Medibank Private chief executive Craig Drummond has again warned revenue in the first four months of the financial year is running below expectations. And he warned that 2017 will be a year of fixing the problem, so investors have been told not to expect any pleasant surprises, probably more costs.
Speaking to analysts at a briefing in Melbourne yesterday Nr Drummond repeated comments made to the company’s annual meeting at the start of last month that the slowdown in revenues was continuing as customers upped and left.
He said that the “Medibank brand has been in decline for about eight years” and his key objective was to “put the customer first” to stabilise the business within the next two to three years.
He promised to cut waiting times and customer complaints and offer new products and services to turn around a collapse in the private health insurer’s market share. The company said revenue in the four months to October 31 was “ lightly below company expectations" and said the company’s health insurance operating profit for the 2017 financial year would be "broadly" in line with 2016 result at around $490 million.
Mr Drummond had told the AGM on November 9 that premium revenue grew below expectations, at just 1.3%, in the first four months of the financial year and that this weaker growth is expected to continue.
“Looking to the 2017 financial year, I expect that the environment will continue to be challenging,” says CEO Craig Drummond.“On the revenue side, we expect market growth to slow in response to ongoing affordability concerns and slowing population growth.” Yesterday it was more in the same vein:
“Our members have declined by 2.5 per cent and our market share has continued to decline at a similar rate … this is not sustainable", Mr Drummond told the briefing.
"The fix is not buying other businesses to grow Medibank. What is right is to focus on the core, strengthen it, fix our customer pain points, get the basics right. We now have the right team in place, we are building the culture of accountability.”
"2017 is about re-orientating to our customer by investing in service, experience and product value and doing so through ongoing cost saves and necessary investment," he said.
Mr Drummond said he plans to measure executive performance using net promoter score – which is driven by customer satisfaction – bring customer waiting times from more than seven minutes to under one minute, cut costs through things like automating procurement and new hospital agreements as well as offering customers new products like $40 million in dental check-ups (already on offer) and better digital channels.
"When you lose two and a half per cent of your customer base in one year, the first issue is to understand what the issues are … we understand those issues now and are trying to fix them."
The insurers shares ended steady at $2.60, after being dow around 1% during the day.
