Medibank boss Craig Drummond flexes muscles with reshuffle

Medibank boss Craig Drummond has flexed his muscle with a major reshuffle of the health insurer’s executive team.

Medibank chief executive Craig Drummond. Picture: Stuart McEvoy.

Medibank boss Craig Drummond has flexed his chief executive muscle with a major reshuffle of the health insurer’s executive leadership team, which sees the chief financial officer exit the company.

Mr Drummond, who took on the top role in July, announced the executive shake-up yesterday, revealing the new-look team he has set up for his tenure.

The move comes as he pushes the company to refocus on customers ahead of the release in November of his new strategy for the health insurance giant.

The former NAB executive said Medibank’s efforts to improve customer experience had fuelled the changes to his executive leadership team in an attempt to ensure that there was a clear focus and accountability on delivering improved outcomes.

“We know as an organisation that we have to improve our engagement with our customers,” he said.

“We have a big agenda to deliver and in order to achieve this we need to have the right team in place with clear accountabilities. I am confident that the changes provide this focus and will drive better outcomes for our customers and the business.”

The market backed the executive changes, with shares in the company closing 1.6 per cent higher yesterday at $2.56.

The leadership changes see David Koczkar assume the role of group executive chief customer officer. Andrew Wilson, the group executive provider networks and integrated care, is now also accountable for Medibank’s strategy and inno­vation.

Mei Ramsay, company secretary, has been appointed to the executive leadership team as group executive legal, governance and regulatory affairs. Her portfolio will also include compliance and regulatory affairs.

Medibank had also announced last month that former Sportsbet technology head John Goodall would join the company as group executive technology and operations.

The changes at the top have led to chief financial officer Paul Koppelman leaving the company after four years of service. During his tenure, Mr Koppelman oversaw Medibank’s $5.7 billion listing on the Australian market in November 2014.

Mr Drummond said the company would start an external search for a new finance leader and until that position was filled Tom Exton, group financial controller, would take on the role of acting chief financial officer.

The health insurer is seeking a new finance head as it fights the Australian Competition & Consumer Commission over allegations of misleading customers and in a regulatory environment calling for increased transparency and softening membership growth. Medibank forecast at its annual results last month that it would continue to lose market share in 2017.

Mr Drummond highlighted at the release of the company’s results that customer feedback had given Medibank a clear message that it needed to do a better job.

To prove his focus on customers, he tied executives’ financial rewards to customer satisfaction.

“If customers don’t get what they need and our net promoter score goes down, then executives will miss a good portion of their bonus,” he said after the results.

Credit Suisse analyst Andrew Adams said in a client note on Medibank’s financial results that Mr Drummond, in his first interaction with the market, had flagged the value proposition that Medibank, and the industry, was struggling with and that Medibank had underinvested in recent years, particularly in customer service. “We see risk emerging of a below the line restructuring charge in 2017, noting Medibank’s strategy day in November could be the catalyst for such an announcement,” he said.

Deutsche analyst Kieren Chidgey said while Medibank had planned a marketing blitz in the second half of 2016 to rejuvenate its brands and attract new customers, that appeared to have fallen flat. “Furthermore, recent IT issues delaying tax statements and the ACCC case around policy changes have further damaged Medibank’s brand and continue to impact growth,” he said.