‘Rewards’ will get us to 80pc vaccination rate, says Medibank boss David Koczkar

Medibank says its strategy of securing stakes in hospitals is aimed at driving uptake of private health insurance and taking pressure off the public system.

Medibank chief executive David Koczkar is investing in private hospitals, saying the sustainability of Australia’s health system is at stake.

Medibank chief executive David Koczkar has called for a “more sophisticated approach” to Australia’s vaccination rollout, involving listening to people’s concerns, providing clear information and rewarding those who proceed with a jab.

It is a different strategy to the mandatory vaccinations policies Qantas, SPC and Healthscope have adopted. Instead Mr Koczkar said he preferred to “encourage and reward” vaccinations in an effort to immunise 80 per cent of the population - the magic number to stamp out lockdowns.

But as NSW’s outbreak edges closer to 1000 infections and the number of patients with Covid-19 in hospital doubles, the return to normality seems far away, particularly as only 31 per cent of the country is fully vaccinated.

And with more people being admitted to hospital with Covid and lockdowns persisting, elective surgeries have once again been delayed or banned, resulting in fewer claim payouts for health insurers, drawing accusations of them sitting on cash piles.

“The one thing that is very clear is that things are always changing and it‘s really too early to tell how this is all going to play out,” Mr Koczkar said.

“In healthcare, there‘s a strong move to have them vaccinated, so that we can provide safety and comfort to our customers. We need to take a more sophisticated approach to the different segments across society.”

Asked if vaccination should become mandatory to accelerate immunisations to 80 per cent, given in places like the US where about half the population is vaccinated, with hesitancy and resistance slowing the rollout, Mr Koczkar said it was a matter for government.

“That’s not for me to comment. That is a plan for government and individual governments. What I will say is that our focus is on listening to our customers and understanding their needs in health and well being.

“We do see some people who are hesitant. We have to respect their individual needs, their medical needs. As a health company, we‘re fortunate to be able to provide a little bit more information.

“So we think we’ve had a very positive response from our people to date. We see strong levels of vaccination and intention to vaccinate and we think that’s one approach right now.”

It comes as Medibank’s dominance of Australia’s health insurance industry strengthened in the past 12 month, with the company signing up 82,500 extra policyholders - the strongest growth it has achieved in a decade.

Full year net profit leapt 40.1 per cent to $441.2m. Meanwhile revenue firmed 2.1 per cent to $6.69bn, $1bn more than its claims expense of $5.6bn.

The result includes a $223m reduction in claims expense due to deferred surgeries, with homecare and telehealth accounting for most of the revenue increase.

Mr Koczkar said the health insurer had provided $300m to its members in Covid support, including returning $103m in claims savings via “premium relief”.

“We will continue to assess known claims savings and will return any permanent net claims savings due to Covid to our customers through additional support in the future.”

He expected the policyholder growth to slow in the year ahead, underscoring the need to offer “differentiated and compelling products” such as investing in short-stay hospitals to slash out-of-pocket costs.

In March, Medibank unveiled plans to build a $64m private hospital in Melbourne in a joint venture with 42 doctors. This followed the company securing a 49 per cent stake in East Sydney Private Hospital at Woolloomooloo last year.

Mr Koczkar said the investments were doctor-led and aimed to divert money normally spent on lengthy hospital stays into surgery fees, which account for the bulk of out-of-pocket costs.

“Around half a million Medibank customers now have access to the short stay, no gap, procedures for joint replacement. There are about 100,000 joint replacement procedures in Australia each year in Australia and many of them can be done in a short stay environment.

“The customers who‘ve experienced this offering have saved around four days on average in hospital hours and around $1500 in out-of-pocket costs.”

Mr Koczkar said Medibank would continue to pursue hospital investments to drive further uptake of private health insurance and ease pressure on the public health system.

“We also have a critical role to play in driving change in Australia’s healthcare system and advocating for reforms to improve the affordability and value of private healthcare,” he said.

“This is why we will continue to invest in preventative health and building more partnerships with doctors, hospitals and governments. However, these changes will not come quickly nor will it be easy, but the sustainability of our health system is at stake.”

The group will pay a dividend of 6.9 cents a share, fully franked, on September 30.