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Acurity Health expects subdued demand to continue into 2014

Acurity Health expects subdued demand to continue into 2014, Isaac says

By Tina Morrison

Aug. 9 (BusinessDesk) – Acurity Health Group, the private hospital operator formerly known as Wakefield Health, expects weak demand for private sector health care to continue in the current financial year.

Acurity’s net profit fell 2.3 percent in 2013 after private patient revenue, which makes up about 70 percent of total patient revenue, fell 1.4 percent as a sluggish economy prompted people to cancel or lower their private health insurance coverage and there was only small growth in Accident Compensation Corp and District Health Board work. At the same time, the company faced higher wage and building insurance costs.

“In general, we expect a continuation of the trends evident in 2013,” chairman Alan Isaac said in notes for delivery at the company’s annual meeting in Wellington. “We will see subdued demand, particularly for private patients and expect minimal change to ACC and DHB revenues.”

New ACC contracts agreed for the June 2014 year allow for only minimal price and volume growth, Isaac said.

Meanwhile DHB revenues will continue to be subject to short-term volatility, except for a three-year agreement in the Hawkes Bay, which will see some uplift in revenue from the addition of a fourth operating theatre.

Cost pressures will continue from wage increases however insurance premiums are stabilising after significant increases in the past few years, he said.

Shares in Acurity dropped 1.9 percent to $4.22.

Acurity expects to finalise redevelopment plans for its Wakefield Hospital in coming months as it weighs up the need for seismic strengthening with the future needs of the Wellington market and its recent investment in Bowen Hospital, Isaac said.

The company is open to opportunities for mergers or acquisitions that would add significant value to the group and offer geographic diversification, he said.


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