Netcare shares suffer after warning on prescriptive medical aids
SA’s largest listed hospital group warns investors that margins in its hospitals and emergency-services divisions will shrink in the second half
SA’s largest listed hospital group, Netcare, was hit on Monday by the biggest one-day drop in its share price in almost two months after it said profits will be squeezed by increasingly prescriptive medical aids. The schemes restrict members to specific hospitals, allowing them to "shift market share in return for price discounts", said Netcare. SA’s medical aid schemes were "going to put more and more pressure on the hospital groups to be more selective in admitting patients", said Sentio Capital portfolio manager Imtiaz Suliman. Netcare warned investors that margins in its hospitals and emergency-services divisions would shrink between 50 and 80 basis points in the second half of the financial year. "I think it’s a new fact of life," said Netcare CEO Richard Friedland, describing the squeeze as the result of medical schemes offering cheaper options to members."So patients are paying less... and at the end of the day we’re providing the same services at a lower price point. In a ma...