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Vhi Healthcare reports surplus after tax of €7.4m in 2011
By Finfacts Team
Mar 21, 2012 - 2:55 PM
Vhi Healthcare, the State health insurer, today
reported a surplus after tax of €7.4m for the twelve months to 31st December
2011 compared to a deficit after tax of € 3.1m in 2010 and a deficit after tax
of €41.7 m in 2009.
According to Bernard Collins, chairman, Vhi: “2011 was a difficult year for
both Vhi Healthcare and the private health insurance market however a number of
business strategies driven by the Board and the management team are helping to
put Vhi Healthcare back on a sustainable footing for the future."
VHI Healthcare said its hospital insurance business continues to be loss-making
but that it is creating the financial environment to achieve long-term
sustainability. It has reserves of €295m, but it will need an extra cash
injection of up to €250m to satisfy the Central Bank regulatory rules for
insurers, mandated by the European Commission.
The company, which has 1.2m customers, said the
cost of private beds in public hospitals have increased by 41% since 2009.
Commenting on the financial results Declan
Moran, chief executive, said: “The Board of Vhi
Healthcare has directed that we build on the cost containment initiatives we
have pursued over the last three years . As a result of tough negotiation with
providers combined with a firm focus on reducing administration costs and
driving efficiencies right across the business, savings of nearly €200m have
been obtained since 2009. For phase 2 of this initiative Vhi Healthcare has now
engaged Milliman consultants to carry out a Utilisation Management Review of our
claims and advise if further efficiencies can be achieved in this way . The
review will provide a detailed report on the advantages and disadvantages of
moving towards greater utilisation management, a cost benefit analysis and a
detailed plan on how this might be achieved including the timelines involved,
costs and potential savings if any that could be achieved .”
- Earned Premium for 2011 came to €1.314bn,
down 1.6% on 2010;
- Total claims incurred for 2011 amounted to
€1.234bn. This figure is down 5.6% on the previous year mainly due to the
effects of cost containment initiatives including agreed reductions in rates
payable to private hospitals (6%) and consultant fees (15%). "In addition,
there were significant savings made as more procedures are being delivered
in day-care settings than ever before, at a lower cost. Savings have also
been recouped by the Claims Special Investigations Unit which investigates
instances of incorrect or inappropriate invoicing of customers by healthcare
- The ratio of claims spend to income earned
reduced from 95.1% in 2010 to 90.8% by the end of 2011. In simple terms this
means that of every €100 received in premium income almost €91 is paid out
to provide medical care for customers;
- Operating costs continued to decline and at
€88.4m are 10% lower than they were three years ago. Expressed as a
percentage of premium income, Vhi Healthcare’s operating expense ratio of
6.3% remains significantly lower than those of its competitors;
- The ratio of free reserves to premium income
at the end of December 2011 stood at 22.3% -down half of one per cent on the
previous year. However, at €295m the free reserves are still considerably
higher than any other health insurer and we have over €780m in liquid
- Investment income showed a negative return
of €23.5m during the year compared to gains of €22.5m the previous year.
This was accounted for mainly by losses incurred on subordinated bank debt.
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