The spiralling cost of health insurance, medical inflation and a shortage of healthcare professionals saw revenues and profits decline at the Galway Clinic. Revenues fell by 1 per cent to €86 million, as pre-tax profits declined by 20 per cent to €10.2 million in the 12 months to December 31st 2015. Staff numbers rose from 585 in 2014 to 593 in 2015. Earnings (Ebitda) fell by €1.5 million to €16.2 million, in a “challenging trading environment”.
“This erosion in profitability is due to a combination of a reduction in prices from insurers and other purchasers, together with an increase in costs due to rising general and medical inflation,” the company says in its accounts.
Medical inflation, caused by a growth in demand for new technologies and the use of more expensive consumables and drugs, poses a “significant challenge”, the accounts say. The spiralling cost of private health insurance is also cited as a risk to the hospital, as people either drop or downgrade their cover in the face of increased premiums.
“If this trend continues, then the demand for private healthcare will diminish, leading to a greater burden being placed on the already overstretched public health system,” the company adds, noting that Government policy must be supportive of the private healthcare market and encourage people to maintain their health insurance.
Galway Clinic also notes that a shortage in the labour market for healthcare professionals is a risk, as is the cost of medical indemnity insurance, which is “spiralling out of control” and is another impediment to attracting doctors to Ireland.
During 2015, the accounts show that the company sold the hospital building and equipment to a subsidiary company, Galway Clinic Doughiska Ltd, for €106 million, giving rise to a profit of €52.1 million.
No dividends were paid to shareholders. It was reported earlier this year that beef baron Larry Goodman agreed to buy out James Sheehan's 25 per cent holding in the Galway Clinic for €31 million, thereby increasing his stake in the hospital to 75 per cent. It is understood that Mr Goodman is also set to acquire Mr Sheehan's 14 per cent stake in the Blackrock Clinic, in Dublin.
