Rising cases of influenza and dengue fever are poised to generate revenue growth for hospitals in the first quarter, but resurfacing prospects of medical price controls will exert downward pressure on healthcare share prices, says Kasikorn Securities (KS).
The Central Committee on Prices and Services (CPGS) is not expected to have a policy to control medical prices and healthcare services for private hospitals, but frequent inspections are likely, said KS senior analyst Piyachat Ratanasuvan.
The resolution from the Health Facilities Board that drugs dispensed by hospitals should not be included with drugs placed on the Commerce Ministry's price control watch list is expected to be submitted to the sub-committee overseeing medical prices and healthcare services for consideration, said Ms Piyachat.
The sub-committee should take some time before they come up with a proposal to the CPGS, she said.
"We also expect the [healthcare] sector to remain under a regulatory overhang from potential price controls for drugs and services, which will resurface and exert downward pressure on share prices," said Ms Piyachat.
A Wang Thonglang district official sprays fogging chemicals in a residential area in Soi Lat Phrao 69 on Lat Phrao Road in Bangkok last year to prevent the spread of mosquitoes that cause dengue fever. Patipat Janthong
KS forecasts revenue in the healthcare sector to exceed 7% in 2019-20, driven by cash patients and Social Security Office revenue recovery.
The outlook for margins is mixed, with Bangkok Chain Hospital and Bangkok Dusit Medical Services likely to outperform their peers on continuing margin improvements operationally, while Chularat Hospital and Praram 9 Hospital are still facing negative margin trends, said KS.
For the first quarter, total revenue in the healthcare sector is expected to be 31.3 billion baht, up 8.1% year-on-year, while net profit is projected to slightly decrease as the rotavirus outbreak last year was more extreme than the influenza outbreak this year.
Total healthcare revenue is anticipated at 120 billion baht in 2019, said KS.
The Epidemiology Bureau reported there was an outbreak of influenza and dengue fever in the first quarter, and Ms Piyachat said cases for both more than doubled during the period.
The influenza outbreak continued into March, but the dengue fever outbreak appears to have slowed, she said.
The high number of flu and dengue cases should bode well for hospital revenue growth in the first quarter, said Ms Piyachat.
Passakorn Linmaneechote, head of research for KS, said the house will shave 4% from its growth target for the Stock Exchange of Thailand index this year, down from its existing target of 1,750 points given that any new government would lack stability.