Hospital giant picks up ‘crown jewel’ from Healthscope collapse

The $8 billion private hospital giant Ramsay Health Care has emerged as the first beneficiary of the Healthscope collapse after announcing plans to acquire its Canberra hospital for $251 million.

“National Capital is expected to be in Ramsay’s Top 20 hospitals based on both revenue and profitability and is expected to be earnings per share (EPS) accretive in the first 12 months of ownership,” Ramsay Group chief executive Natalie Davis said in a statement to the ASX on Tuesday morning.

Ramsay Health Care CEO Natalie Davis says the Healthscope acquisition will be one of the most lucrative in Ramsay’s portfolio of hospitals.

Canberra’s National Capital Private is one of four of Healthscope’s most valuable assets which have been put up for sale to the highest bidder as part of a plan for receivers to raise hundreds of millions of dollars for lenders, who are owed $1.7 billion.

Gold Coast Private is the other asset that could be sold off before Christmas with Queensland’s Mater Health expected to be announced as the buyer.

The other hospitals up for sale are Sydney’s Prince of Wales and Victoria’s Holmesglen Private.

Healthscope insiders have described it as a strategy of selling the crown jewels and hoping the remaining group of hospitals will still be viable. The fact that lenders are expected to receive as little as 50c for every dollar they are owed gives an indication of how little value is ascribed to dozens of Healthscope’s hospitals.

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The receivers from McGrathNicol are expected to turn their attention to these remaining 33 hospitals once the future of the most profitable operations are determined. They will have to decide whether to break up the group to get a better return for lenders, or keep it intact as a not-for-profit operator.

Earlier this month, the receivers from McGrathNicol rejected a proposal from Canada’s Northwest Healthcare to carve off the 12 hospitals where it acts as landlord as part of a deal with not-for-profit Calvary – which would be the new operator – in a deal worth $140 million.

The receivers are already banking $190 million from the NSW government after it terminated Healthscope’s operation of Sydney’s Northern Beaches Hospital under a public-private partnership model.

Healthscope collapsed into administration in May this year after Canadian financial giant Brookfield was unable to reach an agreement with either its lenders, or landlords like Northwest, that would help make the business viable.

Healthscope’s controversial public-private partnership at the Northern Beaches Hospital ended this year with a $190 million payment from the NSW government.Credit: Renee Nowytarger

The 23 hospitals with private landlords top the list of centres struggling to remain financially viable.

The other landlord, HealthCo Healthcare – backed by rich lister David Di Pilla – acquired 11 of the Healthscope hospital properties in 2022 for $1.2 billion.

Both Healthco and Northwest have announced plans to transfer their hospitals to new operators if receivers do not offer them an adequate deal on rents.

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If the sales process does not find buyers for all 37 hospitals, state governments around the country face the prospect of having to step in and keep these unviable operations afloat in order to ensure the public has access to the services they provide.

Private hospitals provide the vast majority of elective surgeries performed in Australia.

The federal government is also pressuring private health insurers to raise the proportion of premium revenue they pay to private hospital operators back to the pre-pandemic level of 90 per cent.

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