Ramsay (ASX:RHC) share price firms as its UK hospitals reopen to private patients

The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price gained ground after its UK hospitals were allowed to treat private patients again.

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The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price gained ground after its UK hospitals were allowed to treat private patients again.

The Ramsay share price inched up 0.3% to $69.01 during lunch time trade when the S&P/ASX 200 Index (Index:^AXJO) slipped 0.1% into the red.

Management said that it’s managed to vary the agreement with NHS England that allowed for the return of some capacity for private patient activity and routine NHS elective surgery.

Ramsay share price back in business

This means that Ramsay doesn’t have to keep all of its capacity reserved for COVID-19 patients, as it had to in the past.

You might think a pandemic is good for hospital operators. But it’s proven to be more of a negative as Ramsay makes more from offering treatments to non-COVID patients.

Under the changes, Ramsay may request a limit on capacity available for NHS work for each premises.

Changes in the NHS contract

The limit cannot be set below 75% generally, and not below 70% for certain premises in the London area, or below 60%  for  certain  facilities in the commuter belt outside  London.

“Ramsay will continue to receive cost recovery for its services, including operating costs, overheads, use of assets, rent and interest less a deduction for any private elective care provided,” said the company’s ASX statement.

“Ramsay will now have an opportunity to retain additional revenue on private patient activity over the course of the agreement.”

The variation in the agreement is extended to the end of 2020. But the NHS can order Ramsay to make 100% of its capacity available to the NHS with seven-days’ notice.

UK on brink of losing COVID control

That’s a good backout clause given what’s happening in the UK. The country is hit by a resurgence in coronavirus cases and its prime minister Borris Johnson is under pressure to institute a hard lockdown.

Official government data showed an extra 17,234 positive COVID cases in the past day, which brings the seven-day total to 104,810, while a further 143 people died.

Johnson introduced a tiered warning system and announced a 10PM curfew. But defiant Britons are refusing to obey, while his own party members are rebelling.

Better placed ASX healthcare stocks to COVID

The coronavirus is a double-edged sword for Ramsay, but the same can’t be said for other ASX medical stocks.

The Sonic Healthcare Limited (ASX: SHL) share price and Healius Ltd (ASX: HLS) share price are outperforming thanks to increase demand for COVID testing.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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.

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