An Idiot’s Guide to the Serco & Fiona Stanley Hospital Controversy

Words by: Jonathon Davidson

Last year, West Australia saw the opening of Fiona Stanley Hospital, a state-of-the-art medical facility located in the suburb of Murdoch. The hospital, identified as the state’s flagship health facility, is unique for many reasons: the inclusion of specialist cutting-edge burns and mental health wards, rehabilitation services, and a general 783 bed capacity. Further educational programs are offered to underprivileged patients whom attend the facility and a range of volunteer opportunities are available. Fiona Stanley Hospital is also a product of the contemporary, digital age – the first hospital ever attempted to be built completely ‘paperless’ – run completely on electronic record management.

I was told there would be controversy. 

These visions of a paperless hospital, however, were abandoned. But not before the State paid for them.

So too abandoned was the original opening time of April, 2014. Instead, FSH opened six months later, last October. For every day the hospital did not open, the state lost an additional $250,000 – at least.

But these are not the only failures. A rich history follows Fiona Stanley Hospital all the way back to 2008, and it takes us into a range of other issues in discussing it. But more on that shortly. Firstly, I want to make something clear.

Hundreds of patients traffic in and out of the hospital daily without mishap, and the point of this article is not to chastise the inevitable errors in management that will come from running any large facility catered to deal with human beings across a vast range of complex intersecting factors. Had there been any hospital in operation throughout the past in which nothing ever went wrong, it would be something we’d know about. The bottom line is that in spending time researching Fiona Stanley Hospital – as I have been for some number of months now – I am not proclaiming that I know how to manage facilities within the public sector better than any other individual or group.

So then like, what’s your beef, man?

Complete and total disrespect for the right to information for Australians, the toxic influence of nepotism and boys-club-mentality running rampant in Australian executive government, and priority being given to the will of private corporate entities over the will of the people.

Additionally, the fact that the process of selection in choosing which corporation would take the state’s largest contract to ever go out for tender – at $4.2 billion – is completely concealed from the public, and it is legal for this to be the case. And to garnish my beef with the hot gravy of idealism, I take issue with the fact that the Liberal coalition are both not only willing to misdirect the Australian public, but also now appear to do so as a matter of due course in managing the public sector.

Woah, woah. Hold on. That’s a lot of accusations. What contract are you talking about?

The non-clinical services at Fiona Stanley Hospital – that is to say, every staff member who isn’t a nurse or doctor – are all handed over to Serco Group for management by the Department of Health in a landmark contract which is the largest in the state’s history regarding scope of the services sought. When the contract went out for tender, Serco put their hand up to take the contract. Keep that in mind.

What do you mean “put out for tender”?

Parliamentarian speak for ‘the government found someone else they could pay to do it’.

Right. Sounds perfectly reasonable. 

And you’re right. It does sound perfectly reasonable, but in practice, it isn’t. Or, to put it another way: dude, they chose fucking Serco to manage the hospital.

Okay, look. The name rings a bell, but I don’t follow this stuff. Who are Serco again?

Serco Group are an outsourcing company based in the United Kingdom. Their history is an interesting one, evolving from small origins working within cinema industries, moving onto nuclear power throughout the 60s – 80s, and now acting as a globally recognized services provider. Serco Group take out contracts with governments around the world, and according to theory of good government, they should be able to fulfill these contracts, or provide those services, for cheaper than those governments themselves could do otherwise.


That never happens.

Secondly, Serco Group have evolved a massive security and defence logistics arm, and now hold a number of contracts managing not only public facilities such as hospitals, schools and public transport; but also detention centres, military weaponry logistics and prisons.

For instance, Transperth informations management is handled by Serco, including every time you tag on and tag off. Serco run all detention centres within West Australia. The company also have ties with Murdoch University – though the nature of those exact ties are protected by commercial-in-confidence laws. Additionally, Serco manage the speed cameras in Victoria. This is only scraping the surace of the service. To put it bluntly, they are everywhere.

Meh. One company got rich enough to start doing heaps of stuff, I’m not really seeing the problem. 

Probably because you legally aren’t allowed to know about the problem.

Remember how I mentioned they manage all the detention centres in WA? You aren’t allowed to make contact with inmates, or report from the inside of the building. Serco staff across the board are employed only under the provision that they never talk about anything that goes on in their job. For this reason, almost all information we have on Serco’s long history of failures today regarding their shortcomings – of which there have been many, including more than a few deaths – have come only from either whistleblowers, victims, or visitors to Serco-run facilities, or the following courts and committees that follow them up. Their standing in the United Kingdom is similar to Fosters Beer’s standing here, and everywhere the company travels, bad press follows.

That rings a bell, I think. 

It should. Serco have been in trouble twice this year alone at Fiona Stanley Hospital. In fact, in April, they lost the fifth service in their contract. For those playing at home, they’re at 19 services now. It would be bad if they had lost five services since opening, but that isn’t the case – Serco lost four services before the opening of Fiona Stanley. Those services pertained to records management – originally envisioned to be done electronically – and thus ended the saga that was the paperless hospital vision.

But again – between the West Australian Treasury and the Department of Health, the state had already paid Serco for the services. We’ll get back to this one, too. Hold tight.

The fifth service they lost this year was sterilisation of equipment, taken from them after fragments of bone were discovered on a needle. Further coverage looked at a case of patient poisioning via mushroom, to which staff had been informed he was allergic.

But they lost that part of the contract, so they’ll lose that money, right? 

This is why I wanted you to remember the part about Serco putting their hand up for the contract. To answer your question: no, they won’t. The process of feeing a private contractor is called abatement. What abatement means is that instead of being fined, the fees will be taken from their corresponding payouts over a period of time. Here’s a good example: Serco have recently been fined $1 million for the bungle with the sterilisation contract. (They have also just lost the contract for prisoner transport in WA).

But anyway, abatement is kind of like HECS. And again, this seems like there’s fair justice being done, but you need to remember some key factors:

a) Serco, at this point, are too big to fail. By means of their being a service provider, Serco are depended upon by governments the world over to provide public transport, guard detention centres and prisons, manage schools and, of course, hospitals – one particular hospital under their management in the United Kingdom has quite literally become infamous.

b) Serco have an outstanding team of lawyers and advisors who, for as far as the discussion of abatement goes, for all intensive purposes will ensure that the abatements charged against Serco are appealed and delayed, and appealed and delayed, and appealed and delayed, ad infinitum. This too, is technically legal.

That’s pretty messed up, sure. But what’s your point? 

There are invested interests within the department of Prime Minister and Cabinet in having Serco run Fiona Stanley Hospital. That much is clear.

Oh, please. I didn’t know Rotunda had turned to conspiracy theories. 

I can’t blame you for thinking that, but hear me out.

Firstly, the contract with Serco to manage FSH was accepted before a report on the acheivability of the project had been finalised. Furthermore, two different versions of the acheivability report were created and disseminated amongst concerned departments and ministers. In the report More Than Bricks And Mortar from the Education and Health Standing Committee, it is stated that further clarification is needed as to whether or not two separate versions of the report were sent to different ministers deliberately.

This culture of miscommunication permeates its way all throughout the history of the FSH contract and it is obviously discernible – from publicly available knowledge – that opposing imperatives within the Department of Health convoluted the negotiation process with Serco to the point where the State government – and thus the taxpayers – have all lost money on awarding Serco the FSH contract. This is extensively addressed in the report Building Foundations for Value from the Public Accounts Committee.

This is getting really ‘House of Cards’. 

It gets better.

Secondly, when governments figure out whether or not privatising a service or just doing it themselves will be cheaper, they hire consultancy groups to do the job for them. Paxon Consulting Group, a Perth based firm, were tasked with reviewing whether or not Serco could do the FSH job cheaper. Serco’s contract contained over 24 separate roles, at $4.2 billion, in the largest contract in state history.

Paxon completed the report in little under 14 days.

But even then, the DoH had gone ahead and begun to finalise further arrangements before that report had been submitted and disseminated. It seems highly likely that Paxon were deliberately selected by the Department of Health, knowing that their report would end up clarifying Serco should take the job. Again – finalisations to the contract with Serco, including meetings between representatives, began before the report was complete.

That is peculiar, I’ll give you that. 

Right? We aren’t done yet though.

Thirdly, a number of other bidders were involved in the tender process who put forward expressions of interest in the management of FSH. However, by and large, the only other company on the list with the financial profile to even consider taking on the contract were Brookfield Multiplex.

Brookfield Multiplex, a name you probably recognise from skyscraper construction cranes, are an odd addition to the list of interested bidders for FSH, given that they have never run a hospital before and are, in fact, a construction company.

If that interests you, you’re shit out of luck, because the public aren’t allowed to know what the fuck is going on there at all.

Alright, so let’s assume there is a deal under the table. Who has connections with whom?

My suspicion is that a good place to start looking would be Perth-based lobbying firm GRA Everingham. GRA Everingham are important for five reasons:

a) They represent the interest of high-profile clients who work with government,
b) The group is run by Paul Everingham, ex-leader of the Liberal party,
c) They have Serco Group as a client,
d) Their model of operation is to hire ex-parliamentarians to represent client interests in government, and
e) GRA Everingham were holding meetings on behalf of Serco on the first day that Troy Buswell was elected into office as treasurer when the Barnett government came to power.

The very first day of his position in office, GRA Everingham had representatives – that is, ex-government workers who knew Troy Buswell personally – in his chambers on behalf of Serco. There were up to four consultations with these same represenatives in the first week of Troy Buswell’s role as Treasurer of Western Australia.

This is all publicly available knowledge, so all I can say is: you do the math. As I’ve hit 2000 words, however – I’d say you’re now officially filled in.