Forecasting the future of health

What facts and figures do actuaries examine when it comes to determining the health of Medibank, our members and Australia?

Medibank’s Chief Actuary, Andrew Matthews, enlightens us on the number-crunching his team undertakes daily and what the markers indicate on our health horizon.

What is an actuary, and what role does it play in the business at Medibank?

I lead an actuarial team where our work is to bring:

1. Financial responsibility

At Medibank, we are responsible for the stewardship of premiums and claim payments for 3.9 million customers and responsible use of the capital provided by shareholders to deliver this service. Our work includes capital management, reserving for liabilities so we have enough to pay claims and contributing to stewardship to ensure Medibank has the vitality to deliver on its purpose – For Better Health.

2. Informed dialogue

We bring analysis that informs decisions today. There are many possible futures. Our work brings informed analysis to evaluate possibilities for input to today’s decisions such as product pricing.

What numbers do you look at?

We look at Medibank’s financial resilience to ensure viability to deliver on customer and stakeholder promises. This includes numbers to explore the questions:

• How strong is our balance sheet?
• What are our financial trends?
• Are we competitive?
• What’s changing? Why

Without financial resilience and viability an organisation, even a not-for-profit, cannot deliver on its purpose. We are most interested in trends that are changing and moving in customer experience, with competitors and in the broader market.

What have you learnt about the health of Australia in your role?

Two themes that strike me:

1. The ‘ageing population’

Changing demographics mean the need for health care for our ageing population is growing and changing rapidly. Some of our highest participation age groups in private health insurance are now moving into older age bands.

2. ‘Closing the Gap’

The health issues in poorer, remote and indigenous communities are a challenge we must step up to as a community.

What things do you look for when it comes to health in Australia?

Trends and patterns that stop us showing up at our potential health. The definition provided by the World Health Organisation is a good one to define better health: “Health is a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity.”

How can your role contribute to building products that support the health of Australians?

By surfacing facts, assumptions, trends and patterns in the data that contribute to informed opinion, exploring possibilities and then initiating actions that make a positive contribution. I am also motivated by a responsibility for building relatedness across our organisation that enhances collaboration.

Medibank’s purpose is For Better Health. What impact can the focus on preventative health have on the numbers that you see?

Focus on preventative health shows we don’t just focus on strategies to lower costs. It’s also about ‘better health’ with lower cost being an important part of that equation. Preventative health initiatives are important in contributing to a health system that can give optimum care, in more efficient ways through avoiding resource use by health issues that can be prevented.

In assisting to develop products that best suit the needs of all Australians, what impacts have you seen around the changing make up of Australian families?

There are big shifts underway, including:

1. Demographics

The ‘fertility collapse’ following the 1960s sees smaller families, and later starts to families. Immigration in Australia also continues to contribute to change. The demographic changes continue to flow through society and health care needs.

2. Digital health

Digital medicine, wearable devices and the internet will continue to bring change. New technology allows more nimble and fluid ‘interoperability’ between different care organisations irrespective of organisational boundaries. This is fundamental to enable improved patient experience and to drive efficiencies by reducing duplication and ensuring clinicians are fully informed.

3. Customer centric focus

Digital, as in other service industries, will enable a far greater patient-centric provision of care. This is important because, traditionally, healthcare systems segment their population groups badly. By understanding who needs what, on what frequency and delivered in a particular way, care provision can be developed in a more efficient and more targeted manner.

There is much to be learned from retailers in this space – Amazon being a hugely successful example of understanding customer buying patterns.