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Australia’s second-largest private hospital operator Healthscope is set to be broken up, with Sydney’s Prince of Wales Private Hospital and Melbourne’s Knox Private Hospital to be sold to private equity under a deal announced on Monday.
Lenders to the embattled healthcare group approved the deal to split up Healthscope, which collapsed last year, after the new owners promised strong job protection for staff and more certainty for the future of the hospitals.
“We are pleased to announce agreements have been reached which provide certainty and continuity of services to Healthscope patients, employees and communities through the sale of Healthscope hospitals to well-credentialed healthcare operators,” Healthscope’s receivers, led by Keith Crawford, said.
Healthscope was put into receivership last year with $1.7 billion in debt, after its private equity owners walked away.
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“Today’s announcement delivers on our commitments on continuity of hospital services and protecting jobs in the interests of patients, employees and the Australian community. The continued operation of Healthscope hospitals across Australia also avoids placing additional pressure on Australia’s public hospital system,” Crawford said.
“Healthscope’s lenders have shared our commitment to securing the best possible outcome for all stakeholders. This has been instrumental in enabling us to take the necessary time to work through a very complex process with care and diligence”.
Under the deal, 14 of the company’s remaining 25 hospitals would be operated by not-for-profit firm Calvary Health Care. Pacific Equity Partners-backed hospital operator Healthe Care will take on six hospitals, including Prince of Wales and Knox. Private operators including Acurio and KnG will pick up the remainder.
“We look forward to working with Healthscope, Calvary, Healthe Care, ACURIO Health and KnG Group, as well as other key stakeholders to complete the transaction by 30 November 2026 and ensure the smooth and timely transition of operations,” Crawford said.
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A standoff with landlords scuppered plans announced in February – after it was approved by Healthscope lenders – to convert the group into a non-profit operation run by its current management team.
Healthco, which owns 10 Healthscope properties, is backed by rich lister David Di Pilla.
Northwest owns 12 Healthscope properties. Both Northwest and Healthco later chose to back the private equity-led consortium that would split the hospitals between multiple operators.
The future of Healthscope is a significant one for Australia’s health system. The private hospital sector provides about 70 per cent of elective surgeries in Australia, taking immense pressure off state and federal governments.
Private hospitals are also under pressure from funding problems with private health insurers, and the loss of lucrative multi-day hospital stays by private patients in favour of at-home care.
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More to come…
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.AdvertisementAdvertisement