Medibank Private records dramatic turnaround in operating performance for 2003 financial year
Australia's largest private health insurer, Medibank Private Limited, has recorded a $10.4 million operating surplus for the 2002-03 financial year - a $185.9 million improvement on the previous year's result.
Medibank Private Chairman Allan Thomson AM said he was pleased with the fund's vastly improved financial performance to surplus.
"Over the past 18 months, Medibank Private's Board and new Management team have been implementing a detailed business restoration strategy to reverse the disappointing result of the 2002 financial year," Mr Thomson said.
"I am delighted to note that the steps taken through this strategy to date have dramatically improved the fund's performance."
The financial improvement against the previous financial year was driven primarily by:
- A $127.2 million improvement in the fund's underwriting position
- A $58.7 million improvement in investment income performance
- A $6.5 million reduction in Management Expenses, with the Management Expense Ratio moving downward to 9.3%, against an industry average of around 10.9%
- Steady fund membership levels at 29.7% of the total privately insured market
Medibank Private Managing Director George Savvides said that the company's financial turnaround was the first step on the road to building a better health fund for its members.
"To remain Australia's health fund of choice, Medibank Private needed to first regain and maintain a stable financial platform. This has been achieved", Mr Savvides said.
"However, throughout the process, we have worked hard to give our members a high quality, value-for-money health insurance offering, supported by a nationwide customer service network.
"We reinforced our efficient, not-for-profit business ethos by returning over 92% of member's contributions as benefits paid - outperforming the rest of the industry's 88.4% average return.
"We also continued our extensive retail refurbishment program, which is winning praise from members across the country.
"Going forward, we will be further enhancing the member value of our product and service offering, with new product features and services planned to roll out over the coming year".
An immediate initiative will be the launch of a new-look brand and advertising campaign in October, using traditional and 'online' media, to highlight the strength of the fund's product and service offerings.
"Over the past 12 months we have had a low brand presence in the marketplace, as our key focus has rightly been on restoring our business performance", Mr Savvides said.
"However, we now believe it's appropriate that we remind both existing and prospective members about the overarching strength of Medibank Private's health insurance offering.
"After all, there are very valid reasons why nearly three million Australians of all ages choose us as their private health fund."
Mr Savvides said that while this year's financial result was both pleasing and necessary, Medibank Private and the broader private health industry faced substantial challenges.
"I believe it is vital for both health funds and private healthcare providers to work together to keep the cost of private health within reach of Australians," Mr Savvides said
"The Federal Government's 30% Rebate and Lifetime Health Cover initiatives have reinvigorated Australia's private health system. The Rebate is encouraging Australians to collectively contribute over $5.5 billion to the cost of their private health care.
"I believe that the private health system's major players - healthcare providers and insurers - must ensure that the Government's initiatives are supported by a sustainable pricing structure for its users.
"It is simply not feasible for healthcare costs to rise unchecked, and for healthcare providers to expect that health fund members will keep funding these rises through increased premiums".
Medibank Private's benefit outlay payments have risen by over $410 million over the past two years. As a result of this unsustainable increase, Mr Savvides said that Medibank Private would look to contain future premium increases by becoming an even more efficient and performance orientated purchaser of health services on behalf of its members.
"In many instances, Medibank Private is currently paying above the industry average for the purchase of private hospital bed services and an improved purchasing performance to the market is warranted," Mr Savvides said.
- Click here to download the 2002-2003 Annual Report
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