Audit finds public-private hospital failing patients while Healthscope seeks escape

The controversial public-private partnership propping up Northern Beaches Hospital is on the brink of collapse, according to a damning report tabled in NSW Parliament on 17 April. The Performance Audit Report by the NSW Auditor-General concluded that the arrangement “is not effectively delivering the best quality integrated health services and clinical outcomes” to the community and the State.

Northern Beaches Hospital – built and managed by Healthscope under the former NSW Liberal Government – remains the only major hospital in the state operating under a public-private model. It was intended to deliver both public and private healthcare, including emergency services, under one roof. However, concerns over its operations have escalated, triggering a parliamentary inquiry and now a damning audit by the NSW Audit Office.

The audit report paints a grim picture, highlighting that the partnership is “at risk of failure.” Healthscope has formally requested to exit the deal early – not once, but twice – where it sought to return the public portion of the hospital to the State 14 years ahead of schedule, citing “insufficient funding, a lack of integration into the wider health network, and strained stakeholder relationships.”

While the NSW Health has previously rejected these requests, stating that Healthscope has “no legal or contractual entitlement to withdraw from or vary the project in the manner proposed,” the audit report calls on the government to urgently reconsider. It recommends “as a matter of priority” that the State evaluate whether the current model is “appropriate” and consider assuming responsibility for public health services at Northern Beaches Hospital well before the original 2038 timeframe – a recommendation NSW Health has now accepted.

The report goes further, demanding that Healthscope “resolve safety and quality, system and reporting issues” by December 2025. In its response to NSW Auditor-General Bola Oyetunji, Healthscope “acknowledges recent instances of failure in patient care that resulted in tragic outcomes” and concedes the hospital’s contractual arrangements with NSW government are “severely challenged.”

The clash between clinical care and commercial pressures is evident. The audit found that the public-private structure has encouraged a high push through of elective surgeries, while some hospital-acquired complications – including sepsis, falls, third- and fourth-degree perineal lacerations, and birth trauma – remain high. Worse still, insufficient action has been taken to address these known safety risks.

Furthermore, Healthscope has not been required to implement key NSW Health initiatives such as Safe Staffing Levels. As a result, it is unable to determine the extent to which factors such as insufficient staffing or equipment result in minor harm or near-miss incidents.

Now, facing an imploding partnership and escalating public scrutiny, Healthscope said it is keen for the “early handback of the public hospital component” to NSW Health.

However, Independent MP Michael Regan has expressed strong reservations, cautioning against letting Healthscope evade responsibility.

“I don’t want to see Healthscope let off the hook or seek to invoke clauses to maximise a financial return, with NSW taxpayers footing the bill,” he emphasised.

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