Mercy Hospital, which was established in 1936, announced recently it was in "advanced talks" over a possible sale.
While hospital leaders would not comment on the nature of the possible buyers, health commentator Ian Powell said he would not be surprised if a private equity firm had the hospital in its sights.
Private equity involves investment firms raising capital from institutional or high-net-worth investors to acquire, restructure and improve private or public companies.
"It’s what happening to many general practices, especially in the North Island.
"Investors come and they invest, and then they look for the most appropriate time to leave with the best rate of return — and they do so.
"There’s a lot of speculation that they will have an interest in Mercy Hospital. When that happens, that increases the chance of a change of ownership. It’s also what’s happened in laboratories."
Mercy Hospital is a not-for-profit organisation with charitable status, owned by Whānau Mercy Ministry Trust.
Entrusted to continue the legacy of the Sisters of Mercy, Mercy Hospital’s executive and governance teams provide leadership and expertise.
Dr Powell, the former head of the doctors’ union, said a move by private equity investors could lead to instability at the top.
"You don’t know with your current investors how long they’re going to be there for, and whether new investors will have the same sort of priorities, same sense of direction.
"So change at the top that’s really driven by profit, a profitable rate of return, is not conducive to stability."
Dr Powell said Health New Zealand Te Whatu Ora’s increasing rate of outsourcing procedures to the private sphere had led to difficult times in the public health system.
"They’re using the rundown of public hospitals as a means of enabling that.
"But quite apart from that, I think that it’s going to create more uncertainty in terms of private hospital functioning."
Private equity "changed the dynamic" away from ordinary private investment, where there would be more of a community focus and less likelihood to "kill the goose that laid the golden egg".
"Private equity would be indifferent to the killing of the golden goose because it’s short-term profiteering. So I suspect they would require the operators to take a more hard-line approach in the price for the revenue they would get from contracting out."
The Otago Daily Times contacted several investment firms and private health companies as a means of determining the actual buyer.
Southern Cross Healthcare and ACC declined to comment on whether they were interested, Ryman Healthcare was unavailable for comment and Waterman Capital did not respond to requests for comment.
Mercy milestones
1897: Seven Sisters of Mercy arrive in Dunedin, beginning their health and community ministry.
1936: Mater Misericordiae Hospital is blessed and opens in Royal Tce, admitting its first patient.
1969: The hospital relocates to Maori Hill, opening a new 64-bed facility with two operating theatres.
1989: The hospital is renamed Mercy Hospital, aligning with other Mercy hospitals in New Zealand.
1994: Mercy Hospital Dunedin Ltd is established, introducing formal board governance.
1996: The hospital transitions to primarily a surgical facility, reshaping its core services.
2011: Mercy Cancer Care is established, expanding specialist oncology services for Otago and Southland.
2023: Ownership transfers to Whānau Mercy Ministries, establishing a new laity-led charitable governance structure.
Source: Mercy Hospital website
