Is private medical insurance worth it? - Business Works

Is private medical insurance worth it?

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Whatever happens to the global economy in the next few months, we can be certain that we are all in for a sustained period of belt tightening. In these circumstances all expenditure comes under renewed scrutiny as management is forced to think the unthinkable. Employee benefits will not be immune to such a review.

Private medical insurance (PMI) is second in desirability as an employee benefit only to the company car. However, since the Government began pumping additional funding into the NHS, waiting lists have come down and many observers have warned that this could herald the end of traditional private healthcare. It is not unreasonable, therefore, to ask if the value of PMI remains the same, both to the individual and to the business. It is significant, though, that in a time of improved performance within the NHS and steadily rising PMI premiums from insurers, the number of people covered by PMI has remained relatively constant over the last ten years and even increased slightly during 2007 according to industry analysts Laing & Buisson.

« three cornerstones - choice of timing, consultant and hospital »

The three cornerstones of private healthcare remain the same as always: choice of timing, choice of consultant and choice of hospital. While the NHS 18-week target has reduced the waiting time for an operation, there is little choice of time and frequent last minute cancellations and rebooking can be extremely frustrating; and if you have to cancel, the clock starts again. When it comes to the consultant, PMI allows you and your GP to choose whom you see; the consultation will be longer and more relaxed and you know for certain that it will be the consultant who operates. As an NHS patient, you may not see a consultant, only a registrar, and even if the procedure is performed by the consultant in charge, post-operative follow-up consultations are becoming a thing of the past as Primary Care Trusts are choosing not to pay for them.

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Through Patient Choice, all NHS patients are supposed to be offered by their GPs a choice of hospital including one private provider. In practice, this is highly variable and many patients do not recall being given a choice. Sometimes the private provider is an independent treatment centre (ITC) and as these were prohibited from using the services of local NHS consultants under “additionality” rules from the Department of Health, ITCs were forced to recruit specialists from wherever they could find them including overseas.

Promises of an end to mixed sex wards and greater privacy for patients are proving very difficult to implement for many NHS hospitals and this is a key factor in favour of PMI. Patients entering hospital are generally apprehensive and not at their strongest psychologically speaking. A private room helps to maintain patient dignity and provides a quieter and more relaxing environment in which to recuperate. Most importantly, however, private rooms significantly reduce the risk of hospital-acquired infections such as MRSA and Clostridium Difficile. Recent surveys show that concern about the risk of acquiring an infection while in hospital is a primary driver for people choosing private healthcare.

« individuals still value private healthcare »

All the above explains why individuals still value having private healthcare, but what value is it delivering for Business? As a perceived high value benefit, it forms part of the total remuneration package and may relieve some of the pressure for salary increases. In a new world order where downsizing and lean performance are the watchwords, PMI, if it is not restricted to the higher echelons, can help to maintain a caring corporate culture amid a harsh business environment. More practically, if businesses are forced to become more efficient and employ fewer people, the good health of those who remain becomes more critical. Speedy resolution of staff health problems becomes a priority when there is no slack in the organisation. Stress levels rise and both mental and physical health can be affected. Good occupational health also plays an important part.

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To compete with a free national health system, private healthcare in the UK has to deliver a first class service. There are signs, however, that leading medical insurers are now diluting the quality of the service based on the premise that with improved competition from the NHS, private healthcare will become a commodity product. Using techniques copied from the United States, the largest UK private medical insurers are beginning to introduce limited hospital networks for certain specific services and insist that patients use only those hospitals for those services. This is different from the BUPA accreditation of breast and bowel cancer centres which serves to highlight hospitals considered to be offering a particularly good service in those specialities but still leaves patients free to choose the hospital they want to go to. The insurers’ new service networks limit patient choice and patients are penalised if they go elsewhere by getting no or only a token reimbursement of hospital and consultant fees. The first areas in which service networks are being applied have been MRI scans, cataract surgery and dental surgery. While insurers make reference to the restrictions in the small print of their brochures, the first time patients frequently become aware is when they request authorisation and find they are unable to use their regular hospital. Even in large companies with Health Trusts, difficulties can still occur if the Trusts are administered by insurers applying the same network restrictions as for their own policy-holders.

The effect of this reduction of patient choice (one of the key benefits of PMI) is more than just a minor inconvenience for the patient. It can also mean being unable to use the services of a consultant they may have been seeing for years if that consultant does not happen to work at a network hospital. If the service network approach were expanded to other specialities, it would raise the appalling prospect of patients having to go to a variety of hospitals for different procedures, with medical notes being spread among them and no single hospital having a complete view of the medical history. This runs directly counter to recognised good medical practice exemplified by multidisciplinary team working and holistic medicine.

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According to the service network business model, leading medical insurers are looking to drive down prices charged by hospitals which are faced with losing a substantial proportion of their business if they do not comply. This has been spectacularly successful in the USA where powerful Health Management Organisations (HMOs) have in recent years consistently improved their financial results. The other side of the coin is that hospitals struggle to survive and find it increasingly difficult to fund developments in new medical technology.

Should companies be concerned about these developments? At first glance, it is to their advantage if insurers can reduce the cost of private health – but only as long as cost savings are passed on in the form of reduced premiums. Benefits managers who are under pressure to keep control of costs may not scrutinise the details of medical cover provided to their employees. However, employees needing to make a claim and being thwarted in their choice of hospital and consultant are not going to be happy and the value of the benefit in their eyes is correspondingly diminished. In the longer term, even excellent hospitals will lose expertise in areas where they have not been included in service networks and will go into decline, ultimately reducing choice yet further.

« PMI - the key factors ... »

What then, are the key factors in relation to purchasing PMI? Firstly, take advice from a specialist independent broker who can look into the details of the policies under consideration. Secondly, do not automatically go for the cheapest option. The primary purpose of the benefit may be to compete in the recruitment market or reduce staff turnover, but this does not mean it is just a question of ticking a box that says you provide private medical insurance. In the same way that a company car needs to match up to the demands of the job and the self-perception of the driver, PMI needs to deliver when it is needed and not be the cause of endless anxieties to the member of staff and administrative problems for the management. Politicians and health experts agree that funding the NHS is increasingly problematic. The current economic crisis is going to make it even more difficult and a good comprehensive private healthcare benefit will prove its value in the long-term.

For information about health care, please visit:
St Anthony’s Hospital, North Cheam, Surrey SM3 9DW, UK
T: 020 8337 6691

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