Pittwater Online News

April 1 - 30, 2025: Issue 641

Audit Office of NSW Report on Northern Beaches Hospital Released

Photo of NB Hospital by Cabrils.

The Audit Office of NSW Report released its report on the Northern Beaches Hospital on 17 April 2025, just before the Easter long weekend.

With Healthscope stating this wish to hand the public component of the hospital back to the New South Wales government, the report provides insights as to why Healthscope seeks to exit years before the contract to operate the public portion of the hospital in 20238.

The Northern Beaches Hospital has a total of 488 beds, with 60% of those as public beds, meaning 292 beds are designated for public patients. The remaining 40% (196 beds) are for private patients.

Healthscope has proposed handing back Northern Beaches Hospital to the NSW government, and wants to retain 192 private beds until 2058, or after the hospital has been in operation for 50 years - which marked the death knell for Mona Vale Hospital, which celebrated its Golden Jubilee in February 2014.

The announcement regarding the start of construction for the Northern Beaches Hospital in Frenchs Forest was made on July 2, 2015, following Stage 2 planning approval by the then NSW Government.

The report also makes public that Healthscope wrote to the Health Minister in November and December 2023, just months after the Minns State Government had become the incumbents, requesting to hand back the public portion of the hospital then.

Health Minister Ryan Park has defended a decision to reject the previous request and said a task force would examine the latest request.

"The taxpayers of NSW would have been hundreds of millions of dollars out of pocket," Mr Park has stated.

The report has urged the state government to consider whether the public-private model was appropriate for health care delivery, stating the operating model created tension between commercial and clinical outcomes.

Mr Park said the government would accept the report recommendations in full.

"It outlines and lays bare the problem with the privatisation of public hospital services here in New South Wales," Mr Park said.

Healthscope has rejected some of the findings, including that it had limited visibility over minor harm or near-miss incidents. Their response states they have ''completed a review of its emergency department IT systems and processes and has invested in an improvement project to enhance triage processes, including automatic alerts for patient vital signs''.

Healthscope's response in regards to falls and birth trauma states these ''remain priority areas at NBH, with active interventions in place.'' and ''The report notes that the NSLHD, in which NBH’s catchment is located, has an older patient demographic, which correlates with a higher expected rate of certain complications, particularly falls''.

But the Audit Offices' report found that the hospital failed to address safety risks with its electronic record system, which had been known since the hospital opened in 2018.

"The Northern Beaches Hospital has recorded concerning results for some hospital-acquired complications and has not taken sufficient actions to address some identified clinical safety risks," the report states.

The report states the risk was realised during a serious adverse event in September 2024, a reference to the death of toddler Joe Massa after he was incorrectly triaged after presenting to the emergency department.

Joe, then just two years of age, was kept waiting for two-and-a-half hours for a bed, despite a dangerously high heart rate and a severe loss of fluid.

An internal investigation found serious failures by the hospital's management, including wrongly triaging Joe as a less serious category of patient and failing to respond to repeated requests from his parents to give him IV fluids.

In February this year, Harper Atkinson was born unresponsive, almost an hour after an obstetrician at the hospital declared an immediate threat to the life of the mother or baby.

The baby died the next day after an operating theatre was not ready for mother, Leah Pitman, as the hospital relies on an on-call system on Friday, Saturday and Sunday nights.

Healthscope has said its on-call system meets all NSW Health and college of obstetricians guidelines.

The report found the hospital had not always met its contractual targets and had recorded elevated rates of falls and birth trauma.

Additionally, a theme of 'not enough money' recurs throughout the tabled full report.

At a press conference ahead of the report's release, Premier Chris Minns said the government remained concerned about the privatisation of essential services.

"When you've got a sick relative, when you've got someone who's injured, the last thing you want anyone thinking about is dollars and cents or the spreadsheet or a balance sheet," the premier said.

The NSW government has expressed its intention to carefully consider the proposal by Healthscope to hand back the public portion of the hospital, but has also made it clear that it does not want Healthscope to profit from the transition.

Residents and the Save Mona Vale Hospital Committee (now 'Rebuild Mona Vale Hospital') have expressed dismay at this colossal waste of public money and significant loss of accessible health services due to the closure of Mona Vale and Manly Hospitals and the financial challenge the current NSW government must now deal with.

Federal Member for Mackellar, Dr Sophie Scamps MP stated the NSW Audit Office’s report into the Northern Beaches Hospital’s delivery of public hospital services, proves the hospital must urgently return to public hands.

“The performance audit clearly states that the Northern Beaches Hospital public-private partnership is not effectively delivering the best quality integrated health services and clinical outcomes to the Northern Beaches community,” Dr Scamps said.

“These findings support the ongoing concerns of hospital staff and patients who have been calling out operational problems, including unsafe staffing levels at the hospital, for far too long.”

Dr Scamps, who called for the independent audit with the Independent Member for Wakehurst Michael Regan, said it is unacceptable that Healthscope is unable to determine the extent to which factors such as insufficient staffing or equipment, result in minor harm or near-miss incidents at the Northern Beaches Hospital, as identified in the performance audit report.

“This proves that Healthscope has no understanding of or concern about how the operational decisions they make are impacting their hardworking staff and patients,” Dr Scamps said.

“The audit clearly states that in the absence of action to enhance staffing levels at Northern Beaches Hospital, there is a risk that patients will experience a lower level of service over time than at NSW public hospitals.”

ALP Mackellar Candidate Jeffrey Quinn, the only other candidate who sent a statement to the news service, said:

''As a lifelong resident of Mackellar and long-time advocate for public health, I want the Northern Beaches community to know that Labor is listening—and we care deeply about the future of healthcare on the Northern Beaches.

The current situation with the privately operated Northern Beaches Hospital is unsustainable. While it is clear that the NSW Labor Government must not and will not offer Healthscope a blank cheque, it is equally important that Labor clearly affirms its principled commitment to a strong and accessible public hospital system.

As someone who has proudly worked with the Save Mona Vale Hospital Committee for years, I support the return of core hospital services to public hands. The privatisation of the Northern Beaches Hospital by the former Liberal Government was a policy failure that stripped the region of its public healthcare infrastructure and left our growing community vulnerable.

Labor’s values are grounded in universal, publicly funded and publicly delivered healthcare. The recent introduction of legislation in the NSW Parliament to safeguard public hospitals from future privatisation reflects this commitment, and I welcome the recent establishment of a Northern Beaches Hospital Taskforce by the NSW Labor Government which will examine the future of the disastrous privatisation deal. We must apply those principles here in Mackellar.

Any potential transition of the public portion of Northern Beaches Hospital to government operation must be conducted transparently, with proper due diligence, and without propping up private profit. I commend NSW Treasurer Daniel Mookhey and NSW Health Minister Ryan Park for their cautious and responsible approach, ensuring that the public interest is prioritised.

In recent weeks, Labor Governments have delivered funding for Mona Vale Road and improvements to local bus services—critical wins for our region.

I am here to ensure Labor’s voice is heard clearly and consistently on public health. The community rightly expects and deserves nothing less than transparency, accountability, and a government that prioritises people over profit. My commitment is to advocate for a truly public hospital system, here and across the state.

Let’s bring healthcare back to where it belongs—in the hands of the people.''

Pittwater MP Jacqui Scruby stated:

''The Audit Office’s report provides an independent assessment of what we are hearing from the community - that the public private partnership is failing to deliver quality health care expected in the public health system and under the deed,’'

“This audit shows how public patients in our community are being let down. This was a failed Liberal Party experiment at the expense of patients. Emergency and public care should not be run by the for-profit sector.

“This report adds further strength and momentum to return public services to the public hands at the hospital, so we can have transparency, accountability and real-time oversight of the hospital’s performance and rebuild community confidence.

“We owe the brave parents of Joe Massa, the parents of baby Harper, and other patients who have been let down by the hospital to get this right.”

“This report, along with the current parliamentary inquiry, are building an overwhelming case for the NSW Government to act. The formation of a taskforce by the NSW treasurer this week to investigate Healthscope - the hospital’s operators who have said they are open to returning the public services to public control - show they mean business. This is a good sign.

“Joe’s Law that will prohibit future public private partnerships put forward by the NSW Government is a step in the right direction, but we still have to undo the partnership at the Northern Beaches Hospital.

“This whole process is going to be like unscrambling an egg and will take time. It needs to be done carefully and we need to protect patients, staff and make sure taxpayers are not delivering windfall profits to the current hospital owners. We can’t afford to get this wrong again.

Ms Scruby encouraged everyone who has a story to tell or an opinion to make a submission to the current NSW Parliamentary Inquiry.

“I keep seeing stories and comments on social media, but these will only have impact if they are submitted to the inquiry. This is an opportunity for the community to influence what happens next. I’m urging everyone to make a submission. It doesn’t have to be long. It can be made confidentially. Contact my office if you need help, but every voice will add to the weight of evidence piling up in support of returning public health services to public hands.”

Submissions can be made until; May 20 HERE

The Audit Office of NSW's Report states:

Report snapshot

The Northern Beaches Hospital is a private hospital that also provides public hospital services. The hospital was built in 2018 and is operated by a private operator, Healthscope, in a public-private partnership with the NSW Government.

Healthscope is contracted to operate the public portion of the hospital until 2038.

This audit assessed how effectively and efficiently the Northern Beaches Hospital public-private partnership delivers public hospital services.

Conclusion

The Northern Beaches Hospital public-private partnership is not effectively delivering the best quality integrated health services and clinical outcomes to the Northern Beaches community and the State – the standard required under the arrangement and the key objective of the project deed.

The partnership is at risk of failure, with Healthscope requesting in November 2023, and again in December 2023, that the return of the public portion of the Northern Beaches Hospital be brought forward by 14 years. In its requests, Healthscope noted the risk to the viability of the Northern Beaches Hospital, citing insufficient funding, a lack of integration into the wider health network, and strained stakeholder relationships.

NSW Health effectively manages the contract with Healthscope day-to-day on behalf of the State, ensuring that public hospital activity at the Northern Beaches Hospital is provided at a lower cost than if the State operated the hospital. However, the public-private partnership structure creates tension between commercial imperatives and clinical outcomes.

The Northern Beaches Hospital has recorded concerning results for some hospital-acquired complications and has not taken sufficient actions to address some identified clinical safety risks.

The project deed, which governs the partnership, does not support the hospital’s integration into the local health district and broader health network. This has an impact on patient journeys and access to services for patients in the Northern Beaches. Additionally, Healthscope has no obligation or commitment to implement NSW Health initiatives – such as the Safe Staffing Levels initiative.

The Northern Beaches Hospital has achieved accreditation to ensure it meets national quality standards for hospital care but some quality and safety concerns remain.

Recommendations

The report made three recommendations:

1. The NSW Government and NSW Health note the findings of the report and consider whether the Northern Beaches Hospital public-private partnership is the appropriate model to deliver the best quality integrated health care in the Northern Beaches region

2. Healthscope should resolve:

1. safety and quality issues
2. system issues
3. reporting issues

3. NSW Health should consider issues raised for this public-private partnership for any future arrangement.

Available in full online at: https://www.audit.nsw.gov.au/our-work/reports/northern-beaches-hospital

Read the full PDF version of report - Parliamentary reference - Report number #404 released 17 April 2025.

Healthscope's statement regarding Audit Office review of Northern Beaches Hospital, released the same day, 17 April 2025, states:

Healthscope acknowledges the Audit Office for its thorough and balanced review on Northern Beaches Hospital (NBH).
The report is further confirmation that the continued operation of the public hospital component of NBH under a public private partnership model is severely challenged, and no longer compatible with the NSW Government’s policy objectives. That is why Healthscope has indicated to the Government that it is willing to engage constructively on an early handback of the public hospital, as allowed for in the project deed.
The report also confirms that NBH continues to meet or exceed national quality standards (on p. 3), often outperforms NSW public hospital peers (p. 5) and performs strongly across key clinical measures, including:

Admitted patient emergency treatment performance (p. 16);
Elective surgery wait time performance (p. 30); and
Ambulance transfer times (p. 19).

In addition, Healthscope has received advice from NSW Health on 15 April that its review of the NBH Emergency Department has confirmed that it is compliant against the eight criteria considered by the review.
Healthscope has accepted most of the findings relating to NBH in the Audit Office report and is actively addressing the areas identified for improvement. Healthscope expresses its condolences to families involved with the recent instances of failure in patient care at Northern Beaches Hospital and is participating fulsomely and transparently in the independent inquiries that are examining the circumstances.
The focus of everyone at Healthscope remains on supporting patients, staff and the community. Healthscope is committed to ensuring any transition is safe, orderly and collaborative.
Tino La Spina, CEO, Healthscope said:
“The Audit Office report released today makes clear that the current public private partnership at Northern Beaches Hospital is severely challenged. This is why Healthscope is offering to collaborate with the Government for the early handback of the public hospital. I want to reiterate that patient care will be put first, and we are not seeking any windfall gain from this process.
The report also confirms the strong day-to-day performance of our people at Northern Beaches Hospital in core areas of care, and I am incredibly proud of them. This has been further supported by NSW Health’s review of the Emergency Department, which has found it compliant against all eight criteria investigated. Our priority now is to ensure continuity of care for patients and stability for staff throughout this process.”

Healthscope's Response on Audit Office review was:

Healthscope agrees that the contractual arrangements with the NSW Government underpinning the operation of Northern Beaches Hospital (NBH) are severely challenged.
We acknowledge the Government’s stated policy position against further use of public-private partnerships (PPPs) in the health sector. We recognise that the continued operation of the public hospital component of NBH under a PPP model is no longer compatible with the Government’s objectives.
Healthscope reiterates its willingness to engage constructively with the Government regarding the potential early handback of the public hospital component of NBH, consistent with the handover provisions in the Project Deed.
Healthscope independently believes that such an outcome would be in the best interests of the hospital and the community for three principal reasons:
1. The complexity and rigidity of the contractual arrangements require disproportionate resourcing and constant administrative attention from both NBH and the Northern Sydney Local Health District instead of allowing both parties to focus on delivery of high-quality health services.
2. The high level of public scrutiny associated with the PPP model has a material impact on staff and clinician morale and undermines community confidence in the hospital.
3. While the report confirms that NBH operates efficiently and delivers significant cost savings to the Government, there has been significant and persistent underfunding relative to actual patient activity levels by the State.
Accordingly, Healthscope believes it is in the best interests of our staff and the broader community for the Government to initiate discussions regarding an early handback of the public hospital component.
Quality and Safety of Care at Northern Beaches Hospital
We welcome the Audit Office’s recognition of the strong performance NBH has delivered in many core areas of care and that we have met or exceeded the performance of most other public hospitals in NSW on most clinical measures.
These include elective surgery access, ambulance transfers of care, and emergency department performance.
NBH provides over 120,000 episodes of care every year, with the vast majority of our patients receiving timely and compassionate care.
However, like all hospitals, there are instances where patients sadly pass away after presenting at NBH, despite the best efforts of our clinical teams. On even rarer occasions, there can be times when the care we provide has not met expectations.
Healthscope acknowledges recent instances of failure in patient care at NBH that have resulted in tragic outcomes in specific cases, and we are participating fulsomely and transparently in the independent inquiries that are examining the circumstances.
In addition, NBH has undertaken a range of improvements which are detailed in the attached table. Continuous improvement is essential to fulfilling our obligations as a health service provider. Healthscope remains committed to embedding these reforms across the hospital and to strengthening community confidence in NBH.
Healthscope looks forward to working collaboratively with the NSW Government, NSW Health, and the Local Health District to ensure that residents of the Northern Beaches continue to have access to safe, high-quality, and reliable healthcare.

The report states that by December 2025, Healthscope should: Resolve safety and quality, system and reporting issues by:

a) working with NSW Health to sustainably address underperformance on hospital acquired complications
b) minimising clinical risk of duplicate and disconnected systems in the emergency department
c) improving incident management system functional capability, to enable analysis and reporting that better identifies and addresses safety and quality risks.

Healthscope stated in its response to the Audit Office of NSW report;

''(a) The report summarises NBH’s performance against sixteen nationally recognised hospital acquired complications (HACs). NBH performs at or above standard in 13 of the 16 indicators. A targeted action plan which has led to significant improvement in pressure injury rates. Falls and birth trauma remain priority areas at NBH, with active interventions in place. The report notes that the NSLHD, in which NBH’s catchment is located, has an older patient demographic, which correlates with a higher expected rate of certain complications, particularly falls.

(b) NBH has completed a review of its emergency department IT systems and processes and has invested in an improvement project to enhance triage processes, including automatic alerts for patient vital signs.

c) NBH will continue to investigate further improvements to incident analysis and reporting. NBH notes it currently has systems in place that allow for interrogation of incidents and trend identification. Specific interrogation ability is available through for all HACs through Healthscope’s dashboard, enabling the review of specific trends and outliers. As the report notes, Healthscope complies with requirements to report serious harm incidents to the Ministry of Health and the NSLHD.’'

Key points in report: Extracts - full report linked to above

Identification and management of risk

There is a risk that the State may need to assume responsibility for public health services at the Northern Beaches Hospital earlier than 2038 In November and December 2023, Healthscope wrote to the Ministry of Health requesting to bring forward the return of the public portion of the Northern Beaches Hospital by 14 years while retaining the private portion until 2058.

In presenting its offer, Healthscope noted the challenges of operating the hospital including:

challenging administrative and integration outlook
risk to viability of Northern Beaches Hospital due to insufficient funding
lack of integration into the wider health network
strained stakeholder relationships.

In January 2024, the Ministry of Health formally declined the Healthscope offer, noting that Healthscope has no legal or contractual entitlement to withdraw from or vary the project in the manner proposed. The Ministry of Health reaffirmed that Healthscope must continue to provide services under the terms of the project deed. The Ministry of Health and the Northern Sydney Local Health District have identified and are continuing to monitor this risk to the success of the Northern Beaches Hospital public-private partnership. Recent reported financial challenges for Healthscope confirm this is an ongoing risk for NSW Health to manage.

The scope of key performance indicator audits commissioned by Healthscope is limited and our audit identified unexplained patterns in reported activity that is now under investigation

The scope of key performance indicator audits is agreed via correspondence between the Northern Sydney Local Health District and Healthscope. The scope of the Key Performance Indicator audits is:

a re-calculation of the performance measures set out in Schedule 18 using a raw extract of data
analysis of current period results with prior periods to identify variances.

The key performance indicator audit reports do not include an assessment of the distribution of results and therefore do not consider unusual groupings of results that might indicate errors. Given that there are significant financial penalties for not achieving certain key performance indicators, this absence is noteworthy.

In evaluating Healthscope’s performance in meeting the abatable key performance indicators relating to the emergency department and general surgery under the Northern Beaches Hospital project deed, the audit assessed the distribution of results over the review period. This review highlighted unusual patterns of activity recorded for one abatable key performance indicator – total time in emergency department less than four hours. Healthscope has never met project deed expectations for this measure and the Northern Sydney Local Health District has applied an abatement for this measure three times during the review period – and granted a waiver in the first half of January 2022 due to the effects of COVID on hospital activity. The distribution analysis in Exhibit 9 shows a significant spike in the total time in emergency department just before the four-hour mark. This pattern is not consistent with results from similar hospitals in NSW – the B1 hospital grouping. This audit identified this anomaly and escalated it to Healthscope and the Northern Sydney Local Health District. The District is now investigating this pattern further.

Emergency Department – Mode = 239 minutes Median = 240 minutes Average = 346 minutes 90th percentile = 718 minutes

Section 3.2 and Exhibit 5 noted that the Northern Beaches Hospital underperformed against this abatable key performance indicator during the review period. The abatement for total time spent in the emergency department is determined on a six-monthly basis as a flat amount of failure points. It is not applied on a sliding scale. Although this pattern does not affect the financial penalty applied, it does potentially obscure actual performance and casts doubt over the accuracy of emergency department data used to apply abatements and monitor the performance of the Northern Beaches Hospital.

Mental health beds: Paediatric acute mental health beds, declined

The original project deed services specification for the Northern Beaches Hospital included a range of mental health services but did not include separate beds to accommodate child and adolescent mental health patients. In June 2022, the Minister for Health announced an enhancement to child and youth mental health services across the Northern Beaches, including four dedicated paediatric specialist mental health beds at the Northern Beaches Hospital. In July 2022, Healthscope gave the Northern Sydney Local Health District informal proposed costings for the proposed unit at the hospital. However, the Northern Sydney Local Health District noted that these indicative costs were higher than expected.

In September 2022, the Northern Sydney Local Health District formally requested Healthscope to cost the provision of paediatric acute mental health beds at the Northern Beaches Hospital. Healthscope wrote back later that month and informed the Northern Sydney Local Health District that it did not wish to proceed with the unit because the original plan announced by the Minister could not be constructed at the hospital and Healthscope deemed that a scaled back service could not be offered efficiently around current services.

In December 2023 the Minister for Mental Health re-directed the funds to a facility at the Brookvale Community Centre. While the construction of the child and adolescent mental health beds did not occur, the Northern Beaches Hospital did introduce a new model of care to treat child and adolescent mental health patients presenting at the hospital. The role delineation set out in Appendix 2 records that the Northern Beaches Hospital must maintain level three Child and Youth Mental Health Services. However, the Northern Sydney Local Health District reported that the Northern Beaches Hospital and district health teams together provide the equivalent of a higher level of service, level four, for Child and Youth Mental Health Services in the Northern Beaches catchment.

Interventional cardiology, accepted

The services scheduled in the original 2014 project deed did not include interventional cardiology services for public patients. Interventional cardiology is minimally invasive surgery to treat heart conditions, including the insertion of stents and pacemakers. Public patients who required this treatment were expected to be treated at the Royal North Shore Hospital, as was the practice when Manly and Mona Vale hospitals operated as level three hospitals. The Northern Beaches Hospital was built with the necessary infrastructure to deliver these services, but those facilities are in the private portion of the hospital and the corresponding services originally available only to private patients of the hospital.

In December 2017, the Northern Sydney Local Health District commissioned a study of interventional cardiology services in the District. In March 2018, following that review and discussion at the project deed governance committees, the Northern Sydney Local Health District wrote to inform Healthscope that it would amend the 2018–19 annual notice to remove the restriction on interventional cardiology for public patients but would not purchase additional activity. The Northern Sydney Local Health District noted that anticipated demand for interventional cardiology could be met from within the established activity profile. Healthscope disagreed and further argued that an additional capital contribution was required because the facilities to undertake interventional cardiology were in the private portion of the hospital.

In August 2020, the Northern Sydney Local Health District elected to purchase interventional cardiology services separately by activity as a new service. The discount applying to other patient activity at the hospital does not apply to interventional cardiology services. The Northern Sydney Local Health District also secured adjustments to the NSW Ambulance allocation matrix to divert patients who require emergency interventional cardiology services to the Northern Beaches Hospital rather than to the Royal North Shore Hospital as they were previously.

Thrombolysis, not progressed

The Northern Beaches Hospital opened in October 2018 with a level five neurology service and a non-thrombolysis stroke service. At the time, this was consistent with the service profile of the Northern Sydney Local Health District, which concentrated acute stroke services at the Royal North Shore Hospital. However, over time, the District expanded access to acute stroke services to Hornsby Ku-ring-gai Hospital.

From mid-2022, Healthscope and NSW Health discussed adding thrombolysis stroke services to the schedule of services in the project deed. Because the thrombolysis service was not included in the schedule of services, Healthscope could, under the project deed, submit a price estimate greater than the discounted price payable for other hospital services. NSW Health could then accept or decline that offer.

The Northern Sydney Local Health District analysis determined that the cost of purchasing the services from the Northern Beaches Hospital and the potential for part erosion of expertise at the Royal North Shore Hospital outweighed the benefits for patients in the Northern Beaches catchment in receiving this treatment closer to home. The Northern Sydney Local Health District analysis determined that it was cheaper for the District to continue to provide the services directly from the Royal North Shore Hospital due to the lower marginal costs.

In September 2023, the Northern Sydney Local Health District decided not to progress purchasing these services from the Northern Beaches Hospital.

Source: NSW Audit Office research and analysis.

NSW Health agreed to Healthscope’s proposal to reduce the penalties attributable to poor performance, in part due to concerns about unintended consequences for patient safety

The Northern Beaches Hospital project deed allows for 48 measures that attract abatements for performance below a given target or performance threshold. The target rate is the higher of the two numbers. Results between the target rate and performance rate attract fewer abatements than performance below the performance threshold. There are no bonus payments for performance above the target rate. Appendix 4 lists the abatable key performance indicators for 2023–24. The original abatement regime, agreed in 2014, set high failure points across many of the measures that attracted abatements. For instance, in the original 2014 project deed, seven measures attracted the highest level of abatements for non-performance – around $900,000 per instance of failure.

In 2019, Healthscope raised concerns with NSW Health that this regime may affect clinical decision making and result in unintended consequences for patient safety. Healthscope recommended recasting the abatement failure points on a risk basis, corresponding to the severity of outcome for the patient or service. The Northern Sydney Local Health District also reported a concern that high failure points were an impediment to accurate reporting. The Northern Sydney Local Health District received advice from the Ministry of Health in agreeing to formally reduce the failure points attributable to not meeting the performance and target thresholds for many measures. The highest level of abatements under the revised regime are about $800,000 per instance of failure. The value of the new abatement regime compared to the old is incorporated into the Northern Sydney Local Health District estimate of financial enhancements granted to Healthscope noted later in this report.

Over the review period, about $1.5 million in abatements have been applied against service fees for the Northern Beaches Hospital.

Some of the measures attracting abatements over this time include:

patients in emergency department greater than four hours
unplanned mental health readmissions within 28 days
transfer of care time between ambulance and the emergency department exceeding 30 minutes.

The unplanned mental health readmissions within 28 days measure is a safety and quality key performance indicator. Healthscope has not triggered or applied abatements for any other safety and quality key performance indicators during the review period.

The Northern Beaches Hospital is not meeting is clinical coding accuracy requirements

The Northern Beaches Hospital project deed provides for a range of assurance reviews at various stages throughout the contract cycle to provide the State with assurance that the hospital is, in fact, performing the purchased services and outcomes that it reports. The annual clinical coding audit and key performance indicator audits are the main reports that purport to demonstrate that Healthscope is performing the agreed public hospital activity. However, the Northern Sydney Local Health District also reviews a range of other data and reporting to ensure that the specified services are delivered.

Hospital activity is expressed in a common activity unit called national weighted activity units or NWAUs. More complex hospital services consume more NWAUs than simpler procedures. It is therefore important that clinical coding is accurate because inaccuracies could lead to over-payment in time. The scope of the clinical coding audits is agreed by subject matter experts from the Northern Sydney Local Health District and Healthscope before endorsement by the governing Operational Services Group. The clinical coding audits are undertaken by experts. The resulting reports are reviewed by the Northern Sydney Local Health District and issues are remedied through the working groups and formal correspondence.

The Northern Beaches Hospital recorded clinical coding inaccuracies slightly above rates achieved by other facilities in the Northern Sydney Local Health District. The value of these inaccuracies was between $3–4 million per annum. NSW public hospitals are afforded a degree of latitude in coding accuracy. However, the Northern Beaches Hospital project deed requires 100% accuracy of clinical coding. Inaccuracies in clinical coding do not receive a direct financial penalty. Instead, Healthscope adjusts the next monthly invoice for public hospital activity for the inaccuracy identified in the clinical coding audit. For the 2023–24 annual notice, the Northern Sydney Local Health District also adjusted the activity profile for coding inaccuracies.

The scope of key performance indicator audits commissioned by Healthscope is limited and our audit identified unexplained patterns in reported activity that is now under investigation

The scope of key performance indicator audits is agreed via correspondence between the Northern Sydney Local Health District and Healthscope. The scope of the Key Performance Indicator audits is:

a re-calculation of the performance measures set out in Schedule 18 using a raw extract of data
analysis of current period results with prior periods to identify variances

Healthscope is not required to implement the Safe Staffing Levels initiative at the Northern Beaches Hospital, which may affect service quality over time

The NSW Government is currently implementing the Safe Staffing Levels initiative in emergency departments at NSW public hospitals. The Safe Staffing Levels initiative introduces minimum staffing levels, which will result in more nurses and midwives in NSW Health public hospitals. However, Healthscope is not required to implement the initiative at the Northern Beaches Hospital.

In the absence of any other action to enhance staffing levels at the Northern Beaches Hospital, there is a risk that patients at the Northern Beaches Hospital will experience a lower level of service over time than at NSW public hospitals. Efforts to match the NSW Government initiative may also make it difficult for Healthscope to make the public portion of the Northern Beaches Hospital work financially, further risking the success of the partnership.

The Northern Beaches Hospital has not addressed a known, longstanding clinical risk and has limited visibility over minor harm and near-miss incidents

The Northern Beaches Hospital electronic clinical systems present quality and safety risks that have been known to Healthscope and the Northern Sydney Local Health District since the hospital opened in 2018. In the emergency department, Healthscope’s electronic medical record system is used in tandem with another system that captures patient administrative data. The two systems are not well connected, elevating the risk that clinically relevant information is not fully considered in making clinical decisions. This risk was realised in a serious adverse event in September 2024 as identified in a Serious Adverse Event Review. Neither Healthscope nor the Northern Sydney Local Health District have taken sufficient action to address this risk.

Differences in electronic medical record systems between the Northern Beaches Hospital and the Northern Sydney Local Health District affect patient continuity of care

Earlier, this report noted that Healthscope is not required to use the same electronic medical record as other facilities in the Northern Sydney Local Health District or NSW Health. Under this current arrangement, clinically relevant information for patients of the hospital is not fully visible to clinicians outside of the Northern Beaches Hospital until discharge. This affects the continuity of care for some patients, notably for mental health patients at the hospital. In other cases, the way the Northern Beaches Hospital electronic medical records connect with the District’s records makes information more difficult to access for District-based clinicians. That is, there are additional screens and selections for Northern Beaches Hospital patients than for other patients, which are different and not always known to all clinicians.

Legal disputes highlight the inherent tensions of the Northern Beaches Hospital public-private partnership

The central tension of the project deed – the maximum payment amount – drives antagonism between parties to the public-private partnership that can be seen across various interactions noted in this report. In December 2021, the Northern Sydney Local Health District commissioned a consultant to work with NSW Health and Healthscope to address the strained relationship between them following a series of seven legal disputes in 2019 and 2021. The resulting report led to the creation of the Senior Governance Board in March 2023, providing Healthscope access to high-level NSW Government representatives to monitor and resolve issues on the Northern Beaches Hospital public-private partnership.

Both Healthscope and the Northern Sydney Local Health District report that the relationship has improved since 2019 and 2021 but is at times challenging and could be better. The antagonism between parties between 2019 and 2021 highlights the importance of trust for this type of arrangement. The safety concerns recounted in the previous chapters erode that trust and put the Northern Beaches Hospital public-private partnership at further risk.

NSW Health restricts the delivery of certain services to maintain efficiencies within the district and the broader public health system

Under the project deed, NSW Health defines the activity it will purchase. It also defines several restricted services that it does not permit the hospital to undertake. For example, the Northern Beaches Hospital is not permitted to perform neurosurgery (or brain surgery), cardiothoracic surgery and elective interventional cardiology for public patients, despite the hospital performing these procedures for private patients. In these instances, and for other restricted services, the Northern Beaches Hospital is expected to arrange transport to another facility, the Royal North Shore Hospital in this case, for care and treatment. The Northern Sydney Local Health District screens for these procedures and investigates whether there were plausible options to transfer patients. The Northern Sydney Local Health District reports that there are about ten of these instances per year. The results of investigations often result in non-payment for that activity as part of monthly billing.

The Northern Beaches Hospital activity profiling does not align with broader funding and district service agreement processes

The Northern Beaches Hospital activity profile is finalised three months prior to the start of the operating period – March for an operating period commencing in July. However, the State budget is generally delivered in June, a few weeks before a new operating period. The State budget informs the service agreements that establish budgets for local health districts. Consequently, the actual funding approved in the budget is not known with certainty at the time of finalising the activity profile for the Northern Beaches Hospital.

In practice this means that the State must assume a lower growth in volume for the Northern Beaches Hospital year-on-year or accept the funding risk for services purchased over this amount. This means that the activity profile for the hospital lags by one year because the starting point for a new year’s activity profile is the completed activity volume for the prior year plus an adjustment for expected activity for the remainder of the year based on simple phasing. Healthscope is therefore responsible for in-year volume risks and must address this shortfall in the operating year. The calculation of the yearly activity profile is a source of tension between Healthscope and NSW Health.