Slip­ping a bit

Finweek English Edition - - MARKETPLACE -

When look­ing at hospi­tal group re­sults, I read them as I would those of ho­tels – although the guests are forced to stay (for surgery) and the fees are mostly paid for by third par­ties (a med­i­cal aid). As such, one of the im­por­tant num­bers is oc­cu­pancy lev­els and Life Health­care’s South African hos­pi­tals recorded 69.9% oc­cu­pancy in the lat­est re­sults, com­pared with 70.7% in the pre­vi­ous pe­riod. The slight slip isn’t of great con­cern, and the group did add an ex­tra 90 beds, but the ques­tion is how much higher this can go. Ideally high 70s may be pos­si­ble, but with stiff com­pe­ti­tion, and week­ends and pub­lic hol­i­days im­pact­ing pa­tient num­bers, that num­ber is a tough call – we should maybe ex­pect oc­cu­pancy lev­els of around 70%. We also saw mar­gins slip from 28% to 27.7%, likely in part due to lower oc­cu­pan­cies. The is­sue with health­care gen­er­ally is that gov­ern­ments around the world are con­cerned about the costs and this is bring­ing closer at­ten­tion to the in­dus­try with a po­ten­tial for leg­is­la­tion that could hurt prof­its. As such I pre­fer drug man­u­fac­tur­ers in the health­care space and in par­tic­u­lar a generic drug man­u­fac­turer such as Aspen.

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