Welcome to the latest edition of IHC Insider. A New Year brings with it new ambitions, hopes and objectives. Whatever your resolutions, whether as an organisation or as an individual, we wish you every success in achieving them this year.
There is plenty to look forward to in 2014, as our industry continues to grow and evolve to meet new challenges. It remains to be seen how the final proposals of the Competition Commission’s investigation into the private health market will play out, for example.
Here at IHC, we have been ringing in the changes. We have a new logo, and recently launched our new-look website, which we hope you will find easier to navigate, more intuitive and more accessible than ever before from your computer, tablet or smartphone. Do take a look at the new site at www.ihc.co.uk, and let us know what you think.
The Competition Commission (CC) has ordered two healthcare groups, BMI and HCA, to sell off a total of nine hospitals after investigations found that patients had been paying too much for medical care. The CC said last August that many private hospitals faced low levels of competition and high barriers of entry in areas across the UK. As a result, prices for insured patients were higher, with HCA, BMI and Spire named as the key groups affected.
As a result, the CC has called on HCA to sell of seven of its hospitals, and BMI to sell off two. CC chairman and chairman of the Private Healthcare Inquiry Group, Roger Witcomb said: “We’ve looked hard at how we can meet the challenging task of opening up this market to increased competition. We’re now proposing those measures which we believe will offer practical and effective ways of improving competition and ensuring private patients get a better deal.
“Requiring operators to sell hospitals is a big step and we have focused on those areas where a sale will be effective in increasing competition—where a single operator owns a cluster of hospitals which face little rivalry,” he said. “As well as these measures, we will look to remove ways in which hospital operators can reinforce their position and close the door on potential competition. So we want to prevent incentive schemes that encourage patient referrals to particular hospitals. We will also look to ensure that the option to partner with a NHS PPU is open to potential new entrants in areas which need greater choice.”
The recommendations were met with dismay by the healthcare groups. HCA International’s CEO Mike Neeb, said: “The Competition Commission’s provisional recommendations are plainly wrong. The CC’s own report acknowledges there are nearly 50 competitors in Greater London, our ownership of these hospitals encourages competition and drives a higher standard of care among hospitals in the UK.”
He continued: “Thirteen years ago, we acquired the London Bridge Hospital in a merger specifically approved by the Office of Fair Trading. Since then we’ve invested millions, transforming it into one of the best providers of quality healthcare in the world and now the Competition Commission is punishing this success. The CC has misunderstood the market and is threatening unjustified and unfair remedies. To forcibly divest hospitals from successful healthcare organisations cannot be good for either patients or our economy.”
Meanwhile, Stephen Collier, CEO of BMI Healthcare, said that while the group had “always welcomed some aspects of the Commission’s work,” the provisional decisions were, he said, “bizarre.”
“It is a fact that BMI Healthcare’s shareholders have taken nothing out of the business they bought in 2006, instead reinvesting every pound earned back into our hospital operating business. It is therefore bizarre for the Competition Commission to claim that we are making excess profits and need to sell seven hospitals, a remedy that will have no benefit for patients because there is already sufficient competition and it won’t lower costs.”
IHC’s Paul Roberts is concerned about the potential impact should the proposals be imposed. “This is a difficult one,” he says. “£190m is the ‘identified harm,’ and that figure will be robustly challenged in the court battles to ensue. It’s a tiny sum for an industry covering 4m people circa £6bn a year. The hospital groups are not easily going to give up profitable and successful sites that have needed long-term investment and commitment. Furthermore, the question is: who will buy them? The hospital sector is debt-burdened so a financial transaction will be complex on top of meeting the CC criteria of ‘being experienced’ at running such a site. The CC also says the buyer must give a commitment to run the same contract terms as before, which suggests changing the colour of the signage above the door, while the underlying supplier pricing does not change. Which begs the question: in this case, why force a sale then?”
Nick Lipczynski also questions the logic behind the proposals. “It seems bizarre that one of the main initiatives introduced by the insurers – open referral – could perversely be weakened by the suggestion that BMI are forced to sell seven of their hospitals,” he says. “Greater competition in London is to be welcomed, but the question is, will there be sufficient investment and support available for those hospitals that HCA have to divest?”
Nonetheless, in the long run, it is hoped that changes will help to bring down prices, as Nick explains: “We expect to see changes to the open referral options offered by Insurers, and hopefully greater competition between the hospitals, which in the longer term should lead to greater discounts.” For now, though, it’s is simply a question of sitting tight to see what happens next. “It is important to wait for the final findings, and the action taken as a result, before seeing how insurers then react,” he added.
Health screening has been available as an employee benefit for a long time, and it is easy to think of this a benefit we know well. But this area of private medical care has been undergoing something of an evolution, and new products have become available that offer a whole different level of care.
“Distribution has changed considerably,” explains IHC consultant Paul Roberts. “And pricing reflect the entire range of screening options, from very lowest cost £49 through to the absolute top of the range at just under £5,500, with many different choices in between.”
HealthScreen UK and Bluecrest Health Screening offer low cost entry point services which check key issues such as heart, lungs, breasts, prostate and skin. It offers peace of mind and can alert employees to possible problems, and for a small cost. “It gives the opportunity to have things checked out that employees might feel they were bothering their GP with, such as suspect moles and freckles,” says Paul. Often, the screening will take place in a hotel, and takes up only a short amount of time.
There are plenty of options at a mid-range cost, too. Bupa Healthscreen comes in at around £300 to £400 (IHC can offer a 25% discount off the full price). The screening takes a little longer and goes into a bit more detail, with employees spending more time with health professionals to get a clearer picture of their health.
And at the top of the range on both price and service is the Executive Health Programme from Nuffield Health, which costs £5,495. Here, clients have a visit at their own homes or offices, and are chauffeur driven to the health screening, which includes a full body scan, as well as a medical consultation and post-screening follow-up. “This is the unique, exclusive screening for clients who want that level of exclusive, luxury service.”
The level of service required for each company’s employees varies significantly, but with a wide range of choice, it is easy to find the right health screening option. “This area has evolved enormously, and continues to do so, but, perhaps now more than ever, health screening offers a highly valuable employee benefit,” says Paul.
The government has announced plans to help employers to manage mental health in the workplace. In a report, Closing the gap: priorities for essential change in mental health, published by the Department of Health, the government outlines plans to tackle discrimination against people with mental health problems, and to help employers to keep existing employees with mental health problems in work, and to employ new staff members with mental health problems.
The report says: “Too often, mental ill health can contribute to people falling out of work. We know that appropriate work is generally good for health and wellbeing, including for people who have mental health problems. Furthermore, returning to suitable work can improve mental health. Helping more people who have mental health problems to work is a big challenge for health, social care and employment services and for employers themselves and it is therefore vital that services work together to find a solution.
IHC welcomes the move and looks forward to seeing these plans put into action. “It wasn’t long ago that it was trendy to remove mental health cover from private medical insurance policies, which flies in the face of the sentiment and actions of government today,” says IHC consultant Paul Roberts. “It will take time for these plans to take effect on the ground, though, and in the meantime there are a lot of simple, low cost actions companies can make in this direction.”
Contact your IHC consultant to find out what you could do to take positive action on mental health in the workplace.
Achieving the best possible deal on the most relevant product is not easy. Fortunately, at IHC, we have a team of experts who know the private medical market like the back of their hands. With a wide-reaching understanding of the sector and experience and expertise in specialist areas, our clients trust us to find them the perfect fit and the best possible value when it comes to employee benefits.
Taking a PruHealth SME client with 26 members and a renewal date set for December. They were faced with what PruHealth deemed a standard renewal increase of 16.8%. “Because PruHealth had discounted the renewal rate the previous year, they therefore had added this back on at the present renewal, which had the effect of distorting the rates,” explains IHC’s Rod McKenzie.
“In the face of non-disclosure of any claims or loss ratios from PruHealth, we confirmed with the client that, to the best of knowledge, there had been few claims from the group, and with an employer cash-back of £1,439.98, we could deduce that the claims loss ratio was good.”
So IHC got to work. “We conducted a market review which provided us with cheaper terms from the other major providers, further convincing the client that the PruHealth Renewal Terms were too high,” says Rod. “Negotiations with PruHealth, taking all of this information into account, resulted in IHC obtaining reduced renewal terms of a more reasonable 7.5% increase for the client.” With such a significantly reduced renewal increase, the client decided to agree to renew on the revised rates.
And then there is a long-standing SME client, this time with Bupa, and with an October renewal date. “Bupa provides claims data that enables us to have very relevant renewal discussions with both the client and insurer,” explains Rod. “We view this as an important factor in retaining business for the holding insurer, as the client has trust in the renewal premium proposals.”
In this particular case, the client has had very mixed claims experience over the years, and is very conscious of providing continuous cover for all members of staff. In the year up to renewal, the loss ratio was around 38%, the previous year the performance was 114%, and prior to that at 30%. “Bupa was looking to a standard 10.5% increase in rates at renewal, but with our long-established knowledge of the client’s history, we knew that if Bupa were able to hold rates then the client would accept that, even with a low loss ratio this year, and with the knowledge of the volatility of claims year-on-year. We were certain they would be happy to renew. Following negotiations with Bupa, we were able to agree a renewal increase of just 1.7%. Some members even received a small reduction.”
We know that working with an expert broker helps our clients to get the very best deals on their employee benefits on renewal. We never accept the price that’s offered, even when it looks good, without investigating further, and negotiating hard, to ensure our clients get the value for money they deserve.
Introducing IHC Senior Executive Manager, Nazmi Khanom
Nazmi Khanom joined IHC in August last year, and provides administrative support at the Fleet Street offices. She comes to the company with a solid experience in the group risk insurance sector, having spent worked for five years as an account executive at Unum, looking after platinum brokers, mentoring and working on annual accounts.
“My role is to provide support to the lead consultant of Group Risk,” explains Nazmi. “My duties involve prepping renewal reports, quality checking renewal accounts, collating data for quotes for different products, sending quotes out and putting together final reports following market review. I also liaise with clients and insurers on any queries they may have about their policies.”
While she was studying for her BA Hons degree in sociology and masters in human rights at Kingston University, Nazmi worked in a number of customer-facing roles at high street retailers. She is enjoying her role at IHC, and says: “It’s interesting talking to various clients and expanding my knowledge about the risk market, and assisting clients regarding any queries that they may have.”