Southern Cross back in black

Chief executive Peter Tynan wants Southern Cross to strike more contracts with providers. Photo / Sarah Ivey

Membership continues to decline.

New Zealand's biggest medical and health insurer has slipped back into the black, turning last year's $390,000 after-tax deficit into a surplus of $5.7 million.

But the annual report out today also reveals continually falling membership numbers, from 825,000 in 2012 to 815,447 in June last year and down to 811,462 members in June this year.

Chairman Greg Gent said Southern Cross still had 61 per cent of all Kiwis with health insurance.

Premium revenues rose from $768 million to $817 million, partly offset by net claims expenses, up from $694 million to $737 million.

The society paid 90.2c in claims for every $1 received in premiums and it has $400 million reserves, "equivalent to around seven months of claims".

The annual report describes the surplus as "small" and highlights that Southern Cross is a not-for-profit society and that it pays 73 per cent of all New Zealand health insurance claims.

Gent expressed concern about the rising cost of healthcare, which he said was an international concern.

The society's affiliated provider programme was its main response, contracting a limited number of surgeons, specialists and facilities to provide procedures at agreed set prices, giving the society some level of assurance that it was getting a good deal and moderating cost rises.

Chief executive Peter Tynan said that programme had now grown to contract 1266 providers in 20 specialties, accounting for 45 per cent of all claims costs.

He cited colonoscopies as an example of the programme's success, cutting annual inflation for procedure costs from 7 per cent in 2011 to only 1.7 per cent in the last financial year.

The society wants to strike more contracts with providers.

"Our aim is to have 60 per cent of all Southern Cross claims through affiliated providers by the end of the next year," Tynan said.

Some specialists complain the scheme has locked them out of providing services to Southern Cross members.

Health spendup

In the June year, Southern Cross paid for:

• $738m of annual claims

• 170,000 surgical procedures

• 781,000 doctors' visits

• 3.1m total claims processed

See the latest Southern Cross annual report here: