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Hospital expansion well on its way

Hospital expansion well on its way

Casey Hospital

A series of transactions have closed for the expansion of the Casey Hospital in Victoria.

Firms: Allens (Plenary Health); Corrs Chambers Westgarth (Victorian government); Pinsent Masons (Watpac); Clayton Utz (Brookfield GIS); White & Case (existing bondholders)

Deal: A series of transactions for the expansion of the Casey Hospital have closed.

Value: $135 million

Area: Projects and finance

Key players: The Allens team advising the Plenary Health consortium was led by partner David Donnelly (pictured) and included partners James Darcy, Wendy Rae, Geoff Sanders and Adrian Chek; managing associates Paul Telford, Paul Cerche and Jennee Chan; senior associates Nick Kefalianos and Stephanie Malon; associates Amy Biggins, Ben van Weel, Tristan Kelly and David Yang; lawyers Yi-Ling Ng and Emma Veljkovic; and graduates Krystyna Lopez and Katerina Dandanis.

The Pinsent Masons team advising Watpac was led by partner Greg Campbell.

The Corrs Chambers Westgarth team advising the state government was led by partner David Warren and senior associate Paul Brickley. 

Deal significance: The Plenary Health consortium, comprising infrastructure and development companies Plenary, Watpac and Brookfield GIS, closed several transactions late last week as part of the expansion of the Casey Hospital in the outer Melbourne suburb of Berwick.

The Victorian government is providing the hospital with $135 million to undertake the expansion, which is being conducted under the existing public-private partnership (PPP) contractual framework. 

The project will deliver 160 new beds, the hospital’s first intensive care unit, six new operating theatres, additional recovery capacity, a new day surgery unit, upgraded pharmacy, pathology and back-of-house areas, more than 300 new staff and public parking spaces and a new front entry building with education and training spaces for Monash University.

The expansion is expected to allow Casey Hospital to treat an additional 25,000 patients per year, perform an extra 8,000 procedures and support an additional 1,300 births.

Allens lead partner David Donnelly said the expansion involved complex arrangements to integrate with the hospital’s existing operations.  

“The two most critical issues with augmentations are the interface with existing operations and facilities and the preservation of the existing (operating) capital structure,” he said.

“These issues were of paramount importance to the team, who were able to ensure these considerations were appropriately addressed within the context of works occurring in and around an existing operating hospital.

“In meeting these challenges, the expansion project draws on work that the team was involved in developing as part of the Gold Coast Light Rail expansion last year.

“We are seeing a definite increase in the number of sole sourced projects – both market-led, or unsolicited, proposals and augmentations. These projects unlock critical value in existing assets and Allens is very pleased to be at the forefront of these developments.”

Pinsent Masons partner Greg Campbell said the project showed that significant extensions to PPPs are possible. 

“With PPP contracts typically lasting two to three decades, we have long predicted that there will be an increase in the number of major extensions or upgrades to existing projects under PPP contracts, required as a result of projects needing significant increases in capacity and other upgrades,” he said. 

The negotiation of the Casey Hospital Expansion Project within the pre-existing contractual framework is the latest in a growing number of PPPs undergoing augmentation to cater to technological and societal changes.

“This project, among others, demonstrates that significant extensions to existing projects are possible despite PPPs often being locked into 25-year contracts. We expect to see this trend continue, especially considering large-scale infrastructure projects will demand ongoing modification in the face of rapid change.”

Pictured: Allens partner David Donnelly

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