In an email to staff, Healthscope the CEO has admitted that no one wants to buy the entire hospital group. He’s sent an extraordinary request to staff to help save their jobs.
Healthscope CEO Tino La Spina has reportedly told staff that there have been no offers to buy the entire company.
According to an article in the Australian Financial Review, Mr La Spina emailed staff on Friday night to say there were offers for some of the company’s 37 hospitals, however others had received “no meaningful interest”.
“This means that Healthscope would be broken up, with hospitals sold to a mix of for-profit and not-for-profit buyers. Some hospitals could be stranded without a buyer. Our For Purpose proposal is a compelling alternative to this scenario,” he was quoted as writing.
The email allegedly warned staff that there could be job losses and closures of some facilities unless there was a restructure. To help combat that, he asked staff to adopt a salary packaging proposal to make it easier to restructure into a not-for-profit company.
His proposal is to turn the hospital group into a not-for-profit model, which would save money on payroll and land tax. This would make the proposition more attractive to lenders.
By putting the salary packaging proposal to staff, it would mean even more tax savings.
Salary packaging is a common benefit offered to medical employees of public hospitals, charities and not-for-profits. They have the option of packaging certain living expenses and meal entertainment expenses. The tax savings received are the Fringe Benefit Tax which public hospitals and not-for-profit employers are exempt from paying.
Usually, the employer and employee share the tax savings 50-50 although in NSW, Health Services Union employees now receive 100% of the tax-saving benefits.
The proposal from Mr La Spina, however, would be weighted the other way, with 90% of the savings going to Healthscope to save the hospital group and 10% to employees. He said employees would receive more over time.
“This reduces your taxable income, meaning you could pay less tax and take home more of what you earn,” La Spina reportedly wrote. “We wouldn’t do this if it wasn’t absolutely necessary, but it is essential to make For Purpose viable and to pay for critical hospital infrastructure.”
The staff are asked to vote on an amendment to their enterprise agreement to introduce salary packaging at a meeting in October. It would be voluntary even if they vote yes.
“A yes vote in this ballot is important in helping convince the lenders that the For Purpose proposal is viable. In other words, a no vote could lead to the break-up of Healthscope,” Mr La Spina reportedly said.
Federal health minister Mark Butler has said many times there won’t be a taxpayer bailout, saying the best thing for patients, staff, landlords and lenders is an orderly sales process.
Healthscope refused to comment on the ongoing sale process of the company.
