Bupa And Its Competitors: A Comparative Analysis

Introduction of BUPA and comparison companies

Bupa is an international healthcare group with headquarter in United Kingdom. The company is serving 32 million customers within 190 countries. The goal of the company is healthier as well as happier lives and providing range of healthcare services and support to people through the lives. The international healthcare group is running care homes, dental centers, hospitals and health centers and provide with workplace health services. The company is making quality healthcare services, focusing on needs of patients, and accessing in areas of wellness (3).

AXA PPP Healthcare and BCWA Healthcare both are operated in UK. Both the companies are offering small to medium sized business healthcare with employee health, wellbeing, travel, international health as well as corporate insurance plans. Both of the competitors of BUPA are UK private medical insurance providers (1, 2 ).

LIQUIDITY RATIO

2013

2014

2015

2016

2017

BUPA

0.96

1.04

0.93

1.01

1.93

AXA PPP

1.28

2.03

2.72

2.76

3.34

BCWA

0.17

0.99

2.83

2.17

1.64

GEARING %

2013

2014

2015

2016

2017

BUPA

48.05

53.17

53.83

43.79

87.29

AXA

7.87

170.63

218.5

185.3

242.34

BCWA

161.21

110.82

ROCE

2013

2014

2015

2016

2017

BUPA

7.43

7,67

5.04

5.93

4.9

AXA

25.38

5.36

6.51

7.48

7.78

BCWA

10.9

16.6

0.31

0.46

0.63

ROSHFUND

2013

2014

2015

2016

2017

BUPA

10.61

11.3

6.99

7.99

8.55

AXA PPP

26.3

14.42

20.33

21.04

25.99

BCWA

18.03

23.97

7.34

10.78

13.23

TURNOVER

2013

2014

2015

2016

2017

BUPA

6,558,700

7,050,300

9,828,400

10,67,9000

8,856,600

AXA PPP

1,132,500

1,165,500

1,270,600

1,390,200

1,445,900

BCWA

20,623,000

20,057,000

20,098,900

20,569,907

21,900,590

Strategy

The strategy of Bupa is to provide the customers with higher care along with support they required at each stage of life. ( 9)

Strategic position

Description

Customers

A true champion and provides with outstanding healthcare experiences (12).

People

People love work at Bupa and for the customers (9).

Performance

There is strong as well as sustainable risk along with capital management. Around 70% of the revenue of the company is from the healthcare insurance, with rest of the revenue is from health as well as care provision (14).

Financial values

Customers

People

Performance

Financial results of Bupa:

Ø Bupa has revenue of growth of 4% to £11.0bn with its underlying profit of £700.7m.

Ø The statutory profit before taxation is £522.9m which is upto40% actual exchange rates (AER).

Ø There is net cash generated from its operating activities which results in 13% to £891m (4).

Ø The capital base of Bupa remains strong with estimation solvency II surplus of around £2.1bn represents with coverage ratio of 204%.

Ø The coverage ratio is decreased to 165% following completion of Oasis Dental care purchase in the year 2017.

Ø Leverage ratio is down to 22.6% driven by the foreign exchange movements (3).

Operating environment

Ø The company is operated in diverse markets across world where healthcare regulations as well as economic environment are evolved.

Ø Its challenging market is Saudi Arabia due to slow economy which affects its profit margins ( 4).

Ø Bupa is consisted of three types of customers such as: Insurance customers of 16.5m, provision customers of 10.6m and aged care residents of 33,100.

Ø The company has employee net promoter score of 30.

Ø The company is adopted of clinical management system to improve over the customers (4).

Ø The performance is tracked by use of financial as well as non-financial metrics aligned with the strategic framework.

Ø Bupa allows their employees to take proper decisions

Ø The company is delivering sustainable purposes in future to their employees

Ø Provide proper training to people so that they can handle healthcare data and information

Ø People are delivering strategic objectives regarding the company’s purpose and vision, mission

Ø Helping people to live longer and happier

Ø The revenue as well as profit growth of Bupa Health Insurance is slower of entire healthcare insurance market growth.

Ø The Australian aged care business is impacted by the reduction of sector funding.

Ø Aged care businesses in New Zealand is continued to deliver of revenue growth.

Ø There is strong performance of health insurance, enhanced into care pathways and better healthcare cost to improve over customer experiences.

Ø Growth into Bupa Chile market as well as regulatory changes which are driven by higher and inpatient activities.

Ø Increasing stake to Bupa Arabia to 34.25% and then sold the businesses in Thailand (3).

Market unit

Australia & New Zealand 

United Kingdom

Europe & Latin America

International Markets

Revenue

£4,360.6m

£2,785.9m

£2,474.7m

£1,427.8m

Underlying profit

£344.4m

£194.9m

£165.6m

£65.9m

Customers

4mInsurance, 1.9mProvision  and 10,800 Aged care

2.4mInsurance, 1.2mProvision and 17,400 Aged care

2.9mInsurance, 6.7mProvision and 4,900 Aged care

7.2mInsurance and 700,000Provision

Companies

Strengths

Weakness

Opportunities

Threats

BUPA

Ø BUPA is UK’s independent healthcare organization with operator of care homes (12 )

Ø Healthcare segment of 70,000 employees (10 )

Ø Higher economics of scale as well as pricing power

Ø Geographically spread all over the world and wide reach the targeted customers (5)

Ø BUPA is accused of overcharging for their work due to undertaken for NHS. The standard price of BUPA is at least 50% higher than average of NHS treatments ( 4)

Ø There is rise in cost for employing nursing as well as care staffs (13)

Ø Recruitment of medical staffs from foreign countries is provided possible solutions to the problems ( 12)

Ø Aging of population leads to expansion into care homes along with home care market ( 4)

Ø By the year 2031, one million people are required of continuous long term care, with an increase of 68%, such that the company is expanded in the market ( 11)

Ø The hospitals of BUPA are seen cosmetic surgery which becomes popular in current times among the age range of 25-35 years ( 15)

Ø The healthcare industry provides a pressure on cost as there is increase in minimum wage, shortages of the nurses and also cares (13 )

Ø Local authority fee is increased and continued to stay below level of staff’s cost inflation (79)

AXA PPP Healthcare

· Well established brand

· It has joint ventures and various subsidiaries (16)

· Continued to grow in the market (6)

· The company is overdependence on the European regions

· There is high attrition rate of the workers (11).

· There is aging population within China for increasing the market demand

· Asset management industry (11)

· Introduction of pension plans for the aging population (17)

· There is new conservation policies of business (14)

· Insurance frauds in the market (7)

· There is uncertainty within European union after Brexit

BCWA Healthcare

· There is higher economics of scale as well as pricing power.

· There is high customer loyalty (6).

· Less diversity into the products

· Static online presence in the market (11)

· Capturing of expansion of insurance market

· Expansion with the mergers with other companies (4)

· Intense competition with technological innovations (7)

· Issues related to government interventions

Political

Economic

Social

Technological

Environmental

Legal

BUPA

Ø The government spends for the healthcare is affected by changing in tax policy. It is benefited and allowed for increase in subsidies (8)

Ø The change in government can affect public as well as healthcare services with change in healthcare bills and also plans (12 )

Ø BUPA is affected by economic factors such as inflation, unemployment and also interest rates.

Ø The company those are manufacturing medical devices does not have enough people to pay the rate when there is an increase in unemployment rate (17)

Ø The healthcare company is relied on understanding changes in demographics as well as public values (5)

Ø As more people are becoming ill each day, then the company is encouraged to join the private hospitals as well as healthcares so that they are recovered better (9)

Ø There is positive change in treatments due to technological advancements such as development f medical devices.

Ø Hearing aid devices enhance the business performance, less background noise as well as premium options towards hearing experiences ( 13)  

When inflation is upward, then the resulting job losses mean higher state of benefits payment and low tax revenue.

Employment, and safety laws are being observed and machines along with medical equipments are meet with the safety standards (13)

AXA PPP Healthcare

Change into the healthcare policies of UK

Ø Effects of Brexit

Ø There is emerging economics requires insurance for covering the risks (18).

Ø There is an increase of awareness for the insurances because of increase into literacy rate

Ø Rise into the disposal incomes (20)

Ø There is internet penetration

Ø Emergence of the internet of things (22)

Ø There is law for vehicle insurance

Ø Evolve of then tax laws as well as regulations (15)

Ø AXA is joined RE100 movements

Ø There is climatic changes which provide negative risks on the natural disasters (14)

BCWA Healthcare

Provision of deferred taxation (20)

People have less price to spend in other activities (12)

Encouraged to join private hospitals as well as healthcares (7)

Faster and easier access to the technology (4)

There is rise in inflation results in job losses (7)

Meetings with the safety standards of safety and employment (21)

                 BUPA

AXA PPP Healthcare

BCWA Healthcare

Rivalry among the competitors

Medium

Low

Low

Bargaining power of buyers

High

Low

Low

Bargaining power of suppliers

High

High

Moderate

Substitute of existing products

Low

Moderate

Moderate

Threat towards entry of new entrants

Moderate

Low

High

Key performance indicators

Patient wait time

It calculates average amount of time the patient must wait between check in and seeing a healthcare provider. It helps in staffing, scheduling and providing insight in satisfaction level of patient (14 )

Room turnover

It demonstrates how fast the patients are moving in as well as out of facility. It affects efficiency of healthcare facility and considers when looking at patient’s satisfaction ( 9)

Overall patient satisfaction

It calculates satisfaction level of patient by analyzing how much the patients are satisfied with the healthcare operations and services (13 )

VRIN Model

Valuable

Yes, the resources of BUPA add value by enabling its firm to exploit opportunities against the threats. The resources are considered valuable as it helps the healthcare firm to increase perceived customer value (8)

Rare

Yes, the resources are acquired by one or more companies, therefore it is rare. The rare resources lead to competitive advantage. The companies such as AXA PPP Healthcare and BCWA Healthcare have same resources and capabilities as Bupa leads to competitive parity ( 14)

Imitate

The resources are costly to imitate when its competitors are substitute at reasonable prices. Bupa international healthcare group is valuable, rare along with costly to imitate then resources can achieve sustained competitive advantages (20)

Non-sustainable

The resources are not conferred advantage for the company if it is not organized to capture value from them. The firm is organizing management system, business processes and also organizational structure to realize potential of valuable and costly to imitate the resources. Therefore, Bupa can achieve of sustained competitive advantages (22)

McKinsey 7S framework

Strategy

The objective of company is establishment of Bupa at recognized and respected healthcare brand in world. The company hopes to achieve goal by continuing to expand healthcare operations and opportunities to leverage brand of the company throughout introduction of new products as well as development of distribution channels (14).     

Structure

Bupa group has functional structure which emphasized need for new ideas as well as employee input (9)

System

The Company has system in place in organization which deals with knowledge as well as product development. The company has training system to train their employees (7)  

Shared values

The organization refers to Bupa experience as well as rallies employees behind delivering as well as satisfying notion. Bupa can deliver healthcare solutions and sell their experience such as healthcare solutions, friendly staffs and comfortable patient’s care (5)

Style

The style of company is flexible as well as team oriented ( 20)

Staff

Through comprehensive training, the company has higher quality employees in healthcare environment (18)

Skills

Bupa has competitive advantage with front line employees those are knowledgeable as well as friendly. The experience of company is reinforced throughout strategic alliances ( 15)

Factors

AXA PPP Healthcare

BCWA Healthcare

Strategy

Expansion of the healthcare operations all over the world

Improvement of healthcare operations in UK

Structure

Functional structure (8)

Flat hierarchal structure (7)

System

Development and innovation in technology (10)

Technological changes (11)

Shared values

Customer satisfaction (18)

Customer satisfaction

Style

Team oriented

Team oriented

Staff

Healthcare and technological experience staffs

Healthcare experience staffs

Skills

Technological skills

Healthcare skills

Challenges

Operation: Bupa is no longer covered for hip as well as knee replacement and other. The company has made 49% of profit from Australia as well as New Zealand. The trend of company is less effective, therefore they are underlying failure with the private health model. Due to cancelling cover of hip replacement, the company cuts costs along which lead to lower premiums ( 5)  

Technology: Technology is a concern in the organization as it is used to improve health as well as wellbeing worldwide. Technology is used to build of platforms which enhance patient physician relations. There are issues regarding the cloud based technology in health information exchange (10)  

Information and service integration: The non-relational database is merged patient’s information from the sources, and provided actionable metrics. The healthcare providers are used of relational databases to store as well as access information related to patients ( 6)  

Healthcare rising cost: There is rise in the healthcare cost due to rise at rate of inflation. There is growing of healthcare cost at average rate of 7% from 2015 to 2030 ( 4)  

Expansion of the operation challenge

Operation challenge: There is sometimes change in the healthcare services and regulations of the organization which cause rise to the business organization. This issue drives up the cost to provide services and also healthcare. It is required for the organization to mitigate the operation issues as the business operation plays an important role for success. It is area to be concerned with creating healthcare services of the healthcare companies. The consequence of operation challenge is failed of internal processes and system of the company (5).

SAFe matrix

Options

Product development

Market development

Market penetration

Market diversification

Suitability (S)

3

7

3

6

Acceptability(A)

8

6

4

2

Feasibility (F)

5

8

5

3

Total

16

21

12

11

Suitability:

It is regarded as whether the strategic options are deal with the situations in which the healthcare company is running their business. The market development is suitable option for BUPA as it is sole option provide long term growth of the company (25).

Acceptability:

Acceptability of the product development is a strategic option for BUPA as it is currently doing its business in UK. The company is serving 32 million customers within 190 countries. The company is larger as compared to two of its competitors. In accordance with the strategic option, the company hopes to expand their market in the international areas as well as prospect market. There is increase in overall profit from the international healthcare market (17).

Feasibility:

The physical as well as tangible resources are feasibility factors in the healthcare companies. The physical resources are consisted of various format of outlet of store in various countries such as Australia, New Zealand and other international market (22).

Target scope

Advantage

Low cost

Product uniqueness

Broad (Industry wide)

Cost leadership strategy

Differentiation strategy

Narrow (Market segment)

Focus strategy (low cost)

Focus strategy (differentiation)

Porter generic strategies

Description

Cost leadership strategy

In current business environment of healthcare industry, most important strategy is cost control protects from the competitive forces raised in the industry. The cost control strategies are included to reduce quantities of wastage, income generation and reduction of healthcare staffs (14).

Differentiation strategy

Bupa is used of latest healthcare technologies and the company differentiates its product and market based on advanced technology implemented in the company. There is provision of patient support services (26).

Focus strategy

It is involved with cost leadership and differentiation strategy where focus principles are driving emergence of the healthcare services. It is either low cost or differentiation strategy (16).

Product

Market

Existing

New

Existing

Market penetration

· By attracting of the non-users of the products (5)

· By gaining of the competitors to gain more customers (25)

· By convincing the customers to use of company’s products (16)

Product development

· Counter competitive entry (19)

· Use of innovative and advanced technology (7)

· Protection of the market share (12)

New

Market development

· Exploration of the new segments of the market (13)

· New users related to products and services of the healthcare industry (12)

· New geographic areas to gain new customers (18)

Diversification

· Bupa moves into business as they are entered in existing business functions (12)

· Synergy with the original business of Bupa (4)

Suitability:

Bupa healthcare has advantage of the resources and therefore they are expected to make proper approach into the international market. The company can construct a distribution channel so that they can save their healthcare cost. The market development is recommended options for the company with consider implementation of healthcare system (24).

Acceptability:

Acceptability describes resources along with abilities to deliver strategic option for Bupa healthcare. It has innovative intangible as well as financial resources which take responsibilities and offer preferred results. The financial ratio highlights its acceptability in UK market (4).

Feasibility:

Bupa has revenue of £4,360.6m and underlying profit of £344.4m in Australia and New Zealand. It has revenue of £2,785.9m and underlying profit of £194.9 in UK while the company has revenue of £1427.8m and underlying profit of £65.9m in the international markets. The intangible resources are geographic location of the outlet formats and stronger relationship with the project suppliers (3).  

McKinsey 7S model

Human

The company has higher quality employees in healthcare environment (18).

Capital

There is traditional mass production of tangible resources of capital, equipments as well as infrastructure which are key factors towards higher healthcare organizational performance of Bupa (7).

Physical

The physical assets are inventory, medical equipments and strong data security measures (22).

Financial

The financial assets are consisted of cash, receivables, and prepaid healthcare expenses (16).

Conclusion

It is concluded that the healthcare sector has strengths and weakness and therefore possible healthcare strategies are required to be implemented so that all the challenges are mitigated on time. Bupa is involved with diversity of healthcare devices as well as technologies. The factors which drive migration are included with rise in cost to provide healthcare, grow number of adults and increase into chronic diseases. It is concluded that the healthcare sector has strengths and weakness and therefore possible healthcare strategies are required to be implemented so that all the challenges are mitigated on time. As both the competitors are involved with diversity of healthcare devices as well as technologies, therefore technological advancement is also required (20).