Yesterday’s stock price fall for Ramsay Health Care was not entirely unexpected. Shares in Australia’s largest private hospital operator dropped 5.75% to A$63.90 (US$49.81) after it revealed distinctly unimpressive first half figures.

Profits were down 3.7% to A$246.5 million.

Managing director Craig McNally admitted “ongoing challenges in the operating environment in Europe”. He wasn’t wrong and nor is the outlook expected to get better any time soon.

At the heart of the problem is Ramsay Générale de Santé, its French business, acquired in October 2014. Revenues fell 1.1% to €1.1 billion (US$1.35 billion) and EBITDAR was down 5.8% to €194.1 million.

“We are focused on achieving efficiencies in these businesses and, to this end, we are investing in a major transformation project in our French operations that will centralise non-core hospital resources and distinguish this business for the long term,” he said. Non-core hospital functions such as finance, administration and HR, will be relocated to a separate shared service centre in the outer suburbs of Paris

All good news, but this is not going to start until the second half and is going to take three years. A sign of how disruptive this is going to be is that Ramsay has provided for a restructuring charge of €43.7 million.

Although its presence is smaller, business is not much better in the UK. British revenues fell 4.8% to £206.2 million (US$286.7 million) with EBITDAR down 4.6% to £49.4 million thanks to NHS management demand strategies.

The issue for investors is that there are no discernable upsides in the short term. Pollyannas could point to Australian revenues. Domestic turnover was indeed up 4.3% to A$2.5 billion with a pleasing 9.1% jump in corresponding EBIT, but proposed caps on health insurance premia from the opposition Labor party could soon bring that growth to a shuddering halt.

Demographic trends and an aging population still support the Ramsay business case, but the next couple of years are going to be anything other than easy.