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Where can I get independent advice on private healthcare?

If you're being treated in the NHS, there are many places where you can seek advice on treatment and the services provided in the NHS. The Patients' Association is a good example of  an organisation that can assist you and that represents the views of NHS patients.

But when you're "going private", using your private medical insurance or paying for treatment in a private hospital, it's a little more difficult. The Private Patients' Forum (PPF) is a relatively new organisation that aims to represents the interests of the private patient. The PPF Council includes people with a special interest in private healthcare who are prepared to give their time on behalf of private patients. (PPF welcomes applications from individuals with direct experience as patients in the private healthcare sector to join the Council.)

The  PPF can point you in the right direction for help in negotiating with any individual or organisation in private healthcare with whom you may have a dispute. The Private Patients’ Forum, itself,  cannot negotiate on behalf of a patient in a dispute with a medical insurer, a medical practitioner or a healthcare provider such as a hospital or clinic

Ask a question in the Private Patients' Forum

A new discussion forum  provides the opportunity for patients and consumers to discuss issues relating to private health insurance, private hospitals and private consultants and specialists. The discussion forum is run and managed by the Private Patients' Forum and is hosted within Private Healthcare UK. (Visit the private healthcare discussion forum).

Here are some examples of the kind of topics that have been raised:

  • Is there a private healthcare ombudsman I can go to if my op goes badly?

          View response

  • How do I choose a ENT Dr for my snoring?

          View response

  • Where can I find the ACTUAL costs of private healthcare?

          View response

  • Why won't my insurers cover Diabetes?

          View response

  • What is ‘pre-existing condition’?

          View response

So if you're looking to raise an issue about your private health insurance, or want some pointers on how to access private healthcare, the Private Patients' Forum is the place to ask.

 

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Compare private surgery cost

If you're a patient without health insurance, and you don't want to wait for surgery on the NHS, you can always opt to "go private" by doing a "fixed price surgery" deal with your local hospital. So... does it pay to shop around?

In our latest report - the Private Healthcare UK Self-Pay Market Study 2015 - we found a variation of £6,000 in the cost of a private hip replacement from private hospitals in Reading and Harpenden.  The report analysed over 7,500 prices for private treatment and surgery in the UK. Nowadays, most private hospitals offer a "Fixed Price Surgery" package. If you don't have private medical insurance and you don't want to wait for the NHS, you can agree a fixed price deal with a private hospital. It will include the surgeon's fees and all hospital inpatient and theatre costs. 

The publication of the report of the Competition and Markets Authority investigation into the private healthcare sector has encouraged greater transparency in terms of pricing in private hospitals. We found it much easier to gather pricing information for this report. But what stands out from our pricing analysis is the massive variation in prices quoted by different providers.

The range of prices provided for some procedures varied by more than 100% from the lowest to the highest. For example:

  • The published price of a single area MRI scan varies across the UK from £200 to £813. 
  • The published price of cataract surgery varies across the UK from £1,850 to £3,405.
  • The published price of a hip replacement varies across the UK from £8,833 to £14,981. 

So, a patient living in Harpenden, needing a hip replacement and willing to pay for the operation, can save around £6,000 by going to the Circle Hospital in Reading rather than their local private hospital in Harpenden.

Is healthcare that much cheaper West of London? Is the quality of surgeon and hospital much lower, explaining the bargain price? Does Circle Reading "pile it high and sell it cheap" when it comes to hip replacements?

I doubt that any of these statements are true. Different companies, different approaches to pricing healthcare services..... I guess.

But it shows how for a private patient nowadays, it pays to shop around!

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What's better? Private or NHS healthcare?

A press release from Your Legal Friend, a UK personal injury and negligence firm arrived in my inbox this week. It was headlined: "Patients turn to NHS to solve private medical blunders".

The company commissioned an online survey of 400 doctors and 1,300 consumers to examine the perceptions of private versus NHS treatment. The conclusions must be taken with a pinch (or sack) of salt, given the purposes of such surveys are to promote the company that sponsored it. But they do highlight a bigger question... Will you get better treatment in the private healthcare sector?

Here's what they concluded from their survey:

  • More than half (58%) of medical professionals have treated patients whose private treatment has resulted in a poor outcome.
  • Almost half (49%) of medical professionals do not believe that patients receive better care in private facilities
  • Over three quarters (79%) of the general public said they would prefer the NHS for emergency treatment

Let's examine each of those points in turn.

More than half (58%) of medical professionals....

...have treated patients whose private treatment has resulted in a poor outcome.

Well, if you think about it, that's not a surprise. Whether you go private or NHS, there's a risk of a poor outcome. It happens. If we assume that the likelihood of a poor outcome is the same whether you are in the private or NHS sector, then any medical professional is likely to have treated patients whose private treatment has resulted in a poor outcome

Almost half (49%) of medical professionals...

...do not believe that patients receive better care in private facilities.

Again, is this a surprise? So half of the medical profession believe that you get better care going private and half believe you get better care in the NHS. But what do they mean by "care". Are they talking about better outcomes? Are they talking about better nurse/patient ratios? Are they talking about more time with the doctor? Are they talking about better doctors?

Over three quarters (79%) of the general public...

...said they would prefer the NHS for emergency treatment.

I'm surprised it's that low! What the private sector doesn't do is emergency treatment. A and E departments don't exist in the private sector. Some hospitals in major cities operate an Urgent Care Centre, such as the one at the Princess Grace Hospital in London and Casualty First at the Hospital of St John & St Elizabeth in London.

Will you get better treatment in the private healthcare sector?

One of the strengths of our NHS is that it is the most transparent healthcare systems in the world. The Department of Health and healthcare bodies across the UK collect masses of data about what goes on the NHS. Much of this is published online nowadays and is freely available to the public and to the patient who wants to gather information about an NHS hospital or a consultant from sites such as NHS Choices. Someone considering a hip or knee replacement can access the National Joint Registry (NJR) and find information about an orthopaedic surgeon's  practice including how many hip, knee, ankle, elbow or shoulder procedures they have carried out since 2011.

The private sector has been slow to follow the NHS lead. But times are changing. The private sector is becoming much more transparent in terms of pricing, activity and outcomes. The kind of pricing and activity information that is now published on Private Healthcare UK, and is available through organisations such as the Private Healthcare Information Network is just the beginning.

So, will you get better treatment in the private healthcare sector? At the moment, there's no hard and fast answer. You'll get easier and quicker access to healthcare, you'll be in a more private and more comfortable  environment, and you'll get to choose who wields the knife. But will the outcome be better? We don't know.... yet!

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What does a private hip replacement cost?

The self pay market could prove to be the key to business growth for private hospitals and private consultants in 2014.

For many self pay patients, price is a key determinant of choice...but certainly not the sole factor. Only recently (and stimulated by the Competition Commission investigation), has price transparency in the self pay market become more accepted.

So what is an uninsured patient faced with if he or she is shopping around for a private operation such as a private hip replacement?

At Intuition Communication, we have completed a detailed analysis of elective surgery prices in the UK private healthcare market. The Private Healthcare UK Self-PayMarket Study 2013 examined the prices on offer in the UK’s 200 or so private hospitals. Over 7,800 published prices were analysed.

Here is what we found when looking at the published prices for hip replacement in the UK’s private hospitals.

  • Highest price:    £14,980 (Norfolk hospital)
  • Lowest price:     £7,610 (Essex hospital)
  • Median price:    £10,340
  • Average price:   £10,385

As you can see, there’s quite an opportunity for private patients to shop around. A patient from Norfolk, could travel 100 miles from Norfolk to Essex and save over £7,000 on their hip replacement!

Why is there such a wide variation in price?

Good question!

To which there is no simple answer…

There will be regional and hospital variation due to varying costs of providing the service. Some hospitals may be incurring higher fees from private orthopaedic consultants. Some hospitals may be taking a decision to price low…or to price high in their local market.

But can the kind of price variation seen in our report be justified? Is the industry that sophisticated when it comes to pricing self pay surgery?

The reality is that there is probably not a great deal of logic. What greater price transparency will deliver (we hope) is greater awareness of comparative treatment prices both amongst private patients and within the industry. We expect more patients to be using sites such as GoPrivate and comparing prices for operations (such as a hip replacement).

It’s not just about price

Private healthcare is not all about price...it’s about relative price, quality and perception of risk. As we have seen in the NHS, there will greater transparency on outcome data and post operative infection and complications. At the moment, the private healthcare sector is dragging its feet.

Want to know more?

You can purchase a copy of the Private Healthcare UK Self-PayMarket Study 2013 for £450 from Private Healthcare UK. We talked to senior industry figures about their view of the market sector, carried out an online survey of participants in the private healthcare sector, including hospital managers, clinicians and senior decision makers, and analysed over 7,800 prices for the most common procedures.

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How can we deliver affordable private healthcare?

This week, Bupa is calling for a 15% reduction in the cost of private healthcare. Damien Marmion, MD of Bupa, says there is a danger that the sector could "flat-line and then decline if nothing is done” and that that "the industry needs to urgently rethink how it sets prices". "We are asking the sector to come together to reduce costs by at least 15% to reach a point where affordability gets better. The whole sector has failed to provide the right outcome for customers. Private healthcare needs to be much more affordable".

Is he right?

What kind of reaction will this get from the hospitals, clinics and doctors whom he is asking to reduce prices (or make cost savings) of 15%?

Finding a way of delivering affordable private healthcare is essential for the future growth of the private healthcare sector. Private healthcare is faced with similar challenges to the NHS but in some cases may be handling them less effectively.

Challenge 1: Demographics

We all know that there’s a change in demographics…which means that people are living longer, creating greater demand for healthcare and thus making more use of their private medical insurance as they get older. More use ultimately means higher monthly premiums. And as subscribers pass the 50 mark, individual purchasers and corporate purchasers baulk at the steep increase in premiums. So, not surprisingly, we are seeing a fall in the number of people covered by PMI. The number of individuals with health cover has fallen to the lowest point in the last 20 years, and there’s no sign of recovery. According to Stephen Collier of BMI Healthcare at the Future of Private Healthcare Summit, “There’s a declining PMI caseload; the ice cube is still melting”.

It’s likely that the traditional PMI model has had its day; but what will replace it? How can we deliver affordable private health insurance to an ageing population who will be subject to continued rationing of NHS services?

Challenge 2: Healthcare cost inflation

Pharmaceutical companies, medical technology companies and device manufacturers want to maximise their revenues. Healthcare doesn’t stand still. Innovative treatments and technologies appear every day but boost healthcare costs.

New and more effective treatments often cost more than existing treatments. The introduction of new cancer drugs and their related cost have contributed significantly to healthcare cost inflation. Thus the “cost per case” often goes up. In some cases, new surgical approaches have helped to reduce cost per case. The development of minimally invasive surgery has certainly been a factor in reducing length of stay and associated hospital and care costs.

New treatments appear for conditions that were previously untreatable and generate new costs of care for both NHS and the private healthcare sector. The introduction of Lucentis, a novel treatment for macular degeneration in the elderly, added around £150 million to the NHS drugs bill when it was launched, and has prompted insurers to seek ways of limiting treatment under existing insurance plans.

If healthcare cost inflation is a given, then should we just accept that increasing prices for private healthcare are inevitable?

Challenge 3: Infrastructure

The UK’s private healthcare infrastructure is based on an out of date model. Many of our private hospitals were built in the private healthcare boom of the 1980’s…but if you built a private hospital today it would (or should) look very different. A typical private hospital consists of 50 or so inpatient beds, a daycase unit and supporting services. The NHS Modernisation Agency (later to become the NHS Institute for Innovation and Improvement) believed that we should be ‘treating day surgery (rather than inpatient surgery) as the norm for elective surgery”. Day surgery with the benefit of the latest minimally invasive techniques is more efficient and it’s what patients want. The balance of private v daycase surgery in the private healthcare sector has followed the NHS trend. But in many cases day surgery in our private hospitals is being delivered in a less efficient inpatient setting.

If you built a private hospital for the 2020’s what would it look like?

Challenge 4: Service delivery model

The insurer (Bupa) v Consultant battle has been going on for some while. Damien Marmion’s comments are to some extent aimed at the consultant fraternity who want to remain immune to the market forces. For many years, consultants have remained comfortable in the knowledge that there’s a healthy private market and there’s little discussion (or knowledge) about what consultants charge. The Competition and Markets Authority inquiry drags on but its initial recommendations are a wake-up call for the UK’s private practitioners. The inquiry has driven a new world of price transparency in private healthcare. In our recent PrivateHealthcare UK Self-Pay Market Study, we were able to analyse over 7,800 published prices for the most common procedures available in private hospitals. But the private medical profession has lagged behind. Few consultants are prepared to be open about their consultation and procedure fees or publish these online in sites such as GoPrivate.com. Indeed, the Federation of Independent Practitioner Organisations (FIPO) is appealing against the CMA requirement for the publication of fee information. This may be a lost cause and they may have to face the inevitable.

The involvement of consultants in the delivery of private treatment will also need to change, if private healthcare is to become more affordable. In the NHS, some services are moving to delivery by nurse practitioners (at lower cost), under the guidance of a supervising consultant. The employment of consultant level staff by private hospitals is likely to be a next step to enable private healthcare providers to control the proportion of costs “controlled” by consultant surgeons.

“Old school” consultants may see these changes as a major threat to their autonomy. But the newer consultant coming into private practice may be more open minded and view such changes as an opportunity to grow their private practice income quickly.

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A new dawn or the end of an era for private healthcare?

Back in April 2012, the Office of Fair Trading (OFT) announced its decision to refer the market for privately funded healthcare services in the UK to the Competition Commission for further investigation.

This week the Competition Commission outlined its proposed measures to increase competition in the private healthcare market.

What were the OFT concerned about?

The OFT held the view that the private healthcare market could work better for patients, and that there were reasonable grounds for suspecting that there are features of the private healthcare market that prevent, restrict or distort competition.

These are the areas that raised concerns with the OFT:

  • A lack of easily comparable information available to patients and their GPs on the quality and costs of private healthcare services. This may mean that competition between private healthcare providers and between consultants is not as effective as it could be. In addition, the full costs of treatment may not always be transparent for private patients.

  • There are only a limited number of significant private healthcare providers and larger health insurance providers at a national level. There are pockets of particularly high concentration in some local areas where private patients have a limited choice of hospital. Given the desire for patients to be treated locally, this may mean that insurance providers will generally rely on these larger healthcare providers to provide this access to treatment for their policyholders.

  • A number of the features of the private healthcare market combine to create significant barriers to new competitors entering the market and being able to offer private patients greater choice. For example, some larger private healthcare providers can impose price rises or set other conditions if an insurer proposes to recognise a new entrant on its network. There also appear to be certain incentives given by private healthcare providers to consultants, such as loyalty payments for treating private patients at a particular facility, which could raise those barriers further.

What has the Competition Commission proposed?

In today’s announcement, the Competition Commission proposes the following measures:

  • Divestiture of nine private hospitals—HCA should sell two hospitals in central London (London Bridge and Princess Grace) and BMI should sell seven hospitals in Greater/Outer London, Home Counties and the North-West of England.

  • Buyers will need to get CC approval and to have the appropriate financial resources and expertise;

  • The Competition and Markets Authority (a newly formed organisation) will review any proposal by a private operator to enter into an agreement to operate a private patient unit (PPU) in an NHS hospitals in a local area where it faces little competition;

  • Prohibition on or restriction of clinician incentive schemes provided by private hospitals to clinicians that encourage patient referrals to their facilities or for particular treatments or tests; and

  • Requiring the collection and publication of information on the performance of private hospitals and individual consultants and the provision of consultant fee information to patients.

So HCA is faced with the sale of the London Bridge Hospital and Princess Grace Hospital. BMI may have to sell hospitals at Chelsfield Park in Orpington, and the Highfield in Rochdale, Greater Manchester. The plans would also mean disposing of: either Bishops Wood or Clementine Churchill hospitals in North- West London; Cavell or Kings Oak in Enfield, North London; Shelburne or Chiltern in Buckinghamshire; Sloane or Shirley Oaks in South London; and Saxon Clinic in Milton Keynes or Three Shires in Northampton.

What is the industry’s response?

Here is how the industry is responding to this announcement:

BMI Healthcare

Stephen Collier, of BMI, accused the commission of failing to grasp how the market for private healthcare worked. He said: "It is a fact that BMI Healthcare's shareholders have taken nothing out of the business they bought in 2006, instead reinvesting every pound earned back into our hospital operating business.

"It is therefore bizarre for the Competition Commission to claim that we are making excess profits and need to sell seven hospitals, a remedy that will have no benefit for patients because there is already sufficient competition and it won't lower costs."

HCA

Mike Neeb, chief executive and president of HCA International, said the commission was "threatening unjustified and unfair remedies". He said: "The Competition Commission's provisional recommendations are plainly wrong. The CC's own report acknowledges there are nearly 50 competitors in Greater London. Our ownership of these hospitals encourages competition and drives a higher standard of care among hospitals in the UK."

Nuffield

Nuffield Health Chief Executive, David Mobbs said: “Today’s report should act as a wake-up call for the private healthcare sector. The over-riding need for some providers to make huge profits at the expense of UK patients is clearly evident throughout the report. As the Competition Commission has recognised, as much as £190 million is being spent unnecessarily every year due to the market dominance of HCA, Spire and BMI allowing them to drive up prices.”

BUPA

Dr Damien Marmion, managing director of Bupa Health Funding, said: "This report is a decisive step forward for customers and patients. The commission is right to address the dominance of some hospital groups in areas like London.”

What is the media view?

The Guardian

Competition Commission orders two healthcare groups to sell nine hospitals

“Investigation concluded that prices were kept artificially high by dominance of largest private groups”

Financial Times

Regulator forces sale of nine UK private hospitals

Vernon Baxter, editor of Health Investor magazine: “The main winners are the insurers, who will hope to reduce fee rates off the back of this…BMI and HCA’s rivals will be keen to pick up these properties, but the proposed solution looks like a redistribution of assets, rather than a panacea for private healthcare.”

Daily Telegraph

Watchdog wants to force sale of private hospitals

“Competition Commission plans to reduce a few companies' dominance of the private health sector could see nine hospitals been forcibly sold under the watchdog's watered-down but bitterly contested plans to shake up the sector. It scales back an initial proposal that up to 20 sites should be sold but was still rejected as "unfair" and "bizarre" by the two leading private healthcare providers affected, raising the prospect of a potential legal battle in the future.”

Evening Standard

Watchdog orders sell-off of London private hospitals

“The ruling will also have implications for NHS hospitals that have private wings, such as UCLH and St Mary’s…. But the CC’s decision is a significant retreat from its original determination, made in August, that BMI, HCA and Spire Healthcare sell off up to 20 hospitals. It said the three firms made “excess profits of between £519 million and £579 million” between 2009 and 2011 and found patients were paying about £200 million a year too much for private medical insurance.”

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Can an app based solution deliver affordable private healthcare?

Given the financial and resource pressures on the NHS, the private healthcare market should be showing healthy growth. But it isn’t. Private health insurance numbers are stagnant; private hospitals are topping up occupancy with NHS patients at reduced pricing levels. Only the self-pay market is showing signs of growth.

The business and service delivery models of the private healthcare industry haven’t changed since the industry was invented. Around the industry, the world we live in is changing. But the private healthcare sector carries on today as it did in yesteryear.

Pay a visit to a private hospital today as a private patient and you’ll see why private healthcare is so expensive and beyond the pocket of many potential customers. Consultants, hospitals and insurers vying for their share of the consumer’s spend. Expensive buildings, failure to implement (non-medical) technology, little change in who delivers what service where and how (sounds like the NHS…) and a reluctance (or a lack of investment) in finding out what consumers really want and might buy.

The end result…private healthcare is restricted to the 10% of the population who can afford it (or whose employers can afford it). The other 90% rely on an NHS which is beginning to creak. How many of these potential private healthcare consumers would go for a paid for option, if they could afford it and if it were easily accessible?

So, how can the industry deliver a private healthcare solution that is affordable to a much broader segment of the population?

Time for change

Well, one company thinks it’s time for change. babylon is a new healthcare venture launched by Ali Parsa, a former investment banker and one of the founders of Circle. babylon is the first organisation of its kind to be registered with the Care Quality Commission (CQC) and receive designated body status from the NHS England.

It’s an app based system that gives subscribers low cost private healthcare. Subscribers get secure and confidential access to a panel of experienced private GPs and Consultants, as well as clinical monitoring, anywhere, at any time via their mobile device (iPhone or Android). babylon describe it as “your own health service in your pocket.”

Patients can:

  • Text a question or a picture for advice from a qualified GP or nurse.
  • Schedule a video or audio consultation on your phone, using the app.
  • Obtain immediate referral to a specialist.
  • Request delivery of a prescription  to their home, or to a nearby pharmacy.
  • Store details of the consultation, and check what has been said.
  • Schedule a test, X-ray or scan.
  • Arrange for a nurse to visit the patient.
  • Use the in-built monitor function to keep track of their health.

So what does it cost?

The service works on a subscription or a “pay as you go” basis.  For £7.99 per month you get daytime access (8am-8pm, 6 days a week) to advice from a private GP or nurse. Users also have the option to have pay-as-you-go GP consultations at £24 per session.

Need a video consultation with one of the consultants on their panel? Then that’s an additional £49 for the consultation. Need a face to face consultation or a test, x-ray or prescription? Then you pay on a price per item for the service delivered through one of babylon’s partners.

And will people buy it?

According to a Daily Mail survey of 11,019 adults (run in collaboration with over-50s group Saga), two million adults wait between two and three weeks to see a doctor and half a million suffer a delay of three or four weeks. According to a Patients Association survey, 60.5% of patients said they could not get to see a GP for at least two days, while 83.8% had to wait for more than 24 hours.

Many practices now offer same-day appointments only to those prepared to queue outside from the moment a surgery opens. It is widely accepted that pressure on general practice has led to an increase in A&E visits.

So, how many of these frustrated NHS patients would pay £72 pa to get immediate advice on a  healthcare concern from a private GP or nurse…or would pay £49 to get an instant video “opinion” from a respected UK consultant?

According to Ali Parsa, babylon’s Founder and CEO, “We want to leverage the mobile devices people already use to make access to healthcare better, simpler and more affordable for all. With easy access, world-class clinicians, comprehensive monitoring and health records all at your fingertips, babylon is simply your own virtual health service in your pocket.”

Will people see this as an affordable and credible way into private healthcare?

Only time will tell.

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Private medical insurance - transformation or death?

Guest blogger, Ian Youngman, believes that it is time for change in the private medical insurance sector and innovation is desperately needed.

The private medical insurance sector is in a critical state; numbers of policies bought by individuals and the percentage of the adult working population covered by PMI have fallen year on year for over a decade.

Many insurers have exited the business. Numbers are actually even worse when you take out of the individual numbers those bought for small businesses. Finally, the PMI industry has realised it is in crisis, after years of optimistically hoping things would improve.

The reverse butterfly effect

Somewhere in the world a butterfly flaps it wings and across the oceans, a massive storm erupts. PMI has been through storms...of changes to product, new ideas, re-pricing, lots of add-ons and loads of extras, and the effect - one dead butterfly - worse than no effect at all. Running to stand still is normal for modern business, but PMI is running backwards.

More of the same

Our economic policy is based on the principle that if you keep going in the same direction, and each year do more of the same, then sooner or later the right effect will happen. This is of course, the triumph of hope over experience. And like the search for fool's gold. PMI has been following this idea for years with loads of extra cover more help lines and enough extras to sink the average battleship. The answer from some insurers to the crisis is "add more cover", or "add more services."

Have you ever tried to find the basic PMI cover in the typical policy? It is hidden by so many extras and add-ons that the average consumer is so confused that they give up. The biggest extra is cancer cover, the most costly extra of all. Your business is losing sales and losing money; so the obvious answer is to add, for no extra price, a cover that in a few years time will hammer your claims ratio. This is exactly like austerity economic policy. It does not solve the problem but just kicks the can down the road a few years, by which time the marketing guru who promoted the idea has retired or gone to another business.

Cost control

Yes, it make sense to try to contain costs, but when you promote PMI as "giving you more choice of when and where you get treated than the NHS" how exactly does restricting the choice of a customer by pathways, work with this?

The average PMI insurer's answer to cost control is to add yet more cover and help lines and free services, free to the customer but not to the insurer!  So how does saddling more costs help control costs?

Innovation in the PMI market

Over the years there have been many innovations, many from new companies. Existing PMI insurers gobble up most of these. The biggest barrier to innovation is the conservatism of intermediaries; most of whom, to put it politely, are not in the first flush of youth; they were brought up in the days of wide affordable package cover so are terrified of selling anything that is not wider than a bendy bus doing a u-turn.

Also, for the low price innovations, there is simply not enough commission in the business for intermediaries to sell them, they think. But as health cash and dental cover have proved, simple low price products can sell if you get your sales coats down, your volume up and provide slick servicing.

Distribution channels for PMI

A recent conference warned health and life insurers that most of them would be out of business within five years if they failed to see that people are moving from buying via computer to buying via mobile devices.

Some have suggested that PMI can be saved if you sell via large employers. But for the next 30 years, the growth of business and of employment is not coming from large or even medium sized employers, but from the self-employed and very small companies. These companies buy everything online, even professional services, so the only way to get to these people is direct and via a simplified buying, servicing and claims process. Many medium and large companies have a mobile, contract or self-employed workforce. The days of a job for life, or even for a few years have long gone.

There is no point selling direct, if you cannot service and offer claims the same way, preferably all via mobile devices on a 24/7 instant response basis.

PMI insurers

One businessman (nothing to do with insurance) I was talking to says that he changes something every day and expects to re-invent and re-engineer his business every 3 years. The pace of change is so fast that however fast you go forward in the same direction, you soon run out of breath and cash.

So tinkering with the product will not be enough for major PMI insurers. In five years time, or less, I expect one insurer to have abandoned PMI and gone to self-pay, with three others only dealing direct with medium and large companies where they can offer a wide range of insurance and non-insurance products, with PMI being a tiny element in the mix. Of the rest, one will have been sold; another will quit PMI and the rest will be left with a bag of niche products.

If you know how the bicycle replaced the horse, and the cars replaced the bicycle, you will know that most businesses stayed in the wrong sector for too long. But the smart ones moved on before the new gadget was fully popular. So what happens to PMI insurers, is not necessarily the same as what will happen to PMI.

Market segmentation

I have been studying various aspects of tourism. You may be surprised to know that in one major Asian country food tourism is now the third largest tourism niche. Tourism has survived and prospered by continual reinvention in a myriad of new market segments to provide novel services to satiate changing consumer demand. The key to growth is the use of the latest technology at all points of the distribution and sales process.



PMI does a little segmentation, but not much more than the equivalent of offering you a colour choice on your new car.

Products

The product solution may come from insurers or from brokers. The problem with most PMI products is that they are designed to be as all-inclusive as possible, with a wide market. PMI insurers have panicked by trying to make it all-inclusive and all-covering, trying to sell an Audi not just to those who can afford one, but also to those who can only afford a Lada, Smart car or van...or who want a McLaren.

In my broking days, I produced many products from a blank page to a product selling in very large numbers that made decent profits for broker and insurer for a decade. The key to success is to produce products on a binary basis - Yes/No all the way down the line. The customer either fits or they do not. There is no attempt to shoehorn them in with extra price or limited cover etc. Price must be very, very simple. As little choice as possible should be given to the customer within a product.

You cater for differing niches not by altering one basic product, but by having a specific product for that niche. On PMI this could mean unique products for students, the retired, the young family, the solo, cancer, the professional, the self-employed, the small business, cosmetic surgery etc.

You make buying easy and instant. You make cover instant, and preferably on a rolling monthly basis so you do not need renewals.

PMI is often obsessed with finding a home for the ill, people with a poor health record, with a risky profession etc. For two decades personal and small business insurance has solved this problem by not trying to write these within the main portfolio, or even by the main insurers. It all goes to specialists in the London market. So when offering stripped down PMI, you do not just tell a non-fitting customer to go away. You offer them a route to specialist cover.

Products have become too confusing, too big and with too many help lines and extras. In private, many insurers will admit that only a few of these extras ever get used in any real numbers and that the only reason they are included is that brokers have pressurised them to match cover, often goaded by the ludicrous extra stars for extra cover service offered by a certain analyst. This "more is better" philosophy beloved by insurers, brokers and commentators is a key reason that PMI could die.

What's in a name?

When did you last buy "private motor" or "private household" insurance? Or go on a "private holiday"? The word' private' is defunct and the word "medical" has a negative, worrying and anti-consumer feel.

Health insurance is better...but new names should be looked at, as long as it is not given the ABI committee "kiss of death".

Pricing and promotion

Health cash and dental plans are doing well as they sell stuff that customers can understand. You pay £x and you get back £y, if you claim. On PMI it is not clear what you get back, what extras you may have to pay and what the cost is.

Media experts say you have three seconds to grab the customer's interest. But by now that may have gone down to two. So grabbing their attention is vital. Too many websites are like a truck decked out for Christmas; lots of flashing lights and colour but impossible to see what the product or price is easily.

You do NOT get time for a customer to plough through a dozen or so pages of product explanation with more "no buts" than a stroppy teenager. The only way to solve this is to simplify price, product and sale process.

Will the market change?

I suspect that some will, by leaving PMI, and others will plough on until they run out of cash or the boss needs to sell to retire.

With the inevitability that the NHS will retrench to core services, there is a need for private healthcare, and it is a challenge for insurers to be part of that change.

They will not do it by "more of the same".

The choice is to innovate and simplify and seek new younger customers, or die out as your customers get older and either die or decide they can no longer afford PMI.

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to the UK Government’s Office for National Statistics.