Economy on slow road to recovery, says Primary chief
Primary Health Care managing director Edmund Bateman says avoiding a recession at the time of the global financial crisis may have locked the local economy in to a drawn-out recovery as opposed to a painful, short-term hit.
Dr Bateman, pictured, said the economy was unlikely to improve soon from the "hard place" where it was languishing. "It is slowly grinding uphill," he said.
If the country had plunged into recession at the time of the economic downturn, it might have bounced back more quickly, he said. Instead, the nation would experience a "10-year recovery instead of what might have been a short-term very painful outcome".
Dr Bateman was quick to add this was his personal view. "We can't change," he said. "And just because I say that's the case, it might not be."
The uncertain economy is affecting non-urgent medical expenditure, such as dentistry, even though Dr Bateman warned this was "counter productive" in terms of long-term health outcomes.
Primary customers have paid fewer visits to their dentists this year. The economic environment and removal of government funding for the Chronic Disease Dental Scheme (CDDS) have taken a bite out of dental revenues.
Dr Bateman told shareholders at Primary's annual meeting in Sydney on Friday that in the first four months of the financial year patients were visiting their general practitioners in line with expectations. But dental revenues were "running below prior year levels".
Dr Bateman said the company was on track to meet guidance provided in August of earnings-per-share growth of 7 per cent to 13 per cent in the 2013-2014 financial year.
Previously, the federal government's CDDS paid just over $4000 for dental treatment, through Medicare, for patients whose teeth problems were so chronic it was affecting their health. The scheme was ended on November 30, 2012.
The managing director of listed dental provider 1300SMILES, Daryl Holmes, told shareholders on Thursday the removal of the scheme had affected his company.
"CDDS had grown to provide almost 20 per cent of the revenue collected by all of the dentists in Australia," Mr Holmes said.
Dr Bateman said it was common for patients to put off dental work during tough or uncertain times.
However the lacklustre economy has also helped Primary. This week, the company announced a refinancing of its syndicated bank debt facility.
The facility was due to mature in February 2015, but the $1.25 billion refinancing provides an extended profile for the company, with half maturing in January 2017 and the other half in November 2018.
The refinancing was "opportunistic", Dr Bateman said. "The price was right. We saw an opportunity that was present in the current market from the banks who want to lend to good risks. Therefore we get a better price."