The view from IHC: Bupa and the prescription for growth

It may be one of the most important reports in the private health industry for some time, but in some ways, Bupa’s Prescription for Growth paper seems to raise more questions than it does offer solutions. The paper, which follows the recent Competition and Markets Authority (CMA) investigation into the private healthcare sector, outlines a sector that is faced with both substantial challenges and almost limitless opportunities.

It begins by referring to the CMA’s “series of recommendations” aimed at helping to address some of the issued the private health sector faces, adding that: “We need to do more if the sector is to grow and be relevant to more families, individuals, and employers,” says Dr Damien Marmion in his introduction.

He continues: “To deliver what our patients and customers want, the sector needs to work together. We must end the situation identified by the CMA Inquiry Group Chairman Roger Whitcomb, who described the sector as full of relationships that ‘appeared, generally, to be characterised by distrust, disagreements and disputes.’

“The private healthcare sector needs to unite around a vision that delivers world-leading quality and much greater cost-effectiveness, so that more employers and individuals can afford it.”

Bupa estimates that there is a potential for growth worth £2bn within the private healthcare sector, growth that would see consultants growing private practices, improving the use of excess capacity within hospital groups and encouraging customers to choose private health insurance. All of which would, says Bupa, relieve pressure on the NHS.

Among the key areas addressed by Bupa are those of transparency, lack of competition and high cost. The paper promotes improvements in these areas.

Nick Lipczynski, managing director at IHC, agrees that these are important points. “In essence, my personal position is to welcome the initiatives being pursued by Bupa, and the other insurers, to improve transparency and ensure efficiencies,” he says. “However, they need to move away from cost. It is stating the obvious that people would buy more if it was cheaper. But the point is, nobody buys a valuable product such as PMI on price, but on the perception of value. The sooner the providers and the intermediary market refocuses on the value of PMI, the ability to improve and save lives, the more chance we have of halting the decline and expanding the market.”

Paul Roberts, consultant at IHC, feels that Bupa makes important points in highlighting the need for the private medical industry in the UK, and supporting the call for tax incentives for UK businesses, which may encourage further growth and the take up of private funding options, which could include insurance. “The report also emphasises the need for vigilance on the waiting lists in the UK,” as the additional funding for the public sector slows,” says Paul. “It’s an important part of the puzzle – we certainly expect waiting lists to slowly increase in all areas.”

For Chris Bromilow, senior consulting partner at IHC, one of the key priorities Bupa covers is that of addressing the perception of “distrust, disagreements and disputes.” But, he says, the group itself does not always set a tone of cooperation. “Bupa’s relationship with clinical providers is often adversarial, which can polarise views, create negative publicity and ultimately damage demand,” says Chris.

He agrees that there is a real need for increased collaboration across the sector, building that supply chain between brokers, insurers and clinical providers, as well as greater and more effective use of public/private collaboration.

Ultimately, though, IHC agrees that there are plenty of opportunities in the private healthcare sector – but growing the market will be a joint effort. “With the increasing spend on healthcare and healthy living, PMI should be capturing more of this market. If someone can spend over £100 on a pair of Nike trainers, or £1,000 on gym membership, then we know there is an appetite,” says Nick. “But now, PMI needs to come out fighting and prove its value.”