What is Happening to Bupa in the International Private Healthcare Business
By Thomas | Published September 13, 2010
In 2007, Bupa took a major strategic decision to sell its network of private hospitals in its long established core market in the United Kingdom (UK). This generated a capital fund of £1.44 billion (US$2.2 billion) at a time when the UK – along with other major trading nations – were starting to feel the effects of the financial tsunami. The sale provided the company with liquidity to penetrate the expanding international market for privately funded healthcare.
Bupa started in the 1970′s, when the UK healthcare sector lacked private healthcare facilities for private health insurance holders. After more than three decades of providing direct patient care with its network of UK healthcare facilities, Britain’s largest medical provider, took the decision to shift its focus to opportunities worldwide and exit the direct hospital market in the UK – which was becoming increasingly competitive.
Nowadays, Bupa has ten million customers across 190 countries, and is the largest expatriate health insurer, providing a range of services from hospital, care homes, health assessments units and insurance products, including cover for repatriation and evacuation.
Bupa recently released first half year figures for 2010, generating a surplus of £428 million (US$ 657 million). Difficult economic conditions in the UK, USA and Europe, have been offset by positive operating conditions globally and, in particular, Australia and Saudi Arabia, where economies have not been so badly affected as those in the western hemisphere; in the six month period between the 1st January and the 30th June 2010, Bupa memberships numbers rose from 10.8 million to 10.9 million, with 57% of Bupa’s income now being generated outside the UK.
One of Bupa’s prime business transactions recently has been the joint venture with private insurer Max India facilitating the establishment of a standalone private health insurer, named Max Bupa, in a rapidly developing Indian economy – where only 2 per cent of 1.2 billion population holds private health insurance. The long term goal for Max Bupa is to capitalize on the growing middle class market in India.
In a bid to capitalize on new Russian legislation, which states that all expatriates working in Russia must have ‘Russian Approved’ private health insurance, Bupa has formed a partnership agreement with Russian based insurer Ingosstrakh. The two private health insurers joined forces in 2009, using Ingosstrakh local knowledge and Bupa’s expertise in private expatriate health insurance, to offer a range of Russian health insurance products for both expatriates working in Russia and Russian citizens employed abroad. Part of Bupa’s focus in the Russian health insurance market is based on the oil, gas and maritime industries, which play a big part in one on the world’s fastest developing economies.
While Bupa International has established itself in the private health insurance markets in Indian and Russia, it has taken the decision to stall further expansion in the faster growing Chinese market. This reflects the competitive position in a market where the population favors continued reliance on state run healthcare provision. However, Bupa’s competitors, Allianz and AXA PPP, have taken aggressive steps to seize opportunities in the Chinese insurance market in the sectors where increased demand for private health insurance exists.
The view is that considerable scope for growth exists in the international healthcare and insurance markets – especially the BRIC countries of Brazil, Russia, India and China and other countries such as Thailand, Dubai and various other countries in Latin America. While the established markets in the UK, USA and Europe are now beginning to show signs of economic recovery, with major structural overhauls of healthcare provision in the UK and USA potentially offering prospects for expansion.
Bupa’s Chief Executive Ray King commented on the healthcare reforms by saying “The UK and US governments started to articulate their plans for reform of their health care systems and we believe that this should offer new opportunities for our businesses in the future.”
Taking into a account the long term trends of increasing aging population, the advances in medical technology, the burden of chronic diseases, coupled with the growing wealth in emerging countries, and the revamping of healthcare systems in the major UK and USA markets, the future for Bupa remains positive. Although in the short term, lingering high unemployment levels and economic austerity measures present Bupa with challenging goals.
Bupa has taken greats strides to expand and diversify in recent years, creating new insurance products and services to meet the needs of international clients, coupled with keeping established and trusted policies. The expertise of the Bupa Group, and, where completed joint ventures with local partners, means Bupa are able to deliver a wide range of health plans to meet local needs.
With their expert knowledge of expatriate healthcare plans, Bupa provides such products as worldwide evacuation, repatriation, medical insurance plus coverage and specialist products; such as Bupa’s oil and gas healthcare plans which cater for the needs and specific local demands of this industry. Bupa’s wide range of plans provides the basis to offer policyholders comprehensive services, and Bupa International endeavors to combine the best products, with customer satisfaction focusing on service and value for money.
Bupa’s balanced international portfolio and strong market positions throughout the world is considered satisfactory to enable it to withstand the challenging conditions in the short to medium-term, with trading conditions not expected to change materially in the second half of 2010. Some recovery is forecast for 2011 and overall the future for Bupa is considered positive.
Insurance Companies Mentioned:
Bupa was established more than 60 years ago in the UK and is now has ten million customers in over 190 countries, and over 52,000 employees around the world. Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, China and across Latin America.
Incorporated in 1988, Max India Limited is a holding company with business interests working in the healthcare and services industries. Their wide range of health related interests include a joint venture life insurance company, Max New York Life, a healthcare services company, Max Healthcare, and a clinical services company, Max Neeman Medical International. The Max India Group reported US$ 860 million in revenues for 2007-2008 and will soon add Max Bupa to their list of businesses.
Ingosstrakh Insurance Company
Ingosstrakh Insurance Company was established in 1947, operating in Russian and international markets. Ingosstrakh provides insurance products and services to retail and corporate clients. It offers life, accident, car, property, mortgage, boat and yacht, voluntary health, and travel insurance products. The company also provides liability, motor, agricultural, trade, marine, voluntary medical, and aviation and space risks insurance products.
Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.
Originally known as PPP Insurance, the company became part of the Global AXA Group in 1999 and changed its name to AXA PPP in 2002. AXA PPP is now an international health insurance company with over 2 million customers around the world.