Last week's Observer column, written by Mr Robert Nutty, managing director of a mobile medical scanning equipment company, contained factual inaccuracies and misleading statements about VHI Healthcare.
VHI operates in a competitive marketplace and its primary focus is ensuring that its 1.5 million members have access to the best medical care in the most appropriate setting at the most affordable price.
VHI's management of claims' costs and supply of services may not have won it admirers among some providers of healthcare services, such as Mr Nutty. However, health insurance consumers in the Republic are paying among the cheapest rates in the world.
The annual premium charged by VHI for its most popular Plan B is less than 2 per cent of the average industrial wage. The VHI premium is half of what you would pay in Britain and one-third of the cost in the US.
One of the key factors influencing premium costs is the work done by VHI to manage and contain costs. Its primary focus is to keep the costs affordable while ensuring that its members have access to the best healthcare treatments and services in the most appropriate setting.
Mr Nutty made a series of inaccurate statements as follows:
Mr Nutty claimed there was legislation going through the Dail and Seanad that would give "full commercial freedom to the VHI". This is not true. Legislation recently passed by the Dail and Seanad deals with regulation of the health insurance business generally. It contains one provision that will allow VHI to provide additional healthcare services. It does not give VHI any of the powers that Mr Nutty suggested.
The Competition Authority is not investigating VHI, as stated by Mr Nutty. Some months ago the Irish Hospital Consultants' Association (IHCA) made a notification to the Competition Authority in relation to discussions that take place on an annual basis between that organisation and VHI. This notification was subsequently withdrawn by the IHCA and a notice to that effect was published in this newspaper.
Mr Nutty's comment that "the consumer does not seem to be considered in the whole process" fails to take account of the fact that the principles of community rating, open enrolment, minimum benefits and lifetime cover were adopted in the Republic in 1994 in order to protect consumers. VHI is a customer-focused organisation and this has been recognised by a number of industry awards over the past 12 months. VHI scored the highest first-time score for an Irish organisation when it was awarded the Q Mark for Business Excellence from Excellence Ireland. In addition, its call centre manager won Call Centre Manager of The Year at the National Call Centre Awards; its new business unit in Kilkenny won the Business of the Year Award in Kilkenny; and its internet health portal won a National Internet Award and a Golden Spider Award.
Mr Nutty claims that VHI "lost" subscribers' money due to a negative return on its investment fund. VHI operates a conservative and prudent investment strategy appropriate to its liabilities and solvency requirements. Due to a downturn in Government bond prices in 1999/2000, VHI reported a negative investment return of £5 million (#6.35 million). However, in the five years to February 2000 it has made a return on its investments of £61 million.
The healthcare market is unlike other markets. Additional supply does not necessarily result in increased competition. It usually results in demand expanding to meet supply and an increase in costs. To avoid this and ensure that all providers are treated equally, since 1995 VHI has had an assessment procedure for applications for cover for new/additional facilities and technologies. New services are approved based on members' needs, medical necessity, qualitative issues and cost. Although this has not endeared us to some providers of medical services it is good news for our members, as it has resulted in significant savings over the past five years.
Vincent Sheridan is chief executive of VHI Healthcare
