IRISH consumers will get "value for money" health care from BUPA Ireland, according to newly appointed chairman, Margaret Downes. With plans to be up and running by the end of the year, she says Britain's biggest independent health insurer will offer a more competitive and efficient service than the VHI.

BUPA will establish offices in Dublin and Cork and is intent on attracting a substantial customer base. "We intend to be so competitive that we will be able to attract many customers. Our prices will be structured that way," says Dr Downes.

But BUPA is keeping its exact product mix and general pricing levels to itself for now. Dr Downes insists that while no final decision has been made on either to date, consumers will find it has "a lot to offer".

Taking the market somewhat by surprise this week, BUPA has shown itself to be keen to get a foothold in the Irish market. In recent years it has been an open secret that the 50-year-old provident society has been keeping a close watch on developments in the Republic. And while an EU directive in 1994 had effectively cleared the way for companies such as BUPA to compete with the VHI, Dr Downes says it was only in the last few weeks that new regulations published by the Department of Health, had clarified the rules under which it could operate.

While ending the State-owned VHI's monopoly, the Government's insistence on maintaining a community rating system makes it a much less attractive market for BUPA than Britain. By stipulating that all subscribers pay a flat premium rate for health insurance, regardless of their age, it effectively prevents insurers from "cherry picking" or offering cheaper deals for certain segments of the market.

But despite these conditions, Dr Downes is confident that BUPA will be able to win a sufficiently large share of the market to be able to achieve a "reasonable return".

Established in Britain for more than 50 years, BUPA insures three million people in 115 states throughout the world. Next to Britain, where it has more than one million subscribers, it also has a substantial operation in Spain through it's subsidiary company Sanitas. As a provident society, BUPA like the VHI, is a non-profit making body, investing surplus funds in health care. Last year its surplus rose sharply to £48.9 million, up 19 per cent on £41.1 million in 1994, while its total reserves increased to £565.3 million.

Such a strong performance is in marked contrast to the VHI's experience. Last year, its annual accounts showed a worsening financial position, reporting losses of £4.8 million on its day-to-day operations, as claims ran well ahead of subscription income. The group has continually been forced to raise its premiums, with VHI chief executive, Mr Brian Duncan, warning that such a pattern was "inevitable".

Operating a "slimmer" and "leaner" business than the VHI, Dr Downes says its long experience in the industry together with sophisticated technology, will ensure it can deliver health care products as cheaply as possible and remain viable.

"We will be offering products tailored to specific groups of people other than those sold to everyone under the community rating system. Products such as specific women's health care policies and screening services" are likely to feature, she says.

"Our research has, for example, also shown a relatively high incidence of cancer in Ireland, creating a high demand for oncology treatment, which we will obviously have to cater for."

Recent moves by the Association of British Insurers, of which BUPA is a member, to complain to the European Commission about the continuance of community rating in Ireland, she says, have no bearing on its decision to trade in Ireland. Claiming that the community rating system is anti-competitive, the ABI has urged the Commission to investigate the legality of its operation under current EU Legislation.

"If community rating continues we will live with it. As of now we intend to compete on that whether it is here to stay or not."

next week, BUPA will open discussions with Irish hospitals and consultants, to secure agreements with them to treat patients covered by their policies. However, the group, which already has a majority stake in Dublin's Blackrock Clinic has no plans to buy other Irish hospitals.

The Blackrock Clinic, according to Dr Downes, is a "one off" in Ireland for BUPA. "Through our experience in the UK, where we have a network of 29 hospitals, we are aware of the benefits of operating our own hospitals. But as of now, we have no immediate plans to make such an investment."

In researching the Irish market, Dr Downes says that while BUPA discovered consumers showed strong loyalty to the VHI, a lot of dissatisfaction is also evident, particularly with regard to the cost of health insurance.

But in some cases, price comparisons between BUPA's policies in Britain and the VHI have shown BUPA to be more expensive. Typically quoting around £1,200 for basic insurance cover for two adults and two children, similar cover from the VHI is available for about £800.

But Dr Downes insists that such comparisons are "unfair" and fail to reflect the different basis on which rates are set in Ireland and Britain. "Its like comparing apples with oranges. Many of our `no frills' policies are cheaper than those currently available here," she says.

Having served for more than a year as a director of BUPA in Britain, Dr Downes is more than comfortable with her new role, but admits that her schedule is becoming quite hectic.

Much in demand, Dr Downes already holds a string of directorships at Bank of Ireland, Ardagh plc, and the Mothercare/BHS group Storehouse. Her latest undertaking, she says, fits in well with her other executive duties, which are all basically focussed on retailing.

"Whether its banking, or insurance, its really all about giving customers what they want."