Southern Cross Medical Care Society Results
12 September 2004
Medical Care Society Announces
Excellent Financial and Service Performance
Southern Cross Medical Care Society has reported excellent financial and service performance for the year to 30 June 2004.
Group Chief Executive, Dr Ian McPherson, says the operating surplus of $32m was ahead of budget as a result of lower claims cost growth and a reduction in overheads, and means the Society’s level of reserves ($238m) are in line with targets adopted by the Board based on solvency standards used by Australian health insurers.
Dr McPherson says as a not-for-profit organisation, Southern Cross will invest and use the surplus funds for the benefit of its more than 800,000 members.
“The 2003-04 year has been one of strong progress in the areas of delivering value and service for members. This has been achieved in the context of robust financial performance.
“We have worked hard on reducing overhead costs and came $6.8m under last year, while at the same time maintaining high standards of service where we have achieved benchmarks in areas like claims payment and call answering.”
“Levels of claiming have also been a significant factor in these results. The average cost of claims per member has continued to rise by around 3.5%, but that’s a lower rate of growth than has been the case in recent years, and was below our expectations for the year.”
Dr McPherson says claims escalation continues to be the main cause of upward pressure on premium rates but Southern Cross had maintained stability in premium base rates for around half of its members in its latest rate review.
“The strong financial position of the Society means we’re now running with a range of initiatives to enhance value for members. Insurance plan benefits for around 92% of members have been enhanced in recent months. We’ve also made excellent progress towards implementing rewards schemes for low claiming members, and founding members who have contributed to the success of the Society.
Low claims reward
“For some time now the Board and management have focused on how we can return more value to members who don’t claim. Tens of thousands of our members each year get tremendous value when they make claims for expensive surgical procedures. We’re envisaging that a low claim reward – in the form of a 10% discount on premiums - will enable us to recognise hundreds of thousands of members who because of good health are lucky enough not to make these claims.
“Members who qualify for the low claim reward will pay less than they otherwise would have in the next premium year. Our forecasts are that around 70% of the Society’s adult members on individual or voluntary group scheme policies will qualify for the reward.”
Dr McPherson says the scheme will be rolled out from mid 2005.
Customer service research
Dr McPherson says positive customer service measures reported at the end of the 2003-2004 year were reinforced by Southern Cross’s own research conducted in March 2004 that looked at the importance of service attributes such as policies, prices, ease of claiming, customer services staff and communications to members.
“It was very gratifying that we are perceived by many members to be performing well in key areas. Prompt answering of queries, professionalism of customer service staff, promptness and accuracy of claims payment, being able to get major claims pre-approved, and being ethical and trustworthy were all attributes on which members rated Southern Cross highly.”