Media releases 2012

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Southern Cross results show demand for private healthcare at record levels

Friday, 14 September 2012 by Aimee Bourke

Southern Cross Medical Care Society released its Annual Report today, highlighting over $600m worth of healthcare services funded in the 2012 financial year.

This included the funding of 171,000 elective surgical procedures, up from 158,000 in the previous year.

108,000 members underwent one or more surgical procedures funded by their Southern Cross health insurance. This included:
  • 1600 hip replacements
  • 6200 cataract surgeries
  • 16,200 colonoscopies
Members’ claims for non-surgical elective services included:
  • 674,000 GP consultations
  • 50,000 ultrasound scans
  • 12,000 MRI scans
For every $1 of premium income, 85.7 cents was returned to members in claims for healthcare treatment.
Southern Cross Medical Care Society Chief Executive Officer Ian McPherson said non-public funders like Southern Cross provided significant relief to the public sector, by freeing up resources for emergency, acute and community health services.
“Despite a tough economic climate and the absence of any financial incentives to insure, 1.35 million New Zealanders choose to make provision for their own elective healthcare needs through health insurance. They place a high value on the knowledge that should they require care they can access it without delay and undue financial burden.”
McPherson said in the future, taking personal responsibility to fund elective healthcare needs will be even more necessary.
“Although the number of elective surgeries provided by District Health Boards is at record levels, so too is the demand for these services. This rising demand is being echoed in the private sector.”
For example, between April 2007 and March 2012, the number of orthopaedic procedures funded by the Society increased by 26% - though total membership remained static over that same period.
“Health budgets are coming under increasing pressure as the population ages, chronic conditions become more prevalent and treatment options expand.For the public system to remain sustainable, a significant change is required in how we pay for and provide non-urgent healthcare in this country.”
McPherson said, “Those with insurance are now prepared for this reality, and nearly all Kiwis should be. The country needs them too. This will necessitate a shift in thinking and a letting go of long-held expectations around what the public purse can reasonably be expected to deliver.
“New ways to help New Zealanders save for the costs of non-urgent healthcare will be required, as has happened with saving for retirement.Healthcare is not cheap - a cardiac bypass in private will set you back between $38,000 - $60,000 and a hip replacement between $18,000 - $28,000.”
The 2012 financial year saw the Friendly Society in a strong and stable financial position, while continuing to deliver good value to its members.
In February the Society retained it’s A+ (Strong) financial strength rating from Standard and Poor’s for the tenth consecutive year. At year end the Society’s reserves equated to around seven months’ worth of claims costs.
Lower claims in the first half of the year resulted in a higher-than-planned surplus of $39m. This surplus will be used by the Society to mitigate future premium increases, to increase policy benefits and to maintain reserves at appropriate levels.
The Society’s market share held steady at 61%, and the number of members on employer-subsidised schemes also remained level with 2011 numbers.
“Against a tough economic background, employers are very aware that helping people stay well and get both the day-to-day and elective medical treatment they need quickly is key to productivity. But it’s not all just about the bottom line – businesses care about their employees and want to support their health,” said McPherson.
Reflecting an industry wide trend, the number of members decreased 1.6% over the year to 822,422.

Southern Cross Medical Care Society’s 2012 Annual Report can be accessed here


Number of Southern Cross-funded surgeries by region* for 2012 financial year
Number of Surgeries
Northland 4126
Counties Manukau
Bay of Plenty
Lakes District
Hawke's Bay
Capital and Coast
Nelson Marlborough
South Canterbury
West Coast
*Regions determined by District Health Board boundaries