Healthscope: The Private Equity Fail For Hospitals
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Private equity investments are bad for health. These American style investments are incredibly unhealthy for the vehicles they, often, drive into the ground. Healthscope: The private equity fail for hospitals in Australia. What private equity does is saddle the thing that they buy with all the debt raised to purchase it in the first place. Then, it liquidates whatever juicy assets in the possession of the targeted investment vehicle. In this case, it was selling all the real estate upon which these dozens of private hospitals reside. This raised billions for the private equity firm. Following this all the hospitals had to pay commercial rents to the new owners of the land. Making operating the businesses more expensive.
“Investing in hospitals is viewed as a safe bet. People regularly get sick and the population ages. Australian private hospitals have the added advantage of being backed by a government-supported private healthcare system. But on Monday, a huge private equity-backed hospital deal officially soured, sending Healthscope into the hands of receivers, and raising questions over whether Australia’s private healthcare system needs to be overhauled.
Brookfield, a private equity multinational headquartered in Toronto, paid $4.4bn for Healthscope in 2019 after a competitive bid inflated the price tag.”
Private Equity Is Bad For Health
Private equity investments are like a scourge over in the United States, where they eat up formerly hard working and effective hospitals and load them up with debt. The financialization of everything in the US has seen essential health infrastructure like hospitals treated primarily as investment assets to be exploited for profit. In too many instances, this has been to the detriment of these hospitals for their hard working staff and needy patients. Leveraged private equity buyouts load up the hospitals with crushing debts and the new operators try and cut costs at the hospitals to meet the debt. Patients end up getting poorer care.
Private Equity In Health In Australia
In Australia, it is no surprise that it is Liberal LNP governments that facilitate the introduction and approvals of private equity investments into the health sector here. Privatization is pushed by the neoliberal economic policies of the LNP state governments and the federal governments of Abbott, Turnbull and Morrison. Australians have just broadly rejected the Libs at the recent 2025 federal election. Much of the fuel for this was the rejection of Trumpian American style policies. America is a dog eat dog place in terms of its appetite for ruthless economics and financial practices. The people downunder don’t like this.
“The collapse of Australia’s second-largest private hospital group is “a canary in the mine” for the private hospital sector, a health policy expert says. The professor of health economics says it signals that private equity firms do not see private hospitals as financially viable. He says private hospitals might have to close some services to keep costs down.”
The Liberals and Nationals have long copied American politics and attempted to bring Republican party ideas and policies downunder. The privatization of utilities and government assets are American neoliberal economic ideas from the Reagan era. Private equity investments are about exploiting assets, often, formerly non-profits like hospitals and stripping them for extreme profitability at the expense of their optimal functionality. This is greed gone mad and America had been in the grip of this frenzy for years.
Leveraged Private Equity Buy Outs Are Fundamentally Wrong
Do not miss the point here. Healthscope: The private equity fail for hospitals. In my view, it should be illegal this practice of leveraged buyouts and loading up the bought business with all that debt. I imagine that the CEOs and boards of these targets acquiesce to these deals in some instances because they personally benefit from them. Shareholders take the deals because of the high offers well above the share price. This over valuing of the company is fuelled by funds derived from credit and that debt is then saddled upon the target company. Thus, banks are complicit in these leveraged buy outs as well. I call these practices the financialization of everything, where making money out of trading assets becomes the main game and what that business was originally set up to do gets trashed by investor greed. This shit is what is wrong with America and they have been exporting their toxic financial culture around the world.
“The LNP Coalition in Australia is a right wing political party, no longer in the mould of its founder Robert Menzies. Its current leader Peter Dutton continues to take the LNP further right via divisive commentary and policies. Why they call Dutton ‘Temu Trump’? Peter, like many on the right, see Donald Trump as an inspirational model for extremist anti-government behaviour. Blame the government for everything is a popular sentiment in America. The LNP encourage similar attitudes here downunder, as they seek to tap into societal grievances toward bureaucracy and red tape. Slash the civil service and reduce the government services provided to minority groups and those who support centre left political policies is a long held Coalition position in Australia.”
Do not miss the point; and get caught up in issues about the cost of healthcare and the private health insurance model. It is the stripping of assets for profit by the private equity firm, which has tipped the balance in the Healthscope case.
Robert Sudha Hamilton is the author of America Matters: Pre-apocalyptic Posts & Essays in the Shadow of Trump.
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