Medi­clinic surges on co-pay rule change

Jump in shares of Al Noor Hos­pi­tals par­ent com­pany

The National - News - Business - - Front Page - John Ever­ing­ton jev­er­ing­[email protected]­ational.ae

Shares in health­care providers Medi­clinic and NMC Health­care surged yes­ter­day, fol­low­ing the re­moval of in­sur­ance co-pay re­quire­ments for Emi­rati pa­tients in Abu Dhabi. Sheikh Mo­hammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Com­man­der of the Armed Forces, or­dered on Wed­nes­day that Emi­ratis hold­ing Thiqa health in­sur­ance cards would no longer be re­quired to pay 20 per cent of pri­vate treat­ment costs.

The 20 per cent co-pay ar­range­ment was in­tro­duced in July of last year.

Shares in South Africa’s Medi­clinic, which ac­quired Abu Dhabi’s Al Noor Hos­pi­tals Group last year, soared by as much as 21.5 per cent in Lon­don yes­ter­day, even­tu­ally clos­ing up 17.5 per cent at 859 pence.

The com­pany’s chief ex­ec­u­tive, Daniel Mein­t­jes, ear­lier this month said that the health­care group’s prof­itabil­ity had been dragged down by the new pay­ment re­quire­ments in Abu Dhabi.

“The group awaits to re­ceive pre­cise de­tails of the changes from the Health Au­thor­ity Abu Dhabi,” Medi­clinic said in a state­ment on its web­site yes­ter­day.

“Medi­clinic will con­tinue to mon­i­tor the reg­u­la­tory en­vi­ron­ment and the ex­tent to which these changes will af­fect the op­er­at­ing plat­form.”

The in­vest­ment bank Jef­feries said in a re­search note that Medi­clinic “had greater ex­po­sure to this re­form given a greater fo­cus on Thiqa pa­tients, so it should see a greater ben­e­fit, but we await de­tails as to the ex­pected ef­fect at its FY Re­sults on 24 May”. JP Mor­gan up­graded the stock to over­weight yes­ter­day, rais­ing its tar­get price to 860 pence.

NMC shares, which like­wise are listed in Lon­don, fin­ished up 2.2 per cent at their high­est ever close of 1,955 pence.

“The benev­o­lence of the rulers of Abu Dhabi, and of this coun­try at large, is known to the world,” NMC Health’s chief ex­ec­u­tive, Pras­anth Mang­hat, said in a state­ment.

“This is a wise step in the right di­rec­tion which pro­motes pub­lic-pri­vate part­ner­ship.”

Medi­clinic ac­quired Al Noor to ex­pand its foot­print in the re­gion, set­ting it up as the main com­peti­tor of NMC. Abu Dhabi’s NMC said last month that it had a prof­itable year in 2016 de­spite the new co-pay reg­u­la­tions.

De­spite reg­u­la­tory chal­lenges, the pri­vate health­care sec­tor re­mains poised for growth amid ris­ing pop­u­la­tions and a strain on gov­ern­ment health care, ac­cord­ing to an­a­lysts at Alpen Cap­i­tal, a Dubai in­vest­ment bank. Sheikh Mo­hammed’s an­nounce­ment of the co-pay scheme’s can­cel­la­tion co­in­cided with an or­der for the es­tab­lish­ment of a spe­cial­ist med­i­cal col­lege and a health­care city in Abu Dhabi, to strengthen the emi­rate as a des­ti­na­tion for med­i­cal tourism and ser­vices.

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