When Dr Natalie-Jane Macdonald, managing director of Bupa Health & Wellbeing, listens to calls from new and existing customers, she gains an insight into their perception of her biggest competitor.
“Health insurance is not a frivolous purchase and from existing customers, especially older ones, there is a real nervousness about going into the NHS,” she says. “Despite the economic pressures on people and businesses, we are seeing higher degrees of retention and lower lapses than we would have thought. New customers are saying that they no longer feel confident about relying on the NHS.”
Whether or not this perception is justified, its source is clearly identifiable. For weeks now, the debate about the future of the NHS has been played out in the national media, with the Government’s insistence on the need for radical reform pitted against clinicians’ warnings of creeping privatisation and system-wide meltdown.
“There is no day that goes by without something in the newspaper making the NHS look like it is really struggling under pressure and I think people are really worried about the approach that the Government is taking to give doctors a lot more decisions and power,” reports Peter Lurie of North London intermediary Proactive Medical & Life.
The NHS Confederation, which represents NHS organisations, has warned in the past of a “perception gap” between the experience of patients and the views of the public. Patients repeatedly report high levels of satisfaction with the NHS and the care they have received. The latest survey of inpatients carried out by the regulator the Care Quality Commission found that 44% rated their care as “excellent” and 35% “very good”. Just 2% rated it poor.
Nevertheless, private medical insurance (PMI) providers believe that the changes in the NHS landscape, and the concern this has generated, represent an opportunity to promote their offering to the public.
Predictions: The NHS
Vastly reduced waiting times remain the major legacy of the Labour government’s investment in the NHS and while the coalition government has pledged to move the service away from “process” targets, any sign of extended waits will undoubtedly be seized upon as evidence of the folly of its reforms. Parliament’s Health Select Committee has already warned that the NHS is facing an “unprecedented” challenge in making billions of pounds of savings while undergoing wide scale restructuring.
Mike O Brien, head of intermediary sales at PMI provider Exeter Family Friendly, believes that waiting lists are “likely” to rise, “certainly in areas or treatments that are deemed not to be life threatening or potentially serious” and Bupa’s Dr Macdonald reports that we are already seeing “a bit of unwinding” of progress on waiting times, as well as “restricted access to care.”
She believes that the NHS is “patchy”, leaving patients “unsure whether or not some treatments might be restricted,” and argues that this will result in an eventual upturn in the private market.
Tal Gilbert, head of research and development at PruHealth, the PMI provider, expects to see more local variation as a result of the move to GP commissioning consortia (see page 33).
“As the NHS changes, it will become more important that people are able to amend their cover based on local services,” he says. “Because the impact of the changes is quite unpredictable everyone is going to have to be quite flexible and adaptable and it is those that are listening to customers and watching what is going on in the market and responding quickly that will succeed.”
Charlie MacEwan, corporate communications director at WPA, another PMI provider, believes the future for the industry lies in helping the public to supplement the NHS with private funding. He gives the example of the Netherlands, where 93% of people supplement national healthcare through top-up insurance.
WPA has developed policies around this strategy for some time, finding ways to fit around the changing NHS offering. For example, it will fund biological therapies for cancer if they are “not readily available on the NHS”, a clause that MacEwan believes could be extended to other treatments.
“Regional variation will rely on a partnership with the medical community, so that what we are offering customers adds value and is affordable and is relevant and contemporary,” he concludes.
Proactive Medical & Life’s Lurie believes that, eventually, private contributions towards outpatient care could be required and argues that cash plans should be more heavily promoted to the public to cover the cost of basic healthcare while the NHS covers the cost of acute care.
Predictions: Private providers
Much of the ideological debate over the future of the NHS has focused on the Government’s determination to build on Labour’s policy of opening up the NHS to “any willing provider.” The cap on the amount of income that NHS trusts can earn from undertaking private work is also set to be abolished. Insurers are divided over what this might mean for their customers.
Exeter Family Friendly’s O’Brien believes that the NHS may “farm out” the treatment of non-life threatening conditions to private hospitals and focus on acute care, with implications for the PMI proposition.
“If private treatment and beds are increasingly used by NHS patients, it will certainly detract from the ‘sheen’ of private treatment and force policyholders to think about the relative value of their PMI policy,” he says.
Bupa’s Dr Macdonald is more cautious about this development. She does not believe that access to private hospitals under the NHS choice agenda has had an adverse effect on customer satisfaction. She is also unwilling to overstate the impact of increased potential for NHS hospitals to open private wings.
“There is a real difference in the experience of being treated in a private hospital and being treated in an NHS private wing,” she says. “The clinical care is very high and big hospitals have a lot of back-up but, of course, patients largely measure how they feel about how they are treated, how they are spoken to and whether they are treated as individuals. We see much lower satisfaction levels in the NHS because it [private work] is not their primary service. Private hospitals focus on excellent customer care.”
Predictions: PMI market
While the NHS has been subject to 15 major restructures in the past 30 years, the PMI market has not grown or contracted in line with its fortunes. However, the Association of Medical Insurance Intermediaries (AMII) believes that it should now be prepared for a rising demand for advice.
“Because of the demand, IFAs need to be geared up so insurers might need to make their products easier to understand,” says Debbie Kleiner Gaines, managing director of Bristol-based specialist intermediary Best Health UK. “We need simplified and modular based products so people can access PMI according to budgets and needs.”
She also believes that the cost of PMI will rise unless the market is extended to include younger, healthier policyholders.
“The increase in demand without an increasing critical mass of those insured will drive premiums up so we need to address the inherent issues of an aging population and escalating claims and costs and educate the uninsured to drive take-up in the virgin population,” she says. “The industry probably needs to be looking at designing entry level plans that are targeted at a younger age group.”
The challenge, perhaps, will lie in balancing this demand for simplicity with the need for flexibility if products are to best complement an NHS characterised by uncertainty and diversity.
“Let’s remember that while it does have its limitations and problems, the NHS is something that most people in the UK are very proud of, although at times they perhaps take it for granted and don’t understand the demands placed on it,” says Exeter Family Friendly’s O’Brien. “We should try and find a way where as many people as possible are able to buy flexible PMI propositions that are built around the service that is there, but add to their comfort and reassurance in knowing they would have speedy access to the type of treatment that is important to them.”
Your guide to NHS reforms
ARE WAITING TIMES GOING TO INCREASE?
The Government has pledged to remove “centrally driven process targets that get in the way of patient care”. The Department of Health no longer manages the performance of the NHS in ensuring that all patients receive consultant-led treatment within 18 weeks of GP referral. However, patients have a right to receive this under the NHS Constitution and the chief executive of the NHS has emphasised to hospitals that this remains in place.
The proportion of patients that waited more than 18 weeks rose between June and September 2010 but analysts at The King’s Fund point out that it is too early to tell whether this is the start of a trend, particularly as there may be a seasonal effect.
Latest statistics show that on average, patients are waiting 7.9 weeks to be admitted to hospital and 4.1 weeks for outpatient care.
Cancer targets, such as a maximum 31 day wait between diagnosis and treatment, remain in place.
WILL FRONT-LINE SERVICES BE AFFECTED BY THE SAVINGS DRIVE?
Although the Government has stressed that savings (£15-20bn by 2014) should be made without hitting patient care, Nigel Edwards of the NHS Confederation, which represents NHS managers, has warned that some savings will have to come from clinical care. There are anecdotal reports from surgeons that some procedures deemed to be of “limited clinical value” such as varicose vein surgery are not being funded. However, many believe that stopping the NHS from funding procedures of low clinical value, including those with cosmetic purposes and overuse of diagnostic facilities and inappropriate referrals, is a necessary reform.
WHAT IS THE RESTRUCTURING?
The Government plans to abolish the management bodies that currently control most of the NHS budget, primary care trusts (PCTs) and strategic health authorities (SHAs), replacing them with new bodies called commissioning consortia headed up by GPs responsible for more than 80% of the budget. While the Government argues that this will result in more locally-responsive services, there are concerns that GPs lack the skills to take on this role and that it will prove a distraction from making the savings described above and delivering the best clinical care.
IS THE NHS BEING PRIVATISED?
The private sector has been involved in delivering NHS services for many years, with the previous Labour government increasing use of the private sector to add capacity to the NHS in its bid to reduce waiting times. The policy of allowing patients to choose from “any willing provider” was established by Labour and is now being championed by the Government which is committed to “creating a fairer playing field” between NHS and private providers. This may result in private hospital groups undertaking more work in the NHS although the Government has said that the NHS should not be choosing providers on the basis of price.