Bupa catches a cold
Health insurance giant faces client backlash
THE biggest health insurer in Australia, Bupa, has admitted the controversial changes it made to paying for out-ofpocket medical expenses prompted customers to dump the fund.
The concession from the health insurance and agedcare titan was made as it handed down a flat profit update, which revealed low wage growth and falling demand for health insurance among young people had also weighed on the fund.
It comes as key rival Medibank Private posted its first increase in market share in a decade and smaller player Nib reported strong growth.
Bupa, a British company, told doctors last year that its policyholders would only qualify for gap cover if they were treated at a Bupa-contracted hospital or day-stay facility. Gap cover pays for out-ofpocket expenses incurred by patients for medical treatment received in hospitals.
The change sparked a backlash from customers and a scathing slapdown from the Australian Medical Association, which warned Bupa was trying to introduce “US-style managed care” – where an insurer would determine where a patient was treated.
It also prompted federal Health Minister Greg Hunt to order the Private Health Insurance Ombudsman to investigate the fund.
Bupa, which argues public hospitals bill health fund members for treatments they could have received without charge, Michael Hill Jeweller chief executive Phil Taylor on his company’s year of “recalibration and repositioning” backtracked on most of the changes earlier this year.
The UK-listed group’s financial report for the six months to June says it made a “number of changes” to its policy in Australia “with the aim of improving product transparency and reducing out-ofpocket costs for customers”.
“However, a negative response to these changes contributed to higher-thanexpected customer churn in the second quarter,” the report, released this month, says.
Medibank last week reported its first growth in market share in a decade, up a slim 0.05 percentage points to 26.9 per cent in the second half of the reporting period.
Nib revealed it had grown its customer base by 3 per cent in its flagship health insurance division during the year to June.