Healthscope, the country’s second-largest private hospital operator, collapsed earlier this year under a $1.6 billion debt load after a 2019 takeover and subsequent property sell‑offs, and its receivers are now carving up the portfolio while also weighing a plan to keep the group intact under a new not‑for‑profit model. The business still controls about three dozen hospitals nationwide, but a mix of loss‑making sites, complex leasing structures and different ownership models has turned the turnaround into a multi‑step process involving private operators, not‑for‑profits and private equity.
In the latest round of moves, one of the largest listed private hospital groups has been granted exclusive due diligence on a major Canberra facility, while a private equity firm that already owns a large for‑profit hospital network is reviewing a key Sydney hospital in the portfolio. A Queensland not‑for‑profit group has secured exclusive access to financial and operational data for a flagship Gold Coast hospital, and a Catholic not‑for‑profit operator appears to be in pole position on a Melbourne hospital and a Hobart asset after a structured sale process led by an international investment bank. However, a previous proposal from that same not‑for‑profit, backed by the main landlord on a dozen leased hospitals, was rejected when hedge fund lenders who hold more than 30% of Healthscope’s debt blocked an offer of roughly $100 million to $140 million because they were seeking closer to a $150 million profit and about a 40% gain after buying the debt at about half its face value.
Behind the scenes, the lending group is pushing a different path that looks like a longer game, which involves keeping the hospitals under Healthscope, converting the operator to a not‑for‑profit and refinancing the debt so that any windfall comes later once the business is profitable again. That idea has appeal because not‑for‑profit operators do not pay payroll tax, which in Australia ranges from about 2.5% to 6.5%, and the estimated payroll tax saving alone could add around $100 million a year to Healthscope’s earnings, which could lift values across the remaining 37 hospitals. Early indications suggest top‑tier sites might fetch about $600 million combined, but it is still unclear who will end up running the 11 hospitals leased from a major real estate investor, even though at least one large Victorian not‑for‑profit group has been in talks. With final bids already lodged and some hospitals still losing money, the outcome seems likely to influence how future healthcare deals are structured in Australia, even if the precise mix of private, private equity and not‑for‑profit owners is still emerging.
