Healthcare Reform Continues to Cloud Investment Waters

Wednesday, March 24 2010

With both Australia and the United States in the midst of intense political debate around the provision of healthcare the investment landscape within the healthcare sector remains clouded, says one of Australia’s largest independent asset managers.

“Following on from yesterday’s Rudd versus Abbott debate we’re going to hear more and more about healthcare and hospitals in the run-up to the federal election and until there is more certainty in the regulatory and funding environment the investment picture for healthcare stocks is going to be murky at best,” said Scott Bender, portfolio manager at Dalton Nicol Reid.

Mr Bender said that what was becoming increasingly clear is that large companies are likely to be pinpointed as easy targets from a political perspective as opposed to doctors who hold a very powerful lobbying position.

“We are looking at potentially large changes in the provision and funding of health services in Australia at a time when governments are looking to tighten fiscal spending,” said Mr Bender. “Within that environment listed companies are likely to be seen as easy targets.”

Mr Bender said the impact of policy change is already painfully apparent in the pathology market with Primary Healthcare being sold down heavily after results from their pathology business were significantly below market expectations. Sonic and Healthscope were also facing tougher operating environment, said Mr Bender, following government price cuts.

“In the past the sector has been a major beneficiary of stable government funding,” said Mr Bender. “As this is no longer the case investment into companies within the sector becomes more challenging and requires stronger bottom-up analysis. Healthcare companies that are less reliant on government funding are those that are more likely to continue to operate strongly. For example, high quality device companies such as Cochlear appear to be well-placed.”

Dalton Nicol Reid is an independent Australian investment manager that delivers client-focused, quality investment solutions to institutions and high net worth investors.

 

Media Contact


Contact

Christine Toll
CompanyShed Media
Emailctoll@shedmedia.com.au
Mobile0414 621163

 

IMPORTANT NOTE: This information has been prepared by DNR AFSL Pty Ltd ABN 39 118 946 400, an Australian Financial Services Licensee, Licence Number 301658. Whilst, Dalton Nicol Reid has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and recipients must make their own enquiries concerning the accuracy of the information within. This document is not intended to provide you with personal advice and in providing this information, Dalton Nicol Reid has not taken into account your particular investment objectives, financial situation or needs. You should assess whether this information is appropriate for your particular needs, either by yourself or with your adviser. Dalton Nicol Reid expressly disclaims any responsibility or liability to anyone who acts or relies upon anything contained in, or omitted from, this document. Past performance is not indicative of future performance. Total returns shown are based on Dalton Nicol Reid’s model portfolio and have been calculated before taking Dalton Nicol Reid’s fees into account. No allowance has been made for taxation.

 

Print this article