Bupa sees decline in health insurance customers

The UK’s leading health insurer said customer numbers fell to 2.7 million in the first half of 2012, in line with a market that has been in decline since 2008, when the banking crisis first hit consumer confidence.

Revenues were flat and profits fell, reflecting continued pressure on healthcare costs and the challenging economic climate.

The company, which recently appointed Evelyn Bourke as its new chief financial officer, said the UK health insurance market faces a lack of competition and escalating fees among providers, which is leading to higher healthcare costs.

Bupa’s Care Homes division, which is based in Horsforth, Leeds, reported occupancy rates of 86.8 per cent which was marginally down on last year.

The care homes division, which employs 350 people in Horsforth and runs 20 homes across Yorkshire, said revenues remained steady but profits fell.

Bupa’s chief executive Stuart Fletcher said: “Bupa has delivered a satisfactory set of results despite challenging conditions. In the UK, the health insurance market is approaching an affordability crunch over the medium term.

“We are taking steps on behalf of customers to tackle the rising cost of care and improve competition and efficiency among providers.”

Bupa, which has treatment centres in Hull, Leeds, Sheffield and York, said it is taking steps to ensure high quality healthcare is accessible to more people.

The company said it is helping customers by challenging escalating fees at private hospital groups.

It is reviewing consultant and hospital reimbursement rates for surgical procedures and has launched revised pricing across a range of procedures including orthopaedics, ophthalmology and urology.

It has also expanded its specialist support teams to help customers cope with oral surgery, obstetric and gynaecological conditions, cancer, heart conditions, mental health issues and back and knee problems.

The group recently launched a TV advertising campaign highlighting that its cancer cover has no financial or time limits.

The company said it is investing millions of pounds in expanding its dental business with the aim of becoming one of the largest private dental chains in the UK by 2015.

It currently treats 13,000 people in dental centres across the country and insures over 130,000 customers.

Bupa said that pressure on public funding means that older people are being looked after in their own homes for longer, resulting in fewer local authority referrals to care homes. In the UK, it has almost 18,000 residents in 300 homes, 70 per cent of whom are funded wholly or in part by local authorities and the NHS.

It said the Government’s austerity programme is having an impact on local authority fee rates, which are not increasing at the rate of inflation.

Bupa said that while it welcomes many of the proposals put forward in the Government’s White Paper and Draft Bill, it fails to address the fundamental question of how to fund a social care system that has been “materially underfunded” for many years.

“We were disappointed by the Government’s progress report on funding because it failed to acknowledge the current funding crisis and said that no decision on funding will be made until the next spending review in late 2013 or early 2014,” said Mr Fletcher.

“Bupa highlighted that if local authorities do not pay fairer fees, there will be a lack of investment in the sector which may lead to a contraction in the overall care homes market and a potential bed-blocking crisis for the NHS.”

Overall revenues rose five per cent to £4.1bn, with underlying profits up three per cent to £254.7m and driven by strong growth in international markets.

The Competition Commission is currently investigating the £5bn private healthcare sector, which it said is dominated by five play- ers.

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