Bupa warns over ‘lack of competition’

As the cost of paying for its customers’ private treatment continues to rise, it has warned that the health insurance industry faces a looming “affordability crunch” in the medium-term.

It is negotiating hard with hospitals to try to keep prices down, but the rising costs, coupled with the weak economic environment contributed to a 5 per cent fall in customer numbers at its UK insurance division to 2.7m in the six months to June 30.

Bupa’s Europe and North America business saw profits fall 22 per cent to £35m in the half-year as the higher fees pushed up the cost of claims.

The Competition Commission is currently investigating the £5bn private healthcare sector, which it said is dominated by five players, with some parts of the country only having one private hospital. Bupa has called for “structural changes” to the market.

Meanwhile its healthcare division, which has nearly 18,000 residents in 300 homes, saw profits squeezed as local authority fees failed to increase at the rate of inflation, echoing the funding squeeze which led to the demise of Southern Cross.

But overall revenues rose 5 per cent to £4.1 billion, with underlying profits up 3 per cent to £254.7m and driven by strong growth in international markets such as Hong Kong.