NIB sees growth in medical travel
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 slowed.
NIB chief executive Mark Fitzgibbon told shareholders at the annual meeting in Newcastle on Tuesday that the question for Australia's only listed health insurer was about "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 of the phenomenon.
Shares in NIB closed flat at $2.45 on Tuesday. They rose by 7.59 per cent last week.
Chairman Steve Crane said he did not expect its Australian residents health insurance business to reach the same levels of "stellar growth" as seen over the past few years. He said the insurer was seeking to cash in on other growth markets, such as providing insurance for international workers and international students, its New Zealand business and the medical tourism market.
About 15,000 Australians were 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 to $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.
Last week, Mr Fitzgibbon said Medibank Private could emerge as a takeover target if it is privatised by the federal government.
He said a takeover of Medibank was not on NIB's agenda but could not be ruled out. On Tuesday, he said a 3 per cent increase in the firm's share price on Friday might have been due to speculation over the sale of Medibank rather than over the "NIB Options" plan.
Mr Fitzgibbon said the plan would 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.
Services would include bundling transport, medical and accommodation services for overseas options and the plans would be sold on the basis of trustworthiness, safety and choice.
The Australian Dental Association and Australian Medical Association have said NIB would not be able to guarantee the quality of procedures. But Mr Fitzgibbon said the two bodies were part of NIB's consultation over the scheme.
"I'm confident they will accept this as a sensible option to improve the quality of something that is already happening."