Fiona Stanley Hospital: a short history of mismanagement

August 5th, 2014 by: Kwinana Electorale Office

Fiona Stanley Hospital (FSH) is the new tertiary hospital serving the people of Western Australia, in the southern suburbs of Perth in particular.

Conceived, designed and paid for by the previous Western Australian Labor Government, FSH should be the jewel in the crown for Western Australian health.

But under the Barnett Government, something has gone badly wrong.

Despite being completed in December 2013, the hospital will not see a single emergency department admission until 2015. It stands idle while the Barnett Government spends $118 million to pay Serco, the privatised operator of the hospital to look after a hospital without patients.

So how did we get to this? How did the Barnett Government so badly mismanage what was supposed to be a Department of Health success story?


On election in 2001, the Gallop Labor government undertook a comprehensive review of health services in Western Australia. The Reid Review, undertaken by Professor Michael Reid, formed the foundations of WA Labor’s long-term vision for health. It is a vision that continues today with the flagship of that vision, the FSH, as the centrepiece. As a new tertiary hospital, it is the single biggest health infrastructure project ever undertaken in Western Australia.

The Gallop and Carpenter governments set aside funds in a special account with $2.2 billion for the construction of the hospital. With architects appointed and earth works begun, the FSH project was handed over to the new Barnett Government in September 2008.

In early 2009, the government appointed builder Brookfield Multiplex, and the construction start date moved from late-2008 to mid-2009. Later that year, the government called for expressions of interest from the private sector to operate non-clinical services at the hospital. The opening date was pushed out to 2014.

In May 2010, the were further costs blowouts, which took it to $2 billion, bed numbers increased to 783, and by August that year, costs had extended to $2.02 billion. In October, Serco was announced as the preferred bidder to contract non-clinical services.

On 30 July, 2011, Serco was confirmed at the hospital operator and awarded a $4.3 billion contract. Treasury was only given two weeks to review the contract before it went to Cabinet, when it should normally take 6-12 months to review contracts of this nature.

The decision to privatise the hospital services at FSH would prove to be a significant factor in the delays and cost overruns at the hospital. Contract negotiations and bickering over issues like responsibility for IT and other cost areas hampered the development of the project and to manage costs.

By the following May, the blowout for information and communications technology (ICT) costs reached $150 million. In September that year, a change in services was announced, with cardio thoracic services moving from Royal Perth Hospital (RPH) to FSH, and major trauma services to stay at RPH.

Remarkably, on 1 October that year, the government announced it was “on track” for the hospital to treat its first patient in April 2014.

A subsequent parliamentary committee report has found that despite the warnings that the hospital would be delayed, in the lead up to the March 2013 election, the Government continued to insist that the hospital was on time and on budget. Evidence now indicates that, while the physical construction was on time, the IT, workforce planning, and commissioning issues were running well and truly behind.

In June 2013, the government conceded that there would be further delays to the opening, stating that there would be a phased opening from October 2014, and that it would not be fully operational until April 2015.

In December 2013, construction was completed, but the hospital was empty. The mid-year financial review revealed further blowout in costs at FSH, primarily due to ICT issues.

The Auditor General had warned in 2010 that FSH had problems, and could face delays.

Essentially, the FSH’s opening was delayed a year due to the Barnett Government’s mismanagement of its IT system, and the first round of patients will not be able to use the facility until at least October 2014. It will not be fully operational until at least April 2015.

The Barnett Government is now paying Serco $118 million to run hospital even though it does not have any patients. And the commissioning costs have blown out by $370 million.

A Parliamentary committee revealed that Treasury received advice in 2012 that the opening of FSH would be delayed, yet Serco was not informed until June 2013.

In 2014, the Western Australian Department of Health took over a majority of patient administration and health records management services, including clinical coding, billing, health records management, scheduling and appointment booking, yet these key services were supposed to be delivered by Serco.

Kim Hames continues to make misleading statements when he says services were never included in Serco contract, even though it’s clear they were.

Finally, the Auditor General report exposes the Barnett Government’s ICT mismanagement, with its $6 million “paperless hospital project” abandoned at FSH.

So it is clear that, over the last six years, the Barnett Government has demonstrated little but its incompetence and mismanagement of this still-empty, irresponsibly over-budget hospital.

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