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News... Insurance News Hospitals ‘not to blame’ for rising medical inflation
News... Insurance News Hospitals ‘not to blame’ for rising medical inflation | Hospitals ‘not to blame’ for rising medical inflation |
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Private hospital groups have denied claims that they are driving up medical inflation by using their leverage to negotiate better deals from insurers. The comments come after employee benefits consultancy Mercer published a report stating that medical inflation is currently running at 10% a year. It said that if the rate of inflation continues, a medical plan costing an employer £1m in 2008 will, measured by compound inflation, cost around 60% more in five years’ time. The survey of the claims data of 250 companies also found that the claim cost per life – the cost of providing medical cover for a group of employees and their dependants – has risen by 67% since 1999. Steve Clements, principal in Mercer’s health and benefits business, said the current rate is unsustainable. “It’s proving an increasing challenge for companies to maintain current levels of cover irrespective of how much their employees value it,” he said. Mercer found that one of the recent drivers of medical inflation is an increase in the frequency of large claims in excess of £10,000. It suggested one of the reasons for this is that the lower-than-anticipated volume of NHS work for some private hospitals is putting pressure on them to raise revenue elsewhere. “There have been widely publicised tensions between some insurers and hospital networks during the past 24 months as they renegotiate deals,” it said. It has also been suggested that the growing trend of consultants joining groups at private hospitals is enabling them to use their joint strength to get better deals from insurers. Dr Ray Stanbridge, managing director of Stanbridge Associates, an accountancy, finance and tax advisory service, said: “Ten years ago consultants could charge what they wanted from insurers, but this has changed a lot now and it is the hospitals that are driving up the costs.” However, Chris Adams, commercial director for HCA International, said hospitals around the UK are experiencing real daily cost pressures which are in excess of general inflation, such as pay inflation and utility and energy costs. In addition, he pointed out that the Office of Fair Trading recently concluded that General Healthcare Group’s acquisition of Nuffield Hospitals would not have a material adverse effect on its negotiating strength, despite concerns from three private medical insurers. “It is convenient to point the finger at hospitals [and consultants] and deny that underlying healthcare delivery cost inflation is also real and significant, but the fact base says otherwise,” Adams said. A spokesman for Spire Healthcare, another hospital group, added: “Medical inflation is driven by three things – medical advances (like new cancer treatments), incidence of claims and provider costs. The 10% inflation figure quoted reflects all three.” Source: Health Insurance Magazine, August 2008 Link: http://www.hi-mag.com/ |
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