Insurer warns against drift into 'unsustainable' healthcare market
Bupa has defended its decision to de-list BMI Healthcare hospitals by warning that the UK private medical insurance (PMI) market risks drifting into an "unsustainable" future.
While admitting that the decision was "high-ish risk", Paul Elliott, customer services healthcare director at Bupa, described an alarming alternative.
"The most high risk strategy you could pursue, not just for Bupa but in this market, is effectively to do nothing," he said. "To sign up to deals that you did not think were the right deals, to do that for a quiet life, to continue to increase healthcare costs, and hope that maybe an upturn in the economy in the future would help you out."
Speaking to intermediaries on a conference call, Elliott warned against a "drift into an unsustainable healthcare market that very few people could afford, [where] more and more companies with good claims experience and more and more personal customers in the lower risk category, perhaps not claiming, no longer see value in the product and drift out of the market and what is left is increasingly only people who are getting value, who are higher claiming. We could drift into a market that is almost uninsurable and certainly unsustainable."
He pointed out that the UK PMI market is "already one of the smallest in the developed economies" and that prices are "significantly higher" than in Australia or Spain where Bupa operates.
"This [strategy] is high-ish risk but at least this one has a good chance of success and of achieving the right outcome for our members," he said.
Elliott also used the call to challenge the criticism of Bupa's approach by doctors groups, including the British Medical Association, which told Health Insurance that the insurer's Open Referral process is "insulting to GPs".
He said that Bupa's strategy of dealing with providers was "not necessarily popular" because it introduced competition to the market, and would force people to justify the prices they charge and value they bring.
"It is important they [doctors' groups] are recognised as trade unions," he said. "The BMA is a trade union, not the GMC [General Medical Council] or royal colleges, so you need to understand that in doing the things we are doing we are introducing competition and people forced to compete don’t necessarily welcome this."
With regard to questions of quality and safety, he compared the healthcare market to others in which competition is at work, including airlines, arguing that this had not prevented them from operating safely.
"The electricity and food industries are probably far more critical than healthcare in terms of life and death but those industries compete and are expected to compete and we don’t see why healthcare is any different," he said. "There is no evidence as we see it, no correlation between prices that are charged and quality that is given, so we don’t believe that that sort of vested interest argument should prevail".
BMI Healthcare has told Health Insurance that the prices charged by hospital groups are not the cause of rising private medical insurance premiums and argued that patient and GP choice of provider should prevail.