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Doctors and insurers in talks as both fear for future of private healthcare market

July 2007 News

Senior representatives from private medical insurance (PMI) providers have met with doctors’ leaders in an effort to find ways of making healthcare more affordable.

The escalating cost of PMI has been blamed as the key reason for the poor performance of both the corporate and personal markets over recent years. With medical inflation estimated to be over 10%, a blame game has emerged with PMI providers accusing hospital consultants of charging too much and clinicians in turn pointing the finger at insurers for failing to retain subscribers, particularly the “fit insured” population.

But at a meeting at the Medical Society in London last month, senior clinicians sat down with senior figures from the PMI industry in a bid to find some common ground, as both parties fear a slowdown in the private healthcare market.

The talks, hosted by the London Consultants Association and the Federation of Independent Practitioners Organisations (FIPO) and attended by representatives from AXA PPP healthcare, BUPA Insurance, Norwich Union Healthcare, Standard Life Healthcare and WPA, as well as Medisure, the medical benefits and health risk management provider, come following heated disputes over insurance-led initiatives such as managed care and direct referral.

Doctors claim that the emergence of such initiatives, and related PMI products which restrict the choice of treating consultant and/or hospital, interfere with their clinical autonomy.

Insurers say that initiatives like managed care, direct referral and hospital/consultant networks are a credible – and potentially essential – way of keeping PMI affordable.

The meeting last month aimed to find some common ground on the issue, while also exploring other means of funding private healthcare including co-payments, which advocates claim do not restrict patient/consumer choice and do not interfere with doctors’ autonomy.

FIPO chairman Geoffrey Glazer, who chaired the meeting, said that the majority of medical insurers agree that changes are “inevitable” if the PMI industry is to be sustainable in the longer term. But he warned both insurers and doctors need to discuss new ways of funding private healthcare that do not interfere with consultants’ clinical freedom.

Senior figures from AXA PPP healthcare and BUPA Insurance – Britain’s two largest PMI providers – both said networks of hospitals are a potential way of making PMI more affordable.

But Dr Natalie-Jane Macdonald, medical director of BUPA Insurance, said that the provider’s controversial ophthalmic network was just one of its responses to customers’ price sensitivities. BUPA’s “broader market response” includes the development of budget products, no claims discounts products and “healthy lifestyle” incentives, she said.

Dr Simon Peck, head of provider audit at AXA PPP, meanwhile, said that since the provider introduced the first acute hospital network in 1999, it has managed to achieve cost savings, control of excess capacity and “quality”.

Norwich Union Healthcare, on the other hand, has no immediate plans for “managed care”, according to director of customer services Rob Brown. However, Brown said that more affordable PMI might be achieved through implementing “evidence-based methodology” and “direct referrals” as well as improving “administrative efficiencies”.

Julian Stainton, chief executive of WPA, said that he does not support the concept of managed care, networks, or any other attempt to “control clinical practice” – a sentiment that was echoed by John Picken, chief executive of Medisure. In Stainton’s opinion, co-payments could provide a financially viable way of managing the cost of private healthcare in the future.

WPA promotes a concept of “Shared Responsibility” whereby each customer shares the cost of medical treatment with the insurer until his or her contribution reaches an agreed maximum annual limit – after which the insurer picks up the bill. According to Stainton, patients use resources more responsibly when they remain involved and when they have a direct financial commitment to their own care.

It is clear, however, that it is the continued roll out of hospital and consultant networks that continues to cause tensions across the medical profession, according to Richard Packard, consultant ophthalmologist and chairman of the Association of Anaesthetists.

“Consultants are at odds with networks and have lost trust in insurers,” Packard said. “There should be a time of reflection: what is the best way to give patients the high quality care that they need, in a way that is supported by consultants, in a way that sustains PMI?”

Glazer added: “We, as consultants, welcome the opportunity to work with insurers to achieve better value for money, but maintain that cost containment must not interfere with clinical decision making and the primacy of clinical advice.”

Easier said than done?

While last month’s meeting with insurers was one step towards the medical profession and the insurance industry working more closely together to ensure the affordability of PMI, Britain’s largest doctors’ union remains sceptical about the motives of the majority of insurers.

Attendees at the annual British Medical Association’s (BMA) Consultants Conference last month voted to resist moves by medical insurance companies to interfere in patient referrals because they believe it denies patients proper choice and is harmful to clinical governance.

The BMA conference voted in favour of a motion that said doctors are “concerned by the activity of certain medical insurance companies, which are attempting to interfere with the traditional GP/consultant referral, and calls upon both GPs and consultants to resist such moves, as it will prevent proper patient choice and is detrimental to good clinical governance”.

Dr Derek Machin, who proposed the motion, said the traditional referral process where a patient speaks to their GP and is then referred to a consultant is at risk because some insurers want referrals to come through certain private hospitals. He said this is cutting out the consultant and is an “exercise in saving money”.