Health cash plans are still prioritising people over profits 70 years later

Throughout all those years and various incarnations, they have remained steadfast to the same overriding purpose: making everyday healthcare services affordable and accessible to their members (employees and customers) and supporting those in need in their local communities. 

Health cash plans offer services that complement the NHS or, as explained by Shelley Rowley, chief commercial officer at BHSF: “Many of the policies help customers with their everyday health costs that do not come free or easy on the NHS, such as dental, optical, therapies, mental health consultations and more.”

So, bearing in mind today’s need for organisations of all shapes and sizes to articulate and live their environmental, social and governance credentials, it could be argued that healthcare mutuals are as relevant now as they were at both their inception and rebirth. 

While many organisations are gradually getting to grips with the E in ESG, the S has arguably been overlooked – maybe because it is much harder to define and there is simply no blueprint.

They are not profit centres or policy numbers, but real people with specific needs and individual expectations.Martin Shaw, Association of Financial Mutuals

What is certain is that the S is about people, it is about supporting diversity, equity and inclusion.

It is about ensuring the engagement of all of an organisation’s stakeholders (employees, customers and the communities in which they operate); engagement that does not come from values on a wall, but rather from living and breathing an authentic, trusting and purpose-filled culture.

In the words of Martin Shaw, chief executive of the Association of Financial Mutuals: “Mutuals were authentic long before it became trendy.” 

And in a world where competitive differentiation is difficult to achieve through product alone, it is people, the service they provide, and the ideas and energy that they contribute upwards and outwards that will separate the winners from the losers.

With that in mind, it could be argued that healthcare mutuals need to better articulate – or rather change the thinking around – their competitive differentiation.

According to a report commissioned by the AFM, 71 per cent of members said that mutuality is acknowledged but not understood by their members. While 90 per cent said that mutuality is less about the title and more about the culture, values and actions.

The 'absence of shareholders' difference

A big aspect of the competitive difference, that has always been communicated by mutuals and not-for-profits, is the absence of shareholders. Consequently, the reasoning goes, the notion of ‘people over profits’ is genuine and tangible. 

Indeed, this was demonstrated admirably during the pandemic. 

For example, Sovereign Health Care highlights that it chose not to use the government furlough scheme, paying all staff as normal and continuing to give to local charitable and NHS causes.

“We believed it was wrong to use taxpayer money to pay staff and continue to gift through our community programme,” adds Russ Piper, chief executive of Sovereign Health Care.

Health Shield gave away thousands of free licenses to use its Thrive mental health app to local schools, colleges and businesses.

The omission of profit from our strategic objectives provides a compelling customer proposition.Nathan Irwin, WPA

Medicash introduced new and complementary benefits to address the working from home and access to healthcare challenge, such as a digital physiotherapy app and an app to assess skin spots and moles for the most common types of skin cancer.

In fact, all providers worked hard to ensure that as many of their usually face-to-face services as possible were made available via phone, online or digital means.

Meanwhile, WPA received widespread praise across the industry for paying rebates to their customers when healthcare became difficult to access.

The ‘absence of shareholder’ advantage is summed up well by Nathan Irwin, chief executive of WPA: “We are not entangled with the conflict between shareholder returns and long-term investment decisions and consequently have continually invested in our people and processes. 

“The omission of profit from our strategic objectives... provides a compelling customer proposition.”

This same line of thinking goes for all mutuals and not-for-profits. 

Growth is not a primary indicator of success in the way it is for shareholder-owned organisations. Consequently, “the money you would have paid out as a dividend [where organisations are shareholder owned] can be recycled back into the business to secure better returns, pay more claims, or offer better customer service,” says Shaw.

“Customers are owners of the business and have a clear personal identity: they are not profit centres or policy numbers, but real people with specific needs and individual expectations.”

But is this enough of a differentiator these days?

A people business

While this all makes perfect sense, it is telling that, as indicated earlier, mutuality is not understood by the majority of members. Plus, 40 per cent of respondents (AFM member organisations) to the report commissioned by the association, did not agree that mutuality provides a competitive differentiation for them.

Perhaps this is because we are now living in a world where employees, customers and communities have more knowledge of, and interest in, the inner workings of organisations and their ‘social’ promise than ever before.

This is not so much about returns, claims and investment in processes, it is more that people want to buy – and work for – organisations that have a positive impact on them as individuals and on society.

“Not having any shareholders is not necessarily enough of a differential these days,” says Jacqui Carr, chief executive designate of Health Shield.

“We’ve always been about people over profits, as have all other mutuals, and while shareholder-owned companies were 100 per cent focused on the profits, the mutual difference was tangible.

"However, even shareholders now want to know what PLCs are doing with regards to better engaging with their people, customers and communities, especially in terms of an organisation’s ESG credentials." 

Carr adds: “This is a big change and a step in the right direction for the PLC sector. However, it’s a mindset that has been genuinely baked into mutual societies from their inception over a century ago. It’s part of board and management KPIs and remuneration strategy and it’s genuinely felt by our stakeholders.”

Not having any shareholders is not necessarily enough of a differential these days.Jacqui Carr, Health Shield

This is a recognition that people are the differentiator.

So, in addition to having the right products, services and good NPS scores, it is about creating positive working environments that enable those closest to the members to get involved in strategic decision-making, challenging and contributing upwards on decisions that impact members, says Carr.

Although shareholders are now asking much more of the organisations they invest in with regards to employee engagement – and ESG as part of that – there is a long way to go to yet, as found by a Financial Reporting Council assessment of workforce engagement reporting. 

But that arguably does not mean that mutuals should not continue to rest on their lack of shareholder laurels.

As summed up by a Simplyhealth spokesperson: “Companies in all sectors are fast realising that it is not only desirable but critical to show consumers just what kind of business they really are.”

Suzanne Clarkson is associate consultant at Carr Consulting & Communications, and has more than 20 years' experience in the employee benefits industry