SYB symbion health limited

Mayne faces doubling insurance charges

  1. 5,237 Posts.
    Mayne faces doubling insurance charges
    Apr 30
    Stewart Oldfield and Miranda McLachlan

    Australia's biggest private hospital company, Mayne Group, faces a near doubling of medical malpractice insurance charges, a mirror image of the crisis facing the nation's doctors.

    US group St Pauls pulled out of the Australian malpractice insurance market before Christmas, after incurring a 2001 underwriting loss of approximately $US940 million ($1.7billion) from its global malpractice operations.

    Australian private hospital operators said the pullout put extreme pressure on premiums across the industry, leading to a near doubling of charges for the 2003 financial year. Medical malpractice charges cover the conduct of all medical staff, including doctors typically employed in emergency departments and all nurses.

    Mayne is understood to be in negotiations with UK firm Marketform on a renewal of its medical insurance requirements.

    Mayne denied rumours that Marketform had advised Mayne it would not be renewing its insurance coverage next financial year, but conceded that it faced increased charges.

    "We don't see insurance with them as being an issue for the coming years," a spokesman said.

    He declined to quantify the financial impact of any rise in charges. Mayne already self-insurers some of its logistics operations.

    Higher insurance charges are just one item in a series of challenges facing Mayne's senior management which was yesterday issued 50,000 fresh executive options, with an exercise price of $5.09 and not expiring until 2007.

    Shares in Mayne closed 7¢ lower yesterday at $3.90, from a high of $7.50 last October.

    Mayne confirmed that it had been advised by the Australian Securities and Investments Commission that its disclosure practices were under investigation following last week's profit warning which wiped more than $1 billion off the company's market capitalisation.

    Portfolio Partners' head of equities, Chris Kourtis, described the recent chain of events culminating in Mayne Nickless' profit warning last week as "a very disappointing outcome".

    The fund manager "caught the sword" by holding the stock after the disappointing interim results, but bought back in after reassurances from management, only to be caught out again with the profit warning, said Mr Kourtis.

    He described the stock's market disclosure as "woeful" and questioned how Stuart James, set to become the next chief executive, could not be on top of the problems in the group's hospital division.

    Michael Stanford, the national chief executive of St John of God Health Care, the country's third- largest private hospital group, said the group's recent industry analysis had found Mayne not close to benchmark in any area of its health care activity.

    "For some time, not being Mayne has made it easier for St John of God Health Care to attract nurses, doctors and patients," he said.

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