Healthscope, private hospital owner, takes $919 million writedown due to rising costs

Healthscope, one of Australia’s leading private hospital operators, has reported an annual loss of $82 million, reflecting the financial struggles faced by the private healthcare sector. This loss mirrors similar reports from other major players in the industry, such as St John of God and Calvary.

According to Healthscope CEO Greg Horan, the private hospital system in Australia is under immense pressure due to rising costs, particularly in labor rates, utilities, and medical supplies. Despite these challenges, Horan emphasized that the quality of care and patient safety are not being compromised.

The latest financial results from Healthscope show a slight increase in revenue to $2.76 billion, but a significant increase in wage costs and medical supply expenses. Profit before finance costs and other expenses dropped to $273 million, down from $371 million the previous year.

In response to the financial challenges, Healthscope is actively engaging with lenders, landlords, private health insurers, and the government to restructure the sector’s funding and manage the debt of $1.6 billion. The company is also restructuring its portfolio of hospitals, moving more profitable facilities into separate corporate structures.

The private hospital sector in Australia plays a critical role in providing healthcare services, with two-thirds of all elective surgeries being performed in private hospitals. However, with a growing number of closures and financial struggles across the industry, there are concerns about the sustainability of the private healthcare system without additional funding from insurers and the government.