BUPA in dispute with BMI Healthcare

If any of your members are insured by BUPA and are booked in for treatment at a BMI hospital after 1 July, they will probably have had a letter from the hospital telling them to contact BUPA before they are admitted.

This is because BMI, now the largest independent hospital operator, are in dispute with BUPA over a new pricing contract. The old contract expires very shortly, but BUPA have now told us that they will honour all charges from BMI while negotiations continue.

Negotiations between BUPA and the main hospital groups are always difficult with much posturing and brinkmanship. BMI's actions in writing to BUPA members is unprecedented, however, and it seems that this year's disagreements are more serious than most. We can only speculate on what is going on, but like other hospital groups, BMI must be seeing stagnation or even reduction in its business from BUPA and other insurers because of the NHS reforms. This is likely to make them push for more revenue from the business that they do get, since the NHS work with which they are trying to fill their beds will not come with a large profit margin. They will certainly be citing the fall off in business from BUPA as a reason for lowering the discount that they give. For their part, BUPA will probably be pushing for lower rates on the basis that the restructuring that BMI and others are going through to chase NHS business should have led to unit cost reductions.

It could just be the beginning of the end of the traditional system of provider/insurer relationships based on volume since, apart from BUPA's difficulties with BMI, we know that they are having similar problems with HCA group, the dominant provider in Central London. Nuffield hospitals have also gone public with an announcement that they do not intend to continue with the old volume based system of pricing.

We will watch developments with interest, but in the meantime BUPA seem to be saying that they will ensure that their members are not caught in the crossfire!