As coronavirus raged across the country and healthcare was thrust into the spotlight, Medibank Private boss Craig Drummond and his team were looking to get increasingly personal with the fund’s members.
While in lockdown in Victoria, Drummond was overseeing his executive team with two goals for the business: stay consistent with strategy, and don’t stop talking to customers.
The $8 billion dollar ASX-listed insurer believes it has spent $185 million this year helping customers and staff with financial assistance as COVID-19 disrupted the economy.
Throughout this period, the fund has still been determined to build policyholder numbers. Drummond says it has been doing this through a personalised, digitally focused approach that wouldn’t have been possible at the company a couple of years ago.
Potential customers are being pitched cover that is more closely based on information about their healthcare background and priorities.
“It’s [asking], where are you in your journey financially – and therefore what can you afford? — and secondly, what’s important to you?”
“For example, we don’t have to sell you, as a young person, a top gold policy with full obstetrics cover when that’s actually not what you need.”
This focus is new for the business, Drummond says. “It’s a big change in our company compared to three or four years ago, where it was more about getting people into the company as a private health insurance customer, rather than saying, ‘what is it that you actually require?'”
It’s also a strategy that has been driven by a steady investment in digital marketing and channels to capture younger members at a time the sector is concerned about this cohort abandoning cover.
Digital sign-ups are now exceeding those made at Medibank’s 85-strong national store network for the first time.
“We couldn’t have done that even two years ago. It’s only because over the last three years, we’ve made a substantial investment in our digital capability.”
This rebate is not for wealthy Australians … it’s for people who are on average or less than average incomes.Medibank CEO Craig Drummond
The pandemic has touched all corners of the healthcare system and insurers have not been immune. The sector moved first to expand its policies to cover coronavirus treatments, then delayed premium increases and offered financial support to members in financial distress.
As quarterly data from the Australian Prudential Regulatory Authority (APRA) flowed through this year, revealing tens of thousands of Australians were dumping their cover, concerns about the viability of the sector and its relevance to younger people were repeatedly raised.
Despite these concerns, Medibank has been able to grow policyholders, revealing at its annual general meeting last week that 33,100 new members came on board in the first four months of 2021, while 8000 members who had paused their policies recommenced their cover. That represented growth of 2.3 per cent, and put the fund on track to target 2 per cent growth for 2021.
Drummond believes the national focus on health combined with anxieties about wait times have driven Australians to seek cover regardless of broader economic challenges.
“Most compellingly, it’s the wait times. Public hospital wait times are blowing out significantly. A lot of Australians have had conversations with us where they are concerned about what that means over the next three to five years,” he says.
Elective surgery waiting lists in Victoria and New South Wales have come under further pressure in 2020 as temporary shutdowns of services have resulted in backlogs. At the same time, the public and private hospital systems have been working together in new ways as governments have inked agreements with private operators to help treat coronavirus cases.
This period of co-operation has led the private sector to put its hand up for greater collaboration post-pandemic. The boss of ASX-listed hospital operator Ramsay Health Care, Craig McNally, told investors in a trading update on Friday that the business was still keen to help the public sector relieve pressure on wait times.
Drummond expects the private system to play more of a role in projects to lighten the load on hospital providers, pointing to a recent joint venture Medibank has launched with healthcare operator Calvary to provide acute care to patients at home, instead of in hospital settings.
“We see ourselves working with private providers to help provide capacity to governments that they may need down the track.”
Rebates ‘not for wealthy Australians’
As Australia works towards “COVID normal”, health insurers have turned their minds back to reforms they have long been lobbying for in the sector. There had been early expectations that funds would see super profits this year due to a slowdown in benefits claims, but the companies have been eager to emphasise that this didn’t actually eventuate due to treatments being deferred rather that cancelled.
Meanwhile, the sector has long argued that the private health insurance rebate should be raised, ideally back to a flat 30 per cent figure, arguing reforms to the tax offset over the past ten years have reduced its value for many members. Drummond believes increasing the rebate would help support younger and less affluent Australians in keeping up their cover.
“This rebate is not for wealthy Australians … it’s for people who are on average or less than average incomes,” he says.
“We need to make sure that when they get a premium increase of 3 per cent, that the premium increase isn’t effectively 4½ per cent or 5 per cent because the rebate continues to fall. I think at a minimum, indexing the rebate to premiums [should occur].”
The sector is lobbying for additional support at the same time the government is juggling a new and significant budget deficit, however. Drummond acknowledges that even prior to the pandemic, gaining traction on the issue was a challenge.
“I think pre-COVID, the budget was tight, and appetite was probably modest at best, until we got into that nirvana surplus,” he says.
“Now, we’re in a different world.”
“The health system has performed very strongly through COVID. I think health, and the investment government places into health, is critical.”
Source: Thanks smh.com