Ann: nib provides forecast FY18 earnings update, page-8

"It is interesting to note that whilst insurers are going through a purple patch, private hospital operators are coming under pressure. Do you see this as a change in the balance of power between the two?"


@andy777,

I've often asked myself this; that is, in the event of an all-out out turf war between hospital operators and health insurers, who would emerge the winner?

And I have to say that I've never come to a firm view other that both of these participants are critical links in the Australian health care supply chain. And that governments on almost all points on the political spectrum recognise this.

Also, that there is an element of natural ebb and flow in terms of which segment of the supply chain; in other words, at some stage the PHI sector enjoys a purple patch (like now), and then there follows some sort of response mechanism (either natural market forces or legislative) which causes the pendulum to swing back towards the middle ground.

And when I see a PHI operator generating super-normal profits - as I see NHF doing currently - then I expect some sort of self-moderating mechanism [*] to come into being at some stage.

Which is why - despite being an NHF shareholder - I am not too enamoured by the current level of financial out-performance of the company.

Because I think it risks attracting reactionary pen strokes of legislators and regulators.


[*] What exactly that mechanism might be, I can't predict, but I suspect it will have its genesis in some adverse patient experience in the public hospital system.