VHI suffers €65m loss as it pays out €30m more than it managed to take in

VHI, the country’s largest health insurer, suffered a €65 million loss in the 10- months to December 2008.

That contrasts sharply with the surplus or profit of almost €63m recorded in the 12 months to the end of February 2008.

Over the 10 months, VHI also suffered a €45m hit on its financial investments due to weak stock markets, and it paid out over €30m more to members than it received in premiums.

Those were the key reasons for the sharp reversal in the group’s financial performance, chief executive Jimmy Tolan said. With demand for healthcare continuing to rise, Mr Tolan said VHI is paying out more than €3.3m extra per week compared with this time last year to meet the cost of its customers.

“The key cost driver is the increase in the number of procedures for which our customers are treated.”

Over the period the number of procedures carried out on clients in private hospitals over the period was up by 14%, in a trend that is likely to continue.

In that context community rating was vitally important and Mr Tolan welcomed the decision of November 2008 by the Government to support community rating, which means all health insurers have to share the burden of a society that is getting older. The levy on the other health insurance companies put in place in December was vital to ensure that older people had access to health insurance at a reasonable cost, he said.

During the year cancer care medical expenses accounted for the number one item in cost terms last year. The group paid out €185m in that regard while the cost of treatment for heart and circulatory illnesses was next at €129m, followed by orthopaedic care, including hip replacements, at €128m.

In total, more than €981m was paid out in claims, an increase of 17% on the previous year.

VHI spent on average €775 for each customer last year in meeting their medical needs, which was between €300 and €400 more on each subscriber compared with its rivals.

VHI also said it plans to introduce new products for illness prevention, chronic disease management and care in the community.

Mr Tolan said the difficult economic environment will affect VHI membership.