Australia learns wrong lesson from U.S.
BUPA Australia Bids To Be Largest Health Insurer Down Under
By Vivian Wai-yin Kwok
Forbes.com
December 7, 2007
BUPA Australia confirmed Friday that it had sweetened its bid to take over MBF for 2.41 billion Australian dollars (U.S.$2.1 billion), stepping up its plan to become the biggest health insurer in the country.
MBF is Australia’s second-largest health insurance concern, currently serving 2 million people, representing approximately a 20% share of the country’s health insurance market. BUPA Australia, a subsidiary of British United Provident Association, which made landfall in Australia in 2002, has accumulated more than 1 million customers, for a 10.13% national market share.
“Together MBF and BUPA Australia would create the country’s leading health fund, which would be in a stronger position to provide affordable health insurance, greater efficiencies and improved services for members,” BUPA Australia’s Managing Director Richard Bowden said.
The integration of BUPA Australia and MBF would significantly challenge the state-owned Medibank Private, which has a 29% share of the country’s health insurance market.
BUPA’s revised proposal involves a cash payment of A$2.41 billion to be distributed among all the contributors to MBF, a mutual insurer, which provides policyholders with certain ownership rights.
MBF has been developing a proposal for demutualization and a listing early next year. “The Board is actively considering the BUPA proposal and preliminary informal consultations have been held with the MBF Council. The Board expects to make a decision in the near future as to whether to recommend this proposal formally to the MBF Council and contributors or continue with the demutualisation proposal.”
BUPA Australia first approached to MBF in August with an A$2 billion ($1.8 billion) takeover proposal. However, MBF turned down the initial bid and said it would follow the route taken by NIB Holdings, the country’s sixth-largest health insurer, and transform itself into a listed company.
NIB Holdings, with about 7% of the national market, floated its shares on the Australian Stock Exchange last month, marking the first time a private health insurer went public. NIB’s stock surged 29% on the first day, pushing up the company’s market capitalization to A$570 million ($499 million).
http://www.forbes.com/markets/2007/12/07/bupa-australia-mbf-markets-equity-cx_vk_1207markets02.html
And…
Revealed: highest-earning woman executive in Britain
By Fiona Macgregor
Scotsman.com
June 27, 2005
The head of the private medical firm Bupa has become Britain’s highest-earning woman executive.
Valerie Gooding, 54, was paid more than £1.4 million in salary and bonuses last year in her role as chief executive. That equates to £815 an hour.
She will receive a further £967,000 under an incentive plan and her pension pot grew from £2.7 million to £3.9 million, according to Bupa’s annual report.
http://business.scotsman.com/topics.cfm?tid=343&id=705382005
Comment:
By Don McCanne, MD
It is often said that private insurers in other nations with less expensive, universal health care systems are very different from those in the United States. They are highly regulated, non-profit entities that serve patients well. But is that always true? Step back and take a look at what is happening in Australia.
The private, for-profit British mega-insurer, BUPA, has moved into Australia big time in an effort to take over the financing of their health care system. Australia’s second largest insurer, MBF, is a mutual company owned by those insured. BUPA is competing with the management of MBF in offering a payout to the insured, opening the way for them to convert to a listed company on the Australian Stock Exchange.
Just as we heard in the United States, this conversion, they claim, would enable BUPA to provide “affordable health insurance, greater efficiencies and improved services for members.” But what we got in the United States was unaffordable premiums, financial barriers to care, greater administrative waste, and greater numbers of uninsured and underinsured.
Anyone paying attention then knew who would benefit: the board members and executives of the insurance companies and their friends on Wall Street who have enabled greed to become a major driving force in the American economy. Wealth moves up while more and more of us suffer financial hardship when medical needs arise.
BUPA was the subject of a previous Quote of the Day, when they pulled out of the insurance market in Ireland. They had been successful in insuring the healthy while leaving high-cost patients to be covered by the state-run program. They left in protest over the demand to adhere to their prior agreement that risk pool transfers would be made to correct for adverse selection. They thought that they should be allowed to keep the excess profits resulting from their devious scheme to market selectively to the healthy.
Someone in Australia should ask Valerie Gooding just how much frickin’ money does she really need. Now she is going to siphon off funds that should be going to patients and those who provide their care.
What she really needs is new quarters as luxurious as those that Sir Conrad Black will soon occupy. At least he didn’t stoop to taking money needed for others’ health care.