Ramsay announces formal agreement with Victoria

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Leading Australian private hospital company Ramsay Health Care has announced it has finalised a comprehensive agreement with the Victoria under which it will make its facilities and services available during the COVID-19 pandemic.

The federal, state and territory governments recently announced the effective nationalisation of Australia's 30,000 private hospital beds during the pandemic. The announcement included the integration of private hospital staff into the public hospital system.

Ramsay announced the agreement with Victoria yesterday. It supersedes the heads of agreement it signed on 1 April 2020.

According to the company, the new agreement has an initial term beginning on 28 April 2020 until 20 business days after the State gives notice. Notice cannot be given before the later of 31 May 2020 and the lifting of temporary restrictions on category 3 and all non-urgent category 2 surgeries by the federal government.

Some restrictions on elective surgery were lifted from this week following an announcement by health minister Greg Hunt. The restrictions are being lifted on a staged basis with decisions on surgery determined by clinical need.

Ramsay said that, in the event of an increase in COVID-19 cases, Victoria can ‘restart’ the operation of the agreement for a further term if it needs to mobilise additional health resources and facilities.

"In return for its commitment to use reasonable endeavours to maintain full workforce capacity at its facilities, Ramsay will receive net recoverable costs for its services (being its recoverable costs less its revenue amounts, calculated on an accruals basis)," said the company in a statement.

It added, "Recoverable costs include direct operating costs, service costs, corporate overhead costs (to the extent related to the provision of the services), depreciation associated with pre-existing capital which is owned and amortisation of leases and preapproved capital expenditure. It excludes debt servicing and interest costs. "

The company said it is in ongoing discussions with the governments of New South Wales, Queensland and Western Australia to finalise agreements.