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Some issues not discussed in Tony’s article on RHC include: (1) Public hospitals canvassing for and accepting private patients in competition to private hospitals. They are not meant to do that but need the money and no one has stopped them. (2) The ever escalating cost of PHI has made it un- affordable to a large segment of the population. Difficult to see this trend being reversed. Do these issues not affect your view?
A: Thanks for the question.
Tony Featherstone has provided the following comments:
“As mentioned in story, I do see further declines in PHI membership, particularly among young people, but believe government initiatives to make PHI more attractive will stem some of the rate of decline in the short term.
I didn’t comment on public hospitals competing for private patients. It is an issue to watch and a good observation by the reader However, the loss of private patients to the public-hospital system is not huge in the scheme of Ramsay’s global operations (yet) and the trend is not as pronounced in other offshore markets that Ramsay operates in, from what I understand.
It all comes down to valuation. As per story, Ramsay is trading at a multi-year low on its valuations metric and a decent discount to comparable ASX-listed health/device companies. As I wrote, I think the market has already factored in a lot of bad news/risk into Ramsay, but others no doubt have different views about moderating growth in private hospitals. It’s not easy taking a contrarian view.”
