It was a good deal: Base hospital contract mired in a series of entangling decisions

SUNRAYSIA’s problems with its undersized hospital trace to a very good business deal in 2000 that has created unforeseen complications for the local community 12 years later, according to La Trobe University academic Larry O’Connor.
Nanjing Night Net

The La Trobe University accountancy lecturer suggests the district’s problems began with the Kennett Coalition Government’s decision in the mid-1990s to replace the ageing, community-operated Mildura Base Hospital with a modern, privatised hospital, and were compounded when the Bracks Labor Government allowed Ramsay Health Care, which built and operated the hospital, to sell it off to the Motor Traders Association of Australia (MTAA) Superannuation Fund in 2000.

Both decisions were now complicating the Baillieu Coalition Government’s negotiations with Ramsays in relation to the company’s application, under the Mildura Base Hospital Services Agreement, to continue as the hospital’s lessee and operator beyond 2015.

He saw “nothing sinister” about Ramsays’ decision to sell the hospital to MTAA Super in 2000, after building the hospital under a public-private partnership arrangement with the former Kennett Government.

“I honestly believe both governments and Ramsay acted in good faith at the time; they just failed to think through the long-term consequences for the local community,” he said.

The deal had been a good one for the MTAA. In simple terms, the hospital facility’s lease payments, paid by the Victorian Government, provided a guaranteed revenue stream that was actually worth far more than the hospital’s value as a capital asset.

“It also made good commercial sense for Ramsay, by freeing up the large amount of capital it had invested in the hospital, which cost about $26 million to build.

“But there are always pros and cons in such decisions, both in the short and long term, so they must be carefully assessed,” Mr O’Connor said.

The community debate over the hospital’s future had become polarised, emotive and had drifted away from key issues. His recent report, “Healthy Outcomes”, sought to bring some clarity to a debate in which key facts seemed to be poorly understood.

For more of this story, purchase your copy of Tuesday’s Sunraysia Daily 06/11/2012.

Mildura base debate.

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