Since Bupa’s “You’re amazing” campaign was first screened three years ago, the UK’s largest private healthcare insurer, has provided healthcare treatment for more than 3 million people. It had taken the insurance wing of the company the previous 47 years to sign up that many people to its policies.
These figures go some way to explaining why Bupa is repositioning itself as an all-round healthcare provider rather than just an insurance company, and why it plans to open a string of walk-in high street health stores (MW January 31). The equivalent of quick-fix health centres offering MOTs for the body.
It also explains why its main rival PPP Healthcare, facing the same problems, is examining its options.
After 50 years of providing private healthcare insurance, Bupa’s share of the 1.1bn market has dropped to 45 per cent from 60 per cent ten years ago. Its membership base has remained stagnant throughout the Nineties at just 3 million. It appears private health insurance membership peaked in 1990, when 6.6 million people were covered for private treatment. Figures from the Association of British Insurers indicate that the market has flattened to about 5.7 million.
As more players enter a stagnant market – Virgin and Legal & General both launched health insurance products last year – Bupa is desperate to maintain its lead. Last year, it launched a loyalty scheme giving members an eight per cent saving on Bupa products. But now it is looking for a more radical approach.
“The whole emphasis has shifted from insurance to healthcare,” says one industry observer. “From the moment Norwich Union and other insurance groups piled into the healthcare market with low-cost insurance, it was inevitable that PPP and Bupa would have to go further and offer a more in-depth product.
“The market now includes everything from the manufacturers of Sanatogen to sports clubs – anybody connected with health and fitness. It is a more complicated market than it was even ten years ago, with people picking and choosing from the public and private sectors to cover their health needs. These companies are competing in a market running alongside the NHS, not replacing it.”
Bupa high street stores would offer everything from dietary advice to diagnostic testing and fitness facilities.
The key causes of this change in emphasis began in the Eighties and continue now. Bupa marketing director Bruce Tranter says: “Hand in hand with Government legislation to devolve healthcare from the state, people have a greater self awareness and a desire to be fit.”
Self-medication is being actively encouraged by the Department of Health, which last year ran a 2.75m advertising campaign through Ogilvy & Mather to encourage patients to think before rushing to their family doctors.
The Government’s Primary Health Care Bill, which is soon to receive a first reading in the House of Commons, promises greater scope for healthcare provision through private GPs. Although the Bill has
little chance of success before the general election, Boots the Chemist admits it is investigating a service-based arm which could tender for healthcare service contracts.
“We are increasingly referring to customers as patients, and exploring a range of possibilities of primary healthcare on the high street,” says a Boots spokesman. “One hugely untapped area, is the use of pharmacists for giving out advice. We will try to bring pharmacists to the front of the stores and make a feature of their skills and knowledge.”
A source at PPP says it is likely to tender for these healthcare contracts, using the services of private GPs, of which there are less than 200 at the moment.
It is into this changing high street environment that Bupa is to launch its new outlets. Tranter believes the solution to the intangible nature of private healthcare lies in providing all of Bupa’s services under one roof.
“It makes sense for all our services to come into one place,” says Tranter. “It will provide a focus for our customers and give people a better sense of what Bupa is all about.”
But it also represents a risk, as Bupa will have to tackle design, stocking, location and financial issues. It would make sense to set up a test flagship store in a major city, such as London, Manchester or Birmingham, where people’s lifestyles demand easy access to health and fitness facilities.
The idea that private healthcare is now a marketing and customer- led culture is reflected in the change in ad campaigns in the past two years. In 1994, PPP Healthcare, with 28 per cent of the market, spent just over 1m on advertising. Last year, it spent 8m through M&C Saatchi as part of a 20m relaunch to raise awareness and reposition itself.
It has also created a joint venture with the US company Columbia to buy four London hospitals for 5m, with more deals in the pipeline. It contributed 100,000 to the opening of a cancer research unit; launched a 24-hour medical advice line offering help on nutrition and fitness; and, according to inside sources, actively considered opening retail centres.
At the time of the relaunch, PPP’s head of marketing Chris Webster said: “We have tried to give PPP a physical manifestation. It doesn’t exist in the consumer domain and we wanted to make it tangible.”
Experts have the same problem linking Bupa, an insurance company, with retailing. One source says: “What Bupa is planning seems like just another distribution point from which to collect names, with the ultimate aim of selling health insurance.
“The reality is there are not enough people coming into the market to warrant a retail business. The only real competition is the NHS. People still want free healthcare.”
The most recent Mintel report on private health insurance suggests that resistance to NHS queue jumping is far stronger than imagined.
The public still supports the principle that the provision of healthcare should be universal and not geared to income.
Although they predate the National Health Service in the UK, it has taken Bupa and PPP 50 years to arrive at a position where they offer healthcare treatments, and even then they only operate at the margins. The public, and the private companies, depend on the fact that the NHS continues.
However, it is also true that most people will have used private healthcare at some stage – even if it is just the dentist. Those numbers will increase as the Government withdraws further from universal care.
That is the future that Bupa and PPP are banking on, and why a presence on the high street becomes an attractive proposition.