Most people in the street, Ken Hesketh acknowledges, won’t have heard of Benenden Healthcare Society, the mutual organisation which he has been chief executive of since 2008.
In fact, there are many people even in the world of private healthcare and health insurance – particularly brokers – who won’t have heard of it.
But before I find out why that is – it seems strange for an organisation with as many as 930,000 members – I need to find out a bit more about what Benenden actually is.
Is it an insurer? A hospital group? A cash plan provider? A trade union? The answer, it seems, is none – or all – of the above. Confused?
In fact, looking back at the history of Benenden, the answer is a bit more simple than at first it might seem.
The organisation came into existence as a hospital, founded in Kent in 1907 before the days of the NHS, for members of trade unions and friendly societies. Since then the organisation has grown to offer discretionary medical care to individuals who meet certain eligibility criteria, as well as, more recently, cash plans and over 50s life cover.
THE BENENDEN PROPOSITION
The basic proposition behind Benenden is that for a membership fee of £1.50 – soon to be £1.80 – per week, members get access to medical treatment at its own hospital in Kent and 18 private hospitals around the country. Sounds like a cheap form of private medical insurance (PMI)? In a way it is, but the key difference is that treatment is given on a ‘discretionary’ basis – in other words there is no ‘contract’ as such between the organisation and members and Benenden can decline to pay for care and treatment, for example on the grounds of cost. It also asks that members “use their judgement” and consider how urgent their case is before contacting the Society to ask it to pay for treatment.
This clearly isn’t medical insurance as most readers of this magazine know it. But while Hesketh acknowledges that there are other limitations to the cover that means it falls short of full blown PMI too, he is keen to stress that members get generous levels of cover for such a small amount of money. In fact, when it comes to consultation and diagnosis “the door is just about as wide as you can make it” he says, although it “narrows a bit” when it comes to treatment – cardiac surgery, for example, is not covered.
“If you look at the kinds of services that Benenden provides either in its hospital or funds in these other hospitals you would probably find the range of clinical care that goes on in most private hospitals,” Hesketh says.
Its own hospital in Kent – which Hesketh ran as hospital director when he first joined Benenden in 2002 – is about to benefit from significant investment and treats not just Benenden members but carries out some NHS and self-pay private work too.
In addition to the hospital benefits, Benenden – though a subsidiary which is underwritten by Engage Mutual – offers traditional healthcare cash plans, including one for people over the age of 66, and an over 50s life cover plan, also underwritten by Engage.
Historically, though, Benenden’s key differentiator has been the fact that – until recently – membership has been limited to current or former public sector workers as well as members of credit unions, co operatives and charities. That all changed this year, though, when members voted to open eligibility to anyone between the ages of 16 and 65 who is resident in the UK. It was a challenge, Hesketh concedes, to persuade members to pass the motion, given the ‘political’ connotations behind doing so. So why the change of heart?
“The original rationale – that the Society ought to be there for current or previous public sector workers – was becoming very out-of-date and confused really so the members this year agreed to change all that,” Hesketh says. And, leaving political sensitivities to one side, there were also very practical considerations that members became aware of, he continues.
“I think they were worried about the effect of just staying as we were, because what that would have meant is that we would spend more and more marketing in a very complex world of tightly defined groups of members,” he explains.
Instead, by opening up membership criteria, he estimates that within the next five years Benenden will have one million members – if not more.
“I think that’s probably quite conservative,” he says. “What we offer is very attractive on a number of counts and I think when it is displayed in the open market there will be a lot of interest in it.”
BROKERS AND EMPLOYERS
In addition to the individual/consumer market, Benenden plans to achieve growth through employers too, although Hesketh concedes that it has struggled in the past to make its traditional medical benefit proposition appeal to businesses. “Until now we have offered companies what you would call corporate membership of our base product, but not surprisingly there’s not a lot of take-up of that because it’s not contractual, it doesn’t have the certainty that they’re looking for,” he says. In other words, employers are nervous about promoting a medical benefits scheme to staff which does not have the certainty that a traditional, full blown PMI scheme provides.
“We’re trying to create a contractual product which gets around that problem, which doesn’t have that weakness in it, where we can say with certainty to an employer that ‘if you buy this product for your employees that is what you will get and if you feel we are defaulting on that then you can take us to the Financial Ombudsman and you could also take us to court as well’.”
Key to tapping into the market, of course, will be intermediaries but that, again, is a channel that Benenden has not worked with extensively in the past, for a number of reasons, not least the fact that brokers would find the proposition so unusual, Hesketh suggests.
“I’m not sure how the average broker would see our traditional offering,” he says. “But we want to add on a widening range of insurance-type products, so operating, marketing and promoting ourselves in the world of brokers will be much more important.”
Certainly, Hesketh – himself a former chief executive of a NHS trust – feels that mutuals will have an opportunity to play an increasingly important role in the delivery and funding of healthcare in the UK in the years to come. There is no doubt there is a need for more solutions, he says. “Everybody knows we’re rapidly moving into a very aged population which tends to make much bigger demands on healthcare,” he says. “We’ve got technology carrying on regardless and the information industry is making sure that we all know what’s available and people are much more clued up in terms of what they can access. All this means that demand is going through the roof.”
Hesketh points to the resultant “widening gap” between what can be provided in the public sector and what is being demanded and believes that “clearly” something has to happen to redress that balance. While traditional PMI may have a place, the issue of affordability means that other models will need to be considered too.
“It’s a drop in the ocean but we generate £80m with 930,000 members and schemes of this kind, if you multiply them up, could make a big difference,” he says. “Not everybody will be in a position to afford PMI, that’s clear.”
Funding models in other countries have shown that the mutual model can work when it comes to healthcare, he continues. “It does in many European countries,” he says, adding that it “wouldn’t surprise” him if the concept was discussed by the main UK political party agenda within the next decade.
Hesketh, however, will not be at Benenden if that comes to pass, since he is due to retire from the position of chief executive in spring next year. When he does, he will have spent over a decade at the organisation and, during that time, he will have overseen perhaps one of the most significant changes during its long history. And even though he is moving on, he is confident that the change will make Benenden a much more recognisable name among members of the public, employers – and perhaps even brokers.
“Most people have not heard of Benenden and that’s because we marketed in a very low profile way and we marketed in that traditional, largely public sector, market,” he says. “So most people in the street won’t at the moment have heard of Benenden but we obviously intend to change that.”
Ken Hesketh has been chief executive of Benenden Healthcare Society Limited since December 2008, having previously been hospital director at Benenden Hospital since July 2002. He joined Benenden Healthcare following a varied career in healthcare management in both the public and private sectors. His career began as a hospital personnel officer at the Leeds General Infirmary before he moved into general management, becoming director of hospital management for International Hospitals Group and subsequently chief executive of the Medway NHS Trust.