NIB bullish on its overseas growth plans
NIB's executives have defended the insurer's plans to cash in on medical tourism, which they said would help boost earnings as profit growth in the established domestic market slows.
NIB chief executive Mark Fitzgibbon told shareholders at its annual meeting in Newcastle on Tuesday that the question for Australia's only listed health insurer was "how can we hitch our wagon to the global thematic of people travelling across borders for their healthcare".
"It's not new. It is actually happening," Mr Fitzgibbon said.
NIB closed flat at $2.45. Shares rose 7.59 per cent last week.
Chairman Steve Crane said he did not expect its Australian health insurance business to reach the same levels of "stellar growth" seen over the past few years. He said NIB was seeking to cash in on other growth markets, such as providing insurance for international workers and international students, its New Zealand business and medical tourism.
About 15,000 Australians are estimated to travel - predominantly to Thailand - each year for medical tourism, said Meredith Jones, an associate professor in cultural studies at the University of Technology, Sydney.
Dr Jones, who has just completed an international research project on cosmetic surgery tourism, said while there were no official statistics on the size of the market, Australians were estimated to spend between $6000 and $20,000 on mostly cosmetic surgery procedures, flights and accommodation.
NIB floated entering the overseas medical arena last year. But the "NIB Options" scheme, which will be launched in January and initially focus on cosmetic surgery, has received more attention in recent days and was the subject of numerous shareholder questions.
The discussion came after Mr Fitzgibbon said last week that Medibank Private could emerge as a takeover target if it is privatised by the federal government.
Mr Fitzgibbon said a takeover of Medibank was not on NIB's agenda but could not be ruled out either. He added on Tuesday that a 3 per cent rise in the company's share price on Friday might have been due to speculation over the sale of Medibank rather than the "NIB Options" plan.
Mr Fitzgibbon said the plan would not be part of the insurance business but function as a Trip Advisor or Expedia-style portal, and offer local and international cosmetic surgery options. NIB expected the 2014 financial year net expenditure on the scheme to be about $2 million. Earnings would be "through cost of goods sold plus margin", with overseas options that would involve the bundling of transport, medical and accommodation services. Incentives for customers to take up the plans would centre around trustworthiness, safety and choice.
The Australian Dental Association and Australian Medical Association have criticised the scheme, saying NIB would not be able to guarantee the quality of the medical procedures.