A mutual relationship with the NHS: the future of healthcare?

Healthcare mutual Benenden was founded in 1905 – 43 years before the NHS, but the society now sees itself as an extension of the country’s health service. Chief...

Healthcare mutual Benenden was founded in 1905 – 43 years before the NHS, but the society now sees itself as an extension of the country’s health service. Chief executive Marc Bell meets with Co-operative News editor Anthony Murray to discuss the current state of health care provision in the UK, and how mutuals can work with the NHS …

Anthony Murray: Benenden has gone through a transformational change over the past few years – from opening its membership to all, through to diversifying its services. Can you talk me through this?

marcbellMarc Bell: The change is all built around the vision to be the leading health and wellbeing mutual community in the UK, so it’s set at aspirational levels. Obviously we want to lead in certain areas and we want to operate in the health and wellbeing space – but, importantly, it’s underscoring our commitment to being a mutual.

The way we want to lead is based on customer satisfaction and staff satisfaction, and those are measured by external measures. In addition to that, we look to outperform the market in terms of its average growth rate.

Finally, clinical excellence is something we pride ourselves on – no infection, better patient outcomes – so a lot of change. The change is built on five building blocks. At the heart of our strategy is health, so we still will retain that core discretionary healthcare service that’s a back-up to the NHS. That’s mandatory. That won’t change, so that’s something that our 900,000 members buy into, but in recent years, we’ve tried to diversify.

The reason we’ve tried to diversify is to protect our position in a volatile market. We need to make sure we are positioned for growth in the future. As you know, as a mutual, there’s more restrictions on raising capital. Our society doesn’t need to do that, but because of that restriction we look to grow new revenue streams from our members. So, we’ve started a new subsidiary called Benenden Wellbeing, and through that we’re starting to build a general insurance business. We’re now offering travel insurance for tens of thousands of members. That started last year, and we’ve recently launched home insurance, and we’re examining other forms of insurance.

Later this year and going into early next year, we’ll enter the corporate marketplace for the first time.

AM: The perception around private services replacing (or extending) the NHS is quite controversial. As a mutual, is this a conflict you see?

MB: It’s a fair observation and it’s very clear the general public love the NHS. Politicians don’t want to tinker with it.

If you take Manchester, you could call it a big experiment there of devolution, where you have got a clinical commissioning group and health professionals tasked with micromanaging their own budget to get better health outcomes, there’s all sorts of opportunities because you’re empowering health managers to have much more freedom in the models around the delivery of care.

One of the advantages of Benenden is that we are not for profit, so we should be more palatable. We think that we’re not a political organisation, we’re there to provide services to our membership, and we’ve got 110 years of providing healthcare. In fact, Benenden started 48 years before the NHS was even invented.

We think there is going to be an opportunity in the short term for us to take part in a trial and see how we can demonstrate that our model works well, complementing the good work that the NHS does, rather than a big, private medical insurer that’s there to make profit. It’s fulfilling a different need, so yes, I think it’s good to have affiliation with the health service.

AM: How do you see Benenden working more closely with the NHS?

MB: I think it’s very clearly a hybrid model. The hub should be taxation-funded concentrating on A&E, long-term conditions, life-threatening care, all the things the NHS is good at, free at the point of delivery, more outreach probably in terms of mental health which is very important, but I do think that certainly for elective non-acute care, stuff that’s more pre-planned, mutuals could and should have a more formal place of supplementing, topping up that taxation-funded system. It would be nice for that to be somehow formalised in legislation.

One could sensibly define the list of conditions and the funding model that sits behind that. A trial to demonstrate and prove how that could work is not beyond the wit of man.

AM: What’s your views on the public sector spin outs over the past five years or so? Some are owned wholly by employees, others are a little bit sketchy. Is this the right path?

MB: I think it’s encouraging. It definitely is moving in the right direction. The Government and others have had a view where the mutuals are the John Lewis model so they’re owned by the staff. That seems to be where their mindset is, but I’ve spent a lot of time –  and others have – saying: “Well, that’s not the only form of mutual in healthcare”. We are one of the few of our scale that are owned entirely by our members.

To me, having a patient at the heart of what our service offering is – and also at the heart of what the long-term future for that organisation is… You can’t get much more empowering than that. So, I think the government has been slow to recognise the Benenden mutual model in comparison with other models like, say, Circle which isn’t a democratic mutual like ours.

Benenden's 2015 annual conference
Benenden’s 2015 annual conference

AM: How do members get involved in the society?

MB: We have 47 branches around the UK. Each is representative of its community, and each takes part in the democracy. They have a duty to attend the annual conference and they will take propositionso either amend the rule book or to have a motion that might somehow improve the service.

So, if the board, for example, wants to take the organisation in a certain way strategically, that goes through the democratic process. That makes for good governance, it makes for prudent management of resources, and it enables the membership to have a say in the direction of company.

So, democracy is hard-coded into the way we do our business. Clearly, there’s still room for the board of directors and the staff engaged in the day-to-day running of the organisation to make things happen and to innovate, provide good service, but some of the big ticket items are carefully managed through that democratic process.

The chair and myself and one or two others go out twice a year in the spring and the autumn to see all of our branch offices to share with them how we’re doing, listen to some of their key issues – because it’s about two-way communication – and then make sure that there’s transparency on the strategy of the organisation. That means that people are more comfortable with things.

The other point about democracy is that each of those 47 branches can nominate a board member to sit on the main board. They have to go through an election process but on our committee of management, which is the board, there’s 14 officers on that board, 10 of whom are elected by the regional branches, two of whom are independent un-executive directors and two of whom are executive directors – myself and the CFO.

So, you have that democracy in action there where you’ve got a branch having the chance to get a seat on the board. That’s how it works.

AM: It’s quite a new concept for co-ops having executives on the board – as has recently happened with the Co-op Group. How does that work for you?

MB: I think it’s better. As an executive director, as a chief executive, our responsibility is the day-to-day running of the organisation and the delivery of the strategy agreed by the board.

In going through that process of stewardship, it’s important that there is rigour behind the challenge that comes through the board. Good board effectiveness is something that’s in the public domain. We comply here with the annotated version of the UK Corporate Governance Code, which basically sets out how a board of directors should manage the affairs of a business, and we comply with that.

Where we don’t comply, we explain. My view on the changes that have happened to the Co-operative Group is that I think they’ll take time to bed down but it’s a positive thing that, in my view, the board was smaller.

You’ve now got the chief executive who’s now a voting director which is a good thing, and equally, there’s professional non-executive directors that have come on to add their insight and experience in running a business. What’s also important is that you don’t lose the traditional knowledge, ethos, and input that a lay director would bring. We have that here. The changes are positive and provided that link with the grassroots is not totally removed, I would be a supporter of it. Here at Benenden, our board of 14, you might view that as slightly larger than the norm, but it works well for us. We have a very rigorous debate and through that process, the governance of the society is discharged. So, yes, I’ve watched what’s happened in the Co-op Group.

AM: How does Benenden keep its members engaged?

MB: We gear our operation around member and stakeholder engagement. It’s really hard-coded into our business plan. We share our three-year business plan with our branch delegates every year. We report back through the annual report and other documents on how we’re performing.

We take several weeks out of the year every year to go and see all of our branch officers with other directors. We have two set pieces where we present to all of our branch secretaries and chairs, so there’s around 120 people there. We’ll talk to them about how we’re doing and our thoughts on the future, and then also, using technology, we have a branch democracy area on our website where our branch delegates can sign in and conduct their own business affairs, so that helps with that engagement as well.

We also produce magazines and written communication which I think is really important just to share news.

AM: What kind of improvements would you like to see on member engagement in the next few years?

MB: I’d like to see better use of technology. There’s only so much time a CEO, for example, can give to going round and seeing members, customers, branch officers, stakeholders because you’ve got a responsibility to the members to run the organisation.

Some of the things that we’re trialling is video conferencing to our regions and building in more functionality into our website so we can encourage our 47 branch chairmen and their executive team to have regular correspondence online. I think that’s a big issue for us. Finally, I’d say our conference is not just like an AGM.

There’s a lot more to it and that’s why we call it our annual conference. We’re trying to broaden out what we do there as a subject matter, so we’re looking at workshops, presentations on different aspects of healthcare and other things, trying to bring in our supply chain into the event so they can be scrutinised and contribute to the overall vision of the organisation.

Benenden staff join the York Pride march
Benenden staff join the York Pride march

AM: Another important set of stakeholders are staff. How do you do employee engagement?

MB: We have a set programme for employee engagement. Just last year, we got our staff to consider our values and how they lived them.

We got our staff to define those values then we had a programme of engagement, so we have regular briefings with staff where we talk to them not just about the business plan but we have gatherings where we meet offsite. We’re still small enough to be able to do that. In total across, we’ve got 500 employees. We tend to gather around York and share experiences, have some downtime and get the business plan stuff as well. I even do a regular blog, so as the CEO, I will write to all the staff. We talk to people about how we’re doing. We have engagement sessions through our team management structure.

We’re particularly proud about staff engagement because it’s one of our key performance indicators and how we measure our progress towards our vision. This year, we were one of the Times ‘Top 100 Best Places to Work’ which meant a lot to us.

We have something called an appreciation hub, so any member of staff that wants to send an electronic message to another member of staff for some work they’ve done that they think has gone above and beyond the call of duty, they can send a pre-templates, basically an email, but it’s appreciation. So, we value appreciation and certainly when I do my regular briefings, I go out twice a year across all the staff on all the different floors and I just do a Q&A with them, one to one, talking to them.

Staff engagement is very important. We track our satisfaction with what we’re doing right, what we’re doing wrong. We review that through our group people services director, we try to improve. Again, not everything is perfect but I think on that engagement side with staff and our customers, we’re doing very well and we’re pleased about the progress there.

AM: How do you find operations in the marketplace compared to private competitors? Is there a level playing field?

MB: It’s very important that we have a level playing field. Our experience of dealing with policymakers in healthcare is that there isn’t always. I think mutuals suffer a little bit from the fact that the plc model is well established, it’s embedded in the capital markets globally, and mutuals are sometimes regarded as not able to deliver the value and the returns for their customers compared with plcs, but that’s not the case.

If you go back to the recession in 2008, since then the number of people employed in mutuals has grown, the amount of revenue that goes through the mutual model in the UK has grown, and certainly speaking from Benenden’s perspective as a mutual, we have outperformed the market in terms of the number of people buying our services.

There’s been a decline in the private healthcare market by around 10% over that time and, although we’ve declined slightly, it’s nowhere near approaching 10%, so we’ve held our own. Yes, a level playing field in terms of raising capital, paying dividends, all that sort of stuff, we know that’s not the case, but we look at it slightly broader than that. We want a level playing field in terms of recognising the contribution that the mutual model already makes to the UK GDP, the UK economy.

Sometimes it appears that mutuals play second fiddle, which is a shame because those of us involved in it know that it’s about empowering people, empowering communities. As I’ve said, it’s about fairness and the one advantage that mutuals have is that, like Benenden, we can return 100% of the value that we create back into the business. We don’t have a leakage out to shareholders or other investors.

AM: Do you have links with other mutuals?

MB: I am a board director of the Association of Financial Mutuals in the UK. So, we have fairly regular correspondence, meetings and discussions with people like LV which is a financial services based mutual, and other mutuals that sit on that committee, so we regularly talk to them.

We also take part in a lot of networking and engagement. We take regular soundbites from international mutuals, so we go over there. We’ve met up with the directors of Harmonie Mutuelle, for example, and we research that marketplace.

We look at, say Denmark, and how they’ve transformed their contribution as a mutual to the public service provision of healthcare.

So, we would look systematically at other, mainly European models, and see about how they’re addressing the challenges they face.

AM: And looking at links with co-operatives – is this an aspiration? For example, have you looked at others, such as the Co-operative Group, with the intention to cross-sell products, for example?

MB: Absolutely. We would love to and believe that as a co-operative community we should certainly look at each other’s services and do some cross-trade because we can provide healthcare services to the Co-operative Group and other co-operatives, and we do, but we could do more equally.

We could commit purchasing commission services through a co-operative community. I think we talk about it a lot as management across the UK on this, but we could probably do more ourselves.

Each individual business is a business and it’s working to its own agenda, but that’s a very good point, you know, and we are in conversations. We also talk internationally, so over time, there might be some benefit that comes out of that through trade. It just depends on how things go with the European Mutual Statute and Transatlantic Treaty. There’s a bit of discussion around that, but absolutely, yes. I’d love to provide healthcare services for the Co-op Group. Unfortunately, that’s not my decision.

AM: Finally, customers may not necessarily understand the mutual ethos, so how do you get this across? Why would someone choose Benenden over a private competitor?

MB: We’re trying to provide peace of mind just the same as BUPA is. We offer a different type of service, so our customer proposition is different. There’s so many different pricing variables in private medical insurance, but typically where roughly 10% of the cost of some of these policies, if you looked in the consumer as opposed to the corporate space, you’d pay well over £1,000 per annum on average for a PMI policy. Yes, it would cover a lot more.

If you take our core health scheme, everybody pays the same flat rate so we don’t discriminate by age or medical conditions.  There’s no excess to pay whether you’re a child, an adult. It’s all low cost, £8.45 per month, and it creates this mutual fund and that fund is what is drawn upon to provide healthcare to members.

Going back to the similarities, we’re trying to address the same need. Having said that, most of everything else we do is differentiated, so we don’t price the risk on sale. We have a flat-rate benefit-pricing strategy. What I mean by that is that if you’re buying through a private medical insurer, with the big ones, you’d get an individual price based on the risk to that business and pre-existing medical conditions, age, lifestyle and all of that. We don’t do any of that. We just say, “Everyone’s welcome and you pay one flat rate”. That’s quite a different approach. We don’t have any excess, we don’t have an annual renewed policy, people can join and leave without penalty and they’re just contributing. As long as they maintain their subscriptions, they can come into our form of care.

We’re about welcoming people that believe in the values of mutuality. One of our strategic building blocks is the number one building block. We do have some corporate business but we’re mainly about just welcoming individuals into our society, joining our society. So, having said that we’re similar, we’re trying to meet a similar need, I suppose, but we have a different level of cover and so we don’t get involved in things that the NHS is good at. Cancer provision, life-threatening diseases – the NHS is strong in that area. We believe that the citizen has some support there so we try to complement and try to provide services that aren’t just replicating what the NHS does, and that enables us to offer a lower price. 

Factfile: Marc Bell took up his role with Benenden in December 2008 as marketing and business development director. In February 2013, he was appointed chief executive – overseeing Benenden’s transition to open eligibility. Marc has 17 years of board service with several blue chip retail organisations, including the Daily Mail and General Trust Group’s Teletext service, where he launched the Teletext Holidays online brand and established a leading holiday distribution portal. He was also marketing director at Granada Hospitality, responsible for hotels and restaurants including the award-winning Travelodge brand. He is married with two children and lives in York.

Factfile: Benenden Health was founded in 1905 and based in York. Benenden is one of the UK’s longest-serving mutual healthcare societies. It offers affordable, discretionary healthcare services that complement, rather than replace,  care offered by the NHS. For £8.45 per person, per month, members can request a range of healthcare services, with no exclusions for pre-existing medical conditions or upper age restrictions. 2013 was a landmark year for Benenden Health – it opened its doors to the general public after previously only serving civil servants and corporate members. Today it has a membership of almost 900,000 people across the UK and in last year provided more than £63m of healthcare services to its members.

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