Escalating PMI premiums and a crippled NHS have forcedconsumers to look for other alternatives. Could self-pay be atangible solution? Johanna Gornitzki investigates
Private medical insurance (PMI) has always been seen by the majority of people as a luxury rather than a necessity.
While it may be the perfect solution for those clients who can afford it, the greater part of the British population may find it hard to justify the cost of cover, particularly if they do not ever claim.
Therefore, most people have come to rely on the public healthcare system when they require medical care.
However, there are several downsides to depending fully on the NHS.
Waiting lists for both treatment and consultations are still long, something many people do not realise until they are faced with it.
“There is often an expectation that NHS treatment will be quicker than it is,” says Nicola Brown, marketing manager at BUPA Hospitals.
Recently there have also been a number of scare stories about patients who have contracted MRSA after treatment in a public hospital.
According to a National Audit Office report, the Government’s new waiting time targets have made this problem even worse, with several consultants overruling the closure of wards suspected of carrying the virus, for fear the move would breach targets.
Revelations such as these are unlikely to enhance people’s trust in the NHS.
Unaffordable PMI policies, and the continuing mistrust and disappointment in the NHS, have left many people considering a third option, which is to pay money upfront to receive the medical care they need privately.
Scare stories This self-pay alternative basically works as a pay-as-you-go option.
Besides allowing people to avoid long waiting times, this route also offers patients the opportunity to choose the consultant who will treat them, at a time that is most convenient.
It could also prove to be a good solution for people who have not got enough health insurance, or only have a PMI policy with a high excess.
Whatever the reason for choosing this option, it has certainly proven to be a successful one.
Over the past couple of years, self-pay has become big business and it now looks set to grow.
Figures from Laing & Buisson’s Health & Care Cover UK Market Sector Report 2004, shows that besides a bleep in 2003, the health market has experienced steady growth since 1997.
However, while this may sound good, this was largely due to strong demand in the newly emerging self-pay market.
Traditionally, a self-paying customer would typically be someone who had never considered private treatment until they one day needed medical care.
According to providers, many self-paying customers belong to the older generation of the population that have not been able to afford PMI.
A typical example would be a grandmother in need of a hip replacement with the younger members of the family footing the bill.
Lately, however, two new groups of self-funding customers have emerged.
One comprises the number of people opting for cosmetic surgery, which has increased massively in recent years.
Since this type of treatment does not tend to be covered under an insurance policy, the majority of cosmetic clients have no choice but to go down the self-pay route.
Another treatment that has also become increasingly popular is obesity surgery, such as stomach stapling, which at the moment is very limited on the NHS.
Nor does PMI fund it.
Nye Jones, head of intermediary development at AXA PPP healthcare, believes this growth in cosmetic surgery has somewhat given the overall result for the self-pay market “a degree of distortion.”
His argument is backed by figures from BUPA Hospitals, which indicates that while the overall self-pay sector saw a 5% growth over the past year, the cosmetic surgery market rose by 32% in 2004.
Regardless of what treatment a customer seeks, it is important they try to find suitable information and shop around.
Most hospitals now offer fixed price packages as a result of the increasing demand in this area.
These packages usually include everything from inpatient care, follow-up appointments and cover for possible complications.
But while the price is usually set in advance, it can range massively from hospital to hospital as there is no such a thing as an NHS tariff for self-funding patients.
“It could differ by as much as 100% – 150%, so shopping around could literally save you thousand of pounds,” says Roger Hymas, chairman of Healthcare Navigator.
Getting hold of this type of information can prove to be a bit tricky.
Advisers could point customers in the right direction but since they are not receiving any revenue from self-pay business, they are unlikely to go the extra mile to obtain all the information that is needed.
Instead, customers should turn to the number of self-pay advisory portals, such as Go Private and Healthcare Navigator.
Other organisations also offer help to find the right consultant and treatment.
One such company is Best Doctors, which has 50,000 consultants worldwide and 1,100 in the UK.
“Many self-pay organisations offer a lot of information on pricing but not nearly enough information on what is the best treatment or who the best doctors are and why,” says Dominic Howard, UK commercial director at Best Doctors.
With the self-pay market continuing to remain strong, and as sales of individual PMI remain slow, there have been suggestions that these two different products could be competitors.
However, Elaine Finch, communications consultant at BUPA, dismisses this claim, suggesting that it is not a threat, but rather a complimentary product.
The majority of advisers and providers seem to agree.
“Self-pay could never substitute private medical insurance.
Customers have to make a clear choice whether or not they want to opt for the self-pay alternative as it could expose them to unlimited liabilities,” says Jones, suggesting that an individual will never know how much he or she will have to spend on private medical treatment.
Charlie MacEwan, head of commun ications at WPA, however, believes it could be an excellent complimentary product.
“On the whole, it will be cheaper to self-pay and then have a high excess policy put into place than opting for a more comprehensive private medical insurance policy,” he says.
He also thinks it could be the preferred option for the younger generation.
“My recommendation to any 18 or 25-year old is do not buy medical insurance but put money in the bank on a regular basis and take control of your health,” MacEwan adds.
Judging from this, it seems selfpay could prove to be an alternative for people who are unable to go down the PMI route, but want to enjoy the benefits of being treated privately.
Whether or not it will turn out to be more or less cost efficient than medical insurance, however, is impossible to tell.
