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PMI market 'to lose 650,000 by 2012'

14 May 2009 Breaking News

Private medical insurance (PMI) must differentiate from the NHS or become a "luxury ghetto product".

This uncompromising warning from Standard Life Healthcare's commercial director Laurent Pochat-Cottilloux echoed concerns expressed by both intermediaries and private hospital providers at Laing and Buisson's annual PMI conference.

The economic downturn, rising costs and the growth in NHS patients accessing private hospitals were all cited as threats to the survival of the industry, compounded by a failure by providers to adequately market their offering.

"The economic storm is battering an already weak PMI market that is not in its infancy," said Pochat-Cottilloux, who estimated that the market would lose 650,000 lives by 2012, followed by a "partial rebound."

Beyond 2012 he envisaged three possible scenarios: government rescue of private healthcare (precipitated by the impossibility of the NHS funding all care), a gentle decline (if rising costs do not reach a "tipping point" for either the NHS or PMI by 2012) or the evolution of PMI as a "luxury ghetto product."

He said gentle decline could be managed by reconfiguring PMI as a "personal health plan" combining many elements including prevention, self-pay and NHS use and said the third option would be less likely if the industry succeeded in better promoting its value.  

"I have never read in advertising that you are 12 times less likely to get a hospital-acquired infection in a private hospital," said Pochat-Cottilloux. "You are more likely to see a picture of a glass of water. We have been relatively coy about the benefits of our product. If we don't get better at selling its benefits PMI will have given up on any mass market aspirations it might once have had.

"As an insurer we are desperate for more data so we can demonstrate the benefits against what the NHS provides. We are struggling at the moment for lack of data."

Alistair Sclare, director of Healthcare at Groupama Insurances, challenged Pochat-Cottilloux's gloomy forecast.

"Inevitably there is likely to be some downturn in the number insured but Groupama is very heavily focussed on the SME market and we would only expect to see a downturn in our book in line with the downturn in the number of companies actually operating within UK," he said. "There might be small degree of further downturn where a certain number of companies say they cannot carry on with PMI during recession but would expect them to take it back up afterwards."

Jill Watts, chief executive of Ramsey Healthcare, which has 24 hospitals in the UK, echoed the calls for better promotion of private healthcare.

"Is is essential that we are able to see what the difference is for NHS patients and private patients," she said. "Our core business is private patients. We want to do everything we can to ensure that we grow that business in future." 

Ramsay has set up two areas of care: Premium Care for insured and self-pay patients and Essential Care for those funded by the NHS, investing £28m in facilities. Watts said the industry could learn much from the hotel and airline industries.

"We have an opportunity to work with insurers and intermediaries to promote the benefits of privately-funded healthcare," she said.

The calls for data to enable promotion of PMI's benefits coincided with the launch of a project to collect private patient data from the major providers including Nuffield Health, BMI Healthcare, Ramsay Healthcare, Spire Healthcare and HCA International.

The Hellenic Project, executed by Dr Foster Research in partnership with Independent Healthcare Advisory Services and NHS Partners Network, will bring together patient-level data including mortality rates, day case rates, MRSA and C.diff rates and surgical site infections for knee and hip operations.

Speaking to Health Insurance prior to the launch, Spire's Dr Jean-Jacques Dr Gorter, vice-chairman of the NHS Partners Network, said the project would build on Spire's existing commitment to publishing hospital-level data.

"Private hospital groups came together and said it's important for us to have valid, accurate, reliable data that gives confidence to consumers and purchasers around clinical quality," he said. "To do that it needs to be administered by an independent third party and the data that is used to derive indicators must be at patient level. At the moment readmissions are just a number; what we need is to provide the third party with individual patient episodes and they will derive the number and perform a risk adjustment."

Steve Clements, a principal at Mercer, the employee benefits consultancy, welcomed the venture.

"Unless that information is available intermediaries are left to broke the market and concentrate on cost," he warned.

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