Medibank's interim result raises questions

In the lead up to its November float, Medibank Private (ASX: MPL) was pitched as a cost-cutting story – management would use the company’s scale and negotiating power to push down the cost of healthcare, reducing claims, while at the same time strip out operating costs.While Medibank’s profit margin increased slightly in its latest interim result, the underlying gross margin fell from 13.6% to 13.4%, which means the company is losing ground when it comes to managing claims.Lowering the actual cost of healthcare is easier said than done.Doctors are paid for each service, so they deliver as many as possible,...

In the lead up to its November float, Medibank Private (ASX: MPL) was pitched as a cost-cutting story – management would use the company’s scale and negotiating power to push down the cost of healthcare, reducing claims, while at the same time strip out operating costs.

While Medibank’s profit margin increased slightly in its latest interim result, the underlying gross margin fell from 13.6% to 13.4%, which means the company is losing ground when it comes to managing claims.

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