Does ‘Not-for-Profit’
mean more focus on health?
July 2014
Melanie Kiely
Health Insurance Summit
28th July 2014
Healthcare cost is rising…
2
Source:
ABS Demographic Stats Jun-13
AIHW Data Table 2014
5
6
7
8
9
10
1986-87
1987-88
1988-8...
Why Peter Dutton is anxious
3
Private health insurance market is big
4
NFP
32%
FP
68%
NFP vs FP Market Share
Mar-14
Type of Fund Members
NFP 4.2M
FP 8.5...
Not-for-profit pays more back in total benefits …
5
Source: PHIAC data
$2,286
$2,402 $2,523
$2,674
$2,168
$2,251
$2,365
$2...
… but for-profit funds are paying more for prosthesis
6
Source: PHIAC data
$61.5
$56.6
$54.0
$56.0
$58.0
$60.0
$62.0
Medic...
Increasing coverage for Chronic Disease Management Program
7
0M
2M
4M
6M
8M
10M
12M
Jun-07
Nov-07
Apr-08
Sep-08
Feb-09
Jul...
Not-for-profit funds are paying more benefits in CDMP
8
$1,178
$531
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Benefits p...
The COACH Program works!
Studies found COACH Program:
• Reduces coronary risk factor
levels.
• Reduces hospital admission
...
People are dying from chronic diseases
10
Source: AIHW Data Table 2014
0
50
100
150
200
250
300
350
1979
1980
1981
1982
19...
Re-admission cost is on the rise
11
Source: AIHW Health Expenditure Australia 2011-12
$-
$20,000
$40,000
$60,000
$80,000
$...
Majority of claims were from a small portion of members
12
In 2013
76% of hospital benefits
5% of
members
HBF
Members
HBF
...
Integrated Care – The Holy Grail?
13
Source:
Transforming Your Care – A review of health and social care in Northern Irela...
14
Early prevention and lifestyle management could be the key
15
16
• What is the shareholder’s ROI
expectations on returns and
timeframe?
• Will Medibank Private continue
existing progra...
17
“The aim of medicine is to prevent disease and
prolong life, the ideal of medicine is to eliminate
the need of a physic...
18
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Melanie Kiely - HBF - Not for Profit/For Profit – Does it make a difference in terms of investment in better health outcomes?

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Melanie Kiely delivered the presentation at the 2014 Health Insurance Summit.

The 2014 Health Insurance Summit focused on how legislative changes affect the future of health insurance in funding, membership and services.

For more information about the event, please visit: http://bit.ly/HISummit14

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Melanie Kiely - HBF - Not for Profit/For Profit – Does it make a difference in terms of investment in better health outcomes?

  1. 1. Does ‘Not-for-Profit’ mean more focus on health? July 2014 Melanie Kiely Health Insurance Summit 28th July 2014
  2. 2. Healthcare cost is rising… 2 Source: ABS Demographic Stats Jun-13 AIHW Data Table 2014 5 6 7 8 9 10 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 % Health expenditure to GDP ratio (per cent) Health expenditure as a % of GDP is climbing, with increasing rates of hospital admissions and increases in costs per case-mix.
  3. 3. Why Peter Dutton is anxious 3
  4. 4. Private health insurance market is big 4 NFP 32% FP 68% NFP vs FP Market Share Mar-14 Type of Fund Members NFP 4.2M FP 8.5M Total 12.7M % of Population 55% Source: PHIAC data; ABS Population data Currently more than half of the population are PHI members
  5. 5. Not-for-profit pays more back in total benefits … 5 Source: PHIAC data $2,286 $2,402 $2,523 $2,674 $2,168 $2,251 $2,365 $2,497 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2009/10 2010/11 2011/12 2012/13 Total Benefits per Policy Not-for-Profit For-Profit • Benefits paid per policy is higher for NFP • Could it be that NFP are less efficient in achieving better health outcomes?
  6. 6. … but for-profit funds are paying more for prosthesis 6 Source: PHIAC data $61.5 $56.6 $54.0 $56.0 $58.0 $60.0 $62.0 Medical Benefits per Service Medical Benefits per Service Not-for-profit For-profit $752.7 $771.6 $740.0 $750.0 $760.0 $770.0 $780.0 Prosthesis Benefits per Service Prosthesis Benefits per Service Not-for-profit For-profit • NFP funds are paying more benefits back to members in medical benefit • On the other hand, FP funds are paying more back in prosthesis
  7. 7. Increasing coverage for Chronic Disease Management Program 7 0M 2M 4M 6M 8M 10M 12M Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Persons Covered for CDMP since 2007 Source: PHIAC data • Introduced in 2007, not mandatory • Coverage increased significantly • Almost all members are covered now
  8. 8. Not-for-profit funds are paying more benefits in CDMP 8 $1,178 $531 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Benefits per Program CDMP Benefits per Program Not-for-Profit For-Profit Source: PHIAC data • Are NFP funds providing more than necessary? • Or are FP funds not providing enough to their members?
  9. 9. The COACH Program works! Studies found COACH Program: • Reduces coronary risk factor levels. • Reduces hospital admission by 16%, bed-days by 20% within 4 years. 9Source: The COACH Program
  10. 10. People are dying from chronic diseases 10 Source: AIHW Data Table 2014 0 50 100 150 200 250 300 350 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Deathsper100,000Population Chronic Disease Deaths per 100,000 Population, 1979 - 2011 Coronary heart disease Cerebrovascular disease Diabetes Cancers COPD Other chronic diseases Perhaps we should also put some focus on chronic diseases other than heart disease
  11. 11. Re-admission cost is on the rise 11 Source: AIHW Health Expenditure Australia 2011-12 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 Total Recurrent Healthcare Expenditure $5,711 $5,849 $5,916 $5,758 $6,258 $5,823 $8,512 $5,881 $0 $2,000 $4,000 $6,000 $8,000 $10,000 NSW VIC Qld WA SA Tas NT Aust Average recurrent health expenditure per person ($) • Recurrent expenditure is on the rise • Averaging $5.8K in recurrent health cost per person
  12. 12. Majority of claims were from a small portion of members 12 In 2013 76% of hospital benefits 5% of members HBF Members HBF Hospital Claims For example: • $283K on one cancer patient over 5 years • $494K on one psych patient over 5 years
  13. 13. Integrated Care – The Holy Grail? 13 Source: Transforming Your Care – A review of health and social care in Northern Ireland http://www.dhsspsni.gov.uk/index/tyc/tyc-timeline.htm Currently is fragmented: • Lack of coordination • Lack of compliance • Patient re-admissions
  14. 14. 14 Early prevention and lifestyle management could be the key
  15. 15. 15
  16. 16. 16 • What is the shareholder’s ROI expectations on returns and timeframe? • Will Medibank Private continue existing programs, or cut them out and do nothing like nib? • Focus on better return from programmes • Shareholder vs member focus What are the implications of Medibank listing, and further profit drivers?
  17. 17. 17 “The aim of medicine is to prevent disease and prolong life, the ideal of medicine is to eliminate the need of a physician” – William James Mayo
  18. 18. 18

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