The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made.

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This web page contains a selection of press extracts revealing the approach to and the breadth of recent corporatisation of health care in Australia.

 Australian section   

The Breadth of Health Care Corporatisation  


No sector of the aging market has been greeted with more enthusiasm and greed than the health care sector. This sector is a very wide one. One twelfth of our money is spent on the expensive operations, therapies and drugs which we use to fight off the ravages of time, and keep us alive long after we would naturally have departed. This pot of gold fuels the surge to capitalise and make money out of our fellow humans' misfortunes.

While the corporatisation of sections of the health care scene started in the 1970s news cuttings from the last few years reveal this enthusiasm and the complete takeover of the sector by the marketplace. An assessment in 2003 that the takeover frenzy was over was premature. Enthusiasm has escalated.

Critical to the whole process was the guiding and controlling hand of government which also paid most of the bills on which profitability depends. Economic "efficiency" has been rewarded but there is little evaluation of its impact on clinical efficiency, empathic care and care outcomes.

The information we have on competitive market systems and for profit services is that they are not only more expensive and less efficient but provide less real care. The claims to competition reducing costs contrasts with markets analysts enthusiasm and their predictions for large profits. The two claims are incompatible. The claims to benefit include efficiency and the provision more care, but some at least of that costly care is a consequence of demand created by marketing and not of need. Here is how they see it.

Nov 2003 The market listed for profit health care marketplace

There are currently 107 health care stocks trading on the Australian Stock Exchange (ASX) representing 8% in participation and 3% by market share ($24.2bn). Of that 107, 31 operate in equipment & supplies, 22 services & providers, 38 biotechnology and 16 pharmaceutical.

The average market capitalisation is $240m and the median $42m.
With the best ever conditions behind it corporate activity is now likely to slow down. We expect hospital activity to quieten, radiology and pathology to continue with small acquisitions, medical centres to be mixed with the exception of the MAY (Mayne Health) sale, aged care acquisitions should heat up, pharmaceuticals should increase but more likely overseas purchases, and equipment/suppliers to be mixed.

Apr 2004 The breadth of the aging business

One is health care. People living longer are going to spend money on their health, and there is a host of businesses associated with health care and private hospitals that one would expect to benefit: Sonic Healthcare , Mayne Group , Ramsay Health Care , MIA , Affinity Health and Health Communications Network .
There are other sectors that will be affected by a greying population. Pharmaceutical companies such as API or Sigma , vitamin manufacturer Blackmores , biotechs like Ventracor , much-maligned hearing implant manufacturer Cochlear , and regional banks producing reverse mortgages (see article on page 27) could be interesting plays.
Grey Power Can Line Your Pockets Australian Financial Review April 21, 2004

Aug 2004 Profit for some in our crumbling away

We are born, we live, we die. And in between those stages, especially just before the final one, we spend bucketloads of money on medicine and doctors. No surprise then that with the greying of Australia the nation's hospitals, pathology clinics and nursing homes are ringing up bumper profits.

So, why just remain a consumer of these services, the argument goes, why not become an investor and reap a financial return from the provision of health services?

It's for these reasons, as well as a bloated federal health budget and innovative drugs, that health stocks are enjoying a stellar run on the sharemarket at the moment.
Demographer Bernard Salt, from KPMG says there's a fundamental driver. "The body decays after 50," he says. "When you have a large push of people into that stage of the life cycle, as things start to decay and droop, you will call on a range of services to replace, refit and prop up. This generation isn't going to put up with bits falling off and not working the way the pre-war generation did."
Health care gets a new lease on life Australian Financial Review August 14. 2004

Mar 2005 The new doctors and the food chain of procedures

Aged health care, once the ASX ugly duckling, is turning into a golden goose.

Harry Unger is the kind of doctor an ageing Australia is going to see a lot more of. At 58, when many colleagues are thinking about retirement, the Melbourne ophthalmologist and his partners have been busy converting their business, Vision Group, from a private equity-backed company into a $90 million float. In between consultations and cataract surgery, Unger talks cash flows and EBITDA margins with investors and bankers. Vision Group shares have soared more than 40 per cent since the company's December listing and Unger and his mates are doing very nicely, thank you.
Welcome to the nation's hot new growth sector. Unger and his friends aren't the only ones cashing in on your arthritis, heart fibrillations and deteriorating eyesight. The rising corporate activity across all segments of the aged-care sector is enough to give anyone a turn. In the past five years or so, an industry once dominated by small businesses and cottage-industry-style operations has been turned inside out by a bout of acquisitions, floats and private equity deals.

As the notoriously cashed-up baby boomer bubble prepares to burst into serious old age, the health-care sector is taking off and fortunes are being made. - - - - - -

"The value of the health-care sector has risen dramatically in the last decade . . . go back 10 years and the sector didn't even exist," he (analyst) says. "We can see no reason why the value of the sector will not double again in the next decade."
There's an entire food chain of surgical procedures blood tests, brain scans, CAT scans and body scans that are feeding a growing array of pathology, radiology, neurology, gastrology, oncology, cardiology and other specialist service providers. And that's even before they get you through the door of the "lifestyle" village for seniors with the golf course and full physiotherapy unit and helpful "extras" aged-care facilities boasting on-site chefs and concierges.
Says hospital and pathology operator Healthscope's managing director, Bruce Dixon: "The elderly are just enormous users of pathology and most of their conditions can only be diagnosed through blood tests. You have more pathology tests in the final two years than the entire rest of your life."
Once fragmented health sectors have begun to corporatise and consolidate at a fast rate, taking advantage of scale and a business model more focused on the bottom line. In the past 14 months, the sharemarket has seen outbreaks of health and medical IPOs (more than 20 at last count), and doctors and their lawyers (they usually like their legal advisers and accountants with them) have been moving into the boardroom and the chief executive's suite.
The bout of deal-making and strong revenue growth has sent the ASX health-care index northwards. This has created a string of new millionaires and has sent the fortunes of the handful of long-time health sector operators rocketing as well as scores of those operating behind the scenes.
Unger believes other specialties likely to be corporatised in coming years include oncology, cardiology, neurology and plastic surgery. "You could almost go through the whole gamut," he says. Vision Group commands about 7 per cent of a $900 million market for ophthalmic procedures in Australia. Unger expects further acquisitions.
"It's still too early to tell whether aged care and hospitals belong in a large corporate environment where it's all our way," he says. "Equity markets are forward looking. I think it will take a good five to 10 years to mature."
RICH PICKINGS THE PEOPLE WHO GET RICH AS YOU GROW OLD Australian Financial Review March 19, 2005

Apr 2005 Industry benefits from government's support

With the Federal Government relying on private hospitals to cater for more than 8.5 million people with private health insurance the industry should enjoy long-term stability.
Greater life expectancy likely to bring solid returns Sun Herald April 17, 2005

Jun 2005 Some investors have profitable fingers in very step of your crumbling and dying

From doctors who diagnose problems in their suburban rooms to the specialists and diagnostic and radiology professionals, patients may run through a vortex of doctors, technicians and facilities.

Investors, too, can take a similar journey: the Australian Stock Exchange is home to nearly every one of these pit-stops on the health freeway. There are companies that invest in GPs' rooms, pathology clinics, diagnostic and radiology offices, hospitals and clinics. A spate of retirement living and aged-care homes have recently listed, and a funeral business and crematorium operation is quoted on the ASX.
Beyond the core network of health companies are a plethora of businesses that play an important part in the industry, such as blood plasma firm CSL, pharmaceutical manufacturer and chemist banner group Sigma, retail operator Australian Pharmaceutical Industries and software developer Pro Medicus. Ansell is one of the world's biggest producers of surgical gloves and condoms.

Some companies sell software to hospitals and doctors who rely on it to make sure patients are properly diagnosed and treated, or appointments are kept; others own the infrastructure and maintain facilities.
Part of the reason for the sudden enthusiasm for health stocks has to do with the greying population, which is causing a sharp rise in the demand for medical and health-related services and driving up profits.
One of the fastest growing sub-sectors within health is radiology and diagnostic services.

Breakthroughs in fighting diseases and other medical conditions have been helped by these services, and government and health-care professionals recognise that continued funding of this market is crucial.
Taking the pulse of health care Australian Financial Review June 8, 2005

Aug 2005 Production line procedures

"Investors in health care typically target the pharmaceutical sector as a destination for ageing population themes, but it's easy to miss some of the stocks in the medical devices sector, which can be greater beneficiaries," Deutsche Bank's Thomas Murphy says.

Murphy says the sector includes "anything from ear implants to artificial knees". Cochlear is an example of the former.

Murphy also highlights private medical companies that are targeting bulk medical procedures.

"We are going to start seeing the development of a production line approach to certain medical processes, because as the population ages we are going to have massive demand for people needing those procedures at low cost," he says. Many of the leaders in this area have yet to hit the stockmarket, but doubtless they will.
Learning the population shuffle Australian Financial Review August 17, 2005

Sep 2005 Rubbing their hands in glee!

"One in every $12 is spent on the provision of health in Australia," Tolhurst Noall biotechnology and health-care analyst Martin Ashdown says. "A lot of money goes through that sector and when a lot of money goes through any pipe it attracts a lot of business."

The general increase in health costs for the year to June was double that of the all group consumer price index as hospital costs, doctors fees and medical technology costs all increased, in part, thanks to consumer demand and government policy.

And with the first baby boomers soon to hit retirement, sector players are rubbing their hands together with glee over the profits to come. "Most of the data suggests that we haven't even hit peak health consumption use," Citigroup health-care analyst Andrew Goodsall says.

From hospitals to medical equipment, home care aids, drugs and aged care, the sector is growing fast.
Money is not a cure-all for health issues Australian Financial Review September 1, 2005

Oct 2005 Government is crucial in supporting this safe investment area

The health care sector offers investors defensive earnings, that critical ability to generate consistent returns even in a weak economic environment. Consumers will cut other expenditures to ensure survival and good health. A growing population, increased life expectancy and the aging demographic spells demand for health care service rising above the rate of inflation.
The government is crucial in creating a positive environment. The regulation of the diagnostic industry to cap annual revenue growth 5% for a five year term adds stability. Participants generate superior returns by consolidating inefficient operators and delivering service at the lowest cost. The sector delivered more for less and the UK government will follow by opening up its giant bureaucratic National Health Service to private enterprise.

Government encouragement of private medical insurance boosted the health funds. This provided an incentive for private hospital operators to invest in facilities to increase the desirability for funds and their customers and so win a higher share of the funding pool. Consolidation of the private hospital industry means the negotiating power now squarely sits with the private operators RHC and HSP.

The eight companies below operate in different markets from domestic to international from device to pharmaceutical. We focus on the strategic direction to grow earnings as the industry adapts to an aging population that requires greater services. You should monitor the price bands of each company to accumulate your favoured companies, particularly during market weakness.

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This page created Sept 2006 by
Michael Wynne