Ernst & Young Australia was appointed voluntary administrator of Western Hospital in Henley Beach yesterday following a “challenging period for the hospital’s operator”.

In a statement, administrators Colby O’Brien, Robyn Duggan and Adam Nikitins said their primary objective was to “continue operations whilst it secures a new operator for the hospital”.

Earlier this month it was reported the hospital was facing closure after failing to pay off debts. Western Hospital managed to secure a $1 million loan from the government prior to calling in the administrators.

Former SA Health chief executive David Swan has been appointed by the administrators to run the business temporarily whilst Ernst & Young sources a new operator.

“Operations at Western Hospital will continue as we work to secure a new operator,” administrator Nikitins said.

“Funding has been secured for the transitionary period and our primary objective is to ensure continuation of services and minimise disruption.

“We are committed to transparent communication with all parties throughout the administration process, to find the best possible outcome for the hospital, its staff, patients, doctors and the community.”

Western Hospital is a 53-bed acute surgical and medical private hospital in Henley Beach on Cudmore Terrace and opened in 1974. It offers services including acute care, cardiology, dermatology, gastroenterology, ophthalmology, oncology, physiotherapy, gynaecology and more.

State Treasurer Stephen Mullighan told ABC Radio Adelaide this morning that the hospital previously indicated to him it was experiencing financial difficulty and that its longer-term plan was to “sell the business from the current owners to a new private hospital operator so that they could operate sustainably into the future”.

“They indicated that they needed some bridging financial support, the state government provided them with a short-term loan of $1 million which was roughly equivalent of three months of rent, hopefully to give them enough time to effect that transaction,” Mullighan said.

“That wasn’t able to succeed for a number of reasons and now the directors of the business have resolved to place the business in voluntary administration.”

Asked whether the government would forgive the $1 million loan, the Treasurer said his department hadn’t been asked to do so yet.

“The loan remains outstanding and I’ve made it clear that our focus from day one, recognising this isn’t just a small community private hospital…we’re prepared to be flexible and pragmatic about what happens with that $1 million because our overall strategy is that we want this facility to stay open and we want to give it the best chance of transitioning to a new operator,” Mullighan said.

He confirmed the government had not been asked by Western Hospital operators for further financial assistance, but that “it would be our very strong preference not to provide further financial assistance”.

“Hopefully those administrators can sort out what some of the impediments have been from running this business profitably or at least on a break even basis, but they can also find a new operator to transition to,” he said.

“This isn’t an isolated circumstance around the country, there have been some private hospitals that have gone into financial difficulties, and they’ve been sold to other private operators and continued on successfully and we’re hoping that’s the case here.”

Asked whether the government could buy the hospital, the Treasurer said: “we haven’t been looking at that”.

“This is not a full-service hospital, it doesn’t have an Emergency Department for example, this is really something that just does elective surgery,” he said.

Shadow Treasurer and Member for Colton – covering Henley Beach – Matt Cowdrey told ABC Radio Adelaide this morning that “it can’t be underplayed the role that the Western has both in the fabric of the local community and the services that are being provided there”.

“We know that there have been huge blowouts in elective surgery waiting lists, we know that there are significant pressures that are taken off by having this private hospital operating, so I certainly hope there is a future for this hospital,” he said.

“We can’t afford to have elective surgeries disappear, we can’t afford to have beds…disappear.”

Administrators said the first meeting of creditors “will be scheduled shortly”.