MELBOURNE, AUSTRALIA – NOVEMBER 30: Medibank CEO Craig Drummond poses for a portrait at the private health insurer’s Investor Day on November 30, 2016 in Melbourne, Australia. (Photo by Jesse Marlow/Fairfax Media) Dr Michael Gannon, President of the Australian Medical Association (AMA), addresses the National Press Club of Australia in Canberra on Wednesday 23 August 2017. fedpol Photo: Alex Ellinghausen
Medibank Private says the health system is at risk if doctors won’t agree to disclose how much they charge for procedures.
Medibank’s push for greater transparency came as it unveiled a 7.6 per cent lift in net profit to $449.5 million and spruiked much-improved customer satisfaction and disputes data.
The result pushed Medibank’s shares up 6.7 per cent to $2.87 on Friday.
The company is readying for a fight with the Australian Medical Association, which is resisting the changes that would give consumers greater insight into how much a procedure will cost when it is conducted by certain specialist.
Medibank chief executive Craig Drummond said on Friday that cost transparency would require “tough conversations” between the company and health stakeholders.
“The stakes are too high and it affects too many people and the way they live their lives. If we want to be leaders then now is the time to lead,” Mr Drummond said.
The Medibank chief said Australia had a great health system but added: “What we’re saying here is that we don’t want to lose that or put it at risk.”
The push comes amid concerns that health insurers would use greater transparency to “Americanise” Australian health care by limiting which doctors members could see and the procedures they could claim.
Responding to Mr Drummond’s comments, AMA president Michael Gannon said blaming doctors for private health insurance increases “was a bit rich”.
“One of the things I won’t do is invoke any conversations on CEO salaries – that would be a cheap shot,” Dr Gannon said. (Mr Drummond’s total remuneration for 2017 was $2.8 million.)
Dr Gannon said only 5 per cent of doctors charged at or above a gap of $500, and 88 per cent had no-gap schemes.
“It is a fact that the industry has moved to a for-profit model … but that cannot occur on reduced services to patients,” he said.
The brewing battle came as Medibank, the most complained about health insurer, reduced its share of customer complaints filed with the ombudsman to 35.6 per cent by the end of June, from 60.7 per cent for the quarter ending September 2016.
“Our focus on resolving customer complaints quickly is making a difference, and we expect our complaint numbers to continue to drop over the period,” he said.
Medibank has invested heavily in improving call wait times, from 10 minutes to 2 minutes, and has improved its call abandonment rate from 75 per cent of calls to less than 10 per cent.
Medibank continued to shed market share during 2017, down 63 basis points, but the rate of decline was reduced due to lower pricing on some insurance products.
The company is flagging flat overall market growth in the coming years as fewer Australians take up health insurance, and expects to continue to lose market share until 2019.
During 2017, the number of Medibank policyholders fell 1.3 per cent to 1,776,100.
Operating earnings at its health insurance division fell 2.6 per cent to $497.5 million but were ahead of guidance during the year.
The decline was offset by a boost in its investment portfolio and better than expected growth in its own out-of-hospital care business, an area that will be of increasing focus for the company in coming years.
Mr Drummond said he expected some regulatory relief from the government in the coming year, particularly in terms of costs for prostheses, and said there needed to be incentives for people to take up private health insurance.
Premium revenues inched up 1.2 per cent to $6.245 billion during 2017.
Management expenses, which blew out by 10.2 per cent to $568.4 million, would reduce in 2018 by $20 million through productivity gains, but Mr Drummond said that would not include any reductions at its new call centre.
It declared a final dividend of 6.75?? a share, taking the full-year dividend to 12??, an increase on the 11?? a share the company paid in 2016. The final dividend is payable on September 28.