When private entities fail, communities shouldn’t pick up the tab – Dr Katharine Bassett of CHA says Healthscope’s not-for-profit status is shifting risk

Healthscope is Australia’s second-largest hospital operator. At its peak, it controlled 37 hospitals and 19,000 staff. In 2019 it was bought by Canadian management giant, Brookfield, for $4.4 billion. What has transpired since has created turmoil for government, taxpayers, staff and the sick, and a searing light is on a system that, advocates and industry leaders say, allows for exploitative measures. 

After being restructured by Brookfield with $1.6 billion worth of debt, Healthscope collapsed into receivership in May 2025. But the greatest shock was yet to come. Healthscope is set to emerge from the embers of collapse via the phoenix form of a not-for-profit, a move that has industry leaders shocked and voicing pointed review of government permissibility and a system that is allowing what many see as a get-out-debt-free metamorphosis. 

Dr Katharine Bassett of peak body Catholic Health Australia shares that what is happening with Healthscope, in its move from a failed private entity to a shielded not-for-profit, has wider and damaging implications for health and aged care, already bruised trust, and the nation’s hip pocket. Bassett champions calling a spade a spade, and that industry leaders have the opportunity to call out the system being bent for private financial gain at the expense of communities.

Rejecting options of integrity

Alongside others, Bassett has been raising red flags over the move of Healthscope from a private entity to not-for-profit. It is not only that the receivership group has been pushing for such a move in the first place that has concerned her, but primarily that Healthscope’s receivers rejected quality bids by genuine not-for-profits. Rejecting viable applications from candidates with decades of experience in managing hospitals, which Australians so desperately need, has flabbergasted many veterans in the sector. She highlights that in seeking not-for-profit for the group, with a leadership team that was at the helm as its private entity collapsed, the receivership team bypassed bids and teams that were excellent and ethical.

Bassett highlights that not only were viable and genuine bids from CHA not-for-profit members rejected, the process was made difficult and costly, “credible, established not-for-profit providers, organisations with long histories of delivering care and reinvesting back into their communities, indicated they were willing to step in and take responsibility for these hospitals.”

“They were put through a costly and uncertain process and then knocked back. We felt this was unjust and not in the best interests of patients. CHA members have a track record of delivering operating models that prioritise patient care, workforce stability, and long-term stewardship. Our members have a long history of stepping in during periods of system stress, often taking on complex services that require patience, commitment, and deep community trust.”

Leadership of substance

Bassett shares that in the road to speaking up about Healthscope’s professional integrity and personal conviction were important, “speaking up isn’t always the easy path, particularly when powerful financial interests are involved. But if the people who rely on the system don’t have a voice in those moments, the system risks drifting away from the purpose it was built to serve.”

As many aged care leaders have experienced, there is a drive to show up and bring skills and moral excellence to the management and care in aged care and health services. Bassett has experienced this calling, bringing many people of gumption and substance to the sector, which makes poor performers all the more powerfully distressing.

For Bassett, the decision to speak up about the situation, and its cost to the sector and seniors alike is also rooted in personal experience, “like many people, I have found myself holding the hand of someone I love in a healthcare setting, hoping everything will be alright. No amount of knowledge about the health system or policy really prepares you for the very human experience of those moments – the vulnerability, the uncertainty, and the profound reliance you place on the people and the system around you.”

She experienced that managing and running health services, to the holistic needs of people in these settings, requires business, clinical and moral substance, “you notice very quickly how much people depend on healthcare being compassionate, stable and there when it matters most. You also notice the extraordinary people who hold it together – nurses, carers, clinicians and support staff who show up every day to care for others, often under immense pressure.”

Bassett continues, “and alongside the clinical care, the pastoral care that organisations like CHA members provide to support patients and families through those moments can be just as important. It recognises that people arrive in healthcare settings not just with medical needs, but often feeling frightened, overwhelmed and in need of reassurance.”

For the shaping of health and aged care policy, on the structuring of financial entities and not-for-profit eligibility, Bassett’s experience showcases a worthwhile reminder, financial mechanisms should be robustly ethical, sensible and fair.

“Experiences like that stay with you. They remind you that healthcare isn’t an abstract policy debate or a financial structure. It is about people at some of the most vulnerable moments in their lives. That’s why it matters that the system is organised around the needs of patients, families and communities, not around financial arrangements that shift risk onto them.”

A broken system

Bassett and other financial analysts note that Healthscope’s journey from failed private group to not-for-profit has laid bare monumental problems with Australia’s charitable eligibility system. For the system to have allowed the move to be viable at all is a significant concern. In so allowing for the strategy to have not just gained credibility within the receiver group but yielded success through government systems has raised countless red flags for health and aged care leaders, and by extension, every taxpayer in Australia, too.

Bassett notes, “while we don’t yet know the financial structure, it is likely the lenders will use taxpayer-funded not-for-profit savings, now and into the future, to allow them to “sell” their debt for a higher price than they would otherwise get if they sold the assets today to genuine not-for-profit providers.”

“This [not-for-profit status] essentially amounts to Australian taxpayers funding a higher payment to offshore distressed debt lenders.”

Bassett is frank; the receivership process is geared to safeguarding private capital. Within market forces, it is understandable that there would be pursuits to mitigate the cost of the collapse and the debt to investors. It is imperative, then, that government systems that manage charity eligibility and maneuverings within it are robust to safeguard other interests. Advocates remind that the community, the taxpayer, genuine health and aged care leaders, and staff who have poured themselves into the daily work of upholding viable facilities and services, with already limited government funds, deserve safeguarding and respect.

“A receivership process is, by nature, concerned with protecting private capital. It is not designed to advance community benefit, workforce stability or long-term service planning. Yet the risks created by this process fall squarely on the patients who face disruption, staff who live with uncertainty, and communities who lose confidence.”

Bassett explains, “Healthscope and its lenders are seeking to reconstitute as a not-for-profit entity, which would give them access to tax concessions designed to support genuine community care. Those concessions were never intended to resolve privately accumulated debt. The public carries the risk while the financial settings are bent to accommodate private interests.”

Systemic reform

Bassett advocates for a reassessment by the government to the inherent principles and intent of not-for-profit status.

“Not-for-profit status was created for organisations whose purpose, governance and operating models are genuinely oriented toward public benefit. It was not designed as a resolution mechanism for failed for-profit businesses. A business that operated under a for-profit model, accumulated $1.6 billion in debt, and is now seeking access to public benefits by reconstituting as a not-for-profit is not embracing a mission. Those are fundamentally different things, and the distinction matters enormously.”

She challenges that the Healthscope process and progress of recent months have blatantly shown the cracks within the system.

“Our regulatory and tax settings need serious scrutiny. The question that has to be asked is whether they are genuinely aligned with a health system built on stability, equity and trust – or whether they are being used in ways they were never intended for.”

She assesses, “credible not-for-profit providers with proven track records indicated they were willing to assume long-term responsibility for these hospitals. The fact that they were put through a costly and uncertain process rather than supported to step in is something that demands an explanation. The rules should not bend to accommodate financial interests at the expense of communities.”

Integrity matters

As the cracks widen for the very health of health and aged care sectors, Bassett challenges that there is even more reason for government and sector leaders to examine what is permissible and expected in the sector.

Business acumen must be paramount. So too, the integrity and authenticity of leadership. Bassett is moved by the countless conversations she has had with executives within CHA’s membership. For the many who have more MBAs and degrees to count, it is their integrity to stay when the going gets tough, to step into responsibility where profit is thin but need is high, that should be the marker of who is protected and upheld by not-for-profit status.

Analysts have calculated that Healthscope’s not-for-profit status could allow investors to save up to $100 million in payroll tax. There is the flip-side to this coin that not-for-profit aged care executives are acutely aware of. This would cost the Australian taxpayer base the exact equivalent in significantly needed health and aged care services, through grants and subsidies foregone.

Bassett champions aged care executives and staff that have shown a work and calling with a very different approach, “[our] mission-driven providers have repeatedly stepped in during difficult periods, taking on services that are complex, costly and essential. They are guided by their mission to bring God’s love to those in need, offer comfort, hope, and healing, as well as provide care for the marginalised, elderly, disadvantaged, and those on the fringes of society.”

Persevering leadership

Bassett has seen first hand what the substance of leadership in health and aged care can look like, and the profound benefit it can have on the health of the sector and all who rely on it.

“What I admire most about CHA members is that they don’t walk away when circumstances become difficult. Their instinct is to lean in and stay. That kind of commitment creates a very different culture of care.”

She says, “when people enter the healthcare system, it is often at the most vulnerable moments of their lives. Families caring for someone they love are often under enormous emotional and practical pressure. And the staff who work in the system are carrying that responsibility every single day.”

“What matters most in those moments is the quiet reassurance that someone will still be there tomorrow – not just when things are working smoothly, but when the system is under pressure or care becomes more complex. That sense that someone genuinely has your back, that they will continue to show up, keep the doors open and keep caring, is incredibly powerful.”

Speaking to what aged care is looking for, what Australians are looking for, Bassett shares, “I think people are looking for that kind of reliability in institutions right now. CHA members are mission-driven organisations that have been embedded in communities for generations.” 

“[Many providers] They don’t see care as a short-term transaction. They see it as a responsibility they hold for the long term. That creates stability and trust, and in healthcare those things matter enormously.”

Not-for-profit traits

Bassett shares her experience from working alongside provider leadership that have done the tough yards. Through walking alongside them, through the consistently tumultuous work of aged care she has seen common traits endure, “stewardship matters. Organisations built on long-term responsibility operate differently from those oriented toward financial churn, and that difference shows up in the quality and continuity of care they provide.”

“These traits [stewardship] are what determine whether a provider is still there for a community when things get difficult.”

She challenges that what has happened with Healthscope means serious and difficult conversations within government, alongside health and aged care leaders. What is acceptable, permissible and protected by systemic measures must be transparently debated, “healthcare demands moral clarity about who the system is for and who bears the risk when things go wrong.”

“Healthscope is not just a story about one operator. This moment should prompt a broader conversation about how Australia structures ownership, leasing, and operation of private hospitals.”