Merrill Lynch 2001 Healthcare · PDF fileMerrill Lynch 2001 Healthcare Conference “Leveraging Intellectual Property” Patrick Grier, Managing Director Ramsay Health Care

Merrill Lynch2001 Healthcare Conference

“Leveraging Intellectual Property”

Patrick Grier, Managing Director

Ramsay Health Care

Industry Dynamics• World wide cost increases in healthcare

– aging population– technology

• Need to spread the costs– public– user pays

• Government Initiatives– 30% rebate– Lifetime cover– Industry restructure

Outcome - Huge Change

• 50% increase in health insurance membership• 3 million more members• ÷ once every five years• x 3.5 days length of stay• Approximately 2 million additional bed days

per year needed• Large health funds reserves• Likely drop of membership level• Still huge demand for better hospitals

Is this Sustainable?

• Bilateral party approach

• Access will be a problem for betterhospitals

• shortage of beds– “Hot Spots”

Rationalisation of the Industry

• Main drivers– industry relevance

– clout with the health funds

– economies of scale - cost reductions

– competitive advantage

Ramsay’s Strategy

• Dominate the markets we are in– niche market players

• Predominantly hospital operators– leverage off good management

• Value adders

• Health Fund partnerships– needed and relevant

– clout

The Alpha Purchase

• Needed to devalue the Company

• Be able to add value

• Health Fund clout

The Deal

• Debt discounted from $31 million to $11million

• Giving an acceptable 40c a share• Reduce overheads by + $3 million• Add value

– management benchmarking– synergy with our hospitals

• Health Fund leverage– all in NSW

Ramsay’s Future Direction

• Possible earnings• Organic growth

– additional capacity

– maximise Alpha

• Strategic growth– core competency related

– available opportunities

Merrill Lynch2001 Healthcare Conference

“Leveraging Intellectual Property”

Patrick Grier, Managing Director

Ramsay Health Care