The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes.

Every attempt is made to provide accurate and well written material. Your contributions, suggestions, additional information and advice sent to the web address at the foot of the page are welcome. Where possible they will be included in revised pages.

The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Material contained here represents my views based on my study of the operation of the health care marketplace and the material available to me. It should not be assumed to represent the views of any other individual or organisation.

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Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then
CLICK HERE to open it in another tab or web page.

Content of this page
This web page examines the culture and practices of United Kingdom based not for profit BUPA. It focuses on the dilemma which BUPA faces operating very successfully in a marketplace context. It looks at the extent to which it has betrayed its mission in order to achieve marketplace goals and the implication this has for its suitability as a provider of nursing home care in Australia.

 Australian section   

The British United Provident Association



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Summary and Assessment

BUPA was established in 1947 as a not for profit provident organisation to meet the needs of those wanting something more than the National Health System (NHS) in Britain offered. It has promoted itself as having no shareholders and existing only for its members. It promises to spend any profits to further improve care for its members.

This is why citizens insure with it and use its hospitals, nursing homes and other services. It has operated as an insurer in Australia and has recently purchased Australia and New Zealand's largest nursing home empire.

BUPA typifies the dilemma facing most not for profit groups forced to operate as a competitive market entity. It illustrates the adaptations that not for profits who succeed in this make - adaptations that are not congruent with the not for profit mission they boast of. The focus shifts subtly from community, to profits and growth. BUPA's own company statements and actions suggest that profit and growth have become primary objectives. Communities are dumped when its business objectives make this expedient.

I stress that these adaptations are survival strategies and that rationalisations are then developed to make them legitimate - even desirable. The conflicting patterns of thinking are absorbed into corporate culture where the tensions result in a "worrying culture". Were they to behave differently then they would not survive in a competitive health and aged care marketplace.

This web page traces these conflicts and adaptations through the services BUPA provide in insurance, hospitals, nursing homes, childcare, wellness centres and a host of other services across the UK, Ireland, Spain, Asia and Australia.

These patterns of behaviour do I believe have implications for BUPA as a provider of aged care in Australia and go to its suitability. It is certainly infinitely preferable to the private equity group it is replacing but that does not make it desirable - or "suitable".

At the very least it should be made very clear to BUPA that Australian citizens expect very different behaviour to that revealed here. They expect a far greater level of integrity and trustworthiness from a company which promises to put their interests first.

Those who have placed their loved ones in a BUPA nursing home because of the promises in BUPA's marketing should not for example risk being unceremoniously sold off to some profit hungry entrepreneur or other for profit operator simply because it is commercially advantageous to BUPA.

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It was not my intention to start researching or writing about insurance companies, non-share market listed not for profit companies or the UK and Irish Health systems.

BUPA has now bought DCA’s nursing homes in Australia and New Zealand - becoming the largest owner and operator of nursing homes in both countries. It has been involved in a damaging dispute in Australia and its commercial decisions in the UK and Ireland deserve some attention.

Being not for profit does not make it a "suitable organization", whatever that may mean, within our regulatory requirements. Nor does it make it a "fit and proper person" as we might understand it within previous probity requirements.

While it may be preferable to Citigroup, BUPA should still be required to seek approved provider status. The concern is that like Citigroup’s venture capital subsidiary CVC Asia Pacific, when it bought DCA’s nursing homes, it may not have to.

BUPA, the leading health and care company, today announced an agreement to acquire the controlling interest in the DCA Agedcare Group from DIAC Holdings NV, a company ultimately owned by funds advised by CVC Asia Pacific and CVC Capital Partners (collectively "CVC"), valuing the group at A$1.225 billion. The DCA Agedcare Group comprises the Amity Group in Australia and Guardian Health Care in New Zealand. Completion of the acquisition of DIAC Holdings NV's interest by BUPA is expected before the end of the year, subject to regulatory approval.

Together Amity and Guardian have 96 care homes and 7,000 beds with a combined annual turnover of A$344 million. They are leaders in their respective markets and will add to BUPA’s presence in the care for the elderly market, where it is already a leading player in Europe, with 20,000 beds in 300 UK care homes and 4,300 beds in 43 homes in Spain. This latest agreement increases BUPA’s portfolio to over 31,300 beds.

The purchase of DCA by CVC Asia Pacific, Citigroup’s Asian Venture Capital arm in 2006 and the implications of a company with a track record like Citigroup’s operating our nursing homes is addressed on another web page.

An urgent request to the aged care department asking whether BUPA would be required to seek approved provider status was made on 4th October (3 weeks ago) but there has been no reply. The attention of the responsible agency was therefore drawn to some issues regarding BUPA. That also has not been acknowledged. When I phoned I was told that the matter was being treated as a matter of urgency. They would not disclose to me whether BUPA was required to seek approved provider status.

Click Here to go to another web page, which will track developments.

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My position

My personal preference is for a not for profit dominated system driven by community interest and cooperation - as contrasted with a corporate for profit system driven by commercial interest and competition.

I see no difficulties in cooperative enterprises between genuine not for profit entities and publicly provided services. Both have or should have a service ethic with a primary interest in the welfare of their patients and in stretching resources for maximum benefit. Market listed and private equity enterprises in contrast have conflicting priorities. In principal therefore I would welcome BUPA.

Not for profit organizations are not what they once were. Forced to operate in a competitive marketplace, many have now embraced marketplace thinking and marketplace practices. While promoting their not for profit ideals they sometimes behave very differently. Problems in care and an increasing involvement in fraudulent practices are already apparent in the USA where marketplace competition is more intense. The manner in which not for profit organizations operate has now become more relevant - their probity.

I do see conflicts and problems in BUPA’s ethic of competitiveness and in its commercial entrepreneurialism. These sit poorly with its mission as a not for profit organization operating for the benefit of its members.

Competition has been good for the market, believes BUPA International's development director Dr Damien Marmion. "New competition is good for the customer and is bringing in a fair amount of product innovation too," he says.
Invasion of the innovators: Andy Couchman charts the profusion of health insurance providers that are now nipping at BUPA's heels The Observer February 13, 2003

In fairness to BUPA it has been forced to operate in this competitive marketplace and, to be successful, it has had to embrace the values and norms of the marketplace and identify with competition beliefs. It has embraced these and this is reflected by the preponderance of successful business executives on the board. (see annual reports at

The UK’s labour government has embraced the global application of the competition ethic and of marketplace beliefs. Even the National Health System (NHS) in the UK has been repeatedly restructured to make it operate as a competitive market. I argue that this is unlikely to work for care because the paradigms of understanding are so different. (see arguments in pdf file)

I find it reassuring to see a report of a move towards a more strongly community run and focused service in parts of the UK.

With the ageing population and limits on public spending, the ability of the NHS and local authority social care departments to meet people's needs is growing ever more stretched. The private sector stands ready to take up some slack, but the focus is on the potential of "not-for-profits" to fill most of the void with more cost-effective and - for many - more politically acceptable forms of social care for older and disabled people.
Not-for-profit organisations are often in direct competition with private healthcare firms but, where companies such as Bupa or Four Seasons once dominated the market, the thriving third sector is snatching business from under the eyes of big business.

An example of this is the Somerset Care Group, one of the first not-for-profit social healthcare enterprises, originating from the outsourcing of social care services by Somerset county council in 1991. The local authority helped establish an independent company that was limited by guarantee but was not a charity. Today, the company employs 3,500 people and has an annual turnover of pounds 50m, providing residential and nursing care in 27 care homes in Somerset, plus 30,000 hours of domiciliary care and personal care and assistance for 4,000 people living in their own homes.
"The idea of not-for-profit is catching on with people in the UK as they are purchasing from companies that are ploughing money straight back into the local community," says Andrew Larpent, chief executive of Somerset Care Group.

"The difference is that we employ people who have a passion for work rather than an equity stake in the business and offer worthwhile and rewarding careers for people. People are at the centre of the business and our ethos is that by investing in our staff we are helping them to provide the care our clients deserve. We are not for sale and no one can buy us - and, as we are not a charity, we are not bound by the rules of the Charity Commission."
Back to the future: Creating social enterprises to deliver care is hailed as a recent innovation, although the idea took off centuries ago. The sector has always picked up where the public purse or private funds have not The Guardian February 7, 2007

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Difficulties in gathering information on BUPA

BUPA has become so prominent in the UK that it has its name in many thousands of articles, most of which have little to do with BUPA. This makes researching it impossibly tedious. This page is therefore based largely on a limited sampling of material, from my data base, from a search of February and March in 2003 and from a restricted search of articles in two newspapers (The Guardian and The Sunday Times) over the last 2 years.

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BUPA’s History

BUPA began as The British United Provident Association in 1947 shortly before the National Health System (NHS) was set up. It aimed to preserve freedom of choice in health care. It provided private insurance and private hospitals for its customers. It has come a long way and changed since then.

Its early story is told in a page on its own web site and in the following extract although some of the dates are incorrect. It purchased Vista Healthcare in 2001.

BUPA was founded in 1947, when 17 British provident associations joined together to provide healthcare for the general public. The original services offered by BUPA included private medical insurance. BUPA had an initial registration of 38,000 when founded, but currently has over four million members, and has grown to become the largest independent health insurance provider in the UK.

A natural progression for the private health insurer was to establish its own treatment network. BUPA opened its first hospital in 1979, and has since expanded to operate 35 hospitals throughout the UK, and one in Dublin, Ireland. BUPA has also grown into markets related to healthcare, in particular health screening, care homes and retirement homes.

The company expanded through overseas acquisitions and diversification into new areas. BUPA's Hong Kong subsidiary opened in 1976, and went on to provide health insurance for over 150,000 people and over 1500 companies.

The company continued to grow in 1989, when BUPA acquired Sanitas, the largest private health insurance provider in Spain. Since then, Sanitas has grown to have a market share of 23%, making BUPA a major player in the Spanish health-care market. International expansion was seen in Thailand, where BUPA had been operating since 1996 in conjunction with Blue Cross. BUPA entered Ireland in 1996 and the Middle East in 1997 and Australia in 2003.

With an established international base, the company began to diversify its operations further in April 1998, with the launch of its own nursing agency, BUPA Healthcare Professionals, which currently has a network of 27 branches nationwide. BUPA Nursing was formed from the amalgamation of several nursing agencies, including Goldsborough Nursing Services.

In August 2000, BUPA purchased Teddies Nurseries, a major childcare provider, which operated 40 day nurseries based in London and the South East. This became the next stage of BUPA's development in childcare provision following the acquisition of Brampton Day Nursery in Bexleyheath, Kent in September 1999.

In 2001, BUPA continued to look for opportunities to grow the company both organically and through acquisition. In May 2004, it acquired a group of quality care homes in Cumbria. It also added 10 children's nurseries to its portfolio during the year. In July 2004, the company acquired Vista Healthcare Asia, whose activities were mainly in primary care, day case surgery and diagnostics, with significant interests in Singapore, Hong Kong and Australia and minority interests in mainland China and Malaysia. And at the end of 2001, Sanitas acquired the Previlabor and Laborservis companies in Spain, which provided services for health and safety in the workplace.

Also, that year, the company's home care business, which focused on providing care at home, was also sold. This enabled BUPA's care services business to concentrate on the expansion of care provision in its residential and nursing homes and on healthcare staffing.
BUPA - History. Datamonitor Company Profiles July 21, 2004

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A not-for profit organisation

BUPA proclaims its not for profit mission repeatedly on its web site and in its reports. The terms used in referring to BUPA are not for profit, mutual, limited by guarantee, and a provident association. In essence it exists (or should exist) for its customers and any profits are used for their benefit.

As this web page indicates it has a tendency to sell the customers to whom it has made these commitments off to others with very different priorities and consequently fundamentally different approaches to their health - priorities and approaches dominated by commercial imperatives and self interest. (eg private equity and other entrepreneurs) This I believe goes to BUPA's integrity.

As a company without shareholders, BUPA re-invests its profits for the benefit of existing and new customers and already looks after more than one million insured customers in Australia through HBA and Mutual Community.

BUPA is a company limited by guarantee and does not have a share capital. As a result, it can focus on its customers, helping them to live longer, healthier lives and can reinvest all of its profits to do this - this is the dividend that BUPA provides.
BUPA Australia web pages Accessed October 2007

BUPA is a global health and care organisation. We are a provident association which means that any profit we make is re-invested in better health and care services.
As a provident association, BUPA does not have shareholders and reinvests its surpluses into improved health and care facilities such as medical equipment, the latest technology and buildings.
BUPA web pages Accessed October 2007

The British United Provident Association Limited (‘BUPA’) is a private company limited by guarantee. As such it has no shareholders and all of its surpluses are re-invested back into the business. BUPA exists for the benefit of its present and future customers.

The oversight normally provided by shareholders is exercised by a body of around 100 distinguished Association Members drawn mainly from business, public life, the medical professions, the charitable sector and academia, all of whom exercise the usual rights of shareholders. Nonetheless, as BUPA is a company limited by guarantee, the Association Members do not have any claim on the assets of the Company and are not entitled to receive a share of profits or dividends.
Annual Report for 2006 obtained from

The British United Provident Association is an odd corporate creature, not, as many think, a mutual, but a company limited by guarantee, a distinction it shares with Network Rail. Bupa has no shareholders, and oversight is provided by a group of 100 eminent "members" who have no direct economic interest in the group. Surpluses are invested back into the business.
Bupa's dilemma in sickness and in wealth The Sunday Times April 8, 2007

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 The market focus

The company is the market leader in the GBP 2.5bn private healthcare sector, with 2.6 million members and over 40 per cent market share.
BUPA blitz to push personalised cover Precision Marketing March 7, 2003

VAL GOODING has done a great job as chief executive of Bupa. Over the past four years its surpluses have more than tripled, from Pounds 100m to Pounds 330m, and she has driven the healthcare group along an overseas expansion trail that has brought it operations around the world.
Bupa's dilemma in sickness and in wealth The Sunday Times April 8, 2007

BUPA’s conflict
BUPA has to live in two worlds, the not for profit world of Samaritan community services and the ruthlessly impersonal profit focused world of the market. As I have indicated elsewhere (
pdf file) the typical human response is to express one world publicly and seek identity within it while acting within the other. Psycho-social strategies are developed to separate the two worlds and avoid confronting the contradictions.

This dichotomy is readily apparent when examining BUPA’s web pages and its latest annual report. Both make much of the not for profit status and community and customer focus.

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The Board
If we examine the board we find that they are, with one exception aged 50 plus. All except a prominent physician have a distinguished track record in business, although they are also involved in other community and humanitarian enterprises. The frameworks of understanding within which BUPA will operate are established by its board. This is balanced to some extent by a Medical Advisory board of health care professionals.

Executive Directors:- Val Gooding CBE Age 56 (CEO), Ray King Age 53 (Finance Director)

Independent Non-Executive Directors:- Lord Leitch Age 59 (Chairman), Oliver James Age 63 (Physician), Roy Brown Age 60, Greg Clarke Age 49, Robert Walther Age 63, Orna Ni-Chionna Age 51,
From Annual report for 2006

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While the growth of not for profit community services is to be encouraged, we should ask to what extent BUPA’s focus on growth and on cost reduction to boost profitability puts pressure on the quality of these services. BUPA’s profits have increased each year for several years. It has competed successfully with for profit multinationals. It is growing rapidly. This is how the market within which its performance is judged measures success. We do not have hard data about cost cutting and whether the need to compete has compromised care in any way.

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A comparison of care between BUPA and NHS facilities showed that care was actually no better than in the much criticised and under-funded NHS in the UK. One would have expected it to be better. BUPA is boasting of its profitability and spending vast sums expanding across the world. If it was fulfilling its promise to reinvest its profits in providing better services for its members then its care should be exemplary.

The principle problem with the NHS has been unacceptable waiting lists for surgery. BUPA had none and this is why nearly half of the UK population now has some form of limited supplementary insurance. A comparison between not for profit BUPA and for profit multinationals was not made explicitly. The one example quoted suggested that there might well be differences comparable to those in the USA.

Paying for private medical treatment does not guarantee a safer or better quality of care than using the NHS, the health inspectorate said yesterday in its first analysis of the performance of the independent sector.

The Healthcare commission found only 50% of the private hospitals and clinics in England and Wales met all the required minimum standards when they were inspected in the 2005-06 period, compared with 49% of NHS trusts.

About 15% of the independent providers failed on at least three tests of quality and safety. NHS trusts had to comply with more standards and their comparable failure rate was 19%.
But it found one Bupa hospital with inadequate infection control and two where inspectors were not satisfied about the recruitment and training of staff.
The British arm of the Swedish hospital chain Capio did not meet the infection control standard at two hospitals, the recruitment standard at three and did not adequately monitor quality of treatment at four. Capio has a network of 21 acute hospitals in England and is one of the leading suppliers of services to NHS patients.
Private healthcare sector's performance no better than NHS: Independent providers analysed for first time 15% fail on at least three tests of quality and safety The Guardian October 31, 2006

The patchy quality of private hospitals in England is revealed by the Healthcare Commission for the first time today in a guide for patients showing how each establishment performed at the most recent inspection.

The health watchdog found 6% of acute hospitals in the independent and charitable sectors failed to meet at least five of the 32 minimum standards, which included safety, cleanliness and quality of care.
The commission found 10% of acute hospitals did not keep adequate health records, 8% did not ensure temporary staff were properly trained and 8% did not meet the minimum standard for combating hospital-acquired infections such as the superbug MRSA.

The results suggested patients could not rely on the brand image of a big hospital chain to guarantee a high standard of compliance with the minimum standards. Results for Bupa Hospitals, BMI Healthcare and the British Pregnancy Advisory Service showed some of their establishments were among the highest achievers and others among the lowest.
Some private hospitals falling short of minimum standards: Big brand no guarantee of quality, watchdog suggests Commission puts guide on website for first time The Guardian December 20, 2006

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The impact of the market on BUPA

There is no reason to doubt that BUPA genuinely sets out to be a model not for profit operator and embraces key not for profit objectives. We need not doubt its commitment as expressed on its web pages.

Like not for profit services in the USA and Australia it has been forced to operate within and accommodate to an aggressively competitive government and corporate driven marketplace. It has done so very successfully. My argument on this page is that in doing so it has had no choice but to compromise those objectives and ignore or rationalise the contradictions in its conduct. Like all of us it then identifies with its conduct and embraces the values and arguments that give that conduct legitimacy.

We can detect tension between commercial priorities and the not for profit focus in

The question this web page addresses is the extent to which commercial priorities have overridden expected not for profit community focused conduct.

The allegations of ruthless bargaining and of underpaying hospitals (when contrasted with its insurer competitors) in Australia during 2003 goes to the heart of the problem. This might be good business but it threatens the standard of care others can give to BUPA customers.

Is it acceptable for the care given to patients to depend on the relative negotiating power of commercial entities rather than the medical needs of the patients?

But judging from the comments of the chief executives of two of the country's largest funds, George Savvides of Medibank Private and Richard Bowden of BUPA (previously Axa Health), the funds are determined to extract maximum value from any rate increases. It is also clear that, although consolidation has improved the hospital companies' negotiating positions, the larger funds are also determined to use their market power in setting rates.
HEALTH FUNDS Business Review Weekly (Australia) April 3, 2003

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A dilemma for critics
There is a dilemma for us here too. If we want not for profit care to survive then we have to support this inappropriate competitive aggressiveness. I argue that neither for profit, nor not for profit health and aged care enterprises prosper in the marketplace when they become socially conscious and place the interests of the community and its members above commercial self interest. Because they are inherently socially conscious not for profit’s are competitively disadvantaged in the commercial environment. To succeed they must find some strategy to get around this - adopt thinking which makes it permissible. If we want not for profits to prosper then we must support them in their efforts. In doing so we are likely to accept practices that are undesirable and then come to see them as legitimate. The only way to address this sensibly is to change the system.

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Examining BUPA’s conflict
To examine BPA's conflict we need to look for situations where commercial priorities and community service are in conflict. How often do commercial priorities trump the community’ interest.

A company’s own statements usually give a pointer to how it is thinking. The following sounds like a for profit basing its actions around profits. A not for profit would be looking at where the services were needed and seeing how resources could be mobilised to meet the need. What does it say when they have a "protection business head"?

Bupa says it wants to focus on areas of business which are the most profitable and limit its exposure to other areas.

Bupa protection business head of sales Martin Noone says: "We have tried to identify areas where we were uncompetitive and review them down but we have also raised our rates in areas where we were overly competitive."
Bupa rejigs CI rates in bid to make them more competitive Money Marketing June 5, 2003

A humanitarian not for profit entity focusing on its members might well assist in forming and cooperating with similar organizations in other countries - a social mission. They might even merge. Why would it seek to buy commercial enterprises in other countries and build a global empire?

BUPA is the UK market leader in health and care with a strong international presence. Established in 1947, it has over 8 million customers in 190 countries and more than 40,000 employees. Its main interests are health insurance, care homes for older people and young people with a disability, health assessments, workplace health and childcare services. BUPA Travel offers a bespoke travel insurance service. Sanitas in Spain, HBA and Mutual Community in Australia, IHI in Denmark and AMEDEX in the US are all part of the BUPA Group, which also has centres in Hong-Kong, Egypt, Thailand and Saudi Arabia.
BUPA Australia web pages Accessed October 2007

The first page of BUPA’s annual report for 2006 is a photograph promoting the ethic of care. The next four display financial highlights in bold text followed by a quote from the CEO. Its actions illustrate the focus on growth.

"BUPA has delivered another year of very good growth with underlying surplus up 15%. Our clear strategy of pursuing growth opportunities in both the UK and international markets has served the Group well."
Quote Val Gooding CBE, Chief Executive Annual Report for 2006

BUPA sold the future cash flows from its 35 private hospitals into a ££450 million ($1.12 billion) vehicle called UK Hospitals No 1 SA, which issued four tranches of notes listed on the Irish Stock Exchange, secured with charges over the assets and revenues of BUPA Hospitals Ltd.

The transaction took the hospitals off its balance sheet and freed-up funds to allow BUPA to pursue acquisitions to grow its empire and diversify its revenues, including a $465 million purchase of Axa Asia Pacific's health insurance assets in Australia.
Mayne's Next Cut Could End Up In Hospital Australian Financial Review August 2, 2003

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Like almost all for profit corporations BUPA motivates senior staff with incentives linked to profits and growth. This sort of incentivisation has been one of the key drivers in encouraging fraud and the exploitation of patients in the USA. There is no reward for plowing profits back into services. BUPA differs in that non-executive directors do not receive these incentives so are less compromised.

BUPA is run in line with the corporate governance, safeguards and commercial principles that would be expected to be found in a listed company as explained below.
The Chief Executive has a bonus potential of 75% of base salary. The Group Finance Director has the potential to receive a bonus of up to 60% of base salary. These bonus targets depend on the achievement of the Group’s annual profit plan.

The annual bonus potential for Managing Directors continues to be linked directly to a combination of Group profit targets, individual divisional targets and customer satisfaction measures. These targets are set before the start of the year.
The exceptional performance bonus becomes payable when performance substantially exceeds the budgeted growth in surplus for the year and meets a demanding financial hurdle.
Long-term incentive plan (LTIP)

The LTIP is designed to reward senior BUPA Executives for the part they play in achieving the Group’s long-term growth objectives over a number of years.
The LTIP targets are currently based on growth in Group reserves as set out in the three-year business plan.
The amount of the fund payable is defined by a scale relating the payment to the achievement of growth in reserves against targets set in the Group’s three- year plan.
Non-Executive Directors are not entitled to participate in any bonus, long-term incentive plan or pension arrangement funded by the Company.
Annual Report for 2006 from BUPA web site

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Picking its friends

BUPA does not restrict itself to not for profit operations. It does not seem to experience any conflict in mission when it invests in market listed for profit entities. In Australia (see later) it happily partners with Macquarie bank a strongly profit focused private equity group.

Over on Aim, health and leisure products group ADDleisure jumped 2p to 5.625p as Bupa took a 29.9% stake in the business, paying 5p a share. Bupa has also agreed to cough up another pounds 3.7m for a 50% holding in ADDleisure's Wellness Holdings division. The people behind ADDleisure include David Turner, the co-founder of LA Fitness, and Allan Fisher, founder of Holmes Place. With BUPA's support, they want to strengthen and develop the company's position in the corporate and consumer healthcare markets.
Retailers win some better prices The Guardian June 23, 2007

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BUPA’S operations

BUPA’S web site ( gives a good overview of its activities in the United Kingdom and globally. Its focus as presented on the web site is humanitarian, essentially not for profit and exemplary.

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BUPA’s primary business has been and still is as a private health insurer in the United Kingdom. Here it provides insurance for those who want to avoid the increasingly long waiting lists on the NHS, who want more privacy and personal care, or who feel that they will get better care if they pay for it. Nearly half of all UK citizens now take some form of insurance if only for elective surgery where waiting lists are unacceptable. It has expanded its insurance globally and Australia is a prime target.

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Hospitals and nursing homes
As private care increased in the UK BUPA built up a hospital portfolio to serve its members but did not restrict cover to its own hospitals. It also entered the aged care sector and has become a major operator of nursing homes. It opened a home care service. It operates in Spain, in Asia, and now in Australia

Having brought the insurance side of BUPA's business into profit, Gooding is now moving the company into provision of services, including care homes as well as hospitals.

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Preventive Health
BUPA has focused strongly on preventive health and has opened Wellness centres where customers are screened for potential problems and given lifestyle advice by a doctor. They provide preventive and occupational health services to businesses.

Bupa is one provider that has made the link between insurance and prevention, and even sporadic television viewers would be hard-pressed to avoid the prime-time advertisements for Bupa Wellness. Services available to companies range from stress auditing, employee counselling and pre-placement health assessments to health promotion and training, sickness absence management and rehabilitation. Bupa also places emphasis on its musculoskeletal medical service
Insurance and prevention Post Magazine March 13, 2003

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BUPA has entered childcare and operates 44 nurseries in the UK.

Her (Gooding) experience as a working mother has led BUPA to open a string of nurseries in the South-East, called Teddies. BUPA has also launched a corporate consultancy service for childcare, which finds maternity nurses, interviews nannies and reviews local nurseries. An ageing population is set to cause a boom in the health business and the number of working women need childcare, so Gooding's influence - and affluence - can only increase.

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BUPA operates as a health care company in "UK, Spain, Australia, Ireland, Hong Kong, Thailand, Malta and Saudi Arabia. BUPA International supplies health cover to expatriates in over 180 countries".

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Some issues of concern


We get two very different pictures of the way the company handles employees. It is difficult to imagine that some management staff in the company did not know about the plight of the foreign nurses who were exploited, yet failed to speak out on their behalf. Some had already left and gone to the NHS. What sort of not for profit culture would let this happen? How did it get to the stage where the union had to take it up?

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A Caring employer:- BUPA has a reputation as a good employer with contented motivated staff on its surveys. It has received awards and acknowledgement from industry bodies. It is claimed to encourage staff to focus on and participate in the community.

This year, BUPA Ireland was palpably thrilled to win the best company award in the smallest category, for firms which employee 250 or fewer. Every employee was given a questionnaire by Dublin survey firm Discovery Research, and the company was pitted against 150 of its peers to whittle down the shortlist to the top 50.

The survey, a questionnaire devised by American firm Great Place To Work, was by no means a new experience at BUPA, however, because the firm had already run its own research on employee satisfaction. In BUPA's internal searches, all results are automatically shown to the staff who generated them. Any problem is then debated.
A CLEAN BILL OF HEALTH FOR BUPA CHIEFS The Sunday Independent (Ireland) March 30, 2003

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But not so caring? :- A 2003 report paints a very different picture of its dealing with employees. Was this a genuine mistake as they claim, a deceptive denial, or a symptom of a pervasive market focused corporate culture?

HEALTH care giants BUPA have been forced to compensate 100 nurses who were promised pounds 8.50 an hour...but paid less than half that when they started working in Britain

The nurses, all fully-trained with university degrees, were recruited in the Philippines to work for BUPA on two-year contracts.

But just three days before they were due to leave for the UK they claim they were given new contracts to sign offering them just pounds 3.65 an hour - only 5p more than the then minimum wage. The nurses also say they were told that they would only get free accommodation for a month instead of the three months they had been promised previously.

Now 100 nurses have received pay-offs of several thousand pounds each after the Royal College of Nursing union accused BUPA of using cheap labour and also damaging Britain's reputation for health care abroad.

And three nurses are still battling for compensation after leaving BUPA to work for the NHS.
"There wasn't much we could do. We had all already moved out of our homes and turned our lives upside down. It was as if they deliberately waited until the last minute. We did not know our rights and we feel they took advantage of that.""

The nurses say BUPA recruiters showed the original contracts with the higher wages to immigration officials at Heathrow when they arrived two years ago.
BUPA spokeswoman Fiona Reid said: "Our recruiter was not operating in accordance with our instructions.

"We immediately stopped using this person and contacted every nurse to see if they had any concerns."

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Standards of care

Some failures in care are inevitable and care cannot be assessed on only occasionally reported failures. What is disturbing is the attempt to conceal what happened from the patient and family. This speaks for corporate culture and the primacy of marketplace concern. Is the explanation offered by BUPA credible?

A company director was awarded pounds 1.32m yesterday in one of the highest damage claims made against a private hospital after suffering brain damage from a bungled operation on a runny nose.

Peter Rogers's family told the high court that they were misled by the Bupa hospital in Leicester, which initially suggested that the surgeon's mistake was the result of a stroke during the operation.
The truth emerged later when a neurosurgeon friend looked at the brain scans. Mrs Rogers, of Leicester, said after the hearing: " If Mr Murty had said from the beginning 'I'm sorry, I have made a mistake', we would have felt differently."

The award was agreed after the hospital and surgeon finally agreed liability. A spokesman for Bupa said: "An independent review concluded that Mr Murty did not try to mislead Mr Rogers."
Man awarded pounds 1.32m for bungled nose surgery The Guardian November 15, 2005

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Dictating who would provide care:- In the 1990s Australian doctors resisted the imposition of managed care in which insurers rather than doctors dictated who gave care in particular situations and what care was given. BUPA assumed that it could make blanket decisions unrelated to clinical judgement and the nuances of individual situations.

Medical perfusion keeps the blood flowing through the body during open-heart surgery. In Australia, the procedure can be carried out either by an anaesthetist or, at less cost, by a scientist without a medical degree. Sometimes both are present.

BUPA argues it is not clinically necessary to have the procedure performed by a qualified doctor. "There is no medical evidence that you get better outcomes from having the doctor present," says BUPA's medical adviser, Umberto Boffa.

Doctors counter that there should be an anaesthetist in charge in case something goes wrong. "For the AMA to allow BUPA to determine these things is equivalent to saying United States-style managed care can happen in Australia," says John O'Dea, the AMA's director of medical practice.
Who feels better now? The Age August 28, 2004

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Like other not for profit enterprises operating in the marketplace BUPA advertises its services and this seems to go much farther than simply informing citizens of the services it provides.

BUPA is launching a DRTV offensive to promote its personalised 'Heartbeat Heart and Cancer' private medical insurance, as part of a strategy to differentiate itself from 'one size fits all' cover.

The campaign, devised by WWAV Rapp Collins North, comprises two executions. They both feature the voice of a female cancer sufferer against the backdrop of a ticking clock, exposing the fact that someone in the UK is diagnosed with cancer every two minutes.

Viewers are invited to "make this the time you call BUPA", with response through an 0800 number. The ads will run on a range of digital channels.
BUPA blitz to push personalised cover Precision Marketing March 7, 2003

WCRS has developed a national press campaign using 12 creative executions to showcase Bupa's full range of services, including care homes, online advice and health assessments, to highlight the company's offer of more than insurance products.

Subsequent phases of the project will look at developing marketing to key Bupa healthcare suppliers and a prototype information system to refine the firm's database.

Bupa has dealings with just under 20,000 surgeons, physicians and anaesthetists, alongside its 2.8 million-strong membership base.

David Quick, Bupa's head of partnership development and quality, says: "Being able to slice data on these providers in different ways will help us develop a better understanding of them, and to work in a more intelligent way.

"5one's credentials in customer relationship management CRM and the business-to-business market were an important factor when choosing our partner for this project."
Bupa revamps strategy to boost consultants activity Precision Marketing July 25, 2003

Some NHS hospitals are already angry over aggressive (advertising to patients) campaigns by Bupa, the private health insurance group, which has been given a bigger role in the NHS.
Hospital to woo patients with death rate boast The Sunday Times December 4, 2005 (Note this article was primarily about a decision by an area health authority to start advertising to patients - a response to running the NHS as a competitive market)

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Many of the extracts on this web page reveal the company’s marketplace thinking - an aspect of its culture. The way staff in a company and in the facilities think and experience the situation they work in has a major impact on the care given. A judge’s finding of a "worrying culture" (see later) in a BUPA nursing home is of particular concern. There are many factors which contribute to an erosion of a culture of care throughout an organisation. Many of these are marketplace related.

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An Australian example:- In an interesting development in Australia, the two executives who drove the aggressive and successful commercial dispute with Healthscope that so stressed the health system is 2003 were poached by MBF. Their aggressive play was clearly highly regarded at BUPA and in the industry. This must reflect the way in which market culture has been adopted by these two "not for profit" insurers.

The defections of Angus Norris and Paul Ray earlier this week to MBF, which is the second-largest private health insurer, comes amid a battle in the private health insurance industry to retain membership and market share.

The two executives are central to contract negotiations with providers such as private hospitals and were reporting directly to the general manager.

Their departure comes after a bitter dispute last year during which around 1 million BUPA members found they were not covered at Healthscope's 26 private hospitals around Australia.
Executives switch health insurers The Sydney Morning Herald November 26, 2004

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Pressure for profit:- BUPA’s increasing profitability is also a cultural issue and reflects its standing in the marketplace. Profits and care come from the same pool and excessive profitability is usually associated with a diversion of funds from care to profit - often claiming this is due to increased efficiency. A culture which sees profitability as a key goal develops strategies which make the steps taken to accomplish this legitimate for them.

BUPA, Britain's biggest private healthcare company, is expected this week to announce a surplus before tax of more than pounds 100m for 2002, compared with pounds 92m a year earlier, and a 6 per cent increase in its UK health insurance customers.

Bupa's turnover has doubled to almost pounds 3bn since Gooding took over the top job in 1997.
Bupa beats gloom with healthy pounds 100m surplus and 6pc rise in customers SUNDAY TELEGRAPH(LONDON) March 16, 2003

Bupa, the private health insurance group, yesterday reported a rise in pre-tax profits of almost 20% on the back of unprecedented growth in the number of NHS patients being treated in its hospitals
NHS patients boost Bupa The Guardian (London) March 20, 2003

The private healthcare group Bupa turned in its sixth year of record results last year, pushing its underlying surplus before tax up by 22% to pounds 304.5m. The group predicts further growth in 2006, although it is not expected to match the rate achieved last year.
Record results for Bupa again as revenues rise 8% The Guardian March 16, 2006

Last year it had revenues of Pounds 4.2billion, up from Pounds 2.7billion four years ago. Its pre-tax profits have more than tripled over the same period, rising from Pounds 100m in 2002 to Pounds 331m last year.
Bupa puts UK hospitals up for sale The Sunday Times April 8, 2007

BUPA has reported a 47 per cent increase in profits, driven by strong growth in its expatriate health insurance business.

The private healthcare group, in its first set of results since selling its private hospitals unit to become a pure health insurer and operator of care homes, said that pre-tax profits had risen to Pounds 166 million for the six months to June 30.
Expatriates' health cover boosts BUPA The Times September 19, 2007

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Influences from the for profit sector:- In a competitive environment the most profitable do best. Others have no choice but to follow and identify with the same practices. BUPA’s competitors are aggressive multinational private equity and market listed companies. To survive they must embrace the same cost cutting and organisational strategies even when these are not in their customers’ interests. The culture changes as they adapt. Those unable to accommodate to these changes go elsewhere.

Most of the first-wave ISTCs (independent sector treatment centre) selected by the government to receive work farmed out from NHS hospitals were American, Canadian and South African companies rather than the established British private hospital chains such as Bupa and Nuffield, which were deemed too expensive.

The surgeries were conceived as specialists in non-urgent operations, such as cataracts and hip and knee replacements, providing a short-term boost to NHS capacity. Critics say they inevitably draw off NHS staff and resources and leave NHS departments to deal with more complex surgery for less money. What was also conceived as a short-term palliative to cut waiting lists - the initial contracts were for five years - is now embedding itself as a more central part of NHS work.

But unions concede that traditional hospitals, after losing out to foreign competitors in the first wave of privatisation, have cut costs to compete in a second round of NHS-paid private work, which is focusing on diagnostics such as MRI scans.
NHS spending on private treatment is set to hit pounds 1bn The Guardian October 11, 2006

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Influences from the NHS:- Once a government run public service the NHS has over the years been restructured using a number of market models. Groups within the NHS have been forced to compete with one another and with providers in the private sector. The service has been driven by commercial incentivisation rather than the norms and values of the community - or the humanitarian ethos of the community and those it trusts. BUPA is one of the groups with whom the NHS bureaucracy cooperates and also with whom its parts compete. I have not explored the details of what has happened in the NHS but it is clear that the market ethos is all pervasive.

Labour rebels, who helped slash the government's Commons majority to 35 during a vote on the foundation hospitals bill this month, say the scheme will create a divisive "two-tier" health service.
In a further move bound to infuriate the Labour left, the Financial Times has learnt that the government is planning an increase in the number of hospital operations to be carried out in new privately-run treatment centres.

The fast-track centres will relieve the burden on NHS hospitals by carrying out operations such as cataract removals and hip replacements.

They had been scheduled to do 100,000 operations annually by 2005. However, the Department of Health now wants the new institutions, which will be run by private health providers such as Bupa, to carry out around 20,000 extra surgical procedures each year.
Blair defies critics with plan to speed up NHS reforms FOUNDATION HOSPITALS: Financial Times (London) July 30, 2003

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Selling its hospitals
A betrayal of trust?

BUPA’s attempt to grow its hospital empire had been blocked by the competition regulator. Whether its inability to pursue its policy for growth in this sector was a factor in the decision to sell its hospitals is unknown. Publicly listed companies and private equity would have done this, moving on to more profitable pastures. Perhaps BUPA was simply being petulant and spitting the dummy in frustration (as it seems to have done in Ireland).

Private equity vs not for profit:- As in the USA and Australia, hospitals and aged care facilities in the UK have become prime targets for private equity investors. They are fetching high prices. In extreme cases private equity groups have bought other companies simply in order to strip them off their assets and enrich themselves. This is alleged to have happened in nursing homes in the USA. This allegation was made about one potential buyer of BUPA’s hospitals.

BUPA has marketed itself to its customers as a not for profit whose sole reason for existence is to serve their interests. It promised to use any profit it makes to improve the care they are given. Undoubtedly large numbers elect to take out BUPA insurance and use its hospitals because of this. They have come to trust BUPA's promises because it claims to have no other priorities.

BUPA has sold its hospitals to a private equity group, Cinven Partners. The sole reason these groups exist and the reason they own and operate hospitals is to make as much profit as they can - or at least can get away with. This profit is taken from the money paid for citizen’s care. The more money that they take, the more successful they are seen to be. The pressures for profit consequently threaten care.

A changed focus:- The change in focus for the hospital business was immediately apparent. Cinven promptly targeted the profitable boutique side of medicine, cosmetic surgery. This is a sector that capitalises on our vanity and creates a demand for services by advertising. It would not have attracted a not for profit seeking to serve the needs of the community.

Betrayal:- There are two ways of looking at BUPA's decision to sell.

Approved provider assessment in Australia:- The key question here is whether the approved provider assessment process, which ensures that only suitable groups own nursing homes in Australia, adopts the community’s view and sees this as a breach of trust and unsuitable behaviour? Alternately does it support the marketplace paradigm?

Competition policy:- In fairness to BUPA we should ask what would have happened had they collaborated with another not for profit and with their customers in order to improve and rationalise services, and then sold their hospitals to this not for profit at an agreed fair price instead of putting them up for sale to the highest bidder. Would the competition regulator have allowed it?

Lets look at an older traditional but actual example. In 1945 a country general practitioner sold his practice in a country town with 4 doctors. He went looking for someone he felt could be trusted to care for his patients. Before the sale was finalised the purchaser did a locum for all of the general practitioners in the town while they took annual leave. The issue was not one of price but of suitability and trustworthiness. The new "competitor" had to be acceptable to patients and colleagues. They had to feel that they could trust him and that he would fit into the community. Their interests came first. One can only wonder what competition regulators would say about this today!

But our revelation that Gooding and Lord Leitch, her chairman, have put the group's UK hospitals up for sale will for many provoke a nervous shiver.

Bupa has 4m customers in the UK, and is one of those organisations, like the AA, that inspires a warm glow. People don't like it when you start messing with household names, particularly ones you might rely on for care when you are ill, or to care for you when you are old.
So what do you do with the Pounds 1 billion plus windfall from the sale of the hospitals? There are no shareholders to distribute it to, nor can you give it your members or policyholders. You could pay down debt, but Bupa could hardly be described as over-leveraged as it is. That leaves re-investment, which is likely to mean a big push into care homes, and more overseas expansion.
But I suspect that in deciding to sell the hospitals, the Bupa board may have started down a slippery slope. If a provident association starts to act like a commercial company -buying and selling assets and looking for growth in foreign markets -then questions will be asked as to why it shouldn't become one.

Proceeds from the sale of the group could be used to set up a medical charity, rather in the way the Wellcome Trust was so spectacularly endowed after the sale of Wellcome to Glaxo. Bupa's board may have unwittingly grabbed the demutualisation tiger by the tail.
Bupa's dilemma in sickness and in wealth The Sunday Times April 8, 2007

The company (BUPA) is Britain's largest private healthcare group. It runs 26 hospitals in the UK which last year looked after 800,000 patients, 5% of which were NHS cases.
Private-equity groups such as Blackstone and Cinven are likely to show an interest, as well as Australia's Macquarie bank and the French private health group, Generale de Sante. Several big Middle East and Asian investors are also expected to be in the hunt.
Bupa has also been on the acquisition trail to expand outside its traditional business areas. It recently paid Pounds 88m for Clinovia, a home healthcare specialist.

But health-industry analysts believe the sale may also lead to pressure for the Bupa board to sell other assets, or even the entire company.

It is understood private-equity buyers have recently made approaches that would value the entire group at more than Pounds 5billion. The offers were rejected.
Bupa puts UK hospitals up for sale The Sunday Times April 8, 2007

The company has been thwarted by the competition authorities when it has tried to expand its hospitals business in the past and believes it could demand a good price in the current market.
The UK private hospital market is dominated by six organisations: the NHS and five private groups, including Bupa. At least two have already been acquired by private equity firms. General Healthcare, which operates 49 private hospitals in the UK, was sold to a consortium led by the South African healthcare group Netcare and the private-equity company Apax Partners in May. And HCA International, which owns six hospitals in London, including the Harley Street Clinic and the Wellington hospital, was acquired by three US private-equity firms last July.
Bupa in talks over selling UK hospitals to fund expansion The Guardian April 9, 2007

GUY HANDS is plotting to buy Bupa's hospitals as part of an ambitious plan to build an international healthcare empire through Terra Firma, his private-equity group.
Now Boots bidder wants Bupa hospitals too The Sunday Times April 22, 2007

The Terra Firma private equity group planning to trump the pounds 10.6bn takeover bid accepted by the directors of Alliance Boots is also bidding to buy Bupa's hospitals.
Rivals have suggested that Mr Hands was plotting to buy Alliance Boots and then dismember it, selling off the parts he did not want to the highest bidder. Such a strategy would refuel the debate about private equity, which has seen trade unions, MPs, fund managers and some chief executives accuse them of asset-stripping and using slash-and-burn tactics.
Mr Hands, who is working with the Wellcome Trust and HBOS on his bid, is understood to be working with Macquarie on the offer for Bupa's hospitals.
Hands' interest extends beyond Boots to Bupa hospitals: Private equity firm bids for another healthcare group Terra Firma denies plan to break up retail chain The Guardian April 23, 2007

BC PARTNERS is believed to be leading a pack of six private-equity firms that have lodged bids to acquire the private hospital arm of Bupa. Those close to the talks say the sale price could approach Pounds 1.5billion, much higher than envisaged.

It is thought some of the proceeds will be shared among Bupa executives who run the hospital business.
BC heads Bupa hospitals bid The Sunday Times June 3, 2007

Bupa has sold its 25 private UK hospitals to the private equity firm Cinven for pounds 1.44bn, to focus on its health insurance business.

Cinven beat competition from CVC, which also made it through to the final bidding round, and other private equity groups including Guy Hands' Terra Firma. The price was higher than expected; when the hospitals were put up for sale in April they were expected to sell for pounds 1.25bn.
Britain's traditional private hospital market is dominated by six players - the NHS and five private groups, including Bupa. Of those, two have already been acquired by private equity firms.
As the number of private hospitals in the UK has increased, Bupa no longer feels the need to run its own hospitals. A spokesman said: "The two businesses have to be run at a complete arm's length for competition reasons." In 2000, Bupa was blocked from buying Community Hospitals on competition grounds.
Private equity firm Cinven wins pounds 1.44bn bidding round for Bupa hospitals in Britain The Guardian June 19, 2007

Cinven Partners is to rebrand BUPA hospitals under its own Spire Healthcare logo.

The private equity firm, which bought the 25 hospitals and one treatment centre from BUPA, will start the rebranding next month.

It is also considering a range of new business opportunities, including a push into the rapidly growing British market for cosmetic surgery. The number of cosmetic procedures performed in the UK grew by about 53 per cent last year and the market now is worth more than Pounds 500 million a year.
BUPA hospitals to be rebranded as Cinven reshapes Spire Healthcare The Times September 13, 2007

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The Tax Avoidance Scheme

 One would expect a large not for profit company to play the game and fairly meet its tax obligations. One would not expect to see it among those stretching the legal limits to prevent the community from collecting the taxes to which they are entitled.

BUPA it seemed tried to game the VAT system in order to increase its profits. The matter went to court and finally to the European court of appeal. This was judged to have been an "abusive process". This disturbing willingness to game the system to increase profits has been a feature not only of for profit corporations in the USA but of the many not for profits who have adopted for profit thinking and strategies in that country.

The European Court of Justice is expected to rule that transactions carried out for the sole purpose of obtaining an artificial VAT advantage are an abuse of the tax system, in three connected cases involving Halifax, the bank, Bupa, the private hospital group, and the University of Huddersfield.
If the ECJ confirms the preliminary ruling, the judges would then refer the cases back to the UK courts to decide whether the transactions should be deemed abusive.
VAT avoidance schemes could face clampdown after test case ruling - EUROPEAN COURT OF JUSTICE. Financial Times (London) February 21, 2006

A statement by the European Court of Justice said "No-one is entitled to exploit Community provisions fraudulently or abusively. That principle of the prohibition of abusive practices extends to the sphere of VAT.''

The ECJ ruled that transactions carried out for the sole purpose of obtaining an artificial VAT advantage are an abuse of the tax system, in three connected cases involving Halifax, the bank, Bupa, the private hospital group, and the University of Huddersfield.

The ruling stated that the UK can prevent companies from cutting their VAT bill by setting up artificial deals that serve no other commercial purpose than tax avoidance.
British VAT avoidance schemes declared illegal. Financial Times (FT.Com) February 21, 2006

In a separate but conjoined case, the court ruled that BUPA, the private health care provider, could not escape pending new rules to tighten VAT payments by bringing forward orders for the future supply of drugs and prostheses.
In the BUPA case the court of justice ruled that the operator of private hospitals had breached EU rules by pre-paying well in advance for goods and services - without precisely identifying them at the time the payment on account was made. Lump sum payments, it added, did not fall under the allowed exceptions from the VAT rules.
Treasury wins ruling to close VAT loophole The Guardian February 22, 2006

The ruling deemed these schemes to be "abusive", permanently closing the door on all companies managing to reclaim VAT where they typically would not be able to.
Revenue closes WT loophole The Independent February 22, 2006

As if they were not aware already, taxpayers have been told that courts in the EU will come down hard on tax planning that does not have a business objective.

The European Court of Justice has ruled that a taxpayer cannot deduct input value-added tax from a transaction where the transaction is judged to be an "abusive practice".
UK Customs decided that the arrangements should not qualify for input VAT deductions because they were not supplies and were only put together to avoid tax. The bank appealed the decision to the VAT and Duties Tribunal, which asked the ECJ to rule on whether transactions that have no "independent business purpose" and that a taxpayer has undertaken to avoid tax should be deemed to be "supplies" and should the abuse of rights principle disqualify Halifax, in this case, from seeking VAT relief as a result of the transactions.
Bupa used a subsidiary to buy drugs and prostheses from a supplier, using prepayment agreements. This was to avoid paying VAT. Customs in the UK refused to allow Bupa or its subsidiary to deduct the tax they paid to the supplier of the products. The company's appeal to the VAT and Duties Tribunal was dismissed and the company appealed to the High Court in London, which referred the case to the European court. It asked the ECJ to rule on whether prepayment schemes were exempt supplies and so entitled taxpayers to deduct VAT and to interpret the meaning of "economic activity" and "supply of goods", if a principle of abuse of rights existed, could it prevent a taxpayer from deducting VAT. The court ruled that prepayment agreements did not qualify for deductions --- - .
European Court strikes down abusive transactions International Tax Review March 1, 2006

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Care Homes

What we call nursing homes has become a major focus of BUPA’s operations. Meeting the aged care bulge is obviously a prime and appropriate goal for not for profit organizations seeking to serve the community.

Care Homes
BUPA is the largest owner-operator of care homes in the UK. The Care Homes business is a major provider of high quality nursing and residential care to older people, employing more than 27,500 staff.

The UK portfolio comprises 298 homes and almost 20,500 beds; there are a further 20 homes and over 2,300 beds in Spain. The homes offer specialist care to a range of groups including frail elderly people, dementia sufferers, young people with physical or learning disabilities, and those with conditions such as Parkinson’s and Huntington’s diseases.
The Spanish care homes business, Sanitas Residencial, operates 20 care homes, caring for over 2,000 elderly and younger disabled individuals. The majority of the homes in Spain are relatively new and during 2006 growth in revenues and surplus was achieved as the homes increased their occupancy.

In 2006, agreements were signed to operate two new homes in Barcelona and Madrid from the beginning of 2007. The construction has begun of three new homes in the Basque region, Salamanca and Madrid.
Annual Report for 2006 from BUPA web site

BUPA has been superseded as the UK’s largest care home owner by a private equity group.

Blackstone, the American buyout firm, is drawing up plans for a flotation of Southern Cross, the Pounds 1.5billion nursing-home group it has created through a string of acquisitions.
Blackstone prepares to float care home giant The Sunday Times January 1, 2006

Southern Cross was itself built up through a string of deals that allowed it to overtake Bupa as the country's largest operator. Despite this, Southern Cross has only a 6% share of the estimated Pounds 11.7billion market.
Care homes giant unveils Pounds 500m float The Sunday Times June 4, 2006

BUPA competes with the private equity groups that have targeted the sector.

WESTMINSTER Healthcare, the privately-held health group, will on Tuesday consider expressions of interest from potential buyers of its Senior Living nursing homes division.
Bupa, the private-healthcare group, and private-equity groups are thought to be the favourites to buy the business. A sale would mean the break-up of Westminster, which also owns the Priory chain of psychiatric clinics. Other private-equity players that could be interested are Electra Partners and Legal & General Ventures.
Westminster is owned by Whitehall, a private-equity fund controlled by Goldman Sachs, and Welsh Carson Anderson & Stowe of New York.
Health group mulls offers. Sunday Business December 2, 2001

Problems in care are a particular problem in those countries that have chosen a competitive market model for aged care. These include the USA, Australia and the UK. The additional bureaucracy needed to monitor and detect dysfunction becomes burdensome and when it impacts on profitability as it must if it is going to work then it causes providers to sell up and go.

THE Daily Mail led the way in exposing the damage that excessive regulation is doing to care homes and to the frail old people who rely on them.

The impact of home closures on residents became tragically clear last summer with the death of Alice Knight following the shutdown of her home in East Anglia. The 108-year-old died after refusing to eat in the unfamiliar surroundings of a new home.

We showed that her case was typical of what was happening to thousands of others trapped by the economic and political pressures forcing homes to close.

When one centre in Birmingham shut down, forcing 26 residents to move, five of them died within a month.

The Mail also turned the spotlight on the way regulations were raising costs.

BUPA, which runs 250 mainly modern establishments, was faced with a GBP 3million bill for work, much of it on altering doors. According to strictly enforced new rules, they were two centimetres too narrow.

We reported how operators had been instructed to prepare-written codes of practice-for residents on racial harassment, ethnic equality, gay sexual rights and HIV and Aids prevention.

The Mail also revealed that 13,000 care home beds were lost in 2000.
Victory for the Mail's campaign DAILY MAIL (London) February 19, 2003

Economic pressure and the disruption of the culture of care within a company and within individual nursing homes increases the incidence of failures in care. I have not tried to search the vast number of press reports to look at the incidence of such failures in BUPA.

As in Australia and the USA sexual abuse and rape of nursing home residents can and does occur.

It is reassuring that unlike a nursing home in Australia this BUPA care home acted when allegations of rape were made. Perhaps not as promptly as they claim. Surely you call the police to investigate immediately and don't send the alleged rapist home!

When a patient in another home suffered as a result of a breach in standards BUPA admitted this. This integrity at the top breeds rust. This would not have occurred in the USA where chains typically contest and appeal every breach to the highest court.

What is much more disturbing is the judges criticism of the "worrying culture" in the nursing home involved.

A CARE worker at a nursing home has been suspended after an alleged sex attack on an 80-year-old woman resident.

Police were called in after the allegations emerged at the Pounds 375-a-week BUPA home.

The male employee was hauled before bosses at Hill View in Clydebank and sent home.
A spokeswoman said: "Following allegations, a care worker at Hill View was immediately suspended and an investigation is now under way.

The private healthcare giant Bupa will be sentenced at Southwark crown court in London tomorrow after admitting a serious lapse in safety standards that contributed to the death of a 95-year-old woman at one of its care homes in Kent.
The case was a serious blow to the reputation of Bupa, one of the largest care home operators in Britain. It runs 298 homes, providing care for 21,000 residents, carrying out 51m lifts and hoists a year. Bupa is likely to receive a hefty fine.
The court heard yesterday how she should never have been bathed by fewer than two care workers, but only one was on duty. A fully supportive hoist should have been used to get her in and out of the bath. Instead she was asked to partially support herself.

The company admitted failing to discharge its duty under the Health and Safety Act 1974 to ensure that Mrs Wood was not exposed to risks.
Prosecutor Natasha Tahta told the court that health and safety inspectors found five major failings at the Kent care home but it was acknowledged that Bupa has tightened up procedures at its homes since Mrs Wood died in November 2003.
Bupa admits safety lapse after care home death The Guardian September 6, 2006

The private healthcare giant Bupa was fined pounds 90,000 yesterday for safety lapses which led to the death of a 95-year-old woman at a care home in Kent. Judge Peter Testar said at Southwark crown court that the company was responsible for a "worrying culture" among staff at the Abbotsleigh Mews home in Sidcup. Charlotte Wood died in November 2003 after falling while being hoisted into a bath by an inadequately trained carer, using the wrong equipment. But the judge accepted Bupa had done everything possible to avoid repeating the mistakes at any of its 298 homes across Britain.
Bupa fined pounds 90,000 over death in care home The Guardian September 8, 2006

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Ireland had a public hospital system and a private system but the private insurer was a wholly owned government enterprise.

Starting in the 1990s Ireland embraced the marketplace model and the long term goal of privatising its wholly owned insurer, VHI. In the meantime the government’s position was compromised as it was both an operator in the competitive market it established and the regulator.

As in Australia the community believed that no one should be barred from insurance because of ill health. A similar system of "community rating" was introduced in Ireland so that all paid the same private insurance rates regardless of age and infirmity.

BUPA was initially the only insurer to enter the market. Whether it deliberately cherry picked as some claimed or whether only the young were motivated to change insurer is not clear. It ended up with a smaller share of the market but its membership comprised mostly the young and healthy - those who had few if any expenses. BUPA was very profitable. VHI in contrast was left with the elderly and the ill - those who had large medical expenses. This was patently unfair.

If this was not a competitive marketplace, a sensible sharing of insured citizens among state and not for profit insurers might have been arranged. The press even suggested it. Instead the government introduced legislation which required BUPA and any other private entity to pay VHI some of their profits in compensation - called risk equalisation.

BUPA felt that this was a breach of market principles, and self-interest on the part of the conflicted government. It might have breached the undertaking given BUPA when they entered the market but we do not have that information.

BUPA bitterly opposed this and appealed it up through the courts as far as the European court. In the meantime another smaller group, Visas entered the market. It also opposed having to make the payments but was less aggressive in this.

Most believed that BUPA’s threat to walk away from the market if they had to pay were tactical and not serious. When BUPA lost its final appeal it started to do just that, throwing the entire system into disarray.

An aggressive and successful entrepreneur came to the rescue and acquired the insurance business from BUPA. Although it also objected it did accept the payment system and clearly considered that it could still make a significant profit. This was not simply foolhardy. The press suggests that AXA and other for profit insurers were also interested.

We must ask whether BUPA was, as in its hospitals, once again spitting the dummy in pique and dumping those who had come to it in trust? If others could provide the service and still take out profits, why could BUPA not afford to provide the service. It was a group which did not require large profits and claimed to be there to serve its customers.

Was BUPA as VHI's CEO suggested grabbing its profits and exercising a "hit and run"?

Was it betraying the customers who had come to it because of its promise to spend any profits in improving services? It handed them over to an entrepreneur renowned for making his fortune by squeezing large profits where there had been none before.

There were many complexities to this dispute and I have selected only a few extracts to give the flavour of these.

ALMOST half the population (of Ireland) has private health insurance or a medical card. With the advent of automatic medical cards for the over-seventies, many wealthier pensioners may have both. In a country with only 3.8m people, and so-called free universal access to the public health service, this level of health insurance cover is quite astonishing -and disproportionate.

The even bigger surprise is that despite sharp increases in premiums in recent years, membership of the private health insurers VHI and Bupa continues to grow.
Many people say they would prefer not to prop up an inequitable system that, thanks to insurance, allows them to jump queues of people who are clearly in greater need of treatment.

But they fear a situation where they, or members of their family, have to wait for months or even years to see a consultant or get a hospital bed.
Even with double-digit price increases - 18% for VHI since last autumn and 14.4% for Bupa this month - this is a discretionary financial commitment that still compares well with other household purchases such as membership of a sports club, foreign holidays or even running a couple of mobile phones. On a list of priorities, it would certainly rank higher in many households than contributing to a personal pension plan.

VHI or Bupa?
With only two providers in the market, it is easy to compare costs and benefits, especially since both companies offer a range of relatively similar plans.

VHI, still a wholly-owned state agency, was set up in the 1960s.
Bupa, which only entered the market in 1996, now claims to have more than 600,000 members.
Companies provide insurance as an important recruitment and employment perk, and employees are now so conscious of the importance of this benefit that it would be very difficult for any company to claw it back, he says.

This fear factor is heightened with every negative story about suffering children and old ladies left for days on trolleys in accident and emergency rooms. (Private insurance membership is irrelevant for most A&E visits.)

"For an individual, the most important reason to buy private health insurance is access to a consultant and a hospital bed," says Loughlin. "The impact of the outpatient excess charge on all the plans, with the exception of Bupa's Health Manager, which has no excess, is that you will seldom enjoy the full benefit of the outpatient payments.
Healthy returns Sunday Times (London) March 16, 2003

THE possibility of the risk equalisation factor being introduced into Ireland's two million-strong private health insurance market is affecting competition, according to the Health Insurance Authority.

At present, the state-backed Voluntary Health Insurance Board (VHIB) and British-owned BUPA are the only players here when it comes to acquiring health cover, and uncertainty over the future is now causing some confusion within their ranks.

Risk equalisation would see the premiums of those insured being based on their age and health status and the risk they posed. Currently all contributors pay the same amount, regardless of their circumstances.

The go-ahead for risk equalisation could see BUPA paying up to Euro 20m a year to the VHI in order to balance the age risk between the two companies.

Up to 46pc of VHI's customer base is aged 45 and over, compared to 29pc of BUPA's, a recent study showed
BUPA MAY PAY Euro 20M A YEAR UNDER EQUALISATION PLAN Irish Independent May 16, 2003

A fortnight ago, the European commission ruled that risk equalisation payments between VHI and Bupa are not a form of state aid or subsidy and can be allowed.

This means Bupa Ireland could end up paying VHI, the government's wholly owned health insurance subsidiary, millions of euros a year in compensation for what VHI claims is Bupa's cherry- picking of a disproportionate number of younger members since it set up here nearly seven years ago.

Bupa Ireland has resisted VHI's demand for the risk-equalisation subsidy. It says it still has not received a copy of the European Union's ruling, which has only appeared as a notice on the commission's website. Nobody from VHI or the Department of Health has invited Bupa to discuss the matter.
Blow to healthy competition Sunday Times (London) May 25, 2003

Risk-equalisation provides for transfer payments between insurers to spread the claims costs of older and less healthy members among all companies. It is also intended to discourage companies from selecting younger, healthier people as members
Rate of VHI rises may be slowed The Irish Times June 23, 2003

Private health insurance providers in Ireland are obliged to use the 'community rating' system. This means that people who are in good or bad health pay the same.

The idea is to spread the risk so that affordable private healthcare is available to those who most need it.

The state-owned VHI was the sole provider prior to 1997, when Bupa entered the market. Since then it has attracted 15 per cent of the market, mainly younger and healthier people. The VHI covers 85 per cent of the market but has a much older age profile and consequently about 95 per cent of the claim costs.
HEALTH IS WEALTH - BUT INSURANCE COSTS The Sunday Independent (Ireland) June 29, 2003

VHI, and to a lesser extent Bupa, know they have half the country over a barrel.

The lack of competition means we can go back and forth between the two providers looking for lower premiums or better value, but we are stuck with whatever products they offer at the prices they set.

VHI is a money spinner for its shareholder, the government. The Euro 20m plus annual risk equalisation payment it says it is entitled to receive from Bupa is reckoned to be about a quarter of the smaller player's entire turnover and far more than its total profits since it arrived in 1996.

Bupa must now make its accounts available to the Health Insurance Authority, but it would hardly make sense for it to remain here if it had to plunder its turnover and profits to compensate VHI for having a disproportionately higher membership.
Patients first casualties of insurance monopoly Sunday Times (London) July 6, 2003

TWO weeks ago, after years of delay, the Dail passed regulations that will allow VHI to get compensation from its only competitor in the health insurance market in Ireland, Bupa, for the fact that it has older, higher-risk customers.

The board of the semi-state health insurer and its chief executive, Vincent Sheridan, are convinced this is the first step down the road to privatisation.
Risk equalisation, which has passed into legislation, was seen as a necessary first step. This would involve Bupa, VHI's main competitor, making an annual payment of about Euro 28m to compensate the semi-state body for having older and sicker members.

Bupa, which is part of the UK-based health insurance provider, has been doing its utmost to block risk equalisation since the mid-1990s.
"Until risk equalisation regulations were brought in by the government, creating a level playing field with Bupa, you could not even turn VHI into a private limited company. Now you can," he said.
Sheridan gets VHI fit for privatisation Sunday Times (London) July 6, 2003

It is an article of faith for most economists nowadays that competition and privatisation inevitably ensure a better deal for the consumer. Fat, smug monopolies suddenly have to fight for customers. They cut out unnecessary costs, get their act together and treat consumers with more respect. The customer, who now has the power to choose, gets better service and lower prices.

This is broadly true in much of the marketplace, but with certain crucial qualifications. The choice has to be genuine. The consumer has to know the difference between one product and another. The number of competitors has to be high enough to stop the emergence of a cosy cartel of operators who effectively rig the market between them. And the marketplace in question has to be open enough that it is genuinely possible for a new player to come into it with different ideas.
The simple and undeniable reality of the health insurance market in Ireland is that the introduction of competition, and the preparation of the VHI for privatisation have triggered price increases rather than price reductions.
The extra rise has two sources. One is the arrival of BUPA as a competitor. BUPA has not been particularly successful. Its market share is around 10 per cent, and remarkably few of its customers seem to have switched from the VHI. But it has targeted younger people, mainly through group schemes in high-tech companies.
Sale of VHI will cost us dearly The Irish Times July 8, 2003

BUPA Ireland has all the commercial freedom it needs. While it does not make any financial information available, it is safe to assume that it would not continue to operate in the Irish market unless it was making a satisfactory return. More competition can be expected with the introduction next year of risk-equalisation legislation, which ensures that the cost of insuring older people is spread across all the players in the market.
VHI commercial freedom pitch will be hard to sell The Irish Times July 28, 2003

MARTIN O'ROURKE, the Bupa Ireland chief executive, fears the company could face charges of reckless trading if it continues to rack up liabilities under the controversial risk equalisation scheme.

Bupa will have to make provisions of almost E150,000 a day to cover the cost of various legal actions and payments to the VHI under the plan. It has been estimated the company could spend three years fighting the scheme though the Irish courts and in Europe.

"We would not have the money to put aside for the contingent liability," said O'Rourke.
Separately, Vivas, the third player in the market, will also this week respond to the triggering of risk equalisation by halving the premiums it charges for the children of its members.

The move will be a very public show of its commitment to the market, and the benefits of competition in the sector.
VHI, which was the monopoly provider up to 10 years ago, has a far larger proportion of older members than the newer entrants, Bupa and Vivas.

Under the scheme, which is triggered by government with effect from today, Bupa could have to pay up to E161m to its rival over a three-year period.
Bupa fears 'reckless' trade charge The Sunday Times January 1, 2006

Bupa says it cannot continue to operate in Ireland if it is forced to make these payments, as its projected profits over the next three years will amount to just E64m. The company stated "unequivocally" in the High Court in December that it will withdraw from the Irish market if risk equalisation stands.
Bupa is fighting the introduction of the scheme on a number of fronts. It is mounting a High Court challenge to the scheme under Irish and EU law this week and has indicated it will appeal to the Supreme Court and to Europe should it fail in this action.

Separately, the company was given leave last week by the High Court to seek a judicial review of Harney's order to implement risk equalisation.

Bupa is lobbying in Brussels and has written to Dail deputies saying the country's international reputation for competitiveness would be damaged if it left the Irish market. It has also written to its 440,000 customers asking them to protest to the government.
McCreevy and Harney face Bupa battle The Sunday Times February 5, 2006

TWELVE years after the Irish health insurance market was opened up to competition, there are only three players in the market. Vivas Health has been the only new player in almost a decade to square up to Bupa and the VHI, the state-owned business.
The reason is immediately apparent: the state does not compete in banking or motor insurance. In health insurance, however, it is hugely conflicted by owning the dominant VHI.

The state allows a series of benefits to the former monopolist that act against the interests of consumers.

The VHI does not carry solvency reserves as Vivas or Bupa are required to do. In fact, it continues to run down its reserves. Allowing the VHI to operate without solvency reserves, with effectively a zero cost of capital, while all other entrants must adhere to EU and Irish prudential regulations, is a clear deterrent to entrants.
Health insurers need shot in the arm;(Personal view by Oliver Tattan, chief executive, Vivas Health) The Sunday Times April 23, 2006

THE High Court's decision to force Bupa Ireland to pay more than it earns in profits every year to the VHI could be the death sentence for the 10-year-old company in Ireland. Its 500,000 customers may have no choice but to join or rejoin the wholly government-owned VHI or opt for the No3 player, Vivas.

The decision may be appealed to the Supreme Court, but for the moment the judgment is clear: Bupa must pay VHI, which is four times its size, as much as E161m over the next three years in risk equalisation payments.
Killing off Bupa will only make ailing health sector worse The Sunday Times November 26, 2006

Last week the British-based insurer's attempt to subvert the rules of engagement in Ireland's health-insurance market was defeated in the High Court. The company must now either follow through on its initial threat to quit the market or seek an honourable exit from a situation that it walked into with its eyes wide open.
Bupa's conundrum The Sunday Times November 26, 2006

Since entering the Irish market a decade ago, Bupa has objected to risk equalisation, a levelling-out process that obliges health insurers with a younger customer base to compensate rivals with older, higher-risk clients. This ensures everybody pays the same rate for the type of insurance they require, regardless of age.

Earlier this year, Bupa launched a High Court challenge against risk equalisation.

It lost and is faced with the prospect of paying VHI, its bigger and longer-established rival, E161m in compensation over the next three years. It is this that Bupa says makes its Irish operation unviable.
The remedy is painful The Sunday Times December 17, 2006

WHAT a mess. Bupa Ireland wasn't bluffing after all. And so the VHI gets to revert to being a virtual monopoly again because the health minister couldn't find some way to maintain fair competition in the private health insurance market.
Now 475,000 people, who preferred Bupa to VHI, and who fear being patients of the public health system, must join Vivas, which faces the same possible fate as Bupa when it is subjected to risk equalisation next September, or VHI, which is controlled by the health department. Some choice.
Private health insurance fiasco is simply a sick joke; The Sunday Times December 17, 2006

"I'm afraid," said Martin O'Rourke, Bupa Ireland's chief executive, with a shake of the head, "there is nothing more we can do."

On Thursday the company announced it was pulling out of Ireland.
Bupa's withdrawal from the market was surprising to everyone because it came at the same time as it could have clutched at the straws offered by the Competition Authority report and responded to the increasing pressure from McCreevy to open up the Irish market further.

According to the Department of Health, Bupa was uninterested in future policy directions and a possible restructuring of the market down the line during last week's negotiations.

"Different schemes were outlined, but the Bupa position was very much related to how much they had to pay now. Their bottom line was money," said the department source.

It seems likely it was the Bupa board in London that ultimately pulled the plug, denying its Irish offshoot any further life support.
By removing itself from the Irish market, Bupa is also able to take with it what is left of its profits and solvency reserve once its costs have been met, a point Sheridan is eager to make.
Is it terminal? The Sunday Times December 17, 2006

BRITISH health insurer Bupa has vigorously denied accusations that it is perpetrating a "hit and run" on the Irish health-insurance market. Rival VHI insists the British company will walk away with profits and reserves of E100m when it exits the Irish market later next year.

"Has it occurred to anyone that what the market needs is protection against someone coming into market and taking out windfall profits? This is probably one of the greatest hit and runs ever perpetuated in the Irish economy," said Vincent Sheridan, chief executive of VHI.

Bupa is exiting the market after 10 years as a new rule has forced it to compensate VHI for its higher proportion of older and hence more expensive members.
Bupa denies hit and run claim The Sunday Times December 17, 2006

BRITISH health insurer Bupa has vigorously denied accusations that it is perpetrating a "hit and run" on the Irish health-insurance market. Rival VHI insists the British company will walk away with profits and reserves of E100m when it exits the Irish market later next year.

"Has it occurred to anyone that what the market needs is protection against someone coming into market and taking out windfall profits? This is probably one of the greatest hit and runs ever perpetuated in the Irish economy," said Vincent Sheridan, chief executive of VHI.
Bupa denies hit and run claim The Sunday Times December 17, 2006

Withdrawal from Ireland
Following the imposition of RES in Ireland we have been forced with much regret to withdraw from the Irish market. RES would have meant paying more than double our anticipated surplus to the state-owned insurer VHI.

It is a consolation that we have been able to secure an agreement with the Quinn Group, the Irish insurer, to take on the systems, premises and staff of BUPA Ireland, so protecting the jobs of over 250 employees and ensuring continuity of service to customers. Completion of the sale will not be achieved until the necessary regulatory approvals have been received.
CEO’s report BUPA’s Annual Report for 2006

Last week, Quinn made an audacious bid to become the Irish insurance industry's top dog by taking control of the health insurance business built up by Bupa Ireland over the past decade for an estimated E150m. If successful, it will put Quinn, who left school at 14, ahead of multinationals such as Axa, Allianz and Vivas in terms of premium income.

Having cut a swathe through the motor insurance industry, the entrepreneur has found a new quest. Taking on and beating entrenched players in mature industries is classic Quinn territory. He did it with CRH in cement manufacturing; Axa, Allianz and Hibernian in insurance; Ardagh in bottle production; now he is pitching himself against VHI Healthcare in health cover.
Nevertheless, Quinn had ample opportunity to ponder a move into health insurance, given the cloud that had hung over Bupa's Irish operations for much of the previous year. The "for sale" sign eventually went up in mid-December and, by early January, Axa was lining up among potential suitors.
By buying Bupa, Quinn has bagged 475,000 customers in one go. It and other new entrants to the health insurance industry will not be fooled by the way VHI has raised attention on the high cost of insuring older people. They know big profits are to be made from younger subscribers who, because of the regulator's one-price-fits-all rule, end up paying over the odds.
Sean and the dragon The Sunday Times February 4, 2007

BUPA threw a tantrum and declared that it would leave the Irish market, but the Government called its bluff and, to add even more drama, cement mogul Sean Quinn called everbody's bluff and bought out BUPA, sort of.

The intervention by the Quinn Group caught everybody by surprise, not least the VHI who are now fighting a rearguard action against the new health insurer and Vivas, another new entrant into the lucrative Irish private health insurance market.

The Quinn Group has argued that as a "new entrant", it qualifies for a three-year exemption from handing over risk-equalisation payments to the VHI.
It's all guns blazing, but with a Supreme Court battle looming between BUPA and the VHI and former finance minister Charlie McCreevy getting tetchy about competition in the Irish insurance market from his HQ in Brussels, the latest legal dilemma adds only another layer of confusion to the great health insurance debate.
Risky ruling on health insurance leaves us sick with confusion Irish Independent February 6, 2007

Bupa Ireland is now officially Quinn Healthcare, but, aside from the name change, everything else stays the same, including the 300 jobs in Fermoy that were at risk, the price freeze for 2007 and the row between the billionaire Sean Quinn and the VHI over millions of euros of risk-equalisation payments.
Quinn eyes a healthy future The Sunday Times April 22, 2007

The legislation removed a three-year exemption from risk equalisation payments for new entrants to the health insurance market.
But Harney (minister) didn't like the way he (Quinn) was using the new-entrant exemption to wriggle out of making risk-equalisation payments to the state-owned VHI. So she pulled a fast one by producing the Health Insurance (Amendment) Bill out of nowhere and fast-tracking it into law.
Still, all's well that ends well, eh? Well, not quite. Quinn is an honourable chap and a smart businessman and he is proceeding with the purchase of Bupa, despite having to make payments to the VHI three years earlier than he expected. He has said, however, that he is "baffled and dismayed" at the shotgun legislating - he wouldn't be alone there - and pledged to fight risk equalisation through "the necessary and appropriate channels".
Harney - The Unequaliser The Sunday Times February 25, 2007

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BUPA has targeted the international marketplace. It has a large and profitable business in Spain. I have not studied Spain further than the extracts already on this page. It does not seem to have targeted other countries in Europe. It offers language difficulties as one reason for this.

Instead it has targeted Asia and Australia. It purchased the US backed Singapore headquartered Asian group Vista Healthcare in 2001. Vista, a Chase Manhattan US backed company operated by past staff from Tenet Healthcare's international operations and Malaysian/Singapore's Parkway Holdings. It was primarily a provider of services and not an insurer. It had expanded throughout the region.

Bupa, Britain's largest independent health-care company, has paid US$35.5 million to acquire Vista Healthcare Asia as it makes its first steps into China and other regional markets.

This is Bupa's first foray into the health-care business in China and Hong Kong, which are undertaking reform of their medical plans, said Andrew Kielty, managing director of Bupa's Asia operations.
The purchase also allows Bupa a way into the China market because Vista has a 23 per cent holding of an eye-care centre in Hangzhou. The remainder is held by a medical university.
Bupa looks after regional concerns with acquisition of Vista Healthcare. South China Morning Post July 19, 2001

The purchase brings into the BUPA network 31 general-practitioner or pathology clinics in Singapore, 16 primary care, pathology, physiotherapy or ophthalmology centers in Hong Kong and the Hurstville Hospital in Sydney. BUPA will also get minority stakes in an eye-surgery center in Hangzhou, China, and a specialist practice center near Kuala Lumpur. BUPA already owns a primary care and diagnostic polyclinic in Bombay and has health-insurance operations in Thailand and Hong Kong, covering more than 270,000 people.
BUPA to Acquire Vista Healthcare For $35.5 Million The Asian Wall Street Journal July 19, 2001

She (CEO Val Gooding) added: "Along with our established businesses in Hong Kong and Thailand, Vista provides us with an excellent platform for expansion. This fits well with our strategy for continued growth both abroad and in the UK."

The acquisition adds to Bupas other interests outside the UK that include Ireland, Spain, Malta, and Saudi Arabia.

Mr Dudley said that, apart from Spain, where BUPA is the leading private hospital operator, BUPA was not active in Europe, where asset values were too inflated and language difficulties militated against expansion.
Loyal Brits give health giant a broad base. The Age June 6, 2002

Development of our business
Elsewhere, as part of our commitment to international development, we continued to assess opportunities for further growth and established a representative office in China to determine the potential in the region.

The continued development of the business was a key reason why, in 2006, we undertook a review of our brand. The BUPA Group and a number of its businesses have expanded dramatically in recent years and it was important to ensure our external identity was consistent and accurately reflected the values at the heart of the business.
CEO’s report Annual Report for 2006 page 5

Val Gooding, Bupa's chief executive, has overseen a significant international expansion that sees the group in countries as varied as Australia, Thailand and Saudi Arabia. It has 8 million customers, half of which are in the UK. In the group's results last month, Ms Gooding said the overseas business had made an "outstanding" contribution to the overall results.
Bupa in talks over selling UK hospitals to fund expansion The Guardian April 9, 2007

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Australia is the third largest source of revenue for BUPA, second to the UK and Spain, but exceeding the total of all other countries where BUPA operates.

In spite of its strong links to the infamous Tenet/NME Vista Healthcare was allowed to buy a hospital in Australia. Tenet had been pushed out of Australia in 1996.

BUPA acquired this hospital when it purchased Vista Healthcare

It entered the Australian health-care industry last July when it acquired the Singapore-based Vista Healthcare, now renamed BUPA Asia, picking up Hurstville Community Private Hospital in Sydney as part of the deal.

Chief executive Louis Dudley said yesterday that Hurstville was a middling operation with 57 beds, specialising in orthopaedics, obstetrics and ophthalmology.
Loyal Brits give health giant a broad base. The Age June 6, 2002

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Buying into insurance
When AXA decided to sell its health insurance business in Australia BUPA bought it. BUPA went into partnership with for profit Macquarie bank. It later bought Macquarie’s share. It immediately signaled its aggressive expansionism by threatening to buy up competitors.

"Since I went all the way to Australia, it was also an opportunity to sound out possible strategic investments," Holden, managing director of Bupa International Businesses, says. Bupa is Britain's largest private healthcare group, One of the parties that Holden met was Macquarie Bank, which, just coincidentally, was advising Axa Asia Pacific, then negotiating with the Sydney-based Medical Benefits Fund to sell its health insurance business.

The upshot of Holden's visit was a deal announced this month: Bupa has agreed to take a 50 per cent stake in a syndicate, led by Macquarie Bank, which acquired Axa Health for $595 million.

"It does not make sense (for us) to have just one hospital in Australia," says Holden. The 72-day bed Hurstville Community Private Hospital was an unintended acquisition. Bupa came to own the Sydney hospital through its acquisition of the Singapore-based Vista Healthcare Asia last July.

"We have been looking at Australia for some time. It has a mature and independent health insurance sector - a business which we understand," says Holden.
Holden plans to grow organically and has warned competitors that he will be out to win their business. Bupa will also seek to acquire smaller funds.
Bupa has health cheque. The Australian June 26, 2002

In June, Axa announced the sale of its health division, for $595 million, to a consortium of investors brought together by Macquarie Bank. The largest investor in the syndicate is a British mutual fund, British United Provident Association (Bupa), which agreed to contribute $130 million. The deal was due to be finalised early in September.
Health-fund relapse. Business Review Weekly September 5, 2002

BUPA has acquired the remaining equity interest from Macquarie Bank in the health fund previously called Axa Australia Health Insurance, now known as BUPA Australia Health. Axa received outstanding proceeds from the sale of more than $500 million. BUPA now owns 100 per cent of the business.
BUPA acquires Axa Health Australian Financial Review March 1, 2003

Bupa is preparing to sell more of its British products to Australia and the Far East. It already owns a Sydney hospital and has a presence in Hong Kong, Thailand and Singapore.
NHS HELPS BOOST BUPA EARNINGS TO POUNDS 2.8BN Birmingham Post March 20, 2003

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Did BUPA compromise care? Underpaying and Aggression

By 2003 health care in Australia had been turned into an aggressive marketplace in which the money spent on the care of patients was determined not by their medical needs but by the relative bargaining power of hospital groups and of insurers. This came down to leverage - ie. regional dominance.

If a company dominated in a region it could dictate the fees paid. Insurer BUPA and provider Healthscope both had leverage in South Australia, the Northern Territory, and some sectors of services in Victoria.

BUPA’s size and international holdings increased its leverage in that it gave them additional resources in a dispute. AXA had enjoyed a similar advantage. From all accounts BUPA’s new operations were already paying much lower fees than its competitors. Providers claimed that they were unable to provide services and that care was being compromised. BUPA's public commitments suggest that unlike AXA it would seek to spend its funds improving services to its members, not squeezing providers.

A vicious stand off soon followed. BUPA refused to pay and a standoff developed in which BUPA's customers were not covered when they attended Healthscope hospitals. Not only were sick citizens traumatised and their care compromised but the entire health system was stressed. In my view this was unconscionable behaviour, for operators in the health sector and both parties were at fault. It goes to their probity and their suitability to operate in the health sector as well as the far more vulnerable nursing home sector. I wrote a web page analysing the dispute at the time.

Click Here to link to the Healthscope vs BUPA web page

In regard to BUPA’s suitability as an operator of aged care homes, the allegations that it was so commercially aggressive that it was prepared to under-fund and so compromise care is most worrying.

Unfortunately these bargaining negotiations and the fees paid remain "commercial in confidence". Customers were and are denied the transparency needed to determine whether their insurers are paying a reasonable fee for the care they get and compare this with what others pay. They cannot penalise those who fail to serve them properly. The market consequently cannot work and insurers can milk the system. BUPA boasts of the profitability of its international operations and Australia makes a large contribution to that profit.

BUPA markets its lower premiums to Australian citizens. These citizens cannot make a logical choice if they do not know what proportion of that premium is paid for their care

BUPA has recently purchased the DCA hospitals in Australia and New Zealand from the Citigroup private equity entity CVC Asia Pacific. It is to be hoped that the government department assessing the suitability of BUPA as an approved provider will have access to all this financial information.

Mutual Community is controlled by BUPA Australia Health Pty Ltd, a member of the UK-based British United Provident Association Ltd.
FUND WAR HITS SICK Adelaide Advertiser August 23, 2003

"We simply haven't been able to reach agreement on appropriate reimbursement rates and they, BUPA-owned Mutual Health Fund, pays substantially less than other competing funds," Mr Dixon (from Healthscope) said.

"So all we're asking Mutual is to pay the same rate as their competitors do."
Health insurers contract negotiations break down. Australian Broadcasting Corporation (ABC) News August 23, 2003

But this time analysts believe Healthscope could have a fight on its hands, as BUPA, which recently bought the HBA and Mutual Community funds from Axa Asia Pacific, has the financial muscle and regional market share to resist the hospital operator's demands.

"We're in a much better position to sit this out," said BUPA corporate affairs spokesman, Eric Granger. "If we get 10 per cent of their patients into other hospitals, that will hit their margins.
Health Insurance Showdown The Sydney Morning Herald September 1, 2003

HEALTH insurance premiums have already gone up - the hospitals simply want the funds to flow on to them as intended.

If this does not happen, Mutual Community members are justifiably entitled to ask: "Where has our money gone?"

One possible answer comes from the purchase earlier this year of Mutual Community by the giant British conglomerate BUPA for $595 million. Mutual Community is a for-profit health fund - the most profitable in Australia.

Respected industry analyst Booz Allen has explained Mutual's profitability on the basis of the fund having the lowest combination of benefits (that is, payments to hospitals and providers) and expenses of any health fund in Australia.

The British owners of Mutual are entitled to a return on their investment, but not at the expense of patients and hospitals.
INSURANCE BATTLE Urgent surgery by MICHAEL COGLIN (from Healthscope) Adelaide Advertiser September 16, 2003

BUPA operates as Mutual Community in South Australia and the Northern Territory, and HBA in other States.
BUPA SPLITS WITH HEALTHSCOPE Hospital & Healthcare (News Bites Summary) November 1, 2003

BUPA Australia is the country’s largest health fund to cover over 94 per cent of hospital charges and has consistently kept premium rises below the industry average for the past six years.

As part of a strong global health focused group BUPA Australia continues to lead the industry in product innovation and improved services and benefits for its customers. In addition, BUPA Australia provides customers with travel, vehicle, home and contents insurance services.
BUPA Australia web pages Accessed October 2007

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Expanding as an insurer

BUPA’s success in its battle with Healthscope would have given it a reputation and placed it in a strong bargaining position - a position which would increase its ability to squeeze larger profits from the system. It clearly wanted to expand and has threatened to do so for some time.

It has targeted MBF but MBF has rejected its overtures and has elected to demutualise and float on the share market instead.

It would be sensible for two genuine not for profits to pool their resources for the benefit of the community. One wonders if there is more to MBF’s reluctance than meets the eye. BUPA continues to pursue MBF. It will gain much more leverage if it succeeds and be able to negotiate lower payments from providers.

BUPA has also been named as a possible purchaser of the government owned insurer Medicare Private, but the government has backed away from its rush to privatise the business. The political fallout is the obvious reason but we might be wise to keep an open mind.

In Australia, it (Macquarie Bank) is believed to be acting as adviser to, and potentially joint buyer with, health insurer BUPA, which is looking to acquire parts of Medibank Private if the Australian Government privatizes the entity.
Macquarie builds up its health Herald Sun (ABIX abstracts) December 29, 2005

BUPA Australia today confirmed its interest in merging its Australian businesses, HBA and Mutual Community, with MBF following initial discussions between the two leading health funds.
BUPA AUSTRALIA PROPOSES MERGER WITH MBF Press release BUPA Australia from web site accessed Oct 2007

Since the sale, BUPA has confirmed its plans to create Australia's biggest health fund by merging its local division with MBF, the market's second-biggest player.

BUPA said that it had held talks with MBF. BUPA Australia, which is seeking regulatory approval for the proposal, is thought to be keen to return to the negotiating table before the planned demutualisation of MBF at the end of the year.
BUPA hospitals to be rebranded as Cinven reshapes Spire Healthcare The Times September 13, 2007

The health care needs of more than one million Australians are supported by BUPA Australia, giving the health fund a national market share of 10.13 per cent. BUPA Australia is known as HBA in all states except South Australia and the Northern Territory where the customer brand is Mutual Community. Both brands have provided health cover for Australians for more than 70 years.

BUPA Australia operates a customer branch network in Victoria, New South Wales, Northern Territory and South Australia. The majority of customers are located in Victoria (550,000) and in South Australia (351,000).
BUPA Australia web pages Accessed October 2007


For Updates:- A good way to check for recent developments in aged care is to go to the aged care crisis group's search page and enter the name of the company, nursing home or key words relating to any other matter in the search box. Most significant press reports are flagged there. The aged care crisis web site has recently been restructured and some of the older links used from this site may not work.

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This page created 22 Oct 2007 by
Michael Wynne