Ramsay increases French margin in strong annual results

The global hospital group Ramsay reported 12.7% growth in net-profit after tax this week with margins increasing in France despite tariff cuts.

Ramsay Santé, the product of Ramsay France’s merger with General de Santé, grew EBITDAR by 0.5% to €448m in the year to June 30, 2017, with sales following narrowly behind with 0.3% growth.

That gives Ramsay an improved EBITDAR margin in France despite another year of cuts to the tariff offered to private hospitals by the French government, which helped to take 1.5% off rival Capio’s EBITDA margin in July.

Stéphane Pichon, managing partner at French consultancy Your Care Consult, put their contrasting results down to a difference in the case mix between the groups and an increased focus on emergency procedures by Ramsay.

“Ramsay did well in mental health and rehab and less well in acute care. It has also begun opening emergency departments, with around half a million visits in the last year, which helps politically when you go asking for higher tariffs. Capio, on the other hand, is much more of a focused acute care hospital business.”

Ramsay is also cleaning out its portfolio by selling off two hospitals, one to Vivalto Santé, and finalising the integration of the HPM group in Lille, said Pichon.

In its domestic market, the Australian group managed to avoid the fate of competitor Healthscope, which reported a 40% fall in NPAT earlier in August causing its share price to plummet. Ramsay grew sales 7% and EBIT 13.6% in the market, which remains its powerhouse despite global diversification. Investors were not impressed, however, and shares fell from 71 AUD to below 67 AUD.

Ramsay’s new boss Craig McNally said: “In international markets, we are looking forward to the increase in tariff in the UK scheduled for April 2018 and in France, the election of the new government has seen an uplift in business and consumer sentiment, which bodes well for the future in that country.

Pichon agreed that the business environment is improving for private healthcare in France. Concrete change to policy have yet to emerge from the new Macron government but Pichon says a tariff convergence between the health and care sides of the senior care business is on the cards, and that this would please the private operators.

“The public sector is arguing against though the government has argued that once you total both sides the tariff will remain unchanged,” said Pichon.

Looking forward, McNally said Ramsay will continue to look for more opportunities in out of hospital and outpatient care. He said: “There is also increasing potential for out-of-hospital growth opportunities in adjacent businesses like retail pharmacy, across all markets in which we operate. We will continue to seek opportunities to broaden our care beyond hospitals to deliver integrated care across an increasingly disperse ecosystem.”

Source: Healthcare Business International, 1 September 2017

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