Healthy pay rise for bosses

Medical fund bigwigs take home record salaries

HEALTH fund bigwigs have pocketed pay rises of as much as 14 per cent after slugging customers with soaring insurance premiums.

While cash-strapped consumers are paying hundreds of dollars a year just to cover the management costs of health funds, industry bosses are reaping record salaries.

Profits at Medibank Private have nearly doubled since the federal government privatised it in 2014 – rocketing to a record $450 million this year as the insurer jacked up premiums by 4.6 per cent.

New chief executive Craig Drummond, a former banker, earned a $2.8 million pay package during 2016-17, his first year in the job. It included $1.5 million in salary and superannuation plus a $597,701 bonus.

On July 1 Mr Drummond pocketed a 2.3 per cent pay rise and other executives received an average pay rise of 3.6 per cent – double the rate of inflation.

The latest pay hikes come just 12 months after most executives at Medibank, excluding the chief executive, received a whopping 14.7 per cent pay rise.

At rival NIB, the managing director’s remuneration has soared 51 per cent in five years. Boss Mark Fitzgibbon earned $3.3 million this year — $1 million more than last year, mainly due to higher payment of “performance rights’’.

NIB’s insurer’s net profits jumped 29 per cent to $120 million this year, and customer premiums rose 4.5 per cent.

Health insurance giant BUPA, headquartered in London, keeps the pay of its Australian chief executive Richard Bowden secret. But former global chief Stuart Fletcher earned $2.1 million before leaving last year while his replacement Evelyn Bourke, former chief financial officer, earned $3 million.

BUPA’s profits from Australia and New Zealand soared 9 per cent to $559 million in 2016, on the back of a 5.7 per cent increase in premiums last year.

Not-for-profit insurer HCF made a $177.5 million profit in 2016 after raising premiums by 5.4 per cent last year. It paid $7 million to its 24 “key management personnel”.

Health fund customers are paying hundreds a year to cover funds’ management expenses, data from the Australian Prudential Regulation Authority shows. The expenses – which cover staffing and office costs – average $839 per policy at Grand United Corporate Health Ltd, $680 at the Reserve Bank Health Society, and $624 at the Railway and Transport Health Fund. Consumers spend an average of $276 a year to cover management costs at BUPA, $299 at HBF, $284 at HCF and $265 at Medibank Private.

Australian Medical Association president Michael Gannon said it was wrong for health funds to boost profits by “reducing services to patients’’.