Health is a key issue in Northern Tasmania.

I was recently asked about Tasmanian Labor's plan to call for tenders for development and construction of a new co-located Private Hospital at the Launceston General Hospital, a plan which includes a comprehensive precinct plan to address long overdue issues like lack of parking.

This hospital would be paid for by a private operator, in all likelihood the existing operator in Launceston consolidating their existing facilities.

I was able to respond with some detail, in part due to my governance experience on the THO-North, but also courtesy of some research I had commissioned.

I though I should share that information.

By 2015/16 there were 68 private hospitals that were co-located with a public hospital, around Australia.


This includes 47 acute and psychiatric hospitals and 11 freestanding day hospital facilities.

New South Wales has 17, Victoria has 7 co-located private hospitals, Queensland 6, South Australia 5, Western Australia 7 and Tasmania, Northern Territory and ACT between them have 5.

It is significant that there is a legislative requirement for the Minister for Health to declare, before a facility can commence operation as a private hospital that it is a "hospital" (doh!).

In deciding whether the declare that a facility is a hospital, the Minister has a statutory obligation to take into account a number of relevant issues.

The minister must consider:

a. whether or declaration of the premises would materially affect reasonable access by public patients to a reasonable range of services; and
b. whether or not declaration of the premises would result in the transfer of costs from the state or territory to any party; and
c. in the case of a private facility which was previously part of a public hospital, operated as a public hospital or was co-located with a public hospital operated by a state or territory, the adequacy of arrangements in that public hospital to ensure that patients presenting for treatment are able to exercise freely their right to elect to be treated as a public patient in that facility; and (finally)
d. whether or not the state or territory and the licensee of the hospital have entered into or are prepared to enter into enforceable agreements with the Commonwealth to supply data or information to allow it to monitor access by public patients to a reasonable range of services, the adequacy of those arrangements for patient election as to treatment as a public or private patient, the cost to the state or territory and any other party, and the extent to which costs incurred by the parties are increasing and decreasing.

The Minister's focus must be upon the range of services that are available, the question of cost shifting between the public system and the insured private system and an assurance that patients will retain access and the choice to be treated as a public patient.

These are all critical issues to the delivery of health services in Northern Tasmania- we want better health services, not a reduction in services available to the general pubic, that is public patients.

There was an ACT Legislative Assembly enquiry in 1997.

This enquiry was focused on concerns that a new private hospital would gain an unfair advantage from service contracts with the public hospital.

The Legislative Assembly listed benefits of co-location as:
a. sharing of infrastructure and management services, the cost of which is shared by each organisation;
b. co-location will allow doctors to remain on campus reducing travel time and allowing more patient contact;
c. quicker response times in times of emergency;
d. co-location would make the ACT a more attractive employment prospect for high quality medical specialists.

These issues are relevant to the business case for a  co-located private hospital in Northern Tasmania.

There was also a Productivity Commission research paper from 1999.

The benefits of hospital co-location listed in that research paper confirm the research and studies undertaken previously:
• sharing of facilities and equipment between private and public hospitals
• providing greater convenience for doctors and patients
• reducing duplication of services and facilities allowing for some sharing of costs
• helping the public sector retain and/or attract medical specialists by providing them with convenient access to private patients
• contributing to the quality of patient care
• increasing the viability of teaching services allowing public hospitals to install better technology and assist in nursing recruitment
• greater convenience in medical specialists accessing their private patients
• giving medical specialists a backup service in the public hospital in the event of complications in treating patients
• increased interaction between medical specialists and their peers
• giving medical specialists access to a wider range of cases
• assisting the private hospital to attract patients.

There is always a concern that hospital co-location can give rise to cost shifting.

We do not want our public system to bear additional costs.

This would occur if services that were formerly provided to public patients in the public hospital at state government expense are provided after co-location by the private hospital with the Commonwealth incurring some of the expense for the medical services involved.

The impact of co-located private and public hospitals on smaller standalone private hospitals was also raised by the Productivity Commission.

The Commission noted concerns from competitors of co-located hospitals who stated it was difficult to compete against the big draw cards for doctors of convenience and time savings.
I think that is significant.

If a competitor can identify this as an advantage then in the context of the small northern Tasmanian market it must at least be an opportunity for both public and private hospital to market to specialists the co-location as an advantage.

The Social Science and Medicine Journal published a case study in 2004 on the impact of co-location of public and private hospitals in Australia. In the case study it was found the distinct advantages of co-location for private hospitals including affiliation with a prestigious public hospital, greater financial returns and greater access to services improved the market position of co-located private hospitals.

The case study also identified significant risks which included the fact that co-located public hospitals may lose revenue from the loss of private patients that would otherwise be treated within the public sector.

The Australian government would be exposed to cost shifting which would be an area requiring mitigation of risk and co-location may result in greater reliance on private hospitals, increasing overall health costs to the Australian government, insurers and private patients.

Remember, there is a statutory obligation imposed upon the Minister for Health to consider the issues of patient access and cost shifting in determining whether a private hospital may be licensed.

It certainly appears to be an article of faith within public hospital governance circles that co-location is a good thing in increasing the ability of a public hospital to attract medical specialists.

Finally, the feedback I've received is that parking pressures at the LGH are critical.

The precinct plan, and any development must relieve the present parking pressures, as well as expected growth in demand for the future.