The NSW government today confirmed it will support the Northern Beaches Hospital (Voluntary Contract Termination) Bill 2025 introduced by Wakehurst MP Michael Regan but with at least one key change – chiefly, that some compensation still be paid to the private operator, now in receivership.
Healthscope was contracted to operate Northern Beaches Hospital from 2018 under a public private partnership (a PPP) that ran for 20 years. Since that time it has faced two parliamentary inquiries and an audit that determined it was not a health model that should be repeated.
The community has raised concerns about staffing shortages, long wait times, and the complex dual model that sees public patients treated alongside private patients under the same roof. The issue came to the fore when Balgowlah toddler Joe Massa died following care at the Frenchs Forest facility.
Healthscope has since offered to hand the public component back (at a price) with the intention of selling its private share. Its parent entities then went into receivership on 26 May.
What does the bill do?
The government’s proposed amendments to Mr Regan’s voluntary termination bill will allow the Minister for Health, Ryan Park, to issue a termination notice if negotiations fail, to avoid a drawn-out legal dispute, but with compensation. Mr Regan’s bill is primarily about there being no compensation. However, the intent of the change is to ensure significantly less compensation than the hundreds of millions Healthscope/its receivers would currently receive if the contract is terminated.
But why amend to provide compensation if the contract is terminated due to a failure to deliver the service promised?
Treasurer Daniel Mookhey explained in a press conference this morning, 20 June: “[To] recognize that, of course, Healthscope contributed money towards the building of the facility, and equally that, particularly when it comes to the private part of Northern Beaches hospital, they did provide capital funding for that contract.”
The Treasurer stressed it was still wanting an agreement, rather than a forced termination, with the operator. The latter could end up in the courts and further protract the process.
While the government already has the power to terminate under the contract signed by the previous government, with it would come significant compensation. Mr Regan’s original bill recommended there be none.
Mr Regan said he was generally supportive of the government’s amendment to allow for compensation if it meant it could end the impasse and not result in a “golden handshake”.
“Since 2014, the people of the Northern Beaches have been the subjects of an experiment in public health. This PPP experiment for acute hospital services for public patients has not worked. Our community deserves a not-for-profit local public hospital,” Mr Regan said.
“The quality of care that the Northern Beaches community continues to receive is only because of the dedication and professionalism of the staff working at the hospital. This has come at immense personal cost to them and we owe them a debt of gratitude.”
“But the reality is that at the Northern Beaches Hospital, we are getting cut cost healthcare and it’s not sustainable. Staff are being squeezed and patients are being put at risk. The Parliament has unanimously passed legislation banning future PPPs. Now members must act to end the arrangement at Northern Beaches too.”
Pittwater MP Jacqui Scruby described today’s news as a “step forward for our community.”
“But we also need the process to be transparent. The public must be told what the hospital is worth, how any compensation is calculated, and when we can expect to see improved governance, staffing and patient care.
“I commend Michael Regan for taking the lead on this, and I welcome the government’s recognition that the prolonged negotiations or excessive costs to the taxpayer are indefensible.”
Editor’s explainer
What would happen if the contract is terminated?
Manly Observer understands that a termination and government step in event would mean state government takeover of the entire hospital operations – both public and private components. A full takeover would not necessarily be permanent, with those private components potentially re-contracted, but would mean government led-operations and continuity of care (and employment) for those working at the facility.
If the bill is passed it will not necessarily be used, but it gives the government a heavier stick to bring to the negotiation table.
Both Mr Regan and Ms Scruby are calling for the entire facility to be permanently put in public hands.
