New South Wales seeks investors for five hospital PPPs

The Australian state says undertaking the Northern Beaches Hospital project as a PPP in 2014 will allow it to save more than A$1.5bn.

The government of New South Wales is inviting expressions of interest for the redevelopment of five major regional hospitals as PPP contracts.

The successful bidders would work on revamping the Maitland, Wyong, Goulburn and Shellharbour hospitals as well as provide services at the redeveloped Bowral Hospital. They would then run the facilities on behalf of the state government. 

The deadline for EOI submission is set on 7 October. 

“If we are to manage a growing and ageing population with increasingly complex health needs, we must have a sustainable health system. Partnering with non-government hospital operators will allow us to maintain quality healthcare while delivering the best value for NSW taxpayers,” said Jillian Skinner, NSW Health Minister, in a statement. 

“The healthcare industry has been eagerly awaiting NSW Health’s five operator-led hospital PPPs. While fine-tuning, the models has delayed the procurement process, industry participants are now keen to see if the models do attract the not-for-profit hospital operators or any new for-profit hospital operator. The industry is also keen to see how traditional equity providers and funders will fit into the new arrangement,” added Simela Karasavidis, an Australia-based partner at law firm Pinsent Masons. 

During the 2015 state election campaign, the NSW government pledged to spend more than A$1 billion ($763 million; €682 million) to upgrade the five hospitals and said works would get underway this term. It also earmarked more than A$5 billion for new health infrastructure projects during this term, an amount of investment it is on track to deliver, it said in a statement. 

In November 2014, the government partnered with private operator Healthscope to build the new Northern Beaches Hospital project, billing the capital cost at A$1 billion, including A$400 million of road upgrades. It later revealed that its private partner would be paid A$2.14 billion over the contract life. 

The government now says the arrangement will allow for savings of more than A$1.5 billion, or 39 percent of the total, over the life of the 20-year contract compared to what it would have cost to procure it publicly. Savings are to be re-invested in health services.