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 all of 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 page describes Ramsay's strategy for survival through the difficult 1990s and then its rapid growth and expansion after government used taxpayers money to subsidise the private health care system.

  Australian section

Ramsay Health Care
Survival and Growth
1994 to 2005




contents list

Getting through the difficult years
1994 to 2000

The coalition of Liberal and National parties won power federally in 1996 and have held power since. In the subsequent years labour won power from the coalition in all Australian states.

The coalition was far more strongly in support of the private health system and had promised to reverse the decline in private health insurance when they gained power federally. The market became enthusiastic at the prospect and a number of companies floated on the share market. Ramsay Health Care was one of them floating in 1997, but Paul Ramsay kept a dominant holding in the company.

The government’s initial steps were unsuccessful in reversing the decline in private insurance. It was not until some time after the coalition were reelected in 1998 that legislation which reversed the decline in private insurance was passed. This required the combination of a massive taxpayer subsidy and coercive pressure penalising those younger citizens who deferred their enrollment in private health until they were at greater risk.

Insurers were in a powerful bargaining position and did not willingly part with their good fortune. New enrollees were not immediately eligible and it was not until late 2000 that the full benefits of the bonanza enjoyed by the insurers flowed on to hospital owners.

During the lean years the companies made positive noises. They jockeyed for position and their survival in a consolidating sector. They positioned themselves to capitalise on the promised future largesse. They bought strategically increasing debt. Ramsay instead steadily upgraded its existing general and rural hospitals increasing their leverage.

During this period Ramsay’s largest competitor Mayne formed an alliance with the minister for health and the French insurer AXA in order to drive doctors into managed care style contracts. This resulted in a acrimonious dispute between the minister and the doctors. This ended with the minister’s departure from politics and the rejection of contracts by doctors.

Mayne had based its plans on controlling the profession. Instead it had antagonised them and made them suspicious. For a while its management seemed paralysed. Ramsay was Mayne’s main competitor and consequently benefited from its discomfort. After Peter Smedley's changes at Mayne in 2000/2001, doctors walked away from Mayne hospitals. Many walked into Ramsay’s.

Towards the end of this period leverage became a critical issue. Because of their leverage in psychiatry and rural hospitals Ramsay and Healthscope survived well. Mayne Health, Australian Hospital Care, Alpha Healthcare and others were decimated by failed privatisation's and colocations as well as crippled by competing with each other for contracts from insurers. Ramsay came through better than the rest because of the consistent profitability of its veterans hospitals.

The extracts give the flavour and thinking of these years and Ramsay's position in them.

1996 Ramsay floats

- - - - - there is talk that the second largest operator, Ramsay Health Care, is testing the waters for a float.
Ramsay, like its competitors, is expanding rapidly as governments sell management contracts and issue licences to build new private hospitals.
Australian Financial Review September 11, 1996

1997 The float

Paul Ramsay, - - - - , intends to forgo around 40% of his private hospital holdings in a sharemarket float valued at $A80m.
Ramsay to float 40pc of empire The West Australian August 13, 1997

1997 Floats well

Hospital owner/operator Ramsay Health Care Ltd made its debut on the Australian Stock Exchange at A$2.15, a 16 percent premium to the A$1.85 issue price.
Ramsay operates 13 hospitals and is building two more over the next 12 to 18 months. It employs 2,500 employers.
Ramsay Health Care lists at premium. Reuters News September 24, 1997

1997 A growth company

"We think we're in a great sector and we believe we're a growth company within that sector."
$21.5m windfall for hospital care mogul Ramsay COURIER-MAIL September 25, 1997

1998 Looking to buy but missed these

Buyers are already circling MBF Australia's 11 private hospitals, with Health Care of Australia and Ramsay at the top of the queue.
Year Of The Health Carve-up Australian Financial Review January 8, 1998

1999 Looking to diversify

Private hospitals are seeing their source of funds shrink - as the health funds suffer declining membership - while they take care of half of all surgery performed in Australia.
"We're certainly being squeezed by the private health fund problems," said manager, development, for the group, Mr Craig McNally. "The margins are getting tighter and tighter.

Hospital group Ramsay Health Care Ltd is canvassing a range of opportunities including joint ventures, new projects and non- hospital services as it moves to strengthen its position in the difficult hospital sector.
The group is also looking at new privatisation and co-location projects as well as opportunities in pathology and radiology.
Ramsay Profit In Poor Health Financial Review March 10, 1999

1999 Diversification seen as the way out

There's no future for hospital operators, according to Ramsay Health Care's chief executive, Mr Pat Grier. No, the future is for total health care managers, for groups with the capacity to grapple with the complexity of hospitals, integrated care, community care and diagnostics.
It has continued to diversify, making a concerted effort to lessen its dependence on the cash-strapped private health insurance funds, and it has made a deliberate decision to invest only in hospitals with future growth.
Ramsay last week reported a 41 per cent slump in interim net profit,
Hospitals Can't Stand Alone: Ramsay The Age March 15, 1999

2000 Still in trouble

Ramsay fell by more than half, from $1.88 to 75 cents before rebounding to around $1.
Last year's profit performance of the hospital operators, during a period of unprecedented economic prosperity in Australia and a booming stockmarket was abysmal. Mayne Nickless fell 16 per cent to $110.5 million, Australian Hospital Care fell 36 per cent to $9.8 million and Ramsay fell 57 per cent to $5.9 million.
"For the rebate to have a material effect on our results, health insurance funds will need to pass on a more realistic reimbursement of increased costs to private hospital operators, as well as any gains in volume which they may experience."
Health Stocks On The Mend Shares Magazine January 1, 2000

2000 Upgrading and also growth

The company's rural medical-surgical hospitals are Albury-Wodonga Private Hospital, Tamara Private Hospital in Tamworth and Baringa Private Hospital in Coffs Harbour. Each remains the only private hospital in its respective area. Ramsay Health Care opened a new $1.8m radiology facility at Albury-Wodonga in February 1999. This facility houses a cardiac catheterisation laboratory, owned and operated by the hospital. During the year, Ramsay Health Care also expanded the hospital's intensive care unit. At Baringa, the company completed the refurbishment of a new day surgery and high dependency unit and opened a new stand-alone day surgery centre.

Ramsay continued to increase its capacity in the hospitals and, in July 1999, introduced 10 new orthopaedic beds to Albury-Wodonga. In addition orthopaedic consulting suites were opened in October.

During 1998/99 Ramsay Health Care purchased the 44-bed Fullarton Private Hospital in Adelaide, which includes the Fullarton Therapy Centre, a standalone day patient facility and the Greenhill Consulting Suites.
Ramsay Health Care Limited Jobson's Year Book March 1, 2000

2002 Looking back on hard times

In the late 1990s, with health insurers in a disastrous financial state, private hospital operators were not able to secure fee increases and their operating margins were severely squeezed. Many private hospitals ran at a loss. In 1999, the managing director of Ramsay Health Care, Pat Grier, quipped that the only division of Ramsay's big Sydney surgical hospital, North Shore Private, making a profit was the coffee shop.
Health-fund relapse Business Review Weekly September 5, 2002



contents list

Healthcare Booms
2000 to 2002

Things took a rapid turn for the better at the end of 2000 as the federal government’s bail out funding for private health care filtered through the system. The buzzword in the market became "consolidation". This is where the bankers and analysts, who sometimes work cooperatively, make their money.

There was a wild rush to acquire and take over. The market saw this as desirable and the rational progression of marketplace "reform". The benefits of efficiency and economies of size were promoted. No mention was made of the human consequences of giant impersonal systems in health care.

The main reason and the driving force for consolidation was the market power of the insurers with whom hospital corporations now had to negotiate payments under the managed care style agreements they had entered. Size and particularly leverage became all important to the companies as they expanded. Not only was growth essential for survival but growth had to be strategic in order to secure leverage. Complicating this was the competition monitor, ACCC. The ACCC vetted purchases to ensure that hospitals in each region competed with one another for contracts with insurers.

This objective was unrealistic. Only one or two specialised hospitals like rehabilitation and psychiatry were needed in any one region. Only one general hospital was viable in rural areas. Competition could not be maintained. Owning non-competing hospitals like these gave leverage in these negotiations. The hospital’s owner could dictate fees. Ramsay and Healthscope had already built up holdings in these areas and consequently prospered. Competition was for leverage and so not primarily for cost or care.

In 2000 new management at Mayne Health introduced market management systems. Their business strategies threatened both the care of patients and doctors career prospects. The doctors, already disenchanted with Mayne and its policies, simply took their patients to other hospitals, many of them owned by Ramsay and Healthscope. As the health care market recovered Ramsay and Healthscope prospered and Mayne collapsed. In 2003 Mayne sold all of its hospitals to a group of venture capitalists led by a Citigroup subsidiary renaming the group Affinity Health.

During this period Ramsay Health Care maintained a steady focus on strategic growth and built its existing hospitals into larger strategic entities which were "must haves" for insurers’ contracts. In 2001 it purchased Alpha Healthcare in an acrimonious hostile takeover adding another 8 hospitals.

In 2003 Ramsay Health Care was the favoured bidder for Mayne’s hospitals offering $800 million. It was overly cautious about risks, particularly related to insurance and consequently lost to the venture capitalists. Eighteen months later in 2005 it paid an additional $600 million, nearly twice as much for the same hospitals. In 2004 Ramsay acquired Benchmark which operated 10 hospitals. There were also some smaller acquisitions such as Lake Macquarie Private Hospital and the Calvary Cairns Private Hospital.

Over the years there have been recurrent rumours and discussions between Ramsay and Healthscope about a merger but it never eventuated.

June 2000 Squeezed by insurers

Ramsay's Pat Grier says the health funds have all the cards "and I think they're being irrational in the way they're dealing them". Grier says funds are paying below cost, particularly for advanced surgery and Ramsay is on the verge of exhausting cost-cutting possibilities.
Dollarectomy / Your private dollarectomy. The Australian June 17, 2000

Sept. 2000 A bad year

Australian hospital companies continue to struggle in the second half of 2000. The initial move that began in earnest in 1996-97 into hospitals by investors failed to produce results because of a squeeze placed on expenditures by private health funds. Mayne Nickless Limited lost 70 per cent of its value at that time. Australian Hospital Care Limited, Ramsay Health Care Limited and Healthscope Limited suffered similar losses. This year, Mayne Nickless is in the red again and is attempting to cut costs. Ramsay has written off $A2.9m but had a net profit of 11 per cent. Australian Hospital Care is in even worse condition.
An ill wind blowing The Bulletin September 19, 2000

Dec. 2000 Rapidly changes but not acquiring

Ramsay managing director Pat Grier said Ramsay, Australia's third biggest private hospital operator, was now happy with its assets. "There isn't really a hospital now in our portfolio that's a problem."

He said acquisitions were not top priority. "Our first focus is getting the best out of our hospitals", for example, by boosting advanced surgery facilities at its existing hospitals.
Ramsay shares have almost doubled since July, and closed up 6c to $1.65 on Friday.
Hospital offload buoys Ramsay The Australian December 11, 2000

Dec. 2000 Profitable

Private hospital operator Ramsay Healthcare has announced its first quarter profits for 2000 were 30 per cent ahead of the same period last year, with predictions of full-year profit growth being significantly higher.
Australian Business News Reuters News December 11, 2000

Feb. 2001 Looking for acquisitions

RAMSAY Health Care looks set to launch the next strike in the rationalisation of the private hospital sector, with the company confirming it is on the lookout for acquisitions.
But Mr Grier said that regardless of whether it found suitable acquisitions, Ramsay intended to add 20 per cent to its bed capacity by building new wards at existing hospitals, a move that could be funded from existing cash flow.
Ramsay eyes healthcare rivals The Australian February 19, 2001

Feb. 2001 Profitable - rejects Healthscope

Ramsay Healthcare Ltd has more than doubled its interim profit, claiming the turnaround in performance is yet to fully reflect the benefits of the surge in private health fund membership.
Mr Grier said Ramsay remained committed to exploring acquisition opportunities, but it is understood that it has withdrawn from merger talks with fellow operator Healthscope Ltd.
Ramsay Enjoys Healthy 60pc Profit Jump Australian Financial Review February 28, 2001

Feb. 2001 Recovery materialises

Chairman Paul Ramsay said the strong rise in profitability reflected significant rises in private health fund membership. "This has been a period where results from expanded operations have materialised," he said. "We were cautiously optimistic about a recovery in the health care environment and that recovery has materialised."
Health fund tonic for Ramsay Australian February 28, 2001

June 2001 Shares up - Takeover of Alpha

After a sharp fall in the company's share price in 1999 and early 2000, the shares have soared from 76c in April 2000 to Friday's close of $2.70.
Ramsay, which is finalising its bitter takeover of smaller rival Alpha Healthcare, operator of Sydney's Westmead Hospital, believes rationalisation of private hospital groups has given the sector greater clout and relevance in negotiating higher reimbursements from health funds.
Ramsay's Prognosis Is Good Health Sydney Morning Herald June 12, 2001

Aug. 2001 Booming

In the past 12 months, Mayne shares have risen almost 60 per cent but have been left in the wake of smaller operators Ramsay Healthcare and Healthscope, which have each risen more than 200 per cent.
Smedley Wets The Baby's Head Australian Financial Review August 30, 2001

Sept. 2001 Profits doubled

Ramsay Healthcare Ltd said on Wednesday net profit for the 2000/01 year more than doubled to A$16 million, and forecast 50 percent profit growth in 2001/02 as private healthcare boomed.
Ramsay yr profit more than doubles. Reuters News September 5, 2001

Sept 2001 Insurers reasonable!

"The health funds are much more reasonable and for the good operators with hospitals their members need, the health funds will continue to pay reasonable rates,'' said Ramsay's managing director, Mr Pat Grier.
Health Funds A Profit Lifter For Ramsay Sydney Morning Herald September 6, 2001

Sept 2001 More beds needed

Mr Grier said Ramsay would spend $50 million over two years boosting its patient capacity by an extra 15 per cent to take advantage of the bed shortage starting to hit private hospitals.
"We can't put on capacity fast enough. The last thing we need is not having the supply of quality beds for the members who have come into funds to get access," Mr Grier said.
Covers improve Ramsay health The Australian September 6, 2001

Feb. 2002 Buys a hospital

Continuing consolidation of the private hospital sector was evident as Ramsay Health Care announced it had an agreement to purchase Lake Macquarie Private Hospital from the Medical Benefits Funds of Australia.
Healthscope Up 65pc, Ramsay Adds 76 Beds Sydney Morning Herald February 20, 2002

Mar. 2002 Well positioned

A MARKET perception that its private hospitals are well positioned in high-income demographic areas helped push up Ramsay Health Care's share price yesterday after the group unveiled a large rise in net profit.

- - - - - a result that pushed its price up 9c to $4.75.
Clean bill of health at Ramsay hospitals The Australian March 1, 2002

Aug. 2002 Looking for acquisitions

Ramsay was actively investigating further hospital acquisitions as well as other opportunities closely allied to the private hospital sector, including the aged care sector.
Ramsay produces clinical display. Daily Telegraph August 28, 2002

Oct 2002 Buys a not-for-profit hospital

Ramsay Healthcare, announced that it would acquire the 141-bed Calvary Cairns Private Hospital from the Catholic Church, adding to its 23 hospitals and 2,530 beds.
Meningitis concerns send Cochlear down Australian Financial Review October 5, 2002

Nov. 2002 Then and now

How things change. In 1999, Paul Ramsay, the founder and chairman of Ramsay Health Care, Australia's second largest private health care operator, was bemoaning the inability of his new state of the art hospitals at North Shore in Sydney and at Flinders in South Australia to turn a dollar, as declining health insurance membership continued to squeeze private hospital operators.

Roll forward to 2000 and the Ramsay stock price is showing a different story. Ramsay shares are in the middle of a two-year upswing that sees the stock rocket from $1 to $5.
Nothing but the best. Shares Magazine November 1, 2002



contents list

A Bumpy Plateau
2003 to 2005

The bonanza for private health care peaked in 2002/3 as more newly insured citizens started using the health funds to pay for health care they might previously have done without.

At the end of 2002 governments gave nurses in public hospitals large raises forcing private hospitals to follow, pushing up costs and placing pressure on margins.

Insurer's balance sheets began to show red. Insurers responded by being less benevolent to hospitals. BUPA showed the way in its bitter 2003 battle with Healthscope. But Healthscope and Ramsay were still cashed up and making acquisitions. They had leverage.

In this more difficult environment where some struggled Ramsay prospered. It bought Benchmark acquiring another 10 hospital and also a few single hospitals. It continued to expand and upgrade existing hospitals.

Aug. 2002 Insurers sustain losses

In an extraordinary reversal of fortunes, the health insurance industry has recorded a pre-tax loss of $34.3 million in 2001-02 after an $852-million profit in 2000-01. The underwriting loss for the year was $102 million compared with a profit of $720 million in 2000-01. It is the industry's worst performance since 1997, when its financial position was so dire
Ramsay produces clinical display. Daily Telegraph August 28, 2002

Jan 2003 Share slump

The share price of Ramsay Health Care has obviously had a shot of adrenalin in the past two weeks, which will come as good news for those investors watching it slump from its high of around $5 in March last year (down to $3.18 in December 2002).
Investment - UBS maintains its stranglehold Australian Financial Review January 7, 2003

Jan 2003 Insurance rates up

2002 was another year of growth for private hospitals due to incentives for private health insurance and 12 month waiting periods now over for those who joined during the Federal Government's lifetime health cover campaign.
Ramsay Health Care Limited Jobson's Year Book January 20, 2003

Feb. 2003 Tough times - hard bargaining

Tough operating conditions persist this year. The investment climate remains depressed, the level of claims is still high, and health costs are rising at a greater rate than inflation. Funds are also toughing it out with private hospital operators, who want substantial rises to cover
Health funds chase another rise Business Review Weekly February 20, 2003

Mar. 2003 But Ramsay's profits are up

PRIVATE hospital operator, Ramsay Health Care, has confounded the hardships felt by other health companies by reporting a net profit increase of 25 per cent in the half year to $18.4 million.
Ramsay is also in the middle of a program of capacity growth at existing hospitals, which will cost $75 million, and Mr Grier expects will increase capacity by 10 per cent by the end of the year.
Profit a tonic for Ramsay The Australian March 4, 2003

Mar 2003 Ramsay cock-a-hoop amidst gloom

In his commentary to shareholders and analysts, Grier contradicted the doom and gloom in the sector by saying there was still money to be made in private hospitals through both organic growth and acquisition. His comments were perceived as a thinly veiled jibe at other operators, in effect to say: there is money to be made in private hospitals if you have solid assets and good, stable management.
Some sickness, some health Australian Financial Review March 11, 2003

April 2003 Costs of labour rise

All expressed concern about a looming wage explosion sparked by a total rise in salaries for NSW nurses of 15.75 per cent, with the last part of that handed down in December, and rocketing medical indemnity insurance premiums.
It is easy to see the reason for that response. Labour costs are the largest single cost for hospitals, and nurses' wages represent 70 per cent of that.
Health returns on the mend. The Age April 18, 2003

Jan. 2004 Analysts are cautious

With the increasing costs associated with running hospitals it is little wonder margins have contracted from highs of 2002
Although our earnings estimates (table below) are in line with those of management we believe that there is a slight chance that HSP and RHC will not achieve guidance.
PRIVATE HOSPITALS Your Money Weekly January 29, 2004 

May 2004 Buys Benchmark

Ramsay Health Care Ltd (RHC) announced it has agreed to acquire all the shares in Benchmark Healthcare Group for $125 million. Benchmark operates 10 hospitals in Victoria and South Australia, comprising 980 hospital beds and 68 aged care beds, rising to 1,119 beds in 2005 as a result of capacity expansion now being developed. The group has an annual revenue of about $200 million.

Nov. 2004 National scope and leverage

Andrew Hamilton: The purchase of Benchmark is significant in that it gives Ramsay a material position in Victoria and South Australia. These acquisitions - - - - make it a true national private hospital company, strengthening its negotiating position with private health funds.
Ramsay in strong position for growth Australian Financial Review November 29, 2004 

Dec. 2004 Share price way up.

Ramsay Health Care is up 55% to $7.35; (share price)
The right tonic Business Review Weekly December 9, 2004

Mar. 2005 Ramsay's size

Ramsay, particularly, has made the most of these conditions, and in the past few years has acquired 38 hospitals, with more than 10,000 staff. By the end of this year, it projects a turnover of $1 billion and is the largest listed private hospital organisation.
RICH PICKINGS THE PEOPLE WHO GET RICH AS YOU GROW OLD Australian Financial Review March 19, 2005

Feb. 2005 Buys two hospitals

Ramsay also said today it had also agreed to acquire two stand-alone hospitals: Murray Valley (30 beds) in Wodonga and Rockingham (45 beds) in Perth.
Ramsay sets sights on more expansion in aged care facilities Australian Associated Press Financial News Wire February 2, 2005

Feb. 2005 Profts doubled

Hospital and aged-care operator Ramsay Health Care is poised to beat its 2005 profit forecast by "almost double", according to managing director Pat Grier.
Ramsay's expansion paying off The Sydney Morning Herald February 25, 2005


contents list

Ramsay Enters Aged Care
2002 to 2005

Aged care has long been a federal government target for market reform and for measures which would force the elderly with any assets to fund their own institutional care. This approach, adopted in 1996, produced a violent backlash from the community. The government back pedaled so that the full policy was never implemented. Attempts to bring in multinationals backfired when Sun Healthcare's business practices in the USA were exposed and it imploded. Local market listed groups did not rush to fill the gap.

In spite of much talk by corporate interests the bulk of aged care has been provided through not for profit, private for profit, individually owned and government services. As opportunities for growth in hospitals, diagnostic services, general practice and even international adventures have withered corporations have turned to aged care and the sector is now claimed to be "ripe for consolidation".

Some not for profits like the Salvation Army have found the constant market pressures and the regulatory structure so onerous that their mission has died and they have sold their nursing homes.

Ramsay's interest in aged care:- Ramsay Health Care was expressing reservations about aged care in 1997. From 2002 onwards it became increasingly vocal about its intention to enter aged care, but did not buy nursing homes until 2005. Analysts were enthusiastic about the potential offered by public funding, but some of those struggling in the industry were skeptical.

Owners of nursing homes have been reluctant to sell at the prices Ramsay wanted to pay. It decided to build its own facilities instead.

Ramsay's efforts to grow in aged care have been interrupted by the diversion of human effort and financial resources to its other large purchases, Benchmark, and particularly the acquisition of Affinity Health in 2005.

Ramsay repeatedly attempted to buy Australia's largest nursing home company, Moran Health Care, a privately owned group which has operated more expensive nursing homes for many years at 48 locations. Moran leases many of its homes from an AMP subsidiary and this group has resisted the sale.

Ramsay Health Care purchased a private home care group Silver Circle in 2003, and finally bought 5 facilities from Victoria's Ellis Residential Care in 2005.

Relevance of the US experience:- The dominance of vulnerable nursing home care by for profit corporate chains in the USA has resulted in major problems. Corporations have deskilled and understaffed in order to fuel profits, fund growth and remain competitive enough to resist takeovers. As a consequence the frail elderly have been warehoused, neglected, abused and even raped by the low paid and untrained employees who have been pulled off the streets to care for them. Some have had criminal records. The rate of complications and deaths from neglect is higher in corporate facilities. In some states citizens have taken to the courts and secured penalties which have forced the worst offenders out of their states.

Disillusioned and exhausted, trained and once motivated nurses have left the profession for better paid work in their thousands creating an acute shortage across the sector.

Red Flag from Ramsay in the USA:- Paul Ramsay did not enter aged care in the USA nor are there reports of similar practices in its US psychiatry facilities, another vulnerable sector where most others transgressed. Authorities pursued Ramsay facilities for receiving moneys billed for but which they should not have been paid by Medicaid. There was a worrying scandal involving its correctional services for juveniles where similar vulnerabilities exist.

As recently as 2003 Ramsay Youth Services Inc. in the USA was chaired by Paul Ramsay. He was the controlling shareholder. It provided rehabilitation and educational services to troubled adolescents in the USA. This group was similarly powerless, marginal, vulnerable and institutionalised. Reports indicate that their care and safety was compromised as a consequence of similar understaffing and deskilling to that in aged care. A grand jury investigation was set up. Allegations indicate that female juveniles were put in solitary confinement, sexually exploited and injured.

Much probably depends on whether Ramsay has learned from this US scandal. Will he try to compete with others by ignoring this lesson. Will Ramsay Health Care follow market prescriptions for deskilling and understaffing in nursing homes in order to compete successfully with others - under the pretext of efficiency?

Mar. 1997 No interest in aged care

He has only slight affinities with the health group of Doug Moran, preferring to stay out of aged care. Ramsay says home care makes sense but there is no cost-reimbursement structure for it.
Ramsay Hitches His Star To The Public System Business Review Weekly Mar 24, 1997

Oct. 2002 Aged care main growth plan

Longer term, Grier says, the main growth plan will concentrate on aged-care facilities, including construction of retirement homes and redevelopment or purchase of other aged-care properties. Grier says he will aim for the top end of the retirement market, where retirement bonds are charged.
Right Prescription For A Healthy Company Business Review Weekly (Australia) October 24, 2002

Oct. 2002 An aged care unit

Fast-growing Australian healthcare provider, Ramsay, will move into aged care provision. The company's MD, Pat Grier, told "Hospital & Healthcare" the company has established a new unit to administer the operation, which will target the upper income levels.
Ramsay to enter aged care field Hospital & Healthcare October 25, 2002 ABIX ABSTRACT

Feb. 2003 Logical expansion -- consolidation

Q The company is looking to enter the aged care sector within 6 to 12 months. Why is this a logical expansion?

A (Tony Scaramuzza, of ABN Amro Morgans) The aged care industry in Australia is highly attractive because it is large and at a very early stage of consolidation. We estimate the market could be worth as much as $6 billion a year. This is a logical expansion strategy because it is closely aligned to Ramsay's core competencies - - - -
Fighting Fit The Age (Melbourne) February 8, 2003

Mar. 2003 New aged care manager

The company has appointed aged-care manager Kevin Rocks to drive this strategy, and some believe Ramsay is very close to an acquisition.
Profit a tonic for Ramsay The Australian March 4, 2003

Aug. 2003 Trying to buy Moran Health

Negotiations with the Moran family are complicated by the ownership structure of the facilities that are operated by Moran Health on behalf of their owner the Principal Healthcare Trust, which is a joint venture between AMP and the UK-based Four Seasons Health Care .
Ramsay Looks Well On Hospitals Australian Financial Review August 29, 2003

Oct. 2003 Tied up bidding for Mayne

Chief executive Pat Grier said Ramsay had dropped plans to buy aged care assets while it focused on the Mayne hospital transaction in the last 12 months.
INTERVIEW: Australia's Ramsay Refocuses On Aged Care Dow Jones International News October 23, 2003

Nov. 2003 Buys home care

Ramsay Healthcare is preparing to move full-throttle into the aged care industry, yesterday announcing the $4 million acquisition of private home-care business Silver Circle, as it targets specific sectors and offers additional services.
Ramsay Health In $4m Aged Care Push The Sydney Morning Herald November 23, 2003

2004 Aged care "ripe"

Over at Macquarie Equities, analyst John O'Connell has taken a closer look at the aged care sector, which is ripe for consolidation and a massive overhaul.
Dosh in old folks The Sydney Morning Herald March 30, 2004

May 2004 Developing its own facilities

RHC strategic approach to the aged care industry is through acquisition, organic growth and investment. RHC is confident of finding further acquisitions. They have been allocated 186 new residential places in the annual aged care approval rounds for the year bringing the total number of licensed beds to 206. RHC are developing greenfield sites at Greenslopes, Coffs Harbour and Brisbane to accommodate these licenses. RHC also purchased Silver Circle, the largest private home care business in Australia generating annualised revenue of $25m.
RAMSAY HEALTHCARE (RHC) $5.12 Your Money Weekly May 6, 2004

May 2004 Some have doubts

- - - he (Grier) is winding up for a leap into the aged-care sector, from which he reckons his management team can extract even better returns.

"Good luck" say many of his competitors. The aged-care scene is littered with corporate corpses, and has an even worse reputation than hospitals. Shameful anecdotes about rotten food, patients treated as inmates and the occasional kerosene bath abound.
Many inside the aged-care industry say it just can't be done. They say there are plenty of hidden costs that could trip up an aggressive company and Grier.
Ref In The Private Hospital Scrum Australian Financial Review May 28, 2004

May 2004 Still no nursing homes but wants lots

Ramsay has no nursing homes, but wants them to contribute about 30 per cent of revenue within five years.
Ramsay beds down southern states with Benchmark buy The Australian May 25, 2004

Aug. 2004 But still can't find any

The only large gap in its health portfolio is aged care. Ramsay is finding it difficult to find the right asset for the right price.
Ramsay tipped to impress Australian Financial Review August 4, 2004

Aug. 2004 So close but still out of reach

Ramsay Health Care said it was close to clinching its long-running deal to buy the $250 million Moran Healthcare aged-care empire after putting forward a new proposal to stakeholder and stumbling block AMP.
Health-care magnate Doug Moran and his family had sold 38 of their 50-odd nursing homes to Principal Healthcare, which is owned by United States giant Omega Worldwide and AMP.
Ramsay puts new Moran ploy to AMP Australian Financial Review August 23, 2004

Sept 2004 Will build nursing homes

In the next three years RHC plans to build self designed facilities to house 500 to 600 beds. RHC continues to review brownfield acquisitions but will not compromise its 15% return on invested capital (ROIC) performance hurdle.
RAMSAY HEALTHCARE (RHC) $6.20 Your Money Weekly September 9, 2004

Nov. 2004 Moran bid rejected

RAMSAY Healthcare's plans to buy out the lion's share of the Moran family's nursing home business have stalled amid uncertainty over investment giant AMP's plans for the property assets.
AMP holds up nursing home bid The Australian November 26, 2004

Feb. 2005 Buys nursing homes in Victoria

Ramsay Health Care is to acquire five aged care facilities in Victoria from Ellis Residential Care for an outlay of $51 million.
Ramsay Health Care has also entered into a separate agreement to purchase Gracedale Private Nursing Home from Ellis Residential Care.
Ramsay buys five aged care facilities Australian Business News February 2, 2005

Feb 2005 Struggle to enter aged care

Ramsay has talked about getting into aged care for more than two years in a country with a large greying population. However, until now it has found price tags on existing facilities to be too high and the company instead focused on plans to build its own aged-care centres.
Australia's Ramsay takes small step into aged care Reuters News February 2, 2005

Update October 2005/January 2006:- At the beginning of August 2005 Ramsay was still committed to aged care. As the financial and logistic implications of its purchase of Affinity were realised it organised a strategic review at which the sale of its aged care facitities and some money losing hosptals were discussed. No announcement was made. Analysts speculated as to whether Ramsay would sell - or simply put its aged care program on hold for a while. In October it invested in the building of a new aged care facility in Shellharbour. In December it was deciding on the bidder.

Aug. 1, 2005 Increasing aged care

Ramsay Health Care is determined to increase its aged-care business and is investigating off-balance sheet structures, such as trusts, to shield cash flow needed for its rapidly expanding hospital portfolio.
Ramsay factors aged care into its plans Australian Financial Review August 1, 2005

Aug. 30, 2005 Second thoughts

Australia's largest private hospital operator, Ramsay Health Care, may quit the growing aged-care sector to focus on running hospitals.
Ramsay may offload aged care The Sydney Morning Herald August 30, 2005

Oct 2005 Buying

PRIVATE hospital operator Ramsay Health Care is investigating a Shellharbour City Centre site for a $15 million aged care facility.
Ramsay Health Care The Sydney Morning Herald October 11, 2005

Dec 2005 Sale under way

Ramsay will now turn its attention to disposing of its remaining aged-care facilities, estimated to be worth as much as $80 million.

Ramsay owns five aged-care facilities with more than 400 beds and has a significant land bank that could accommodate up to 10 more centres. That sale process was run at the same time as that of the hospitals, and the successful bidders of those assets could be announced before Christmas or early in the new year.
Ramsay to sell five hospitals for $80mAustralian Financial Review December 12, 2005

Dec 2005 DCA Group bidding

The impending auction has attracted one of the largest players in the sector, DCA Group, as well as private equity firms - some with possible links to Macquarie Bank and AMP.
Ramsay to boost hospital capacity Australian Financial Review December 13, 2005


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Ramsay becomes a Giant :

In 2005 Affinity Health Care, Australia's largest private hospital group, owned by a Citigroup led consortium of venture capitalists, decided to float. The market was not receptive to their plans and Ramsay Health Care seized the opportunity to buy the hospitals in a trade sale. This convoluted sale doubles the size of Ramsay Health Care making it very much larger than its competitors. It dramatically changes the health care scene in Australia giving Ramsay 27% of the private hospital market and Healthscope, which acquired some of Affinity, 17%

Click here to explore the purchase of Affinity Health by Ramsay Health Care. 

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Web Page History
This page created August 2005 by
Michael Wynne
Updated October 2005