The Ramsay Health Care Limited (ASX: RHC) share price will be one to watch on Friday.
This follows the release of an announcement by the private hospital operator after the market close.
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Why is the Ramsay share price on watch?
The Ramsay share price will be on watch after providing an update on current operating conditions in Australia.
According to the release, positively, the NSW Ministry of Health has announced that it will now allow day surgery to take place at seven of Ramsay's owned hospitals in Greater Sydney.
This could help offset elective surgery restrictions announced last week by the Victorian Department of Health and Human Services (DHHS). The DHHS has requested that all private hospital and day surgery centres in Metropolitan Melbourne reduce elective surgery lists by 50% per month from Friday.
Furthermore, cosmetic surgery and other procedures that are not addressing significant medical conditions will not be permitted.
In Queensland, Ramsay advised that its hospitals in South East Queensland have been impacted by COVID isolation orders. The Queensland/NSW border restrictions are also disrupting the movement of clinicians, team members, and patients in the area. This is causing the cancellation of some surgeries.
Earnings impact
As per previous comments by management, Ramsay has reiterated that these restrictions will have a material impact on its earnings in FY 2022.
For example, the company advised that the 90-day restriction on elective surgeries in Victoria in 2020 hit its earnings by $70 million.
However, its NSW operations are twice as large as its Victorian operations. And the seven hospitals that were restricted are approximately the size of Ramsay's Victorian hospitals.
Despite these disruptions, the Ramsay share price is beating the market with an 11% gain this year. Investors appear to be looking at the bigger picture instead of focusing on these short term headwinds.
