nib (ASX:NHF) has reported a 9.2 per cent increase in underlying operating profit to $201.8 million for the past financial year.
The company's Australian private health insurance business accounted for around 75 per cent of its total operating profit - $149.5 million - and delivered net policyholder growth of 2.1 per cent for the year.
Managing director Mark Fitzgibbon said this growth in policyholders would "contrast starkly with what is expected to be a decline in hospital coverage across the industry as a whole."
“Market conditions have been challenging for a range of reasons," said Mr Fitzgibbon.
"There’s broad weakness in consumer discretionary spending, fierce competition for that spending and private health insurance has some issues around cost and affordability, especially out-of-pocket expenses for members.
“But we continue to work hard at redressing these issues, improving the value proposition and growing our business and market share. For the five years up until 30 June 2019 we estimate nib accounted for about 20% of total industry growth. It’s a very solid achievement indicative of constant innovation such as the partnerships we enjoy today with the likes of Qantas, Suncorp Group and TAL,” added Mr Fitzgibbon.
He said the company funded almost 300,000 hospital visits in the past year and that its focus will remain "grounded in actually delivering on its purpose".
“We’re allowing our members fast access to high-quality healthcare and a choice of doctor or healthcare provider. Average waiting times in private hospitals for say a total knee replacement in 2018 were 28 days compared to up to 3636 in the public system,” he said.
“And although we still have a long way to go, we are making good progress on helping our members make better healthcare decisions. For example, today we have digital platforms to improve health literacy such as 'The Check-Up' as well as assist members in choosing a healthcare provider,” continued Mr Fitzgibbon.
He said further improvements could be made to improve the value of private health insurance to consumers.
"Consumers are increasingly looking to us to cover their costs wherever they meet the healthcare system as well as protect them against often large out-of-pocket expenses. On the former it’s well past time we are able to cover doctor expenses outside of a hospital and on the latter, more actively guide our members, with their GPs, to specialists offering the best value.”
The company said low levels of claims inflation in recent years have resulted in a higher than expected margin in its private health insurance business. However, it said it does not expect this to continue indefinitely, and added further industry consolidation appears possible given a range of factors including an increased focus from the prudential regulator on business sustainability risk.