Alpha Healthcare - response to
(letter dated 5 August 1997)
The Foreign Investment and Review Board (FIRB) was supplied with information about the investigation of Sun Healthcare by the FBI and also with court documents making serious allegations. FIRB is responsible for vetting and approving foreign corporations entering Australia. FIRB addressed the matter and asked Sun for explanations. What Sun's responses were is hidden in the confidentiality of the FIRB process. We do have a letter written by Alpha to FIRB shortly before the decision was made. This is the only publicly available response to the serious allegations made. I was so disturbed by the wording of this letter when I received it in February 1998 that I wrote a scathing criticism. I have modified it slightly here. It is also criticised in the overview of documents on this www site. This contains quotes from the letter.
Click Here to read the letter from Alpha to FIRB
Introduction:- The letter from Alpha to FIRB dated 5 August 1997 is presumably the final response to FIRB's concern about Sun Healthcare's practices and to the July 1997 objection by NSW. It is the only information we have. FIRB's advise to the treasurer was given 8 days later on 13 August 1997. His decision was rapid. Approval was given for Sun's entry into Australia on 15 August 1997. It is disturbing that a minister holding a responsible position should have accepted the unfounded assertions in this letter over the volume of disturbing documentation in FIRB's possession. It reveals the same level of naivety which characterised NSWHealth and Veteran's Affairs' dealings with Tenet/NME in 1992 and 1994.
Sun Healthcare a US giant specialising in nursing home care had bought de facto control of Alpha Healthcare and full control of a number of Moran health care facilities. It required FIRB approval. In the USA Sun is under investigation for fraud and there are allegations which impact on corporate integrity. FIRB were supplied with a large number of documents.
The Minister of Health and his department:- The importance of this letter is the implication it has for the federal Minister of Health and his department. Both distanced themselves from the decision on the basis that this was a state matter because the states licensed hospitals. In fact the minister's own department licenses nursing homes. The Health Insurance Commission, another federal body in his portfolio licences the Alpha owned pathology laboratories which Sun now effectively controls. It is inconceivable that they did not know this, particularly as the minister was planning to revolutionise health care using "subacute hospitals". This letter confirms that this is a nursing home speciality of Sun's. It is interesting that the minister's department did not make any inquiries about exactly which facilities Sun was purchasing. Presumably it knew or else did not want to know officially.
Alpha/Moran/Sun Healthcare will be providing nursing home care:- The content of the letter quite clearly indicates that, contrary to the implied claim in a letter to FIRB from the department of Health and Family Services, Sun does intend to directly involve itself in the provision of nursing home facilities in Australia. It does plan to use its US business nursing home expertise and experience in Australia. It is this "expertise" which resulted in the practices which led to the fraud investigation of Sun Healthcare and to the matters which forced Sun to settle a shareholder's action for US $24 million. In this it seems no different to Tenet/NME, Columbia/HCA, SmithKline Beecham and many other dysfunctional corporations. The adverse consequences of US corporate business practices are widely documented. Of particular concern is the available information about standards of aged care in for-profit facilities in the USA. Even more worrying to me are the concerns about Sun's own business practices. It is reasonable to conclude that Sun potentially poses a serious threat to our health and aged care system and so to the welfare of our elderly citizens. This is at a time in citizen's lives when they are vulnerable and defenceless.
Disturbing practices in the government- I find it very disturbing that both the Department of Health and Family Services and the minister distanced themselves from the decision to admit Sun to Australia on the basis that the facilities were licensed by the states and that they had no jurisdiction. They advised FIRB to this effect and instructed them to approach the states. The fact that this federal department did not even bother to ask whether Sun/Alpha planned to operate nursing home facilities is doubly disturbing as it suggests that they did not want to know officially of Sun's plans. The minister's plan to revolutionise health care by providing the sort of step down subacute nursing home care advocated in Alpha's letter indicates his interest in such matters. He could not have been ignorant of Sun's intentions. The health minister's junior colleague then disregarded the state's objection and allowed Sun into Australia. It is not credible to claim that a junior minister overruled a state government without consulting the cabinet. Dr Wooldridge would have been directly involved and would have acquiesced in the decision. It is deceptive "Yes Minister" conduct like this which has caused so much disillusionment and distrust of politicians and governments in Australia.
A. The letters describes the urgent need to plan for the aged care explosion:- This very valid argument highlights the need for open and concerned debate so that rational plans can be developed for health care and for the aged
-- plans which do not squeeze care and squander 30-50% of available funds in profits for shareholders.
-- plans which do not expose our health system and our frail elderly to the ruthless and fraudulent practices so prevalent in the US health care "marketplace". In the USA health care has become a profit driven industry rather than a "generous and benevolent service".
These sections of the letter highlight the vulnerability of our system and the possibility that Sun will fulfil Ron William's pessimistic predictions by dominating the "market" and then dictating care. Dave Lindorff claims that in the USA some corporations so dominated aged nursing homes that they simply flouted regulations relating to standards of care. Regulators could not close the homes and turn the frail aged out into the street.
I have repeatedly written of the urgent need to open public discussion. I have pointed to the folly and inhumanity of attempting to solve the health care problems of the ageing population by behind closed doors arbitration between "stakeholders" each intent on a slice of the financial cake. Government and citizens should be openly advised by informed practical people whose prime concern is the welfare of the public rather than corporate shareholders or economic ideology.
B. The misuse of language to distort the situation:- The letter from Alpha is filled with what I called "NMEspeak". I first encountered it in Tenet/NME's correspondence in 1992. This stressed its similarity to the way in which George Orwell's "newspeak" redefined social consciousness. John Ralston Saul's recent analysis shows that what I called NMEspeak is integral to modern corporatist discourse. The most striking feature is well illustrated in this letter. This is the use of forceful and assertive positive claims about exactly those matters which are in question, and where the corporate position is weakest. The very matters of contention are assumed to be self evident truths and to be desirable. By this technique the requirement to confront the concerns is avoided. Past experience has shown that gullible and inexperienced Australian bureaucrats swallow this nonsense without discomfort. (see NSWHealth's dealings with Tenet/NME's in June 1992 and October 1992)
Please note the claims:-
1. Sun's healthcare skills match Australia's needs. --- The evidence from the USA, from independent assessments, from the FBI investigation, from corporate statements, and from the court action for which Sun has paid US $24 million raise serious concerns that Sun's skills, like those of Tenet/NME are a serious threat to Australia. (see reports and assessment by WAHealth Department Feb/Mar 1993).
2. Sun's investment will assist Alpha's growth. --- The assumption that Alpha/Sun's growth is desirable once again goes to the heart of the major concern that companies like Mayne Nickless and Alpha which have followed US corporate policies will come to dominate the private health sector and dictate the way in which medicine is practised - the US way! This concern is not confronted.
3. Sun's investment will enable a new hospital to be built at Westmead. This assertion once again assumes the desirability of co-located hospitals and also that Sun is essential for this. An alternate bidder would not pose the serious risk of introducing dysfunctional and possibly criminal US business practices into this hospital complex. The response simply ignores the fact that the NSW government does not want Sun. It objected to Sun's entry into Australia.
4. Sun is an experienced and respected international healthcare operator:- This statement lays claim to a false credibility. Sun is a company accused of fraud and of dishonesty in its dealings. The paragraph makes exaggerated claims without responding to the concerns which have been raised by the independent review of standards, by the concerns of the nursing profession, by the FBI, by board members own statements, by the settlement of court actions making very serious allegations, and by the disturbing exposures of fraud, unethical practices and the misuse of patients in comparable US corporations. These are corporations whose corporate effort has been similarly concentrated on expansion and profit.
5. The aged healthcare industry badly needs the experience, expertise and investment funds of leading private sub-acute and aged healthcare provider:- In the USA independent studies have shown that not-for-profit facilities provide both more and better services to the patients and to the community. For-profit services performed poorly. There are serious concerns about standards of care in the US corporate system and particularly in aged care where Senator Cohen found fraud to be rampant. Investigations by nurses, consumer groups and patient advocacy groups have all raised serious concerns about standards in aged care nursing homes in the USA.
Aged care must be paid for. There is no reason for believing that by paying shareholders 20-50% of available funds we will reduce the cost of care and maintain standards. Sun once again makes claims but does not confront the evidence or the contrary arguments. Making exaggerated claims is not a valid substitute for addressing issues.
In Australia, like the USA private care has in the past been provided largely by not-for-profit groups whose prime interest is in the welfare of citizens and the community. To suggest that corporations are so much more efficient that they can provide the same care with 20-50% less money is a lot to swallow.
6. Sun's skills portfolio perfectly fits Australia:- The concerns about Sun's skills portfolio are described in the previous paragraphs and once again are ignored. Sun fails to indicate the nature of its "skills portfolio" and we must therefore base our assessment of this on the documents in our possession. Only a blind ideologue could support this claim. The use of impressive sounding words with strongly positive associative meanings like "skills portfolio" is a prominent feature of corporate discourse.
7. Sun's investment will provide us with a list of benefits derived from the US and international health care markets:- Vast amounts of information from the investigation of numerous corporations in the USA and of companies like GSI in the UK have raised major concerns about the nature of corporate health care business practices and their touted expertise. In the USA at least dysfunctional practices are the rule rather than the exception. The FBI appear to raid hospitals more often than drug syndicates. The corporate for profit integrated services which the letter advocates have been associated with unethical and fraudulent conduct. Once again the section simply makes elaborate claims and ignores the issues which they should be addressing. The inappropriateness of driving activities which depend on humanitarian commitment by using strong profit pressures is not confronted.
8. No other healthcare provider has focused on the subacute health care sector:- This is correct but this is simply because our health system has not been structured for this. Those of us who have advocated progressive care for many years have met an unresponsive brick wall. Government must take much of the blame. Building separate subacute for profit hospitals is a commercial decision designed to generate profits. It is not in the interests of patient care. Such facilities should be on-site in order to ensure continuity of care. Australian doctors will be most reluctant to relinquish care to another facility until their personal responsibilities to that trusting patient have been adequately discharged. This policy takes no account of the bond of trust and responsibility between patient and doctor which is so important for a dedicated service.
9. Sun's investment will not alter the structure of Australia's aged and subacute health care industry:- This is contradictory nonsense. The letter has already indicated Sun's intention to introduce its US expertise. This foreign, profit first culture would most certainly result in major changes.
10. Sun's investment will increase employment:- This is exactly the rationalisation used by the previous minister for health in NSW when he attempted to justify the decision to grant Tenet/NME hospital licences in 1993. This decision entrusted the welfare of Australian citizens to a company which had mercilessly exploited vulnerable patients, many of them young children. The morality of sacrificing vast numbers of Australians in order to increase employment and corporate profits is revealing.
Alpha uses NMEspeak:- In this letter all of the serious concerns about Sun's entry into Australia are met by ignoring them. Instead firm contrary statements are made. These are based on the assumption that these concerns either do not exist or that Sun's position is beyond contention. I sincerely trust that Australians will learn from their experiences. We should not be so gullible as to be persuaded by this sort of nonsense. The only conclusion which any sensible person could reach from this letter is that Alpha is not addressing the concerns because it is unable to do so. Were it to attempt this then the weakness of its position would be exposed.
A corporatist society:- The tragedy of our time is that the language of reason and science has been replaced by the rhetoric of the advertising agency. The art and wisdom of leadership have become victim to the manipulative art of the international corporate con man. Principles of democracy and concern for the citizen have been subjugated to the interest of corporate "stakeholders". The discourse of an integrated, caring and supportive society has been replaced with the interest driven language of competition. In this way the whole of a rich human civilisation is reduced to what becomes a self interested and vulgar market - all in less than a decade.
The place of the market:- Our market evolved within the constraints imposed by a culture of democracy. As such it has been an integral and valuable component of our balanced society. It has served us well. However when society, its leaders and its members become vassals to the market then the integrated value systems which make the market work for citizens are devalued. Restraining values are usually considered to be obsolete (e.g.. those which have governed health care). The "social control" which society exerts over its parts is destroyed.