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Issue #1546      9 May 2012

Royal North Shore Hospital

A privatisation horror story

There was no end of horror stories from ABC radio listeners last week recounting experiences of patients and staff at the Royal North Shore Hospital (RNSH) in Sydney and raising serious concerns about hygiene, patient transportation and security there. Callers provided details of filthy toilets, incontinent patients left lying for hours in urine, patients picking up infections. Parents spoke of mopping filthy floors, of blood and dressings on the floor. Staff reported that they hardly had time to wipe down beds let alone clean the surrounding area or bathroom between patients. There were stories of patients being left in corridors, long ambulance queues waiting for patients to be taken in, and one patient that went missing. Overwork has resulted in injuries and stress-related problems for staff.

Photo: Josephine Donnolley

Doctors and nurses raised concerns that the hospital is not being cleaned properly, that patient care is being compromised. But still, the NSW state government refused to intervene as the crisis continued. The NSW Nurses Association said a patient with the highly infectious superbug golden staph was left in a corridor at RNSH because no clean single room was available.

The RNSH “public private partnership” between the government and the InfraShore consortium is one of a long string of disastrous PPPs but with potentially far more serious consequences than tunnel-related traffic jams, failed public transport or government bailouts when private companies go bust. It is the lives and health of people that are at risk.

After 12 weeks in dispute of staff shortages with the private subcontractor ISS Services, the cleaning staff, members of the Health Services Union, decided that they would walk out for two hours on Friday May 4. The NSW Industrial Relations Commission called a compulsory arbitration session. At the hearing the union agreed to hold off industrial action until June 1 and IRC president Justice Roger Boland promised the Commission would inspect the hospital. A workplace consultative group will be set up.

The RNSH is a major public and teaching hospital in Sydney. Under the PPP signed with the former Labor government, the InfraShore consortium won a $1.1 billion contract to build new facilities; run maintenance; and provide security, patient services (portering, cleaning, food, linen, etc) and retail services at RNSH.

ISS blames the govt

InfraShore subcontracted cleaning, portering, security and other ancillary patient services to consortium member ISS Services. Under the contract, the monthly government payment for its services can be adjusted if the workload rises or falls by five percent or more. NSW Health can also make deductions if InfraShore fails to meet specified performance standards – these are believed to be relatively trivial amounts, but as with other details of PPP contracts are not publicly available.

InfraShore claims the number of beds has increased by over 20 percent from 600 to almost 740. They say they took on 80 extra casual staff, to supplement the 243 permanent staff who are employed by NSW Health but managed by ISS under a labour service agreement. For 12 months ISS has been at loggerheads with the government over its refusal to increase payments in line with the extra beds. In January, it reduced the number of casual staff from 80 to 45, saying it was not profitable to continue employing them without the additional income from the government. This placed intolerable pressure on remaining permanent and casual staff.

Last month the Industrial Relations Commission ordered ISS to employ 20 more casual staff for cleaning and portering.

Govt passes the buck to ISS

The government refused repeated requests to intervene, claiming staffing levels were not its concern and that NSW Health has a contract with ISS to provide the service.

It was only after the politically embarrassing exposures on ABC radio and threat of a walk out by cleaning staff, that the health minister Jillian Skinner showed her face. When Skinner did finally agree to answer questions on ABC radio, on Monday this week, she disputed claims by InfraShore that bed numbers had increased, saying there had been some “restructuring”. She blamed the problems on an old building which is difficult to clean – the new building is still under construction.

As with all PPPs, the details are shrouded in secrecy.


The Infrashore consortium includes ABN AMRO, since taken over by the Royal Bank of Scotland (for finance), Thiess (design and construction), Thiess Services (facilities management and maintenance), ISS Facility Services (hospital security, food, laundry, portering of patients), Zouki (retail outlets) and Wilson Parking (car parking services). The former Labor government awarded the $1.1 billion contract in 2008 and it runs to 2036 – 28 years – at which time the assets transfer to the public sector.

This is typical of a PPP consortium, covering finance, design, management, construction and service provision companies. They borrow heavily to finance the project and have huge interest bills. They also expect to make a large profit, and to ensure this, governments usually guarantee a minimum rate of return on their investment. After a certain period the assets and responsibility for management and maintenance revert to the government.

For example, for public transport or a tollway, the government might top up income where usage and fares or fees fall short of agreed amounts. These have usually been overestimated during the tendering process and governments end up paying out millions of dollars to subsidise the profits.

In other types of contracts, such as the RNSH, which is a non-fee charging, public hospital, the government pays agreed amounts for the services provided. The details are “commercial in confidence”.

Pro-privatisation governments and private operators claim that cash-strapped governments cannot afford the capital to provide public infrastructure and services; that the private sector takes all the risks and the outcome will not only be cheaper but better.

But in reality, they deliver poorer services, result in fewer jobs, undermine wages and working conditions, and end up costing government more as the motive for service provision becomes private profit not the service being provided. If the private consortium goes bust, then it is the government that picks up the pieces and foots the bill.

It costs the government far less to provide infrastructure because it can borrow at lower interest rates and does not have to make huge profits to satisfy shareholders. Some companies tender too low just to win the contract, then come back to government asking for more.

If the government borrows the money, carries out the construction and manages the facilities and provided all the services it costs less, the quality of service improves, workers have greater protection and it is clear where blame lies if services are under-funded or of poor quality.

With PPPs there is no public accountability. Everything is shrouded in secrecy. The lines of responsibility are blurred. The buck is passed and, in the case of the RNSH the patients and staff suffer. Patient care is coming a poor last behind corporate profits.

The cleaning crisis at RNSH is frightening patients away. Some have just gone home or looked for another hospital. Some, who have private health insurance cover, have turned to the private North Shore Hospital which is on the public hospital’s grounds.

Public health services should not be compromised by private, for-profit outfits. The present situation cannot wait until the Commission carries out inspections. Urgent action is required immediately. The government should step in, employ the necessary staff to provide top quality services and cancel the PPP with InfraShore. All other PPPs should be reviewed and their terms made public. There should be full accountability for all public spending.  

Next article – Editorial – Capitalism is on the nose

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