Bupa and BMI - the definitive analysis

  • Tuesday 13 December 2011

What does the future hold for private healthcare in the UK?

The very public dispute between Bupa and BMI Healthcare over recent weeks has seen heated debate from all interested parties. Now, as the Office of Fair Trading recommends that the Competition Commission looks at how Britain’s private healthcare and insurance sector operates, Madeleine Davies assesses the implications for the market as a whole.

With membership numbers declining, and some of Britain’s private hospital companies operating below maximum capacity amid an economic downturn, it was perhaps inevitable that relations would show signs of tension this year.

In May, analyst Laing & Buisson reported that the number of policies funded by companies fell by 3.3% in 2010.

“The combination of a very tough and uncertain economy with a private sector healthcare delivery model that is very inefficient and doesn’t give customers the value that they should deserve makes it a very challenging time,” Dr Natalie-Jane Macdonald, managing director of Bupa Health & Wellbeing, told Health Insurance.

As a result, Bupa is introducing a socalled “Open Referrals” process from January 2012. Open Referrals means that, instead of referring these patients directly to a consultant, GPs will have to provide them with an open referral, that is a referral for a procedure with no named consultant. The member will then call Bupa to pre-authorise the diagnostic procedure or treatment they need and, provided this is covered by the policy, they will be provided with a choice of consultants at nearby hospitals. The member can then book their consultant appointment.

The new strategy, coupled with the news that Bupa was de-listing 12 – or possibly 36 – BMI Healthcare hospitals, took many Health Insurance readers by surprise. Our analysis of industry sentiment reveals a market in turmoil.


There is widespread agreement across Health Insurance readers that the rising cost of PMI is a primary concern for clients, creating a climate receptive to bold moves from insurers.

“The market has gone from static to decline over recent years and therefore any measures that can be implemented to make treatment less expensive therefore PMI more affordable have to be applauded,” says Wayne Pontin, sales director at Jelf Employee Benefits, the advisers. “Premiums have more than doubled in the last five years for many corporate purchasers.”

Dr Doug Wright, head of clinical development at Aviva UK Health, adds: “Increasingly, PMI is bought by corporates and they are much more interested in the long-term affordability and sustainability of that for their employees and managing the cost of that is really important.”

Health Insurance readers have also been quick to point out that Open Referral, while a radical departure for Bupa, is not a new concept in the market. In May last year AXA PPP healthcare launched Corporate Health Plan Pathways, under which employers pay less in exchange for granting the insurer power to direct members to selected hospitals and specialists.

“We offer this as a choice to our corporate customers because we believe that customer choice is key,” says Sharon Lyons, head of provider management for the insurer. “They are paying the premiums and it should be up to them how their scheme operates.”

comments powered by Disqus