Plans by the region's health chief for a private facility to be built within the grounds of Wollongong's public hospital have been upset by this week's announcement of a rival private hospital.
Illawarra Shoalhaven Local Health District board chairman Professor Denis King had been set to hold talks this week with three hospital operators, including Ramsay Health Care to discuss plans for the project.
However, this week Ramsay Health Care said it would lease 4½ floors of the eight-storey $90-million medical precinct being built by AA Crown Holdings on a site near the public hospital.
Ramsay, which runs Figtree Private Hospital, will move its staff and services from Figtree to the new Wollongong Private Hospital, which it expects to open in October 2015.
Prof King first flagged the health district board's plans for its private facility to be co-located with the public hospital last December.
The board said in March that it would stage a "market sounding" exercise to allow interested parties to register their interest.
"The idea of the co-located hospital, which would be on hospital land that was leased to a private hospital operator was that it would give us some opportunities for some synergies which would be advantageous to the private sector and the public sector," Prof King said.
"The private hospital announced by Ramsay this week is not on hospital land but from the perspective of the district we applaud any high quality health facility in the Illawarra - it's only a good thing.
"We were due to see three hospital operators this week regarding our plans, one of which was Ramsay but they've obviously decided to go down another path and we respect that.
"We were within about six weeks of making a decision but this will of course make a big impact on anything we do."
Prof King said he would still call for talks with the remaining two hospital operators that had registered interest.
"They may want to alter their plans in light of this latest announcement or they may decide not to go ahead on the basis that there isn't enough work to keep two private hospitals busy," he said.
"They're public companies and they have to respond to the commercial imperatives which may mean that ours may not go ahead," Prof King said.
Figtree Private Hospital chief executive David Crowe said timing had been the main factor in Ramsay's decision to withdraw from the hospital board project and instead opt to lease space at the AA Crown Holdings development.
"Realistically, the timeline [of the hospital board project] didn't really suit our exit strategy from Figtree with our lease there expiring in 2015," Mr Crowe said.
"Ramsay was interested in both projects - but it ended up being a case of 'first in, best dressed'."