Rising costs hurt Bupa's UK arm


Private medical group Bupa has reported a sharp fall in UK profits as it continues to battle the trend of falling customer numbers and higher claims costs.

The organisation, which has warned for some time that the health insurance sector is in the grips of an affordability crunch, suffered a 22% drop in profits to £109.7 million in a "disappointing" year in the UK.

But with its overseas operations now accounting for 70% of revenues, growth in Australia, Spain and in international private medical insurance meant overall underlying profits still rose by 8% to £604 million.

Bupa's UK health insurance arm saw customer numbers fall 6% to 2.7 million - on top of a 5% decline in the previous year - while the average claims cost per customer increased by 6%.

It wants the sector reformed because it believes a lack of competition among private hospitals is pushing up the cost of treatment and forcing more patients on to the NHS.

The business has reviewed what consultants are paid to treat Bupa members and launched a number of new products during the year, including a self-pay option for people to access one-off non-urgent procedures such as hip replacements and cataract surgery.

Chief executive Stuart Fletcher said: "We have made fundamental changes to ensure we address excessive claims inflation driven by both private hospital and consultant practices, and fees. The changes we are making, whilst not always popular, are necessary to ensure more customers in the UK are able to access affordable, high quality private healthcare."

The Competition Commission is currently investigating the £5 billion private healthcare sector, which is dominated by five players.

Bupa's care services business, which looks after more than 17,900 residents in almost 300 homes, has also been under pressure as fees from local authorities and primary care trusts, who pay for more than 70% of residents, remain stagnant and costs rise. Occupancy was stable at 87.3% last year.

Meanwhile, Bupa Home Healthcare saw significant growth in patient numbers as more people used its out-of-hospital healthcare services. Bupa has no shareholders and is able to reinvest profits into its healthcare operations.

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