Ramsay Unfazed At Medicare Plan
The Age
Tuesday August 26, 2008
PRIVATE hospital operator Ramsay Health Care says changes to the Medicare levy surcharge that will make private health insurance less attractive are merely a "bump in the road" and will still allow it to match this year's earnings per share growth.
The operator of hospitals in Australia, Britain and Indonesia expects EPS to grow 10-12% in the new financial year after yesterday reporting it had notched up 11.8% "core" EPS growth in the year to June 30, at the upper end of its guidance range.The private health sector is grappling with the effects of changes in the Medicare levy surcharge (MLS), which applies to taxpayers who do not take out private insurance.The Government proposal announced in the May budget - but yet to be passed by the Senate - increases the income threshold before the surcharge needs to be paid to $100,000 for singles and to $150,000 for couples.But Ramsay, whose hospitals significantly rely on privately insured patients, says the fundamentals for private health provision remain strong given an ageing population and a reluctance by government to increase the strain on the public health system."Despite what's happened with MLS, I really do see it as a bump in the road. It doesn't bring the industry to it's knees," said Ramsay managing director Chris Rex.He indicated the company was using its muscle to negotiate prices with health insurers who would have an extra keenness to cut costs given the effects of the MLS changes."In terms of any passing on of the pain - if there is any pain to pass on - we have spent the last 15 years getting big enough to look after ourselves if a day like today came along," he said."We are quite comfortable that we will be able to negotiate prices, and in effect have already done so, in a more tight health insurance market at a level that will allow us to continue to grow our business."Ramsay , booked a net profit of $92.2 million, down 13.9% on a year earlier.However, once discontinued operations, specific items and the amortisation of intangibles are removed from the result, the company said its "core" profit after tax rose 11.5% to $123.1million.Revenue for the year was up 27.4% to $2.7 billion and earnings before interest and tax rose 20.4% to $254.7 million. The company will pay a fully franked final dividend of 17.5 on October 15, bringing its full-year dividend to 32.5, up 12.1% on the previous year. Ramsay shares rose 35 to $10.25.LINK? www.ramsayhealth.com.au
© 2008 The Age