Health insurer's own hospitals paid promptly

By ANDREW LAXON

Southern Cross Healthcare is paying claims on time for treatment at its own hospitals and a few other selected hospitals - but leaving most customers to wait an average of five weeks.

Chief executive Roger Bowie yesterday confirmed that policyholders were being paid promptly if they had been treated at one of Southern Cross' 11 hospitals or at one that had a contract with the insurer guaranteeing payment on time.

He would not say which private hospitals were included in the deal, on the grounds that it was commercially sensitive.

The two-tier payments system has angered the Private Hospitals Association, which claims it should not matter which hospital saw the patient.

Executive director Lesley Clarke said many of her members believed this was Southern Cross' latest tactic to force hospitals into fixed-price contracts for operations.

She did not think this was likely, but "if it is a strategy to get people to sign up, it's not going to work".

Even before the unpaid claims row started, some private hospitals were at loggerheads with Southern Cross over the contracts, which many doctors regard as a device to force down their charges.

Mr Bowie also confirmed that this month's premium payments for about 300 members who joined through Diner's Club had not gone through because of a dispute between the credit card company and Southern Cross.

He said the members would still be covered while the dispute was being resolved.

Mr Bowie would not say whether Southern Cross had lost any members because of its unpaid claims problem.

The managing director of insurance broker Stone & Associates, Todd Jones, told the Herald that about 20 Southern Cross customers a day were switching to other insurers through his firm.

Calls had increased 70 per cent to about 35 a day, mostly from dissatisfied Southern Cross policyholders, who were already uneasy about looming premium rises, he said.

But about one in five people who called had medical conditions, such as a heart problem, which would make it difficult for them to find a new insurer.

Mr Jones said Tower, the second-biggest health insurer, and Sovereign, which has launched an aggressive advertising campaign, were picking up the most business.

Tower chief executive Jim Minto said his company did not plan to poach Southern Cross customers because many had expensive health problems that were likely to cost Tower money.

"That's why we didn't feel it was appropriate to be opportunistic about this because people switching might jump to something worse," he said.

"If we take on board the wrong sort of business, we'll destroy value for shareholders as well as existing policyholders."

Mr Minto said the fact that many Southern Cross customers effectively had nowhere to go showed the monopoly dangers of Southern Cross' takeover of Aetna.

As a competitor, he was also amazed that Southern Cross had tried to simultaneously change its computer system and the location of its claims centre last year.

Mr Minto said he would have expected the company to move its claims business from Auckland to Hamilton gradually until it had enough staff there to cope with the workload.

"But they just went big bang and they burned all the staff at once," he said.

"That was a terrible mistake - you just don't do that."

Full coverage:
nzherald.co.nz/southerncross