Merrill Lynch2001 Healthcare Conference

“Leveraging Intellectual Property”

Patrick Grier, Managing Director

Ramsay Health Care

Industry Dynamics• World wide cost increases in healthcare

– aging population– technology

• Need to spread the costs– public– user pays

• Government Initiatives– 30% rebate– Lifetime cover– Industry restructure

Outcome - Huge Change

• 50% increase in health insurance membership• 3 million more members• ÷ once every five years• x 3.5 days length of stay• Approximately 2 million additional bed days

per year needed• Large health funds reserves• Likely drop of membership level• Still huge demand for better hospitals

Is this Sustainable?

• Bilateral party approach

• Access will be a problem for betterhospitals

• shortage of beds– “Hot Spots”

Rationalisation of the Industry

• Main drivers– industry relevance

– clout with the health funds

– economies of scale - cost reductions

– competitive advantage

Ramsay’s Strategy

• Dominate the markets we are in– niche market players

• Predominantly hospital operators– leverage off good management

• Value adders

• Health Fund partnerships– needed and relevant

– clout

The Alpha Purchase

• Needed to devalue the Company

• Be able to add value

• Health Fund clout

The Deal

• Debt discounted from $31 million to $11million

• Giving an acceptable 40c a share• Reduce overheads by + $3 million• Add value

– management benchmarking– synergy with our hospitals

• Health Fund leverage– all in NSW

Ramsay’s Future Direction

• Possible earnings• Organic growth

– additional capacity

– maximise Alpha

• Strategic growth– core competency related

– available opportunities

Merrill Lynch2001 Healthcare Conference

“Leveraging Intellectual Property”

Patrick Grier, Managing Director

Ramsay Health Care