to conclude these formal comments by saying that the Company is optimistic that the steps that are now in place or being introduced will provide a solid platform for future growth and profitability and enhanced returns on equity. MAYNE NICKLESS LIMITED: CHAIRMAN'S ADDRESS TO SHAREHOLDER BRIEFINGS (MARCH 2000), Australian Stock Exchange Company Announcements 20 March 2000

Mayne Nickless Ltd chairman Mr Mark Rayner affirmed yesterday the group would focus on consolidating and expanding its health care and logistics businesses, despite pressure from some analysts and investors for a break-up. Mayne Sees No Need For A Break-up Yet, Australian Financial Review 21 March 2000

MAYNE Nickless says its diagnostics business is not for sale, quashing market speculation of an imminent demerger of the health care and logistics group. --------------------- - - - - chairman Mark Rayner, - - - said the struggling group was confident of improving profitability and saw tremendous growth prospects for its health care business. Mayne Dismisses Talk Of Demerger, The West Australian 1 April 2000

The heat is intensifying around Mayne Nickless chief executive, Bob Dalziel, with the talk about town that a consortium is being formed to sink its teeth into the conglomerate's separate morsels. --------------------- Not that Toll managing director Paul Little has been napping, his new consortium is said to include pathology group Gribbles and Singaporean group Parkway Holdings (who are interested in the hospital operations). Sharks circle Mayne Nickless, Australian Financial Review 14 Apr 2000

Calls for a break-up of Mayne Nickless Ltd have intensified, with Salomon Smith Barney arguing the group's businesses need to be freed from the conglomerate structure to compete effectively against more focused rivals. --------------- Singapore's Parkway Holdings, Toll Holdings, Revesco and Linfox, with Australian Air Express, are among the parties rumoured to have looked at the group New Call For Major Overhaul At Mayne, Australian Financial Review 30 May 2000

Besieged healthcare and transport conglomerate Mayne Nickless Ltd is looking at the sale or joint venture of its $400million-plus United Kingdom transport businesses in an attempt to lift its languishing share price and restore shareholder value. ---------------------- Meanwhile, KPMG is handling the sale of the Australian ports business, Mayne May Sell UK Operations, Australian Financial Review 1 June 2000

Operating out of the cloistered Melbourne environment does little for the firm's chances. Dalziel on the edge, The Australian 8 June/2000 From abstract by Australasian Business Intelligence:

The power of fund managers:- Under extreme pressure Dalziel casts about for solutions. He must appease fund managers and this illustrates an interesting and disturbing phenomenon. To appease them Dalziel must cut costs and compromise care.

The fund managers control the pensions and investments of older Australians particularly those who will take out private insurance. It is citizens financial representatives and their financial interests, which are putting intense pressure on Mayne Nickless and other health care multinationals. The pressure for profits from the wealthier older sections of the population is unwittingly and unknowingly the force, which is seeking to undermine the care given when these same citizens become sick or aged.

With Pacific Dunlop, Mayne Nickless is the second Melbourne-based conglomerate desperate to appease fund managers, which have become increasingly frustrated with deteriorating earnings and poor sharemarket performance. Mayne May Sell UK Operations, Australian Financial Review 1 June 2000

Finding legal ways of "bribing" or influencing doctors:- Even more interesting are the formulas, which were being proposed. The success of US corporations was based on their ability to form financially advantageous relationships with doctors - arrangements, which encouraged doctors to put the financial interests of the corporations ahead of the needs of their patients. Giving doctors incentives meant either breaking the laws prohibiting kickbacks or finding some legal strategy to circumvent it.

The underlying problem for Mayne was that it had not yet found a formula which would allow it to cut care, select profitable patients, or over-service in "legitimate" ways. To do so it would have to get doctors on side. Dalziel's nice guy persona and Catchlove's knowledge were impediments.

Administrators in hospitals in the USA and Australia have been paid huge bonuses for increasing profits. Doctors see these people, who do little real work reaping the benefits of their hard work. It is hardly surprising that a significant number can be induced to accept the rationalisations and explanations, which are used to make financial inducements (read bribery) sound legitimate.

The most glaring illegal example was employed by Tenet/NME in the late 1980's and early 1990's. They saw incentives and kickbacks for referrals and complicity as legitimate practices and the law as an ass. They paid US $379 million in fines. The majority of the fraud actions against major US health care corporations include allegations of kickbacks in one form or another.

Columbia/HCA in contrast attempted to circumvent the law by getting doctors to invest in the companies to which they wanted them to refer patients so that they benefited by doing so. They considered this legal. The US Department refused to accept this practice and included it in the fraud charges against Columbia/HCA. Columbia/HCA acknowledged that its relationships with doctors were not acceptable and abandoned them in 1997 soon after the FBI raided its hospitals. They settled the fraud charges for US $840 million.

The incentive proposed as the solution for Mayne Nickless is the one used by Columbia/HCA. It seeks to build financial relationships with doctors to induce them to put the company first when making clinical decisions. This goes to the heart of the problems with marketplace solutions - the problem with the US system and the emerging problem with the Australian system.

It is not a question of whether this is legal or not in Australia. It is a question of whether it is moral and ethical - whether a company, which indulges in such practices is behaving in a "fit and proper" manner in the health care context. This is why the enforcement of probity provisions in our licensing regulations is so important.

Mr Bob Dalziel has argued that building scale, efficiency and synergies are the key to restoring value from the group's healthcare and logistics portfolio. This week, Mayne's senior management will meet for a two-day workshop planning strategies to restore earnings growth. ----------------- Some observers believe a spin-off of diagnostics would help Mayne attract new radiologists by enabling it to offer direct equity, a strategy used successfully by Sonic in pathology. --------------- He sees value in having an ``integrated health offer'', underpinned by an integrated IT infrastructure, that enables the hospitals and diagnostics divisions to leverage off the relationships with GPs. Dalziel's Mayne Game Through Scale And Synergies, Australian Financial Review 6 March 2000

Good intentions which have problems:- Another strategy favoured by Dalziel is to turn preventive medicine to financial advantage. The strategy is to use its data bases to encourage preventive diagnostic procedures. This sounds and probably is an excellent idea. The problem is that Mayne would control the data base as well as the interpretation of what is beneficial diagnostic screening.

Experience shows that market pressures are very likely to profoundly influence this process so that deliberate or even unwitting positive slants are put on financially rewarding practices and negative findings are down played. In a not for profit context these ideas should be welcomed. In fact they are one of the prime reasons for building an integrated cooperative Australian not for profit health system around a digital network of data bases - a model I would strongly support. In a for profit corporatised market context it is a recipe for future problems.

The big step in that regard is Mr Dalziel's long-held ambition for the company to capitalise on its strengths in healthcare by exploiting its huge database of information to enable general practitioners to intervene earlier in patients' medical conditions rather than waiting until hospitalisation was necessary. That works in Mayne's favor because it means greater use of diagnostic tools, such as pathology and scanning, where it has a major investment. Dalziel Delighted To Make An Early Exit, The Age 27 June 2000

Dalziel finally goes:- The writing had been on the wall for Dalziel for at least a year. He had painted himself into a corner and it must have been a great relief for him when the end finally came, as he knew it must.

When Smedley left Colonial it was a heaven sent opportunity. He possessed the ruthlessness and aggressiveness lacked by Dalziel and Catchlove. He was not a "nice guy" and would not have the same scruples. He did not expect to be liked. His ruthlessness in getting what he wanted from his staff was legendary. He was worshipped by the market so did not have any credibility problems. He would be able to ride roughshod over his critics and stare down arguments and evidence.

It is hardly surprising that Mayne was prepared to offer the salary and the incentives he wanted. He came to the rescue like a great white knight and Mayne's shares rocketed up.

Health-care and transport conglomerate Mayne Nickless Ltd suffered another blow yesterday when credit ratings agency Standard & Poor's lowered its long-term credit rating a notch to BBB following last week's warning that net profit before abnormals this year would fall by up to 27 per cent. ----------------------- Meanwhile, there is market speculation about a significant management reorganisation. S&P downgrades Mayne Nickless, Australian Financial Review 08 Jun 2000

The public seems to have lost faith in Mayne Nickless Limited. - - Bob Dalziel - - - Dalziel has a reputation for having exhausted his supply of ideas. Operating out of the cloistered Melbourne environment does little for the firm's chances. Dalziel on the edge, The Australian 8 June/2000 From abstract by Australasian Business Intelligence:

The talk around boardrooms yesterday was dominated by two topics: what former Colonial chief Mr Peter Smedley will do next and why he isn't joining the Commonwealth Bank board. -------------------- But this abrasive style and his huge success at Colonial has made Mr Smedley a much sought-after candidate by troubled companies that needed a tough, hands-on chief executive to turn them around. ------------------ Mr Smedley known as ``Pacman'' for his voracious appetite for takeovers is also highly regarded outside the financial services arena. Smedley Wants To Be Boss, Again, Australian Financial Review 15 June 2000

Mayne Nickless is high on the corporate betting sheet for those speculating on where former Colonial chief executive Peter Smedley will resurface. Dalziel Ready To Take His Mayne Chance, Australian Financial Review 19 June 2000

Former Colonial Group chief executive Mr Peter Smedley is expected to make widespread changes to Mayne Nickless' management and structure after being installed to turn around the ailing health-care and logistics conglomerate Smedley Takes On Ailing Mayne Nickless, Australian Financial Review 27 June 2000

Dalziel goes with a big smile:- Dalziel's relief when the burden was finally taken from his back was palpable and is reflected in the press reports. In my analysis of the personality types needed for success in the health care marketplace I spoke of 'closed minded" and sociopathic characters. Dalziel, like so many of us displayed a few of these features. He surrounded himself with fellow thinkers and resisted outside understandings.

While Dalziel had the charisma to keep those around him on side and persuade shareholders that things would get better he lacked the ruthlessness. He may well have been aware of the human consequences of drastic cost cutting and been sufficiently open minded to look at the evidence and act on it. Perhaps he really was a "nice guy" but being a "truly" nice guy is not compatible with success in the health care marketplace.

Mr Bob Dalziel's boundless optimism made him widely liked in the investment community, but ultimately was part of the reason the market lost confidence in his ability to turn around Mayne Nickless. Agent Of Change' Bows Out, Australian Financial Review 27 June 2000

Mayne Nickless chairman Mark Rayner told Bob Dalziel to stop smiling yesterday, but he was finding it hard. -------------------- Mr Dalziel appeared unworried. Instead, he had the air of a man with the monkey off his back - or at least one who was counting his options in more ways than one. Dalziel Delighted To Make An Early Exit, The Age 27 June 2000

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Update Aug 2004
Note the attempt above by Salomon Smith Barney, a division of Citigroup, to find an international buyer and to break Mayne up by selling off its health business. This plan was frustrated when Smedley was welcomed as the new manager. When Smedley's strategies compounded Mayne's problems, Citigroup bought the hospital business itself in 2003. Its subsidiary CVC Asia Pacific formed a consortium with two other venture capitalists. That the real purchaser was the scandal plagued Citigroup was concealed from the public.

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Web Page History This page created November 2001 by Michael Wynne Modified March 2002, Aug 2004 Format changed Nov 2005