“I’d partly agree with Michael Moore’s assessment,” says Stuart Scullion, sales and marketing director at healthcare specialists The Private Health Partnership. “If someone needs accident and emergency services then it’s great, and there are also some fantastic specialist heart and cancer units within the NHS, but other areas of the service really let it down. The public has seen some improvements since the funding increased with waiting lists falling for many procedures for example, but it’s also seen a lot of wastage, with a lot of the extra money going on management rather than patient care.”
A report by the King’s Fund supports this. Our Future Health Secured?, which was published in September 2007, suggests that although there were some indications that quality had improved, for the service to continue to do so in the future while meeting cost reduction targets seems unlikely. Rather than achieving target annual unit cost reductions of between 0.75 per cent and 1 per cent between 2002/03 and 2007/08, unit costs had broadly increased for all hospital services. This means that going forward, with lower investment into the service, achieving improvements will be difficult if cost targets are to be met.
And while there are some improvements, albeit smaller than intended, people are beginning to question the long-term sustainability of a free to all NHS. “Our annual market survey found that only a third of consumers believe the NHS will always be part of the UK’s health system,” says Abby Bowman, a spokesperson for HSA. “The other two thirds of respondents thought it would either disappear altogether or they would have to pay for certain areas of their healthcare themselves. It’s hardly surprising the public is losing faith in the NHS when hardly a day goes by without a report on the latest failings within the NHS, whether related to dentistry, waiting times or the number of newly qualified medical students choosing to practise abroad. “
Moore is not the only American to put across his views on the UK’s state healthcare system this Autumn. US Republican presidential hopeful Rudy Giuliani put the private sector side of the argument into the public arena and promptly caused a media storm two months ago when he criticised the record of the NHS during a visit to London. Speaking at an event in London, the ex-mayor of New York, who suffered prostate cancer, said he would have been less likely to have survived had he been treated in the UK. He outraged supporters of the NHS by saying: “Healthcare right now in America – and I think it has been true of your experience of socialised medicine in England – is not only very expensive, it’s increasingly less effective.
“I had prostate cancer seven years ago. My chance of survival in the US is 82 per cent; my chance of survival if I was here in England is below 50 per cent.” Critics have pointed out that the five year survival rate in the UK for NHS prostate cancer care is 72 per cent, but the whole story reinforces the renewed life that has been breathed into the state versus private debate.
But while perception of the NHS may be changing, this has yet to have a major effect on sales of medical insurance. Figures from Laing & Buisson show that the number of people with medical insurance increased by just 1.5 per cent in 2006, with growth of 3.4 per cent in the corporate arena tempered by a 2.2 per cent decline in sales in the individual market.
However, insurers are noticing a change in the buying habits of their customers with many citing very different reasons for a purchase. Where a sale is to an individual, either through a voluntary, flexible benefits scheme or an individual policy, Camilla Nichols, sales support and development manager at Axa PPP healthcare, says that the risk of contracting a life-threatening infection while in hospital is now one of the key reasons behind a purchase.
“Waiting lists used to be one of the main reasons people bought cover,” she explains. “But the hotel aspects are now coming to the forefront with people concerned about everything from contracting an infection to the food they’ll be given while in hospital. They don’t want to come out of hospital in worse health than when they went in.”
This view is supported by the findings of Bupa’s Health of the Nation survey. Conducted in February and March this year, it found that the cleanliness of hospitals was the number one reason for taking out medical insurance. Some 65 percent of respondents cited this as their primary reason for buying cover. The next most common reason was the absence of waiting lists, meaning less pain, followed by faster recovery as a result of getting quicker access to treatment.
Although being treated in a private hospital doesn’t automatically guarantee you won’t contract a superbug, a number of checks are in place to reduce the likelihood. “Private hospitals are starting to screen patients for infections before they are admitted, which is something that NHS hospitals can’t always do because of the volume of admissions and the emergency nature of some of them. Further, because patients in private hospitals have their own rooms, there’s less ability for an infection to spread,” says Julian Ross, head of policy communications at Standard Life Healthcare. “The risk of being infected is uppermost in people’s minds, especially as they get older and are less likely to be able to fight off these infections.”
Infection rates are also one of the criteria Axa PPP healthcare includes when it assesses hospitals for its network. “People are worried about this and it has meant that we’ve seen an increase in the number of sales to individuals from socio-economic groups that wouldn’t traditionally buy cover. Even if they buy a more limited plan it does show they want to protect themselves,” adds Nichols.
While some individuals might be looking to cleaner hospitals as a reason for going private, very different motivations are coming into play when employers are purchasing healthcare. “Some employers are compelled to buy medical insurance because the competition buys it, for instance it’s commonplace in the City, but increasingly we’re seeing it being purchased as part of a wellbeing package,” explains Scullion.
Dave Priestley, sales director at PruHealth, agrees. “We’ve moved away from the perk mentality. Employers want to use medical insurance to help manage productivity and absence. Although it deals with after the event issues, for instance fixing the employee’s health problem, products are evolving to incorporate health and wellbeing tools to make it more valuable to the employer.”
Examples of this include Norwich Union’s recent acquisition of occupational health companies and their subsequent integration into their corporate propositions. Standard Life Healthcare has also boosted its wellbeing package with the introduction of GP advice, occupational health, screening and employee assistance programme modules on its corporate schemes.
PruHealth’s own product, which is based on the South African model, is also a good example. This rewards employees financially if they take a more proactive approach to looking after their health.
“Healthier employees make fewer claims,” explains Priestley, “and the vitality programme on our plan provides all the incentives and encouragement that the employees need to look after their health.”
Perhaps as a result of this he has seen significant growth in the corporate arena in the last year. Usually insurers can expect a fairly stable book with new joiners replacing leavers but PruHealth has seen an increase of around 20 per cent on its group business.
But while these developments are helping to increase sales, medical insurance still retains some of its elitist image. “The government has thrown huge amounts of money at the NHS but it now really needs someone with some conviction to say the country has to move to a model where it provides a more limited range of services. This will enable people to buy some form of top-up insurance to ensure they get the treatment they want,” says Scullion.
Although a politically sensitive move, this has already happened to a degree in NHS dentistry. With resources limited, members of the public are accepting that they can either pay to go private, travel to see an NHS dentist if there are none in their area or, in extreme cases, carry out their treatment themselves.
This may not yet be the case for other NHS services but with treatment now being administered through private hospitals too, patients are seeing what options are available.
“My neighbour had a hip replacement in a private hospital after having three cancellations on the NHS,” adds Scullion. “He was extremely impressed with the service he received and the standard of the hospital. As more people experience private facilities there will inevitably be further rises in the take-up of medical insurance.”