Ramsay Health Care Inks COVID-19 Deal with NSW Health
The federal government has given the green light for states to accelerate elective surgery capacity when ready, leaving private hospitals operators hanging mid-air with growing waiting lists. Across the nation, most states were operating at 25 per cent for non-essential elective surgery. Yet, South Australia was the outlier, moving to 100 per cent on Wednesday, 13 May 2020.
Aside to Victoria and Queensland, Ramsay Health Care (RHC) has now entered into a binding deal with the NSW Ministry of Health to make its services and facilities available during the COVID-19 pandemic. The new agreement with NSW Health replaces the non-binding terms that were in place since 31 March 2020. Specifically, the initial period of the agreement has started on 14 May 2020 and will last until the date notified by the Commonwealth as the last date covered by the private hospital financial viability payment under the National Partnership Agreement. The deal emerges weeks after a partial lift on the ban of non-urgent elective surgeries in Mid-April.
On Friday, 15 May, merely 50 COVID-19 cases remained in hospital with 12 patients requiring ventilators. As a result, Prime Minister Scott Morrison announced a three-staged approach towards a full resumption of elective surgeries. Specifically, stage one is no more than 50 per cent of normal surgical activity levels; stage two is up to 75 per cent and stage three spans up to 100 per cent.
Moving forward, the feral government will review the level of elective surgery monthly in ensuring that it remains safe and sustainable. Ramsay Chief Executive Craig McNally says that the firm, which operates more than seventy hospitals nationwide, was ready for the reintroduction. Surgeons anticipate that Australia will be greeted by a wave of overdue as procedures such as endoscopies, colonoscopies, and hip and knee replacements are rescheduled. Yet, RHC believes it is in an excellent position to assist with the backlog of elective surgery that has been weighing heavily on the public system.
Outside of Australia, RHC has also confirmed that it has finalised an agreement with NHS England to make its facilities and services available to the NHS and its patients during the COVID-19 pandemic. The term of the comprehensive agreement is for a minimum of thirteen weeks from 23 March 2020, following which the agreement will operate on a rolling basis terminable by NHS England on one month’s notice. Additionally, the hospital operator will receive cost recovery for its service, including overheads, operating costs, utilisation of assets and rent.
More broadly speaking, having received both funding support from the federal and state government, it is likely that RHC will break even on earnings before interest and tax (EBIT). In April, Ramsay has also successfully completed A$1,200 million placement to institutional investors, priced at $56 a security. The firm is also looking to raise up to A$200 million through a share purchase plan.
By Caroline Wong
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