An Analysis of British United Provident Association- BUPA
In the late 1940s, as the world reeled from the effects of World War II, an attempt to return to normalcy was underway. One of the major elements of this attempt to restore life to what it once was included access to appropriate and affordable health care, something that was only a luxury for the very wealthy in the years of the war, and almost absent from the health care community immediately following the war. It was into this chaos that the British United Provident Association, BUPA, was formed in 1947 to “preserve freedom of choice in health care. It believed that with a National Health Service being introduced a year later, there would still be a need for a complimentary service enabling people from all walks of life to afford the benefits of choice in where, when and by whom they were treated” (BUPA, 2007). The organization has evolved over the succeeding decades, as has the industry in which it competes. In this paper, BUPA and the entire health care industry in which it operates will be explored in an effort to not only show how impressive BUPA’s growth has been, but also how BUPA has evolved effectively, despite the many issues it faces as a player in the health care industry itself.
The evolution of the international health care industry is as much a tale of the progression of basic human rights as it is a story of the quest to make it possible for those in need of medical treatment to be able to afford to obtain it , even with the case of individuals who have little financial resources at their disposal to pay for the care they require.
In the early days of primitive medicine, treatments were provided by tribal healers or community physicians who administered remedies for all types of illnesses (Willard, 2005). As the understanding of the human body advanced, and the ability to render more effective medical treatments emerged, medicine at some point became a for-profit business, albeit a primitive payment system whereby goods or services were often traded as compensation for medical treatment. Economic progress eventually led to the establishment of hospitals, physician offices, and the like, which demanded monetary payment for medical services rendered. Therefore, it became critically important for ways to pay for these treatments on the part of those who could not pay- in essence, the birth of the health care industry as we know it (Bhat, 2001).
Payment for health care was originally possible as“out of pocket” expenditure for all but the poorest of individuals, but in time, the cost of health care demanded a more comprehensive network of payment resources. Therefore, what came to be were several main payment avenues within the health care industry. First, of course, those with the means to merely pay for medical treatment would do so as needed. Beyond this, governments made a commitment to provide for the health care of the citizenry, as seen by the development of such entities as the National Health System in Britain and the National Institute for Health in the United States. Private charities also began to make financial commitments to providing health care to those who needed it. A third segment of health care payers also came onto the scene in the form of health care insurance companies. These companies had as their foundations a basic premise- the collection of premiums from paying customers, which in turn would provide these customers with the guarantee of their health care needs being paid for when such health care services were needed (Glaser, 1991). However, as the complexity of health care itself increased, as did the numbers of health care insurance companies and their customers, many ethical questions emerged, as did the concept of corporate social responsibility-CSR.
Ethical and CSR Issues Prevalent in the Health Care Insurance Industry
Because of the fact that health care insurance is in fact a for-profit business, with the exceptions of the strictly government-run programs which are the exceptions to the rule, an extremely important moral paradox comes to light. Namely, where does the border lie between providing the health care insurance customer all of the services that they need in order to maintain good health and avoiding excessive expenditures on the part of the health care insurance companies, so that they may be able to remain financially viable and continue to provide health care insurance benefits to their customers who need it the most. A great deal of this paradox is caused by ethics and corporate responsibility.
Present day, the emergence of information technology which makes even the most private of a person’s information available for those who have the ability to find such information via the World Wide Web in just a few clicks of a computer keyboard presents a huge, and expensive problem for health care insurance companies. Because of the nature of their business, they have to possess the most intimate of a person’s information, including medical histories, financial data, identity data and so on. The costs of protecting this information, which is needed to be done by the means of expensive technology, monitoring methods, and the retention of personnel to safeguard the data place a financial burden on the insurance companies (Corby & White, 1999). Naturally, the first reaction of these companies is to simply raise the prices of their premiums to their customers to cover the costs of these measures, while still being able to maintain a level of profit for themselves and their stockholders. However, these same companies must also realize that the nature of their business requires that they have a minimum level of consideration for the needs of their policyholders, which restricts the ability to increase prices to customers beyond a certain point, lest they be unable to afford the insurance that they need in order to maintain the health of themselves and their families. The extent to which insurance companies have a social responsibility in this regard has been debated for some time (Maignan, 2002). Believers in a free market economy maintain that the insurance companies should be allowed to offer rates of any level they choose. If these rates in fact turn out to be higher than the customers are willing or able to pay, the company will lose customers to competitors, and eventually will have to exit from the marketplace as a result of competitors who can offer more at a lower price. Conversely, an opposing viewpoint holds that health insurance companies have an overriding social responsibility to provide affordable health insurance coverage to all that need it due to the essential nature of health care itself. Aside from the business aspect of the health care industry, these individuals see it as a basic human right to which everyone is entitled, courtesy of health care insurers.
Liability issues have also become a critical point of risk for health care insurers in recent decades; the proliferation of lawsuits against doctors, hospitals, and health care insurers has presented what can be a lethal situation for the insurers- if they make what seems to be a business decision and deny or limit certain types of health care coverage, or the health care providers that the insurance company compensates make errors which lead to health complications or death, the insurance companies can in fact be put out of business overnight due to large financial lawsuits. Once again, the question of the role of health insurance providers comes into question.
Whichever point of view someone takes, one thing is clear- there are companies that have successfully bridged issues such as these in order to thrive for decades. A perfect case in point is BUPA.
Why BUPA Has Become a Global Player and How it Was Done
BUPA’s status as a global player in the health care insurance industry has been decades in the making and is as much a lesson in history and human development as it is a story of business success.
As was stated earlier, BUPA emerged from the aftermath of World War II as a provider of health care insurance for people who were likely to move across Europe, and needed to take their health care with them wherever they may roam (BUPA, 2007). The company was founded on the idea of common people being able to afford the health care that they and their families were lacking for so very long. This portable type of product has over the years opened the firm to opportunities to increase its business presence throughout Europe, Asia, or anywhere else in the world that a customer may wish to purchase coverage. This model of business without borders gives the firm a unique competitive advantage- as an example, if BUPA is operating in a nation where costs lead to minimal profit margins, they do not need to unnecessarily increase rates to those customers because operations in another nation may in fact be far more lucrative, which net effect, balances out the ill effects of unprofitable operations in some areas, and very lucrative operations elsewhere.
The goodwill, and resulting business that BUPA’s ability to keep rates at a reasonable level because of their diverse business model are key items which fuel its longevity and will also bolster its future growth. For example, BUPA is able to avoid many of the lawsuits, public outcry and government inquiry that other competitors have to endure when they arbitrarily raise rates. Additionally, when competitors are damaged by such situations, BUPA can pick up additional customers at the expense of their rivals in the industry.
Innovation is yet another element in BUPA’s rise to becoming a global player. As public interest in maintaining good health through lifestyle changes and the like has grown, BUPA has embraced this interest by offering free health information via Internet technology, thereby adding tremendous value to what can be provided to customers, only making BUPA’s status in the world markets all the better.
Overall, BUPA has paid attention to changing trends in its industry, as well as the lives of its customers, to reap huge benefits. In conclusion, this has truly proven to be a sound business and financial strategy.
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British United Provident Association (2007). Retrieved June 15, 2007 from the World Wide Web: www.bupa.com
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