Medibank's successful expansion into health services has contributed to a strong 2010 financial result for the nation's largest provider of integrated health insurance and health solutions.
Medibank announced today a net profit before tax of $380 million for the year ending June 30, an excellent result that revitalises the company after a GFC-challenged 2009. Following conversion to for profit, Medibank will report a net profit after tax of $305 million.
Driving the result is the solid underwriting profit growth in Medibank's core health insurance market, which climbed 58% to $226 million, and a strong turnaround in investment income to $134 million.
Managing Director George Savvides said that the company-wide focus on management expense savings played a large role in the underwriting profit growth.
"Medibank has one of the lowest management expense ratios in the industry and our efforts to create a leaner, more efficient business are helping us to deliver on our 'Purpose' of ensuring our customers are better off, while underpinning earnings growth.
"We have reduced our management expense ratio to 8.9% for our resident private health insurance business and, despite difficult market conditions for much of the year, grew private health insurance membership by over 100,000. This brings total membership across the Medibank Private and ahm brands to over 3.7 million people," he said.
A key strategic achievement for the broader organisation was the successful expansion of Medibank's health and wellbeing business and the launch of the new Medibank Health Solutions division. The new brand consolidates the medical and allied health capabilities acquired by Medibank over the last two years, delivering face-to-face, telephone and online health solutions Australia-wide.
"Medibank has undergone a dramatic transformation in the last two years - from 2008 when we were entirely focused on insurance to 2010 where Medibank Health Solutions operates 40 workplace health clinics around the country and has recorded a profit of over $19 million, a fourfold increase from last year. We have, in addition, recently acquired McKesson Asia-Pacific and Carepoint Industrial Services, which will grow our Health Solutions business revenue by more than 50 percent in the coming year.
"Medibank's transformation is most clearly evident through our workforce. Our employee numbers have doubled since 2008 to 4,100 people and, significantly, we now have over 1,500 clinical staff responsible for delivering health services across Australia and New Zealand.
"Every week we purchase $72 million of hospital, medical and allied health services for our customers - a rise of 12% on last year. This is a very significant $3.8 billion contribution to the Australian health system and one we are well resourced to make.
"This transformation is a very deliberate strategy and growing our health services capability allows us to better meet the health needs of all our customers and to play an active role in their lives. Our transformation not only benefits our customers individually, but also helps Medibank contain increasing healthcare costs, reflected in claims growth. This results in reduced pressure on premiums for all members.
"With a large and diverse customer base, Medibank is one of the best recognised brands in Australia. We are committed to providing health services to private health insurance members, corporate clients and governments, and to the position of trust we have established and of our integral role in delivering health care to all Australians," Mr Savvides said.
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