Ex-staffer says layoff caused $25m Southern Cross backlog

Southern Cross denies redundancies are to blame for delays, writes JO-MARIE BROWN.

A former Southern Cross Healthcare employee believes the insurer's decision to make almost its entire claims department redundant in November is partly to blame for the backlog of claims.

About 60 Auckland-based claims staff were asked to reapply for their jobs, a move which would have meant shifting to Hamilton and learning to use Southern Cross's new computer system.

Only one chose to do so.

The insurer now blames a switch to that new computer system for a backlog of claims that has left patients and healthcare providers about $25 million out of pocket.

But the former claims staff member, who did not wish to be identified, said new staff hired in Hamilton to replace those made redundant would not yet have enough knowledge of Southern Cross' policy and payment systems to speedily process claims.

"The people with all that knowledge are gone now.

"There are so many different types of claims and so many different types of policies," she said.

"Anybody can learn a new computer system, but you can't pay a claim without the knowledge behind it."

The woman said Southern Cross did need the new computer system, and acknowledged that difficulties with it would be slowing the claims process.

"But I believe the decision to move the claims department [to Hamilton] has also contributed," she said.

Southern Cross spokesman Dr Michael Ashby strongly denied that the redundancies were a factor in creating the backlog.

"The people who were laid off were people who could only operate the old system.

"They couldn't have helped one little bit unless they shifted to Hamilton and trained on the new system."

Southern Cross was "absolutely gutted" by the delays which had members waiting seven weeks for their claims to be processed, he said.

The new computer system required more details to be entered for many claims than the previous one did - something which could not have been foreseen.

About 2000 claims were being paid each day, and Southern Cross hoped to have the backlog cleared by the end of the month, said Dr Ashby.

"We are very sorry this has happened and we are working as hard as we possibly can to rectify it."

The new system would result in faster claims turnaround and a better service once the problems were ironed out, he said.

The chairman of Southern Cross' board, Dr Hylton LeGrice, said the slow transfer of 800,000 members' details was a "small hiccup".

While it was a nuisance, he said, it was not of great concern to the board.

But Southern Cross has said it is worried about losing customers over the affair.

And at least one rival health insurer is making plans to entice dissatisfied clients.

Sovereign Healthcare's head of marketing, Vena Crawley, said the company was looking at expanding its services to attract customers from its rival.

"We're now working on other things and waiting to see ... how many other customers are out there and what we can do."

Meanwhile, Tower Insurance - the country's second largest health insurer after Southern Cross - said it would not be mounting a direct campaign but aimed to compete in the long-term.

Chief executive Jim Minto said: "Thinking people will be making their own choices, and we're happy to help them."

People continued to contact the Herald yesterday to complain about their unprocessed Southern Cross claims.

However, some callers took a more sympathetic view.

A businesswoman from Waitakere City, who did not wish to be named, said she would not hold any grudge despite the delays.

"In the 25 years we've been members I can't say that we've had a problem in all that time.

"I just think it's something that's happened ,and hopefully they'll sort it out quickly."