Before coming to CS Healthcare, you spent 30 years in the GAD. Tell me briefly about your experience there.
The GAD is an interesting place to work. It's a consultancy within a government, which is fairly unusual, and it gives you an interesting perspective. At the GAD, one of the things you are doing is solving problems for other departments, so you get to visit most of the departments, big and small, and you get to see the difference in culture and the different problems they're facing. Traditionally, actuaries look at questions to do with pensions, insurance and social security. The general issue is about identifying risk – and looking at both short-term and longer-term impact – and to help frame solutions and policies. Actuaries are very good at spotting risk.
As our readers would guess, the CS in CS Healthcare stands for civil service. You’ve worked with civil servants, you understand civil servants, you’ve been a civil servant yourself. How has this shaped the way you approach your job?
As I said, I've worked with civil servants across many departments. As I'm sure you're aware, there's much variety in the cultures of the civil service. The insight from my experience comes down to understanding the things that drive civil servants. They're not driven by the profit motive but by other values, and there can be a moral dimension to that as well. The idea that “we're in this together” resonates with the ethos of a mutual organisation like CS Healthcare – we're not trying to generate money for someone else. We have no shareholders, but we do have stakeholders (namely our members), and they benefit from any “surplus” we generate year on year. We also understand the constraints under which civil servants operate.
So just how healthy is your department?
Addressing the challenges posed by compliance with the Freedom of Information Act 2000
For me and for other former civil servants who serve alongside me on the board, it can be said that we appreciate what the customers want and the kind of organisation that appeals to them.
All my predecessors, as chairmen, have been former civil servants. It's not a prerequisite, but I think it is an important link to the marketplace and it serves to project and reinforce the values that CS Healthcare shares with civil servants.
What are some of the most interesting public sector projects that you've worked on?
First is the privatisation of British Coal – a huge project dating back to the early 90s, where the main consideration was how to secure the pension rights of hundreds of thousands of former miners and their families (many of whom had also worked in the coal industry). Securing their pension rights was a critical part of the process.
The Government decided it wanted to offer a guarantee, and I was asked about the implications and how to secure the interests of both taxpayers and the members with pension rights. If taxpayers were going to give a guarantee, I needed to consider the risks and costs. I also needed to consider the mechanics of making it all work. It was a massive project and a great privilege to be involved in something that was so interesting and complex – it had to stand the test of time.
I also spent 10 years as a member of the World Trade Organisation’s management board for its pension scheme, which was akin to being a trustee. What was truly fascinating was working in a highly politicised organisation – a supranational body with member states from around the world. What’s more, it’s an organisation in which decisions are made by consensus, and that is quite a challenge. It was a stark contrast to my experience as a civil servant in the UK!
The third project I would highlight was my involvement with premium bonds, which have been around since the late 1950s. Each month prizes are given to bond holders, whose bond number is generated by a machine called the Electronic Random Number Indicator Equipment, affectionately known as “ERNIE.” There has been a growing concern since the 1950s as to whether the results are actually random – so one of my jobs was to certify that, statistically speaking, they were. I did this every month in advance of the results being published.
How did you do that?
There are various tests you can run – how frequently numbers appear in different positions, or how often you expect to see pairs or sequences. Patterns seem surprisingly frequent, but if you look at the statistics, you should expect that.
According to your website, 94% of members would recommend CS Healthcare. What do you think is the main driver for such impressive customer satisfaction?
It has to do with principles and mechanics. The principle is mutuality. We’re a friendly society owned by our members, and as we keep telling them, “this is your society. We're here to do what you want.” We’re very keen to make sure we put the customer first; lots of organisations espouse that but fall short. And since we have no shareholders to answer to, there isn’t an external financial interest driving our considerations and actions.
On the mechanical side, I think we score hugely. Why? Simply because we get it right. If you phone up with a claim, you get through almost immediately to someone in Kingston, which is where we're based. There's no menu system when you call – you go straight through to a human being, and our members can expect that person to be friendly, sympathetic and knowledgeable. Our philosophy is to help people get the benefits they’re entitled to, and I think that plays strongly with our membership. They paid for the policy and that’s what they should expect. That’s the culture and ethos that we embody.
What are the biggest challenges that your organisation faces?
There's a general market challenge. Private medical insurance is sold in two ways: it is either provided by an employer, perhaps as part of a broader benefits package, or it’s purchased privately by an individual. We’re in the market of selling to individuals. That market has declined hugely in the last 25-30 years. Since the early 90s, about 750,000 people have stopped buying policies in this market, and there has been a 10% decline over the last five years. The reason for this is largely that the products have open-ended liabilities – medical inflation has kept going up and plans have become much more expensive.
And whilst there have also been a lot of new procedures that have improved the cost-effectiveness of many treatments (e.g. treating cataracts is now much cheaper than it used to be), medical science has advanced hugely, so there are also a lot of new treatments coming around, many of which happen to be very expensive. As providers, we are under pressure to include these new treatments.
So, by and large, these 750,000 people have left because the product has become more expensive. That's a particular problem with CS Healthcare because our market is pay constrained, so you're reaching a point in the market in which it's just becoming too expensive to buy. That opens the door to innovation and to lower-cost products, where you limit the range of products but target a particular set of benefits which people say they want. CS Healthcare has an advantage here because we're small and nimble, and we have a clearly defined market, so we know who to talk to. We can go to civil servants and say: “What is it you value? How much would you be prepared to pay?”
For two years now CS Healthcare has been providing on-site health checks for civil servants. What would you say is the biggest benefit of getting a health check?
A health check has two benefits. The first is for the individual, who benefits from basic health data: blood pressure, body fat content and body mass, pulse, etc. Health is crucial to wellbeing, so it's important to know where you stand. For example, we can tell people when they come along: "Your body mass is very good, but it could be better.” The whole thing is really just making sure that people are starting to appreciate that thinking about personal health is really quite important. We've had a few people who have had a health check and said: “Hang on, I might just go see the doctor about this". That's a good thing.
The second benefit of these health checks is for the department concerned. Departments want people to be at work and to be healthy and happy. If you are facilitating health checks you’re showing that, as a department, you are interested in your employees and in helping them to feel better about themselves. You're communicating a duty of care.
Do you try to keep fit in your free time?
I'm a committed walker. Essentially, walking is the best way to get around central London. When I was working in London I walked everywhere if at all possible. I think eating well and not eating too much is also a good policy. I'm afraid gyms aren’t for me, though – I'd much rather be outside.