This guideline is to assist managers of hospitals to decommission the facilities under their control in accordance with government policy and the Department of Human Services (DHS) asset management procedures.
Assets including land, buildings, plant and equipment at a hospital to be decommissioned are to be used for alternative human services purposes wherever possible.
Hospital assets which cannot be used for alternative human services purposes are to be sold for the highest price on the open market.
The decommissioned hospital site remains the responsibility of the rural hospital or health care network until sold.
The sale of surplus Crown land occupied by a rural hospital or health care network can only be arranged by the Department of Treasury & Finance following referral by the Department of Human Services. The proceeds of sale are credited to the Consolidated Fund. In some cases, receipts from Crown land sales can be credited to specific capital redevelopment programs if prior approval has been obtained from the Department of Treasury & Finance eg. the current Metropolitan Health Services Plan.
The sale of freehold land, and all plant and equipment can be arranged directly by the rural hospital or health care network. The proceeds from the sale of these assets can be retained for reinvestment in health service capital developments approved by the Department.
Hospitals may only sell freehold land via public auction or public tender. The reserve price for sale is to be based on a market valuation from a private valuer with current membership of the Victorian division of the Australian Institute of Valuers and Land Economists (Incorporated); or from the Director, Valuation & Survey Services, Department of Natural Resources & Environment if the estimated value of the property is greater than $400,000. If the land was acquired or developed with government funds then the hospital must also comply with the Government Land Monitor Guidelines.
The roles and responsibilities of rural hospitals or health care networks and DHS personnel regarding the decommissioning of facilities are as follows:
DHS regional program staff is responsible for assisting the rural hospital or health care network in planning and implementing service redevelopment and relocation plans.
DHS Capital Management Branch is responsible for providing advice on Government and DHS asset policy and procedures, compliance monitoring; and for arranging services from other Government departments such as the Department of Treasury & Finance and Department of Natural Resources & Environment as necessary.
The rural hospital or health care network is responsible for day-to-day management of a decommissioned hospital site up to date of sale regardless of whether it is Crown or freehold land.
The manager appointed to decommission the hospital is responsible for identifying all asset management issues resulting from closure and is to develop and implement an asset management plan consistent with government policy and DHS asset management procedures.
Asset management plans must make provision for the following:
The DHS procedures to be adopted in asset management plans are as follows:
The rural hospital or health care network CEO is to refer the property to the DHS Regional Director as soon as the decommissioning timetable is developed even though timelines may change subject to availability of replacement facilities.
The Regional Director must determine whether the site or part of the site can be used for delivery of an alternative DHS program/s.
If the site or part of the site is suitable for an alternative use, then
Freehold property held by a rural hospital or health care network is to be sold to the Secretary, DHS at Government valuation.
Crown Land (including conditional Crown Grants) under the control of a rural hospital or health care network is to be relinquished to the Crown.
If the site cannot be used for an alternative DHS program/s it is surplus to DHS service delivery needs and must be sold.
Freehold property can be sold by the rural hospital or health care network following approval from the DHS Regional Director.
Crown property can only be sold by the Department of Treasury and Finance. The DHS Regional Director is to refer the facility, or that part which is surplus, to the Assistant Director, Capital Management Branch to arrange disposal.
The referral must include a copy of the decommissioning timetable and the name and telephone number of the local contact at the hospital for site access.
Capital Management Branch will arrange for head office endorsements by the Line Director, Program Director and Portfolio Minister as appropriate and then refer the property to Department of Treasury and Finance for disposal.
Issues that need to be addressed in managing sale of a hospital site include:
The Victorian Government Property Group (VGPG), Department of Treasury and Finance is responsible for managing these issues for Crown land disposals.
The rural hospital or health care network is responsible for managing these issues for freehold land disposals and should engage planning and or property consultants for this purpose. The VGPG can also be engaged to undertake this work.
The hospital team responsible for day to day site management must determine the scope of property management activities comprising:
The market study provides a framework for property management. For instance, existing buildings that are likely to be demolished in any redevelopment need only be secured and maintained to a level consistent with public safety.
Some assets require particular attention as follows:
The hospital management team must build the costs of these activities into a residual site budget retained for the purpose.
Fixed assets are distinguishable from moveable assets in that they are permanently connected to services and require specialist technical skills to effect their disconnection/relocation.
These assets typically comprise:
The market study provides a framework for determining whether fixed assets should be sold with the property or dealt with in a similar manner to moveable assets. Fixed assets are sold with the property only when they bring additional value to the transaction or where separate sale is not deemed to be viable. Additional value is only obtained when fixed assets associated with a building can be sold as a "going concern". This is rarely the case because hospital sites are invariably sold for an alternative commercial or residential use for which existing buildings are usually unsuited.
DHS approval is required for disposal of fixed assets regardless of the Crown or freehold status of the property. The hospital decommissioning manager is to prepare a list of fixed assets with recommendations on disposal for approval by the Assistant Director, Capital Management Branch.
The procedure for the disposal of moveable assets comprising plant and equipment and stock and stores is as follows:
This document is available as Guideline 8.7 in the Capital Development Guideline series.
The document is an extract from a Victorian Government publication titled Government of Victoria Policy and Instructions on the purchase, compulsory acquisition and sale of land, Department of Infrastructure, March 1998.
The complete document is available from the Department of Infrastructure Bookshop, Nauru House, 80 Collins Street, Melbourne VIC 3000.