July 28, 2012

CEO talk: insurance sector focus

Michael Bassingthwaighte, CEO of not-for-profit health insurer Peoplecare, talks cash flow, growth, decision-making and regulatory management.

Michael Bassingthwaighte has clocked up 38 years in health insurance, with the past 30 as CEO of Peoplecare, a national not-for-profit healthcare insurer based inWollongong. For the 2010/11 financial year, Peoplecare achieved a $6.096 million surplus. Here are his thoughts on how to manage cash flow, growth, decision-making and regulatory changes.

Management approach

Michael Bassingthwaighte’s four priorities for health insurance management:

1. Cash flow management

  • Manage risk by implementing a diversified investment strategy with a strong emphasis on defensive assets in the current volatile economic environment.
  • Select short/medium-term investments with strong liquidity.
  • Monitor recurring funding obligations. Make sure risk equalisation payments are linked to the timing of your investment placements.

2. Business growth

  • Actively engage all staff. Align them to your strategy and make sure they have a transparent view of the business and its performance and are rewarded by success. This is crucial, as staff deliver the service and customer satisfaction.
  • Review your product development and service offerings against the market. Organise independent reviews to test product and service effectiveness for consumers.
  • Target a younger demographic to counteract an ageing membership base.
  • Continually evaluate the impact on capital, expense ratios, acquisition costs and product profitability.
  • Look beyond organic growth for collaborative opportunities.

3. Decision-making during volatile economic times

  • Strengthen your board.
  • Position the company for opportunities to innovate, notwithstanding the limitations of the regulated environment of the private health insurance sector.
  • Develop a strong infrastructure platform (e.g. IT) to enhance service delivery and to reduce operational costs.

4. Industry changes – economic and regulatory

  • Monitor key economic issues relating to affordability and members’ capacity to pay (e.g. interest rates movements).
  • Keep up to date with key political issues, such as the potential impact of the means testing of the Private Health Insurance Rebate that took effect from 1 July 2012. While the implications of this policy change are still being defined, continue to demonstrate the value of the products you sell.