18 Feb 2014

Serco and the West Australian hospital with no patients

The argument for privatisation is that it increases efficiency. So  the WA government paying Serco $118m to run a hospital that hasn’t even opened?
The series of crises affecting Serco around the globe are starting to hit its bottom line and financial markets are getting very nervous. Nonetheless, shareholders will take comfort from the $4.3bn, 20-year-deal Serco has struck with the West Australian government to provide most non-clinical services at the new tertiary Fiona Stanley Hospital.

The $2bn facility was due to open this April, but the government has announced it will have staged openings from October, with it not becoming fully operational until April 2015.
In 2014 Serco will be paid $118m to run this hospital with no patients. 
$53m is simply being paid to Serco because the hospital is not open.

This is a compensation payment the Western Australian Liberal government must pay because the hospital delays mean the anticipated rivers of operational revenue to Serco are yet to flow.
The WA Health Minister has confessed that he is paying Serco for over 200 people to work at the site. 
Serco says the 150 “operational staff” and an 80-person “pre-operational project team’' are doing things like cleaning, conducting safety checks, maintaining the gardens, moving furniture?

Others perform a “welcoming service” that includes providing directions and managing site events. 

All for a hospital that is blissfully free of the inconvenience of a single patient.
Is this providing an efficiency dividend to the W A government, I don't think so.

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