Making Britain Healthier

You may have seen advertisements in your Sunday paper recently sponsored by a campaigning group with this name.

The group consists of all the leading health insurers, together with two private hospital groups, BMI and BUPA Hospitals. Its campaign is intended to remind people that, amid all the publicity about what is happening in the NHS, the private sector is still alive and kicking. It highlights the usual advantages of private medicine, such as choice of consultant and hospital, single room when in hospital and convenience in scheduling treatment.

The campaign makes a particular point of saying that the private sector is not suffering reduced demand because of the improvements in the NHS. This is, indeed, what all the experts appear to confirm. In which case, why the need for this expensive exercise? The impression given is that insurers are, in fact, worried that if the Government's plans for the NHS are fully realised, consumers will eventually decide that medical insurance is too expensive and numbers covered will drop.

The market most at risk is the self-purchase individual market where, although overall demand is holding up, it is already apparent that people are down trading to cheaper options. This is bad news for insurers, as it is in just this market where they make most of their profits. Success in the corporate market is good for improving market share but, because this business has normally to be won and negotiated through intermediaries, insurers cannot carry large margins.

BUPA confirms that the initiative came from them and that all insurers and private hospital groups were invited to take part. It is interesting, therefore, that while all the major insurers have joined up, there are some notable hospital group absentees in Nuffield, Capio and HCA. This relative lack of enthusiasm from the hospital sector is understandable, since hospitals have much less to lose from what is happening in healthcare. For a start, they are winning large contracts to treat NHS patients. But at the same time, people don't seem to be giving up on the private sector; rather they are choosing to have less insurance cover and instead to pay hospitals and doctors directly for what they need. Furthermore, if the Government's initiatives end up giving less power to the big insurers, this will help hospitals to resist their demands for large price discounts.

Will all this have much effect on the corporate medical insurance market? Much less, certainly. The corporate consumer is generally reluctant to trade down on benefits and gets a better deal on price than the self-purchase customer. Consequently, there seems much less demand for change. Nevertheless, employers are likely soon to have the choice of paying less if they are prepared to mix private care with use of the NHS. Furthermore, if the power of the big insurers to leverage large discounts from hospitals does start to wane, this may have a significant influence on which insurer employers choose for their corporate medical plan.

The information contained in this document is of a general nature only and should not be relied upon as advice in any specific situation.

For further information, please telephone your usual contact at Buck Consultants (Healthcare):

Tel: +44 (0)118 955 7700
Fax: +44 (0)118 955 7701
Email: healthcare@buckconsultants.com
Web: www.buckconsultants.co.uk
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