‘ Neu­tral’ on pri­vate health­care sec­tor

> AmIn­vest­ment: Pos­i­tive growth prospects glob­ally over the long term

The Sun (Malaysia) - - SUNBIZ -

PE­TAL­ING JAYA: AmIn­vest­ment Bank Bhd is main­tain­ing its “neu­tral” call on the pri­vate health­care sec­tor in 2018 as it an­tic­i­pates pos­i­tive growth prospects for it glob­ally over the long term, un­der­pinned by ag­ing pop­u­la­tion, ris­ing af­flu­ence and in­creas­ing life ex­pectancy.

In a note yes­ter­day, the re­search house said it may up­grade its call for the sec­tor to “over­weight” if there is a surge in pa­tients due to out­breaks of pan­demic dis­eases; lower-than-ex­pected start-up losses at new hos­pi­tals; value-ac­cre­tive merg­ers and ac­qui­si­tions; and ma­te­ri­al­i­sa­tion of a na­tional health in­sur­ance sys­tem in Malaysia.

“In con­trast, we may down­grade it to ‘un­der­weight’ should there be a sig­nif­i­cant dropout of pa­tients from pri­vate hos­pi­tals due to eco­nomic rea­sons, higher-thanex­pected and pro­longed start-up losses from new hos­pi­tals.”

AmIn­vest­ment said the lo­cal pri­vate health­care sec­tor has the added cat­a­lyst of med­i­cal tourism, backed by highly com­pet­i­tive med­i­cal charges and hos­pi­tal­i­sa­tion costs, a gen­er­ally English-speak­ing pop­u­la­tion and gov­ern­ment in­cen­tives.

Over the short term, it said, lo­cal pri­vate health­care op­er­a­tors will also ben­e­fit from the strength­en­ing ring­git against the green­back, as costs of key in­puts such as drugs, med­i­cal sup­plies and med­i­cal equip­ment are de­nom­i­nated in US dol­lars.

How­ever, it said lo­cal pri­vate health­care op­er­a­tors will con­tinue to face wage in­fla­tion in 2018 and some short-term pain, such as start-up losses from new hos­pi­tals.

On a pos­i­tive note, AmIn­vest­ment noted that the pri­vate health­care op­er­a­tors in Malaysia are poised for a ma­jor step-up in rev­enues and prof­its if a gov­ern­ment-backed na­tional health in­sur­ance sys­tem be­comes a re­al­ity. Un­der such a sys­tem, cit­i­zens can choose be­tween seek­ing treat­ment in a pub­lic or pri­vate hospi­tal.

The re­search house said while a pa­tient seek­ing treat­ment in a pri­vate hospi­tal will still in­cur a higher cost com­pared with a pub­lic hospi­tal, price dif­fer­ences should nar­row.

It added that there is a pos­si­bil­ity that pri­vate hos­pi­tals may drop prices for cer­tain ser­vices due to bet­ter util­i­sa­tion of their equip­ment, with more pa­tients switch­ing to pri­vate hos­pi­tals from pub­lic hos­pi­tals.

“How­ever, the big­gest hur­dles for a na­tional health in­sur­ance sys­tem re­main who will be con­tribut­ing, by how much and the le­git­i­macy of free rid­ers in the sys­tem.”

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