dr ian mcpherson group chief executive southern cross healthcare new zealand
TRANSCRIPT
DR IAN MCPHERSON
Group Chief Executive
Southern Cross Healthcare
New Zealand
DR IAN MCPHERSON
• Degree in Medicine and Diploma in Obstetrics
• Worked predominantly as a GP in New Zealand
• Held a range of different positions:
– Red Cross, Department of Health, Aetna, Allianz based in Singapore
• Started with Southern Cross Healthcare in 2002
KIA ORA
WHAT MAKES UP NEW ZEALAND
• Four million New Zealanders
• Rugby
• The country has a GDP of $NZ 138 billion – $AUD 128.73 billion
• Primary industries are farming, forestry, tourism
• Political environment is MMP – Recent election resulted in slim majority for Labour led
coalition
NEW ZEALAND HEALTH SYSTEM
• NZ has a mixed health system like the UK
• Public and private health care systems are complimentary
• Primary primarily covers elective conditions
• Total health spend $NZ 10.69 billion – 8.7% of GDP
• 78% of total health spend is publicly funded
• Expenditure is increasing rapidly
• Predicted to reach 63% of GDP by 2050
PRIVATE FUNDING IS GROWING
Total health funding (%) in 1979/80 and 2001/02
10.4 16.1
1979/80 2001/02
1.1 6.7 0.4 0.3
77.988.1
Publiclyfunded
11.9 22.1
Privatelyfunded
Privatehousehold
HealthInsurance
Not-for-profitorganisations
ROLE OF PRIVATE HEALTH SECTOR
Meets individual needs by:
– Providing quicker access
– Giving choice of specialist
– Comfortable hospital facilities
– Access to additional health services
HEALTH SYSTEMS ARE BALANCED
• Health systems are like a mobile in the children's bedroom
• Alter one component – it impacts another– Private - Public– Funder - Provider– For Profit - Not For Profit– Primary - Secondary
ROLE OF PUBLIC HEALTH SECTOR
• Funding and provision are different matters
• Publicly funded & publicly delivered – acute hospital treatment
• Publicly funded & privately delivered – doctor visits, medicines, elective surgery overflow
• Privately funded and privately delivered – Elective surgery, $2 billion mostly primary care
ROLE OF PRIVATE HEALTH SECTOR
• Funding:– 1.3 million New Zealanders with health insurance
– 32% of the population
– Out-of-pocket expenditure of $NZ 2 billion
• Delivery:– Primary care (GPs, pharmacies, etc)
– Allied health professionals (physios, dentists, etc)
– Radiology (x-ray, CT scans, MRI scans)
– Specialist treatment (primarily surgical)
– Elective surgical hospitals
SOUTHERN CROSS HEALTHCARE
• Not-for-profit organisation established in 1961
• The Group an extensive range of health care products and services
• New Zealand’s largest private health care organisation
• Employs 1,500 people
• Southern Cross Insurance has 60% market share – 800,000 members
OVERVIEW OF INSURED POPULATION
• During the 1990s health insurance membership declined
• Affordability has been the major issue
• In recent years the market has been declining but now stable
• Traditional indemnity insurance will continue to lose attractiveness
• A further decrease in health insurance will increase pressure on the public system
PHARMACEUTICAL MANAGEMENT
• Government run, central funding agency for all pharmaceuticals
• Determine which drugs will be funded and the subsidy level that applies
• Health insurers fund the shortfall for PHARMAC drugs only
• Patients pay the full cost for non-Pharmac drugs
IMPACT OF PHARMAC STRATEGY
CPI trends Sept 1999 to Dec 2003
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Dec-93
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All Groups
GPs
Specialists
Hospital Room
Health Insurance
Prescriptions
PharmacueticalsPharmacueticals
PHARMAC IMPACT ON DRUG EXPENDITURE
PHARMAC METHODS
• Reference pricing
• Generics
• Bundling
• Negotiated deals with the Pharmaceutical industry
• Tendering
WHAT’S REQUIRED
• Clear definition of what the New Zealand public sector does or does not pay for
• Respect for the other components of the system
• Increased use of private hospitals for public funded elective surgery
• Innovative new products– e.g. Health Management Accounts
• Incentives for private health insurance– Removal of FBT– 30% tax rebate or ‘defined’ contribution
WHY SUPPORT THE REBATE
• Choice: health insurance provides insured people with a choice about how they access health services
• Fairness: insured people pay twice – through tax and insurance
• Coverage: a subsidy would boost coverage, making the viability of the health insurance industry more certain
• Cost: for every $1 the Government spent on the rebate for insured people it would be spending $2.76 on the same health services for an uninsured person
PRIVATE v PUBLIC
• If the health insurance market halved in the next ten years, net cost to the Government would be $230 million
• Three times the cost of the rebate
• Australian experience used to not justify it:– Public workload still increasing– Had to be increased again– Money could have been better spent
• NZ should retain a pure tax system
AN ALTERNATIVE TO THE 30% SUBSIDY
• Defined contribution
– e.g. $200 tax rebate per person, annually
– Applied through a health insurance plan or health management account
– Could target certain age groups such as families or the elderly
– Limits Government exposure to premium increases
INNOVATIVE NEW PRODUCTS
• Health today is more than sickness – it’s about being and keeping well
• We are spending:– $700 million on health insurance (Industry data)
– $1.75 billion out-of-pocket on health goods and services (Ministry of Health);
– More than $350 million on sports goods and fitness (industry data)
• Many people spend more on gym memberships and the related sports gear and clothes than they do on health insurance (Research conducted by TNS)
ACTIVA ACCOUNT
• Health Management Account – also known as a Medical Savings Account
• A new way of paying and managing health and wellbeing needs
ACTIVA
Information Tools
• Health spend calculator
• Health management tools
• Directories
• Information on common procedures
• Self-help reference for day-to-day health needs
Information Tools
• Health spend calculator
• Health management tools
• Directories
• Information on common procedures
• Self-help reference for day-to-day health needs
activa Network
• Partners
• Merchants
• Activa providers
activa Account
• Card and web accessed
• Used to pay for day-to-day health related expenses and low cost diagnostic and surgical expenses
• Operates in debit and credit
• Healthy interest rates
activa Plan
• Health insurance which helps pay for high cost surgical and medical treatment
• Lump sum for serious health events
• Excess options $1,000 or $2,500
ACTIVA PARTNERS
Household Spending
HEALTH INSURANCE
• Must add value
• Get you better health care than you can get yourself
• Our competition is:– Self insurance - Not the competition