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From: The Question of Collocation
Australian Doctors Fund Collocation Meeting
Sydney - 20 May 1998
Address by Ms Anita Ward, Health Reporter for Business Sydney Newspaper
The collocation of public and private hospitals is a concept that has been with us for some time, but it is only now starting to pick up pace as healthcare providers recognise the benefits of integration between the public and private sectors.
The idea of building private hospitals on public hospital campuses has not only received the support of a large contingent within the medical industry, but successive governments in New South Wales have also given it their stamp of approval.
During its last term in government, the Coalition approved a number of collocations and the Labor Government has carried on the tradition by approving a further five collocated private hospitals which are at varying stages of development.
At present, Sydney has three public hospital campuses which incorporate private hospitals, these include St Vincent's in Darlinghurst, St George in Kogarah and the recently opened private hospital on the Prince of Wales campus at Randwick.
Plans are also underway for collocations at the Royal North Shore, Royal Prince Alfred, Nepean, Westmead, Bankstown-Lidcombe, Lithgow and Armidale.
These may soon be joined by Concord Hospital which is seeking permission from the NSW Department of Health to undertake a feasibility study into the development of a private hospital on its campus, and Liverpool Hospital which has engaged an independent consultant to consider a similar proposal.
At this rate, it would be fair to expect every teaching hospital in Sydney to have a collocated private facility within the next five years.
As this trend accelerates, private hospital operators are beginning to look beyond public hospital campuses for potential collocations sites.
Health Care of Australia is one of these operators which, in conjunction with the University of Sydney, is attempting to build a private hospital on the grounds of the university. A development application for the proposed hospital is yet to be approved by South Sydney Council, and a court hearing in the Land and Environment Court is underway to determine whether the university is contravening land and environment rulings by building a hospital within its grounds.
As expected, not all factions within the university fraternity support the idea of collocation.
Professor Stuart Rees, a fellow of the university's senate, is one of the opponents who questions the university's $15 million investment in a private hospital.
"It's a huge investment in terms of money, time and resources for a relatively small section of the population which happens to live in this area and have private health insurance.
"It's the private sector ripping off the public sector, because it's being massively subsidised by it in terms of things like transport, electricity, water, even garbage collection. Plus all the nurses and doctors who work there have been trained at the public's expense."
Despite these claims, there is general consensus within the healthcare industry that collocation brings the promise of reduced duplication, greater efficiencies and a wider range of specialist services. But it also treads a fine line between the public and private sectors and runs the risk of the public sector being seen to subsidise the private.
Evidence from collocated campuses in Sydney suggests this is not the case, and health officials working on the campuses attest to the independence of the public and private hospitals.
Dr John O'Donnell is the chief executive officer of St George Private Hospital which has been operating on the Kogarah campus since November 1995. In order for the two hospitals to exist on the same campus, O'Donnell said there must be rigorously applied commercial arrangements.
"We have no obligation to buy services from the public hospital, nor they from us. If we want to buy something we go to the marketplace and we will only buy from the public if it is offering the best product or service at the best price.
"This needs to be well documented so there can be no allegations that the public system subsidises the private," he said.
The need for such records is also recognised by the Sisters of Charity Health Service, the Catholic order which oversees the St Vincent's public and private hospitals on the Darlinghurst campus.
The St Vincent's collocation is the oldest, and some say the finest, example of collocation. The private hospital joined the public around the turn of the century and was rebuilt in 1975.
Kate Purcell is a project officer with the Sisters of Charity Health Service at Darlinghurst. She has been closely involved in the integration of the hospitals on the campus which operated independently until 18 months ago when a programme was introduced to achieve efficiency and solidarity between the two facilities.
Purcell recognises the sensitivities of integrating the activities of public and private hospitals.
"People get nervous about collocation because they think one of the systems will subsidise the other, but that's not happening at all. You need auditing systems in place to track activities and finances and show that is not what's happening," she said.
"Collocation, in the sense of cooperation, allows both systems to function more efficiently than they have done by getting rid of duplication of infrastructure and time spent on things like policy and procedure. The commonsense of collocation is overriding. After all, we're all here for healthcare and we're not really as different as we think we are."
Purcell said there has been a lot of success in the area of purchasing where the combined size of the St Vincent's campus allows it to flex its muscle when purchasing things such as medical equipment, computer systems and even food.
The public and private hospitals are sharing some levels of management, expertise and education seminars, and are looking at sharing facilities such as sterilising theatres and cardiac catheter laboratories, but they have not yet taken the plunge into sharing staff.
Purcell said the Sisters are looking at a way to approach the issue of staff sharing, but are treading very carefully to ensure the unions are on side and the best interests of the staff are served.
Dr Stuart Spring, the national chief executive officer of the Sisters of Charity Health Service, said there has always been concern from the industrial associations that collocation is the thin end of the wedge of privatisation of public hospitals and that this could mean job losses. But, he said, this has not been shown to be the case. "It has enhanced the working environment on the campus rather than detracted from it."
"There has been uncertainty (about collocation) because people need to see how it works in practice. People are only now realising that there is a need to balance services between the public and private. That knock-down, drag-out brawl between public and private services is not going to work.
"Collocation is a commonsense approach to making healthcare more efficient and providing (patient) choice. The problems of the future of healthcare will require a greater degree of coordination, an agreement to rationalise and to not compete inefficiently. Monopolies don't do well over the long haul."
Unlike St Vincent's, the St George public and private hospitals have gleaned the greatest benefits from sharing specialist medical services and staff, to the point where virtually all the doctors at St George public are on some form of arrangement where they also work in the private hospital.
Dr George Skowronski is the personification of this arrangement; he is director of the critical care division at St George public hospital and director of the intensive care unit at the private hospital.
"In the early stages of negotiations we had an idea that St George public hospital could be contracted to provide intensive care services to the private, but this floundered because of the legal difficulties of what the public hospital could be held liable for.
"This was thrown out and instead four intensive care specialists in the public hospital formed a partnership and we did our own deal with the private hospital to supply intensive care services."
These specialists work full-time in the public hospital but, like all full-time staff specialists, are entitled to a certain amount of time outside the public system to pursue private interests.
"Most of the surgeons are visiting medical officers in the public hospital so they already have established private practices and are under part-time arrangements in a private hospital elsewhere. It is convenient for them to have their public and private hospital practices together," Skowronski said.
Research supports this convenience factor, with doctors that have left their various private practices and consolidated on the one campus reporting a 20 to 30 percent increase in productivity.
While Skowronski and his intensive care colleagues have secured a formal arrangement with St George private, other specialists may simply have purchased or leased rooms in the private hospital and have the right to admit patients for consultation in these rooms.
Both public and private hospitals at St George have their own nursing staff and junior medical staff.
"We don't share nursing staff or clerical staff on any formal basis," Skowronski said. "We have very loose arrangements where the hospitals help each other with nursing staffing difficulties. There is a pool of casual nurses working part-time in the public hospital which the private hospital also has access to."
"This informal sharing extends, from time-to-time, to pieces of equipment which might be borrowed. This is not strongly encouraged, but if there is a real problem equipment can be borrowed.
"There is a lot of informal sharing of resources but little formal sharing because the public hospital has to be very mindful of its government funding and public brief, it can't afford to be seen to be funding the private hospital."
Skowronski said the private hospital also wants to be self-sufficient and maintain its independence from the public.
"Strong views have been expressed by various bodies against the idea that the private hospital could contract to manage some of the public hospital patients. This is frowned on by the AMA and the Government because there is a view that this might discourage people from getting health insurance because why should people pay for health insurance when in the next bed in a private hospital there is a public patient who hasn't paid a brass razoo?"
One of the greatest advantages of collocation at St George, and in fact for all collocations, is the broad range of services and infrastructure which is made possible by the economies of scale.
Dr Denis King, chairman of the department of surgery at St George Hospital, said collocation benefits the whole campus because a larger critical mass of patients means the hospitals can justify capital expenditure and attract more specialists, resulting in improved levels of care and a greater variety of care.
He said the collocated private hospital also relieves pressure on the public system by taking some of the privately insured patients out of the public hospital.
"At times when the public sector is under intense pressure it has the option to transfer privately insured patients (at their consent) to the private hospital where they can often be looked after by the same specialist. At times, the private intensive care unit has acted as a safety valve for the public."
King said the "stunning success" of collocation at St Vincent's and St George hospitals has encouraged most other teaching hospitals to build collocated private hospitals.
King is not alone in his prediction that the Australian healthcare industry will witness an increasing number of collocations as the public and private sectors band together to offer the highest degree of care.
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