The collapse of Healthscope demonstrates why prioritising financial outcomes over patients ultimately does not work. Australia’s second largest private hospital provider has gone into administration after its Canadian owner, Brookfield, walked away with debts of some $4.4 billion.
In the wake of this development, stakeholders have rightly questioned the role of private equity in Australian hospitals. Rachel David, CEO of Private Healthcare Australia, echoed Ivor Ries’ assessment in Rampart about the “history of private equity being inconsistent with high quality health care.”
Similarly, an AHSA article, Does Private Equity Belong in Our Hospitals, noted that Healthscope hospitals were lagging “almost 10 percentage points behind the highest rated private hospital group on overall patient experience”. The article concluded:
“The decision of who owns these hospitals cannot solely depend on who’s willing to pay the most. It must also reflect honestly on whether they are going to play a positive role in the Australian healthcare system. We must not risk Australian healthcare being treated as a commodity business to shore up balance sheets.”
Having worked across all ownership models – not-for-profit (NFP), ASX-listed, and private equity – I can say the pressure to deliver financial performance is constant. In the NFP sector, it’s often said: “No margin, no mission.” But the distinction lies in how each model defines its mission.
I recall many years ago sitting in a meeting with a Managing Director in the for-profit sector. His message to the assembled executives was blunt: “Our priority is to our shareholders.” The words still ring in my ears. For the clinicians in the room, the shock was palpable.
As a hospital Executive, I always believed in being transparent with staff about our strategic aspirations and progress. The key focus areas are familiar:
- Quality of care
- Patient engagement
- Staff engagement
- Doctor engagement
- Financial sustainability
The order matters. Lead with finance, and you quickly lose your audience. But when these objectives are aligned, they are mutually reinforcing. Culture is the glue. Shared values create an environment where staff willingly give discretionary effort — especially clinicians, who will go the extra mile for patients, but rarely for profit.
My experience bears this out. At one hospital, we faced poor reputation, low doctor confidence, and financial underperformance. Partnering with the Studer Group, we drove cultural transformation by engaging patients, staff and doctors around shared values.
The turnaround was dramatic: community confidence grew, doctor recruitment followed, and the hospital went on to win the Studer Firestarter of the Quarter award, Community Business of the Year, and the Australian Private Hospital Association’s Private Hospital of the Year. Financial performance not only recovered, but significantly exceeded budget, and staff engagement scores reached ‘A Culture of Success’, as measured by Best Practice Australia.
Research supports this connection. A Gallup meta-analysis found that great organisational cultures reduce turnover by 25%, quality incidents by 41%, and safety incidents by 48%, while also improving productivity and consumer outcomes. In short: when culture thrives, so too do clinical and financial outcomes.
This brings us back to the central question: should private equity be allowed to invest in Australian hospitals? The answer depends on the mission. Financial sustainability is essential, but when money becomes the primary message, authenticity is lost and trust erodes. Culture cannot be bought, and patient care cannot be treated as a commodity.
Healthscope’s collapse is a stark reminder: in healthcare, mission must come before margin.
This is an abridged version of the article Healthscope’s Collapse Highlights Risks of Financial Priorities in Healthcare, originally published on Health Services Daily, 19 September 2025.
Vincent Borg has extensive experience in the health sector, having worked both in private and not-for-profit organisations. His previous roles as General Manager at Healthscope, St. Vincent’s Private Hospital and Epworth Healthcare saw him oversee large, multi-site facilities in the acute and sub-acute services, including greenfield operations. Vincent’s recent operational experience means he is well-connected with industry thought leaders, across all segments of the sector. As such, he has a clear understanding of issues many hospital executives are currently experiencing and the emerging issues impacting health care providers. Read more…