Assessment of Private Health Insurance Industry in Australia
Added on 2019-11-29
28 Pages5899 Words148 Views
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Medibank pty ltd1
Executive summeryMedibank pty ltd is the largest private health insurance (PHI) organisation. It commandsaround 29% of the market share. The organisation provides integrated healthcare servicewhere apart from health insurance the organisation provides complementary services whichaccount 10% of its volume. The main investment strategy that the organisation as a privatehealth insurance company applies is the low risk low return investments. Previously it used tobe fully govt owned. The population of Australia is aging and in 2055 the ‘average lifeexpectancy’ is expected to be 96.6 and 95.1 year for women and men respectively. Theintroduction of the technology based services like the tele-health is changing the servicedelivery. Considering this long term and innovative approach is needs in the business. Alongwith these general risks Medibank pty ltd faces two specific risk factors. One is the loss ofcustomer because of the affordability matter. To counter this business developed twodifferent brands. Brand Medibank is a premium service based private health insurance andbrand ahm uses affordability as its position statements. Addressing two different type ofcustomer based with two different brands helps the business to retain customer. on the otherhand the recent technology up gradation at Medibank's botched is a transition process from40 year old mainframe system to recent technology. This process has disrupted the customerservice and number of complaints has gone up by 60% on year on year basis. This is a majorrisk factor which was considered earlier and may impact the future operation until the workends. Considering this Medibank increased customer service spending by $6 m andintroduced 60 more customer service officer to provide better service. The social mediaplatform is also used to provide service 24*7. A proper governance structure andmanagement process is there in the organisation and that is helping the organisation tominimise the risk of the business. 2
Table of ContentsExecutive summery....................................................................................................................2Introduction................................................................................................................................6Part-1 Developing understanding about the nature of Medibank pty ltd...................................6Operations of the business.....................................................................................................6Investments and the activity done in this regard....................................................................7Financing and the activity done in this regard.......................................................................9Practices of the financial reporting process...........................................................................9Part -2 Developing understanding for the nature of industry Medibank pty ltd belongs to.......9Size of the industry.................................................................................................................9Growth of the industry...........................................................................................................9Supply chain structure of the industry.................................................................................10Market share distribution and significant players in the market..........................................11Success factor which are critical for the businesses.............................................................12Part-3 Developing understanding for the legal requirements..................................................13Regulatory environments and factors...................................................................................13Format of financial reporting...............................................................................................14Political and legal environment............................................................................................14Part- 4 Developing understanding for the business external type environmental factors........15SWOT analysis.....................................................................................................................15PEST analysis.......................................................................................................................16Porter’s five forces...............................................................................................................17Part-5 Analysing the business risk along with the strategy and objective of the business......18Expansion and maintaining customer base..........................................................................19Bad service and use of IT.....................................................................................................19Part- 6 Performance analysis through the analytical procedure for Medibank pty ltd.............203
Premium growth...................................................................................................................20Management expense ratio...................................................................................................21Net margin ratio...................................................................................................................21Part-7 Medibank pty ltd’s governance and management structure..........................................22Ethics, integrity and communication....................................................................................22Competency..........................................................................................................................23Attributes of the people responsible for governance............................................................23Operating style and the philosophy of the management......................................................26Conclusion................................................................................................................................26Reference..................................................................................................................................274
IntroductionThe businesses are in the dynamic environment and not in any static environment.Considering these changes in situation, decision taken in this regard may cost the businesswith less profit or complete loss. This probabilistic factor is risk for the business (Vose,2008).In this report Medibank pty ltd is the chosen organisation for development ofunderstanding of the possible angles of risk identification and evaluation. Part-1 Developing understanding about the nature of Medibank pty ltdOperations of businessIn current setting the business is providing solution in the field of integrated healthcare. Inone segment the business provides health related insurance and on the other hand it providesservices in the field of health care solutions through the Medibank health (Bloomberg, 2017).There are health insurance related services like hospital cover, health cover for services ofoptical, dental or physiotherapy and others. The organisation also provides insurance forstudents and visitors who come from overseas (Bloomberg, 2017). Some tele-services andhealth management services are provided to corporate or govt clients through Medibankhealth. The services are in rehabilitation field, health and injury management of face to facenature, management of chronic disease, wellness and web platform based advices, providingsoftware for the clinical decisions and so on. In Australia Medibank pty ltd have 29% shareand Other than Australian market the organisation has small presence in the Singapore andNew Zealand. [Source: medibank.com.au, 2014] 5
[Source: medibank.com.au, 2016] These are subsidiary of the business which is owned by the company 100%. Investments and activity done in this regardMajor investment in management category of business is for capability increment. Theorganisation was preparing for Medibank bank re-launch. Investment activity is done in thebusiness after getting necessary approval from board of directors about ‘Capital managementpolicy’. Investment activity is evaluated based on factors like risk to return understanding fordifferent class of asset, appetite for risk, regulatory requirements of APRA, analysis ofliquidity and stability of base of capital (medibank.com.au, 2016). Main approach ofinvestment activity is low risk and low return approach. It abstains itself from high growthoriented risk activity in its investment decisions. The property section consists of investmentin building and land worth $24.4 m. Cash and cash equivalent consist of $ 438.7 m(medibank.com.au, 2016). 6
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