The product of your research and collaborative effort is a report that is to be submitted to the senior management group of ABC Equities Ltd (ABC), a very large client firm who is currently undertaking a due diligence on both companies. The report must include the following:

1.Covering letter, table of contents and executive summary.

2.Introduction: including company profile and strategic overview.

3.Profitability ratios - where relevant financial data is available, which company has performed better over the past five (5) years? Why?

4.Market based ratios (i.e. earnings per share, price earnings ratio; dividend yield and dividend payout ratio).

5.Financial Management / Efficiency ratios - where appropriate, which company has better managed the working capital management relationship between accounts payable, accounts receivable and asset turnover? Comment on the relevance of the three ratios to understanding the working capital financial management practices of ASX listed companies operating primarily in the Debt Collection industry.

6.Comment on and compare the short-term liquidity (i.e., current, quick and cash flow ratio) positions of both companies.

7.Comment on and compare the long term liquidity positions of both companies (i.e. debt ratio, equity ratio, debt to equity ratio and interest coverage).

8.Cash flow analysis. Identify and discuss each company's operating, investing and financing activities during the 2012 - 2016 financial years.

9.Corporate social responsibility practices and disclosures.

10.Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis of each company.

11.Investment Recommendation - which company would you recommend that ABC Equities Ltd invest in? Why?

12.References and appendices (include all sources i.e. annual reports, databases etc).

13.Presentation quality, graphs, tables, spelling and the use of correct grammar.

ACCT5021 Accounting for Managers Assessment Task: Report 2 (Group Report) Semester 2A, 2017 Value: This assessment task accounts for 35% of your final mark in ACCT5021 Accounting for Managers. Due Date: Friday 15th September, 2017 at 6:00 pm. Hard copy to the Local Lecturer and soft copy submitted to Blackboard Turnitin by Friday 15th September at 6:00 pm. Group formation: Each group will comprise a minimum of four (4) members. Remember that all members are jointly responsible for the Group Project. Therefore, equal contribution from each group member is assumed. Task: Financial Statement Analysis To consolidate your learning in ACCT5021 Accounting for Managers, you are to undertake a financial analysis of Ramsay Health Care Ltd (ASX Code: RHC) and Sonic Healthcare Ltd (ASX Code: SHL), two Australian Securities Exchange (ASX) listed companies. Apart from examining each company's annual reports, all other relevant disclosures made (e.g., quarterly and half yearly reports), ASX disclosures and other information relevant to the performance and position of each company and the industry report for Health Care Services in Australia. It is expected that your research effort will extend beyond each company's annual reports and Morningstar DatAnalysis. Accordingly, your team will need to identify and evaluate other sources of information such that a thorough and well-founded analysis of each company's past performance and position adequately supports the provision of a well-argued investment recommendation (e.g., to buy, hold or sell shares in either company and the Australian industry sector to which they belong). Accordingly, your team may choose to access and interpret publicly available information on each company from sources such as the ASX, the Australian Accounting Standards Board; online databases such as ABI, IBIS World, ORBIS, ProQuest, Factiva, Morningstar DatAnalysis Analysis, etc; stock broker research reports; relevant websites such as http://www.bloomberg.com.au; business publications such as the Australian Financial Review and business oriented periodicals. 1 Group Project Report (35%) The product of your research and collaborative effort is a report that is to be submitted to the senior management group of ABC Equities Ltd (ABC), a very large client firm who is currently undertaking a due diligence on both companies. The report must include the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Covering letter, table of contents and executive summary. Introduction: including company profile and strategic overview. Profitability ratios - where relevant financial data is available, which company has performed better over the past five (5) years? Why? Market based ratios (i.e. earnings per share, price earnings ratio; dividend yield and dividend payout ratio). Financial Management / Efficiency ratios - where appropriate, which company has better managed the working capital management relationship between accounts payable, accounts receivable and asset turnover? Comment on the relevance of the three ratios to understanding the working capital financial management practices of ASX listed companies operating primarily in the Debt Collection industry. Comment on and compare the short-term liquidity (i.e., current, quick and cash flow ratio) positions of both companies. Comment on and compare the long term liquidity positions of both companies (i.e. debt ratio, equity ratio, debt to equity ratio and interest coverage). Cash flow analysis. Identify and discuss each company's operating, investing and financing activities during the 2012 - 2016 financial years. Corporate social responsibility practices and disclosures. Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis of each company. Investment Recommendation - which company would you recommend that ABC Equities Ltd invest in? Why? References and appendices (include all sources i.e. annual reports, databases etc). Presentation quality, graphs, tables, spelling and the use of correct grammar. 2 Please note the following: Presentation standards: As indicated in the marking guide, approximately 9% of the assessment of Group Report is weighted towards the presentation quality of the submission made. Apart from drawing upon relevant ratios in support of the provision of concise yet clear discussion of the issues posed in each question, the team should give proper consideration to the benefit of using graphs and other exhibits to illustrate the team's response to each question. Report format: Your report should include a cover page (see Blackboard/Assessment Folder/Report 2), brief executive summary, introduction, body (using sub-headings based upon questions 1 to 6 above) and a conclusion (with the recommendation to ABC). The report use 12 point Times New Roman font, 1.5 line spacing, with 2.5cm margins, and printed single-sided using A4-sized paper. Report length: The maximum of the report is 3,500 words, excluding cover page, figures, graphs, tables, references, and appendices). Do not exceed the word Note, that it is the quality, not the length of the report that determines the grade of the assignment. Referencing: You can refer to real world cases, recent news, book chapters, research papers, and annual reports to support your arguments or analysis. Do NOT use another student's paper or a website as your reference. This report must be your own work. All your references must be properly cited in your content and included in the reference list at the end of report. Plagiarism is a serious academic offence. Students should get familiar with Curtin policy on plagiarism to avoid committing the offence. Student Guidelines for Avoiding Plagiarism and Student Checklist to Prevent Plagiarism can be downloaded from: http://academicintegrity.curtin.edu.au/global/studentbook.cfm File Format and File Name: MS Word with a file name \"GroupID_ACCT5021_S2A_2017_Report2\". For example, for Group X, the file name should be Group-X_ACCT5021_S2A_2017_Report2.doc (or .docx). Submission For a group assignment, one group member can submit the report on behalf of the group. The hard copy of your report must be submitted to your local lecturer on the due date and time. The soft copy of your work must also be submitted via Turnitin on Blackboard by the due date and time. Please refer to http://www.youtube.com/watch?v=PcbGIAcNXjs for further details on how to submit your Group Report through Turnitin. Please note that the Blackboard site may occasionally be offline for maintenance purposes. During these maintenance periods, you will not have access to the materials on Blackboard or to Turnitin. Curtin Technology Services (CITS) will notify the university community of scheduled maintenance work generally around two weeks in advance. Since scheduled maintenance can affect the completion and submission of your assessment tasks, please check your Curtin email regularly and pay close attention 3 to all notified downtimes. Unless approved extenuating circumstances exist, late submissions will not be accepted. The University's policy for a late submission of or missed assessment task is as follows: Late assessment policy This ensures that the requirements for submission of assignments and other work to be assessed are fair, transparent, equitable, and that penalties are consistently applied. 1. All assessments students are required to submit will have a due date and time specified on the assessment instructions and Unit Outline. 2. Students will be penalised by a deduction of ten percent per calendar day for a late assessment submission (e.g. a mark equivalent to 10% of the total allocated for the assessment will be deducted from the marked value for every day that the assessment is late). This means that an assessment worth 20 marks will have two marks deducted per calendar day late. Hence if it was handed in three calendar days late and given a mark of 16/20, the student would receive 10/20. An assessment more than seven calendar days overdue will not be marked and will receive a mark of 0. Assessment extension A student unable to complete an assessment task by/on the original published date/time (e.g. assignments, tests) must apply for an assessment extension using the Assessment Extension form (available from the forms page at students.curtin.edu.au/administration/ as prescribed by the Academic Registrar. It is the responsibility of the student to demonstrate and provide evidence for exceptional circumstances beyond the student's control that prevent them from completing/submitting the assessment task. The student will be expected to lodge the form and supporting documentation with the unit coordinator before the assessment date/time or due date/time. An application may be accepted up to five working days after the date or due date of the assessment task where the student is able to provide an acceptable explanation as to why he or she was not able to submit the application prior to the assessment date. An application for an assessment extension will not be accepted after the date of the Board of Examiners' meeting. Blackboard / Assessments Folder: Several documents are supplied in the assessment folder on Blackboard. These are as follows: 1. Group Report cover page 2. Group Report Instructions and Marking Guide 3. Morningstar DatAnalysis spreadsheets and company annual reports 4 4. Group Member Appraisal Form 5. IBIS World reports for each company and Health care Services in Australia. 5 Group Project Report Marking Guide (35%): The Group Report will be graded using the following question weighting and evaluative criteria: Question Poor Marginal Sound Good Excellent Total 1 Covering letter, table of contents and Executive Summary 4-7 8 - 11 12 - 14 15 - 17 18 - 20 20 2 Introduction - company profile and strategic overview. 7 - 13 14 - 20 21 - 25 26 - 30 31 - 35 35 3 Profitability ratios (NPM%, EBITDA%, ROA% and ROE%). 7 - 13 14 - 20 21 - 25 26 - 30 31 - 35 35 4 Market based ratios (EPS, PER, Dividend Yield & Payout ratio). 7 - 13 14 - 20 21 - 25 26 - 30 31 - 35 35 5 Efficiency ratios (receivables, payables & asset turnover) 7 - 13 14 - 20 21 - 25 26 - 30 31 - 35 35 6 Short-term liquidity (Current, Quick and Cash flow ratio) 7 - 10 11 - 14 15 - 18 19 - 21 22 - 25 25 7 Long-term liquidity (debt ratio, equity ratio, debt to equity ratio & interest coverage) 6 - 11 12 - 17 18 - 21 22 - 26 27 - 30 30 8 Cash flow analysis (operating, investing & financing activities) 7 - 13 14 - 20 21 - 25 26 - 30 31 - 35 35 9 Corporate social responsibility practices and disclosures 4-7 8 - 11 12 - 14 15 - 17 18 - 20 20 10 SWOT Analysis 6 - 11 12 - 17 18 - 21 22 - 26 27 - 30 30 11 Investment recommendation 4-7 8 - 11 12 - 14 15 - 17 18 - 20 20 12 References and appendices 7 - 10 11 - 14 15 - 18 19 - 21 22 - 25 25 13 Presentation quality, graphs, tables, spelling and the use of correct grammar 7 - 13 14 - 20 21 - 25 26 - 30 31 - 35 35 Total 380 Comments: 6 Mark /35% ACCT5021 Accounting for Managers Semester 2, 2017 Assessment Task 2: Group Report - Marking Rubric Discipline Knowledge and Skills Standard (DK), Critical Thinking Standard (CT), (Written) Communication Skills Standard (WC) Criteria Below Expectations Approaching Expectations Meets Expectations Exceeds Expectations Exceeds Expectations Application of discipline knowledge (DK) [Fail: 0% - 49%] Discipline knowledge is poorly applied resulting in the problems being incompletely resolved, and where applicable, calculations are incomplete and/or complete but containing serious mistakes. [Pass: 50% - 59%] Discipline knowledge is poorly applied resulting in the problems being incompletely resolved, and where applicable calculations are almost complete and/or complete with several minor mistakes. [Credit: 60% - 69%] Applies appropriate practices, principles and/or theories to the problems, resulting in adequate analysis, and where applicable calculations are mostly correct and complete. [Distinction: 70% - 79%] Applies appropriate practices, principles and/or theories to the problems, resulting in good analysis, and where applicable calculations are correct and complete. [High Distinction: 80% - 100%] Applies appropriate practices, principles and/or theories to the problems, resulting in very good analysis, and where applicable calculations are correct and complete. Inadequately analyses data from sources other than financial statements and create unusable information. Inadequately analyses data from sources other than financial statements and create partially useable information. Analyses data from data from sources other than financial statements and create useable information. Extensively analyses data from sources other than financial statements and create useful information. Thoroughly analyses data from sources other than financial statements to generate relevant, in depth information. The conclusions and/or recommendations are vague. Conclusions and/or recommendations are not logically supported by the evidence and/or process of analysis. The conclusions and/or recommendations are clear and relevant. Few conclusions and/or recommendations are generally supported by the evidence and/or the process of analysis. The conclusions and/or recommendations are sound, clear and relevant. Some conclusions and/or recommendations are generally supported by the evidence and/or the process of analysis. The conclusions and/or recommendations are relevant, significant and organised. Most conclusions and/or recommendations are logically supported by the evidence and/or the process of analysis. The conclusions and/or recommendations are robust, comprehensive, relevant, significant and organised. All conclusions and/or recommendations are logically supported by the evidence and/or the process of analysis. Does not use language that conveys meaning to readers with sufficient clarity and includes some errors. Uses language sufficiently well to convey basic meaning although errors reduce effectiveness of communication. Uses language that generally conveys meaning to readers with clarity and writing is virtually error free. Uses language that effectively conveys meaning to readers with clarity. Any errors which occur do not reduce effectiveness of communication. Uses language that skilfully communicates meaning to readers with clarity and fluency, and is error-free. [25 Marks] Analysis of data (DK) [30 Marks] Conclusions and/or recommendations (DK, CT) [20 Marks] Control of Syntax and Mechanics (WC) [25 Marks] 7 Fit as a fiddle: An ageing population has increased demand for many subdivision services This report was provided to Curtin University Library (2125737259) by IBISWorld on 08 March 2017 in accordance with their licence agreement with IBISWorld IBISWorld Industry Report Q8400 Health Services in Australia December 2016\b James Mullaly 2 About this Industry 13 Products & Services 26 Queensland Health 2 Industry Definition 15 Demand Determinants 2 Main Activities 16 Major Markets 27 Department of Health of Western Australia 2 Similar Industries 17 International Trade 3 Additional Resources 18 Business Locations 4 Industry at a Glance 30 Operating Conditions 30 Capital Intensity 20 Competitive Landscape 31 Technology & Systems 20 Market Share Concentration 31 Revenue Volatility 5 Industry Performance 20 Key Success Factors 32 Regulation & Policy 5 Executive Summary 20 Cost Structure Benchmarks 33 Industry Assistance 5 Key External Drivers 22 Basis of Competition 6 Current Performance 23 Barriers to Entry 35 Key Statistics 8 Industry Outlook 23 Industry Globalisation 35 Industry Data 35 Annual Change 11 Industry Life Cycle 24 Major Companies 13 Products & Markets 24 Ministry of Health 13 Supply Chains 25 Department of Health & Human Services Victoria 35 Key Ratios 36 Jargon & Glossary www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 About this Industry Industry Definition The Health Services subdivision includes entities that primarily provide direct treatment to patients, or perform auxiliary services in support of treatment. Health services entities that provide Main Activities The primary activities of this industry are direct treatment to patients include general hospitals, general practices and physiotherapy clinics, while auxiliary service providers include pathology and diagnostic imaging operators. Operating general hospitals Operating general practices Providing specialist medical services Providing pathology and diagnostic imaging services Providing dentistry, orthodontics and optometry services Providing chiropractic, physiotherapy and alternative health services Providing ambulance services Providing other allied healthcare services The major products and services in this industry are Dental services Diagnostic testing General practice medical services Other health services Private hospitals Public hospitals Specialist medical services Similar Industries Q8401 General Hospitals in Australia This industry provides acute care to patients and makes up about half of the Health Services subdivision. Q8539 Other Health Services in Australia This industry includes a range of health services including non-specialist allied health services and blood bank operation. Q8700 Community Services in Australia Organisations in this subdivision provide community, childcare, crisis care, welfare and aged-care services. Q8601 Aged Care Residential Services in Australia Aged-care homes provide accommodation for the aged. Provided to: Curtin University Library (2125737259) | 08 March 2017 2 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 About this Industry Additional Resources For additional information on this industry www.abs.gov.au Australian Bureau of Statistics www.aihw.gov.au Australian Institute of Health and Welfare www.health.gov.au Department of Health www.privatehealth.gov.au Private Health Insurance Ombudsman \u0003\u0003IBISWorld writes over 500 Australian industry reports, which are updated up to four times a year. To see all reports, go to \u0003www.ibisworld.com.au Provided to: Curtin University Library (2125737259) | 08 March 2017 3 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 4 Industry at a Glance Health Services in 2016-17 Key Statistics Snapshot Revenue Annual Growth 12-17 Annual Growth 17-22 Profit Wages Businesses $119.9bn 3.4% 2.9% $15.4bn $61.4bn 105,657 Federal funding for medicare Revenue vs. employment growth Ministry of Health \u000314.6% % change Department of Health & Human Services Victoria \u000310.7% 8 10 6 8 % change Market Share 4 2 Queensland Health \u00038.8% 0 Year 09 6 4 11 13 15 Revenue 17 19 21 2 Year 23 11 13 15 17 19 21 23 Employment SOURCE: WWW.IBISWORLD.COM.AU p. 24 Enterprises 7.2% Key External Drivers SA Federal funding for Medicare 1.8% 0.5% TAS NT 1.6% ACT 9.4% Median age of the population WA 34.5% Government funding for public hospitals NSW Private health insurance membership Real household disposable income 19.0% QLD 26.0% p. 5 VIC Industry Structure Life Cycle Stage Revenue Volatility Growth Regulation Level SOURCE: WWW.IBISWORLD.COM.AU SOURCE: WWW.IBISWORLD.COM.AU Heavy Low Technology Change High Capital Intensity Low Barriers to Entry High Industry Assistance High Industry Globalisation Low Concentration Level Low Competition Level Low FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 35 Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 5 Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage Executive Summary The Health Services subdivision includes a range of health services and facilities. General hospitals are the subdivision's largest driver of revenue growth, accounting for over half of Australia's health services revenue. General practitioners, clinical specialists and dentists also represent significant streams of revenue for the subdivision. Australia's growing and ageing population, combined with expanding private health insurance coverage, is expected to generate strong demand for health services over the five years through 2016-17. Demand has been the major driver of growth, with increases in Medicare benefits per service and schedule fees failing to keep up with inflation in some industries. With rapidly increasing patient volumes, health services revenue is expected to grow at an annualised 3.4% over the five years through 2016-17, to be worth $119.9 billion. This includes forecast growth of 2.9% for the current year. People aged 65 and over use health services more frequently than younger individuals and tend to have greater private health insurance coverage. People naturally become more susceptible to illness and health issues as they age. As a result, growth in this demographic has propelled demand for health services. Subsidised services such as hospitals and ambulances have required greater government funding due to increased demand. General practitioners and specialists that rely on Medicare subsidisation have grown through increased demand, despite schedule fees trending downwards in real terms. Rising private health insurance membership has contributed to growing demand for healthcare services, boosting revenue for the Health Services subdivision. Australia's age profile and private health insurance coverage are expected to continue rising over the next five years, which should strengthen demand for most health services. However, the Federal Government's freeze on Medicare rebate indexation until 2020 is likely to constrain growth in funding for the subdivision. Anticipated changes to Medicare's safety net system, which provides additional subsidies to frequent users of specialist medical services, may also negatively affect demand over the period. Despite these issues, increasing organic demand for health services should contribute to subdivision revenue rising at a compound annual rate of 2.9% over the next five years, to reach $138.3 billion in 2021-22. Key External Drivers Federal funding for Medicare Medicare primarily covers full or partial consultation costs with general practitioners and specialist medical practitioners. A rise in federal funding for Medicare typically increases the subdivision's revenue. Although federal funding for Medicare is expected to increase in 2016-17, the freeze on Medicare rebates threatens the industry's pace of growth. is likely to increase demand for health services. The median age of the population is expected to increase in 2016-17 as the baby boomer cohort ages, providing an opportunity for the subdivision to increase revenue. Median age of the population Older people generate a greater amount of health services revenue per capita compared with younger individuals. A rise in the median age of the population Government funding for public hospitals Government hospital funding is a major source of health services revenue. State and territory governments provide the majority of public hospital funding. A rise in government funding for public hospitals should assist growth in health services revenue. Government funding for public hospitals is expected to increase in 2016-17. Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 6 Industry Performance Key External Drivers continued Private health insurance membership Private health insurance coverage across the Australian population influences private hospital and allied health services revenue. Greater private health insurance membership generally increases demand for healthcare services, as members may feel less financially restricted to visit health practitioners or undertake elective medical procedures. Private health insurance coverage is anticipated to rise in 2016-17. Real household disposable income Patients are required to pay out-of-pocket expenses for many health services. Patients make out-of-pocket payments on top of Medicare or private health cover for some services and have to pay in full for allied health services that are not covered. A rise in real household disposable income is likely to increase patient demand for particular healthcare services, such as physiotherapy and some dental procedures. Real household disposable income is anticipated to rise in 2016-17. Median age of the population Federal funding for Medicare 10 0.5 0.4 % change % change 8 6 4 2 Year 0.3 0.2 0.1 11 13 15 17 19 21 23 0.0 Year 10 12 14 16 18 20 22 SOURCE: WWW.IBISWORLD.COM.AU Current Performance The Health Services subdivision has expanded consistently over the past five years. The subdivision encompasses a range of primary, secondary and tertiary healthcare industries. General hospitals make up slightly over half of the subdivision's revenue, with the remainder consisting of general practice medical services, specialist medical services, dental services and other health services. The subdivision has grown strongly over the past five years due to Australia's ageing population and expanding private health coverage. The ageing population has driven greater demand for health services across the board, necessitating greater funding for Medicare and public hospitals. Expanding private health insurance coverage has encouraged the use of non-essential health services, with health insurers paying out benefits for usage. Subdivision revenue is expected to rise at a compound annual rate of 3.4% over the five years through 2016-17, to $119.9 billion. This includes forecast growth of 2.9% in the current year. The subdivision has increased its capacity over the past five years, with demand for all health services industries growing over the period. The number of health services establishments has grown steadily. Solid increases in the number of general practices, pathology service operators, diagnostic imaging and dental practices account for the majority of new healthcare establishments. This has offset slow growth in the number of general hospitals, ambulance services, and optometry and optical dispensing establishments. Changes to government policies regarding individual Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 Industry Performance Current Performance continued health industries have had the largest effect on growth rates in the number of establishments. Subdivision employment is expected to grow over the five years through 2016-17. Strong employment growth has occurred in general practice medical services, diagnostic imaging and ambulance services over the past five years, to keep pace with rising demand from Australia's growing population. The average wage across the Health Services subdivision is expected to increase over the five years through 2016-17 due to strong demand for qualified staff. Rising revenue, particularly in the private hospitals segment, has contributed to a rise in subdivision profitability over the period. Public hospitals and not-for-profit private hospitals have no profit motive. As a result, the industry's profit margins are substantially understated. Subdivision growth Revenue from general hospitals has grown at the same pace as the subdivision, with hospitals maintaining capacity while increasing throughput rates. Consequently, the number of patient separations (cessations of treatment) has increased, contributing to public hospitals attracting greater funding from state governments. Throughput rates have also increased for private hospitals as same-day separations have become more popular following improvements to the cost and convenience of elective surgery. Additionally, private hospitals have benefited from wider private health insurance coverage, which has broadened potential client pools. Increased patient volumes for general practitioners and specialist medical practitioners have driven growth for these two segments over the past five years. Patient volumes continue to rise as Medicare provides a significant source of funding, particularly for general practitioners, keeping out-of-pocket costs for patients low. Unlike general hospitals, general practitioners are among the most profitable in the subdivision as Medicare schedule fees generally allow for profitability. The remaining health services industries either complement publicly funded services or are largely funded by private health funds and out-of-pocket patient costs. Industries that complement publicly funded services include pathology services, diagnostic imaging services and ambulance services. Annualised revenue growth for diagnostic imaging services has significantly exceeded the subdivision average. This increase is due to more advanced and often more expensive diagnostic imaging procedures replacing traditional x-ray procedures for many patients. Pathology services and physiotherapy revenue have also outpaced subdivision growth. Industries that are privately funded through private health benefits and out-of-pocket costs include dental services, optometry, and chiropractic and osteopathy services. Revenue growth for the optometry and optical dispensing services and dental services segments have lagged behind that of the general subdivision over the past five years. However, the musculoskeletal issues of an ageing population have supported growth in chiropractic and osteopathic services. Ageing population Australia's ageing population has driven demand growth across the entire Health Services subdivision over the past five years. Older people, particularly those aged 65 and over, are more susceptible to injury, illness and disease. Older people require more frequent check-ups and treatment for health issues and are consequently more likely to use the services of general hospitals, general practitioners, specialist medical practitioners, Provided to: Curtin University Library (2125737259) | 08 March 2017 7 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 Industry Performance Ageing population continued diagnostic imaging and pathology services than their younger peers. The ageing of the Australian population has been the primary factor behind health services demand growth over the past five years. Private health insurance Private health insurance coverage has increased over the past five years. An expected 11.8 million Australians will be covered by private health insurance in 2016-17, up from 10.6 million people in 2011-12. The surge in private health coverage, driven by Federal Government incentives, has contributed to revenue increases across numerous health service industries. Many health services that do not receive Medicare funding are benefiting from the private health insurance boom. Paying for services completely out of pocket is often too expensive for patients, but increased private health coverage has widened the client base for health services, such as dental services, optometry, physiotherapy, chiropractic services and osteopathy. Private health benefits primarily fund these services, which may reduce or remove out-of-pocket costs for patients, contributing to demand growth. Government funding Funding from all levels of government, including private health insurance premium rebates paid out by the Federal Government, accounts for a large proportion of subdivision revenue. While the ageing population has helped drive subdivision revenue, it is placing a significant burden on state budgets for hospital funding. In 2011, the Federal and State Governments signed the National Health Reform Agreement (NHRA) to reform health service funding. However, in its 2014-15 Federal Budget, the Abbott Federal Government planned to revoke the NHRA, committing instead to transfer the burden of hospital funding back to state governments from July 2017. These cuts were subsequently overturned in the 2016-17 Federal Budget, in which the Turnbull Federal Government agreed to continue to fund 45% of growth in hospital services based on the National Efficient Price for three years from 2017-18, capped at 6.5% per annum. The Federal Government is also seeking additional cuts to other primary care services through its freeze on the Medicare Benefits Schedule, which is currently in place until July 2020. Industry Outlook The Health Services subdivision is forecast to continue growing strongly over the next five years due to Australia's ageing population, the increasing prevalence of many chronic diseases and growth in private health insurance coverage. General hospitals are expected to contribute much of the subdivision's growth due to increasing demand from the ageing population and rising chronic disease rates. However, growth in private health insurance coverage should continue to boost other allied health services that derive revenue from private health benefits. The Health Services subdivision Industry revenue 8 % change 6 4 2 0 Year 09 11 Provided to: Curtin University Library (2125737259) | 08 March 2017 13 15 17 19 21 23 SOURCE: WWW.IBISWORLD.COM.AU 8 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 9 Industry Performance Industry Outlook continued is projected to increase by an annualised 2.9% over the five years through 2021-22, to reach $138.3 billion. The number of industry establishments is expected to increase over the next five years, to satisfy the demands of Australia's growing and ageing population, particularly in areas with high population density. Industry employment is expected to increase to meet the subdivision's expanding capacity. Revenue growth is Ageing population Australia's ageing population will be a primary driver of subdivision growth over the next five years. Australia's median age is projected to continue increasing as the baby boomer generation ages. Older people tend to use health services at a greater rate than younger people. In 2016-17, people aged 65 and over are expected to account for 35.6% of health services revenue, despite only making up about 15% of Australia's population. This age bracket is expected to continue expanding as a share of the population over the next five years, which should boost health services revenue. The ageing population has also partially driven growth in private health insurance coverage. Older people tend to have greater private health insurance coverage than younger people. This disparity is due to the greater wealth accumulated by older people, which enables them to pay for private health insurance. Additionally, older people are more likely to have health issues that require services not covered by Medicare. Private health coverage is expected to continue rising over the next five years, driving growth in other health service areas. As private health benefits cover consultation costs with a range of practitioners, this trend is anticipated to benefit numerous subdivision operators, particularly dentists, physiotherapists, chiropractors and osteopaths. Government funding currently accounts for just under 70% of all health services revenue, so future changes to government funding arrangements could substantially affect the subdivision. Governments have faced increasing pressure due to rising costs associated with health services. As a result, governments are expected to force healthcare providers to take on some of the inflationary pressures. According to the Treasury's 2015 Intergenerational Report, Medicare will be one of the fastest growing aspects of government expenditure in coming decades. The Medicare Safety Net (MSN) supports people who require frequent specialist consultations for managing and treating health conditions. In 2017, the MSN is expected to be replaced by a new safety net system that will increase the threshold required to access subsidised services. This may, in turn, reduce demand from individuals who may no longer receive benefits due to the higher threshold. Medicare schedule fees have not risen with inflation over the past five years and this is not expected to change over the next five-year period. In announcing its intent to overhaul the Medicare system in April 2015, the Federal Government Government funding changes anticipated to outpace employment growth as efficiency improves and technology usage increases. Although the growing number of industry establishments will increase competition, profit margins are expected to remain stable across the Health Services subdivision. Not-for-profit entities, such as public hospitals, will continue to offset the substantial profit margins generated by general practices and specialist medical practices. \u0003\u0003Australia's ageing population will be a primary driver of subdivision growth Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 10 Industry Performance Government funding changes continued reiterated that the pause on indexation of GP and specialist Medicare rebates would continue until the necessary reforms were in place to cut waste and inefficiencies. As part of the proposed shake-up of the Medicare system, a taskforce has been established to review over 5,700 Medicare-funded tests and procedures. Any cuts may limit revenue growth if enacted. One proposal put forward in the Federal Government's 2015 draft green paper on the Reform of the Federation was the introduction of a Hospital Benefits Schedule that, like the Medicare Benefits Schedule, sets Commonwealth funding for public and private hospital services. According to the Grattan Institute, this proposal improved on the previous bipartisan commitment set out in the 2009 National Health Reform Agreement. However, this proposal was abandoned by the Federal Government in April 2016. Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 11 Industry Performance Life Cycle Stage An ageing population is promoting increased demand New technologies are bringing forward new services % Growth in share of economy Government funding for health continues to increase 20 Maturity Quality Growth Company consolidation; level of economic importance stable High growth in economic importance; weaker companies close down; developed technology and markets 15 Key Features of a Growth Industry Revenue grows faster than the economy Many new companies enter the market Rapid technology & process change Growing customer acceptance of product Rapid introduction of products & brands 10 Quantity Growth Many new companies; minor growth in economic importance; substantial technology change 5 Health Insurance General Hospitals Health Services Other Health Services 0 General Insurance Pharmaceutical Product Manufacturing Decline -5 Shrinking economic importance -10 -10 -5 0 5 10 15 20 % Growth in number of establishments SOURCE: WWW.IBISWORLD.COM.AU Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 12 Industry Performance Industry Life Cycle \u0003This industry is G \u0003 rowing\u0003 The Health Services subdivision is in the growth phase of its life cycle. The subdivision is growing due to higher overall public funding for health services, such as general hospitals. Australia's ageing population is another key driver of demand. Rising private health insurance coverage has contributed to growth in industries that lack government funding. While the subdivision encompasses a range of industries, growth has generally occurred across the entire spectrum of health services. Industry value added (IVA) measures the subdivision's contribution to the overall economy. IVA is forecast to grow at an annualised 4.0% over the 10 years through 2021-22, exceeding the overall economy's forecast GDP growth of an annualised 2.5% over the same period, suggesting that the subdivision is outperforming the wider economy. Forecast IVA growth over the 10-year period suggests that current trends, such as population ageing and private health insurance coverage growth, will continue over the next five years. Subdivision growth is primarily generated through government funding, private health benefits and out-of-pocket patient costs. Federal Government funding for Medicare has grown over the past five years. Medicare funding is expected to continue rising despite a downward trend in schedule fees and the freeze on indexation, as service volumes increase further over the next five years. State government funding for public hospitals has also undergone significant growth in real terms. Australia's ageing population and significant government incentives have spurred increased private health insurance coverage, resulting in more people taking advantage of health services that would be costly otherwise. As the subdivision takes in a range of different industries, key indicators suggest that the Health Services subdivision is mature rather than growing. The range of services provided is fairly stable, while establishment growth is occurring at a slow rate commensurate with population growth. However, technology change is continuous and significant. Hospitals are using robotic surgery, 3D imaging for positron emission tomography (PET) scans has been introduced and telehealth advancements are allowing the subdivision to embrace everyday technology for productive uses. Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 13 Products & Markets Supply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations Supply Chain KEY BUYING INDUSTRIES K6321 Health Insurance in Australia Health insurance promotes demand for health services. K6322 General Insurance in Australia Workers' compensation helps meet the costs of health services when applicable. O7510 Central Government Administration in Australia The Department of Veterans' Affairs helps to meet the cost of veterans' health services. KEY SELLING INDUSTRIES Products & Services C1841 Pharmaceutical Product Manufacturing in Australia Medicines and pharmaceuticals are used in the care and treatment of patients. C2412 Medical and Surgical Equipment Manufacturing in Australia Surgical and medical instruments are often necessary for treatment and for the personal care of patients. N7311 Commercial Cleaning Services in Australia Cleaning services are sometimes outsourced by hospitals and other medical facilities. Q8511 General Practice Medical Services in Australia General practice medical practitioners are a source of referral for hospitals and other facilities. Q8512 Specialist Medical Services in Australia Specialist medical practitioners refer patients to hospitals. Q8521 Pathology Services in Australia Pathology tests are either conducted in medical facilities or outsourced. Q8539 Other Health Services in Australia The Australian Red Cross Blood Service collects and distributes fresh blood products from voluntary donations. It also distributes plasma products to hospitals. General hospitals contribute over half of total health services revenue. General hospitals can be further divided into public hospital and private hospital services. Non-acute care practitioners, such as general practitioners (GPs), clinical specialists and dentists represent the majority of subdivision revenue outside of hospitals. Activities that complement primary caregivers, such as pathology and diagnostic imaging, make up much of the remainder of subdivision revenue. Services. Public hospitals provide the majority of complex, resource-intensive procedural services to Australians. Despite Australia's rising population, the share of subdivision revenue generated by public hospitals is anticipated to decline marginally over the five years through 2016-17. This comes as an increasing proportion of older aged patients take up private health insurance and switch preferences from public to private hospital care. Public hospitals Public hospitals perform a range of services, including inpatient care, outpatient care, emergency services, medical training and research. State and territory governments are responsible for managing public hospitals across Australia. The largest providers of public hospital services are New South Wales' Ministry of Health and Victoria's Department of Health and Human Private hospitals Private hospitals, mostly operated by private and non-for-profit organisations, represent the subdivision's second largest service segment. While public hospital services are fully funded by Medicare, private hospital services often charge higher prices than the Medicare Benefits Schedule fee for different treatments and procedures. As a result, private health insurance funds and patients (through Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 14 Products & Markets Products & Services continued direct out-of-pocket payments) account for the primary streams of revenue for private hospitals, alongside government funding. Ramsay Health Care is Australia's largest private hospital operator and accounts for more than half of all for-profit private hospital beds. Private hospital services are anticipated to increase slightly as a share of subdivision revenue over the five years through 2016-17. Increased demand for private hospital services is partially due to a rise in private health insurance membership among older Australians. General practice medical services GPs are trained in the total health care of individuals and are generally a patient's first point of contact in the medical system. Patients visit GPs for a variety of reasons, including diagnosis of undetermined medical problems, referrals to specialists, prescriptions and routine check-ups. Medicare primarily funds patient costs for GP consultations, covering scheduled fees for various types of consultations. A rise in chronic health conditions such as cancer and diabetes, particularly in those aged over 65, has increased the frequency of GP consultations for patients. As a result, the segment's share of subdivision revenue is anticipated to increase over the five years through 2016-17. Specialist medical services Specialist medical practitioners generally treat patients after they are referred by a GP. This segment includes surgeons, anaesthesiologists, gynaecologists, obstetricians, paediatricians, psychiatrists, dermatologists and physicians such as cardiologists and neurologists. Medicare covers the majority of specialist consultation costs. Specialists that do not work with hospital patients primarily treat non-acute cases in private clinics, and hospital outpatients. The segment's share of subdivision revenue has grown over the past five years due to Australia's ageing population and subsequent growth in chronic diseases, which often require regular visits to specialists. Dental services Dental services involve treatment and check-ups for oral diseases and other problems relating to teeth. General dental practitioners generate the majority of revenue by treating oral problems as part of regular dental check-ups. Other practitioners in the segment provide more specialised services. These include orthodontists, which specialise in correcting improper bites through apparatuses such as braces, and prosthodontists, which reconstruct and replace missing teeth. Out-of-pocket patient costs largely fund dental services, with private health insurance providing minor cover. Demand for dental services is largely Products and services segmentation (2016-17) 7.9% 5.4% Diagnostic testing Dental services 9.6% Specialist medical services 31.1% Public hospitals 9.8% General practice medical services 14.4% Other health services Total $119.9bn 21.8% Private hospitals Provided to: Curtin University Library (2125737259) | 08 March 2017 SOURCE: WWW.IBISWORLD.COM.AU WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 15 Products & Markets Products & Services continued Demand Determinants Diagnostic testing This segment includes pathology services and diagnostic imaging services, both of which have grown strongly over the past five years. As a result, this segment's share of subdivision revenue has increased. Australia's ageing population, which is increasing the prevalence of chronic illness, and technological advancements in pathology testing are driving strong demand for pathology services. Growth in pathology services is being driven by demand rather than fees per service, which have dropped over the past five years. Meanwhile, both demand and fees charged are driving revenue growth for diagnostic imaging. Greater Medicare funding for more expensive procedures, such as MRIs, nuclear medicine and CT scans, has enabled growth in diagnostic imaging. Other health services Other health services include optometry and optical dispensing, physiotherapy services, chiropractic and osteopathic services, psychiatric hospitals, ambulance services and other health industry services. Optometry involves diagnosing sight defects, and prescribing and dispensing spectacles and contact lenses. Physiotherapists treat ailments relating to the musculoskeletal system and patients often see chiropractors or osteopaths for similar issues. Ambulance services provide emergency treatment and patient transport to hospitals. Psychiatric hospitals provide specialist psychiatric treatment to patients. This segment's contribution to subdivision revenue has declined over the past five years. This decline is predominantly due to weak growth in optometry and optical dispensing, while the remaining services' shares of subdivision revenue have stayed generally stable. Slow growth for optometry and optical dispensing is attributable to a drop in the average prices of spectacles and a fall in the average Medicare rebate per service. Demand for health services is consistently high as it is generally essential for patients to receive treatment for acute and non-acute health reasons. Price is often not a factor affecting demand for essential health services, as Medicare can fully cover general practitioner and specialist consultations. While the level of funding provided by government departments can influence subdivision revenue, it primarily determines the amount of practitioners willing to bulk bill. Therefore, the most important determinants of demand are the age profile of the population and the level of private health insurance coverage. Australia's ageing population will drive revenue growth, as individuals over the age of 65 account for a disproportionate level of health services revenue. The prevalence of private health insurance coverage determines demand for health services that are not covered by the public system. Private health often covers some of the cost of treatment by practitioners including dentists, physiotherapists, chiropractors and optometrists. Treatment by these practitioners is not covered by Medicare. As a greater proportion of the population acquires private health insurance, these practitioners gain a wider client base whose costs are either partially or fully covered by private health benefits. The acquisition of private health insurance also increases demand for private hospital work. This is particularly so with regard to elective surgery. While public hospitals often have waitlists spanning over 12 months, private hospitals can perform elective surgery in a much shorter time frame. stable across different age groups. As the ageing population has driven increased demand for referred specialist services, this segment has declined slightly as a share of subdivision revenue over the past five years. Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 16 Products & Markets Major Markets With an ageing population, age-related illness is a big factor driving demand for health services. Therefore, age groups provide an appropriate categorisation of health services usage. Higher age brackets are overrepresented in many health services segments, particularly people aged 65 years and over. People aged 65 and older Individuals aged 65 years and over are expected to account for 35.6% of health services revenue in 2016-17, despite only making up about 15% of Australia's population. This overrepresentation is largely due to increased hospital use by this age bracket. Age-related illnesses tend to result in greater demand for hospital services. Older people also require palliative care more often, which increases patient days. People in this market visit general practitioners and geriatric specialists more often than younger patients. Market share for this demographic has increased over the past five years due to the ageing Australian population. People aged 45 to 64 People aged between 45 and 64 account for about 25% of Australia's total population and are projected to account for 27.8% of health services revenue in 2016-17. People in this age bracket are generally afflicted with a greater frequency of diseases and chronic illness than those in younger age brackets. These health issues result in greater use of general hospital services, general practitioners and specialists. People in this age bracket are also likely to require more musculoskeletal work such as physiotherapy. Market share for this age bracket has decreased over the past five years, as an increasing number of people leave the age group to enter the aged 65 and older market. People aged 25 to 44 Individuals aged between 25 and 44 are underrepresented in their contribution to health services revenue. This age bracket is expected to account for 20.7% of health services revenue, although the total population share of this market is just under 30%. This trend is largely due to greater health in this age group compared with older age brackets. This age bracket accounts for the majority of women of childbearing years, resulting in a disparity between male and female revenue contributions. Females aged 25 to 44 account for more overnight hospital stays than males, contributing to revenue gains for general practitioners and obstetricians. As the median age of new mothers has risen, subdivision revenue attributable to this market has increased over the past five years. People aged 24 and under People aged 24 and under make up slightly over 30% of the population, but Major market segmentation (2016-17) 15.9% People aged 24 and under 35.6% People aged 65 and over 20.7% People aged 25 to 44 Total $119.9bn 27.8% People aged 45 to 64 Provided to: Curtin University Library (2125737259) | 08 March 2017 SOURCE: WWW.IBISWORLD.COM.AU WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 17 Products & Markets Major Markets continued are forecast to account for 15.9% of health services revenue in 2016-17. Individuals in this age group are generally healthy, particularly between the ages of five and 14. Children under five years old account for a high percentage of revenue for this market. Market share for this age bracket is expected to have remained stable over the past five years. While fertility rates and the population share of this market are decreasing, parents generally have greater income and private health insurance coverage to use on health services for their children. As people are deciding to have children later in their lives, parents have increasingly been able to establish their careers and secure higher incomes to better finance child health care expenses. International Trade Due to the nature of the subdivision, there is minimal direct international trade in the services provided. Visitors to Australia may be classified as part of the international market that the subdivision services, but this activity is not significant. Similarly, the number of Australians who travel overseas for medical services is also minor and represents a negligible proportion of domestic demand. Provided to: Curtin University Library (2125737259) | 08 March 2017 WWW.IBISWORLD.COM.AU\b Health Services in Australia\u0003 December 2016 18 Products & Markets Business Locations 2016-17 NT 0.5 QLD 19.0 WA 9.4 SA 7.2 NSW 34.5 ACT 1.6 VIC 26.0 Enterprises (%) TAS Cold Zone (