Good afternoon everyone. Thank you so much to LaingBuisson for inviting me to speak here today. I’m very pleased to be addressing this conference, to talk about an issue which I feel so passionately about: how we all together can fulfil our potential to deliver world class healthcare to millions more people. In short: the future of our sector and its role in supporting the UK healthcare system as a whole.
At the moment our market is going absolutely nowhere. LaingBuisson recorded a small decrease in health insurance subscribers in 2014 in the market – and this comes at a time of record numbers in employment and record population. This is on the back of several years of stagnation.
And we are slowly building to a crisis. The critically important personal market – people who on top of their taxes have stepped up to take responsibility and pay extra to fund much of their healthcare – has been shrinking every year since 1997 when tax relief was removed from some premium contributions. To reinforce this, the customer research we do at Bupa clearly tells us that many of the remaining customers are reaching the limits of what they can afford. In addition, this group of customers is ageing. Fewer younger customers are coming into the market, and the general body of customers is getting older and despite your best efforts won’t be with us for many more years.
On top of this from the 1 November our customers who renew their policies will be getting an extra price increase this year. Insurance Premium Tax is going up by over 50% to 9.5%, and as the government continues to battle the deficit we should be prepared for future decisions like this. As the recent LaingBuisson market report concluded, we needed this ‘like a hole in the head’.
I know that most of you know these things – we have all known them for a while. I’m not reminding you of them just to depress you, but to reinforce the point that unless we do something significant in this market, we will drift on, in a state of slow decline until we meet a cliff edge.
But it doesn’t have to be this way, it really doesn’t. It WILL be if we don’t change what we are doing, but it doesn’t have to be, we CAN change things.
I strongly believe that the solutions to deliver a brighter future are within our grasp. Together we have the expertise, vision and leadership to overcome the challenges we are facing. We can build a better and brighter future for the UK health system.
And this is what is at stake.
The UK health system is now under enormous strain. The NHS is facing a funding gap of £30-40bn by 2020. The government has promised another £8bn in funding assuming that the NHS can deliver tens of billions in efficiency savings, but this looks like a forlorn hope. Already it is clear that this extra funding will not be enough. The system is already creaking, with hospitals routinely in deficit, waiting lists growing, and demand continuously rising.
Some think-tanks are already starting to talk about asking patients to make a financial contribution for heat, light and food during their hospital stay. This can’t be the right answer, can it?
Part of the solution HAS to be more people and organisations taking responsibility for funding part of their healthcare. This could be an even greater source of extra funding into healthcare and take some more pressure of the NHS. And this could run to £billions of extra funding.
We asked LaingBuisson in 2014 to estimate how the market could grow if we in the industry could deliver new ways of working, and demonstrating greater quality in the private sector along with better value for money. They estimated we could bring in £2.2bn of extra funding by 2020, which would be a significant help to the NHS.
We could all do with this happening, right? It will mean the many consultants who told the CMA that they wanted to do more private work will have full patient lists. It will mean that hospitals can use their spare capacity and will be able to spread their costs over more patients to give better value. It will mean the same for insurers. And it will mean a better deal for patients who use the NHS.
Great! But it will only happen if we change how we work today.
Without doubt, THE number one thing we need to tackle is affordability. Year after year healthcare inflation has gone up faster than general inflation and disposable income. This is not the route to long-term sustainability, especially in that all-important personal market. We speak to many people every day who call us and would dearly love to buy health insurance but then don’t because it is too expensive.
This is a real test for us: can the private healthcare sector deliver value for money healthcare? Only when we can demonstrate this, will we be taken seriously as a significant part of this country’s health system.
So, it follows that my first and primary focus is affordability and stemming rising costs.
I believe that we can do this.
As funders in this system, we recognise we have a specific role to play to contain costs. Our customers have told us so loud and clear – 78% say that they expect us to manage the costs of their care on their behalf and to negotiate the best prices with hospitals and consultants.
We have also been very demanding of ourselves to restructure our business and streamline our operation. Last year we delivered cost savings of £30m and we are going after more this year, by streamlining some of our processes.
We are listening to customer feedback and launching a number of innovative healthcare products and services – for example Bupa Fundamental which offers individual customers a more affordable option.
Equally, we know that we need to engage constructively in partnership with others across the sector to meet this cost challenge. As a result, we have been clear that we’re looking to work with our hospital providers to deliver better value for our customers, seeking reductions of 15% or more from the leading hospital providers.
Our long term agreement with Spire hospitals is one example of how together we can find a better way forward, making the patient benefits go further, adding value for our customers and demonstrating the benefits of private healthcare.
There really is no alternative if we are to survive. Some may be less willing to collaborate but we will continue to push hard for better value for our customers.
But lower costs on their own are not enough we also need to clearly demonstrate better quality and service.
Every day thousands of skilful experienced consultants and therapists deliver great care and outcomes to customers who have health insurance. But we do not show this. In fact we are unable to clearly demonstrate this. Furthermore there are many aspects to our customers’ experience that could be a lot better.
This means that in a world that moved on some time ago, we are still trading off the 1980s value proposition of fast access to treatment and care by an experienced consultant. Now don’t get me wrong, these are still a good feature of health insurance, but the world has moved on significantly and we need to catch up.
Or we risk becoming an irrelevance: A Yellow Pages in the age of Google.
Imagine a world where our patients can book their appointments online, get seen quickly, judge the quality of their hospital with some comparable metrics, and not have to worry about any unforeseen payments. It’s there today – it’s called the NHS (or in parts at least)!
We have to do better than this to give people a reason to pay extra for their healthcare on top of what they pay for the NHS....and we have some catching up to do.
We need to objectively and comparably demonstrate the quality of care and outcomes that we can deliver in the private sector. One of the best things to come out of the CMA enquiry into the sector – which did not paint a good picture by the way – was the creation of the Private Healthcare Information Network. This needs to become established quickly and start to collect and report outcome data soon. We need to push it to go as far as it can as a sector – in the longer term we need PHIN on steroids so that we can demonstrate world-class levels of quality to customers in the UK and overseas.
I can’t exaggerate the importance of this in changing our proposition to customers, so that it becomes about accessing the best quality healthcare for you and your family, something which everyone will want.
We need easy online booking for appointments with doctors and therapists so that customers can do this when and where they want and don’t have to spend ages calling around on the phone. This is something we are working with our providers to deliver.
We need to get away from the nasty surprises that can often give a poor experience to a customer, like unexpected anaesthetic shortfalls which they have had no ability to avoid.
There are lots more examples like this. I don’t think it’s an exaggeration to say that we’re one of the last sectors to fully understand and embrace the potential of putting the customer at the heart of our business.
Working together to drive better value and a better experience for customers and a better deal for the industry must be our blueprint for growth.
We need to be able to tell some new compelling stories about privately funded healthcare in the UK. A story of the quality of care we deliver to our patients. A story of how it is so easy and straight-forward. A story of how it can be for the many not just the few. And the vital contribution the sector makes to the UK healthcare system and the economy.
We need to find a way forward where we can support the NHS more in meeting the UK’s healthcare needs and challenges. We are a vital part of the whole UK healthcare system.
This is a particularly important case for us to make so that Government not only understands the value of our industry, but thinks twice about the potential impact of decisions like increases to IPT on the UK healthcare system and economy.
We need to make a compelling case as to why we can offer part of the solution to the current NHS crisis if more and not fewer people are encouraged to take up health insurance.
We can only really do this by working together, both insurers and hospital providers, and consultants and therapists. To deliver better value, a better customer experience, and a better deal for the sector overall.
Nothing will change unless WE change it. We need to get on the case now.