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Why the Ramsay share price is surging 17% higher today

The Ramsay Health Care Limited (ASX: RHC) share price is back on form on Thursday.

On Wednesday Ramsay’s shares fell heavily after the government announced that it would soon stop elective surgeries.

But in afternoon trade the private hospital operator’s shares have recovered these declines and more and are up a sizeable 17.5% to $59.32.

Why is the Ramsay share price storming higher?

Investors have responded positively to an update out of the company this morning in relation to the elective surgery news.

According to the release, Ramsay confirms that it is in discussions with Federal and State Governments in Australia regarding the capacity and support it is able to provide as part of the Government’s COVID-19 response.

The company’s managing director, Craig McNally, explained that Ramsay’s facilities are being utilised by governments globally to ease the burden on the public health system and believes it is in a position to do the same in Australia.

However, in respect to elective surgeries, the cancellation of category three and non-urgent category two elective surgeries has been deferred in all Australian private hospitals until 11:59pm on April 1. This means Ramsay has a few more days to rush through as many elective surgeries as it can.

It notes that decisions on the category of patients are at the discretion of their treating medical professional.

Outside this, Ramsay advised that it will continue to provide all its other services, including urgent surgery and medical services beyond April 1.

Healthcare shares rebound.

Ramsay isn’t the only healthcare share which is zooming higher today. In fact, in afternoon trade the S&P/ASX 200 Health Care index is up an impressive 5.3%. This compares to a 2.4% gain by the S&P/ASX 200 Index (ASX: XJO).

Other healthcare shares rising strongly today include Avita Medical Ltd (ASX: AVH) and Polynovo Ltd (ASX: PNV). They are up 20% and 11%, respectively, at the time of writing. This is despite there being no meaningful news out of either company.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.