AGENDA: BUPA looks for better health - Healthcare giant BUPA faces a declining share in its stagnant core market of health insurance and is seeking a new ad agency. Can its new management team find a strategy to grow and diversify? Claire Murphy reports

A crack squad from McKinsey roving the corridors, a rumoured

takeover bid from the Halifax and a total review of marketing strategy -

it’s been all go for BUPA’s new marketing team over the past few

months.

No one close to the healthcare firm was surprised last week when it

parted company with ad agency Ogilvy & Mather. The agency had been put

on notice in the summer that its work was not thought to be up to

scratch.

A relaunch of the brand at the start of the year failed to

materialise.

Instead, TV viewers saw an evolved version of the ’You’re amazing. We

want you to stay that way’ campaign. Recently this has been supplemented

with ads promoting BUPA’s hospitals and its screening service.

Strategic shift

But what lies behind BUPA’s split with its agency of six years? Does the

falling out indicate fundamental changes in BUPA’s business strategy

that have arisen from the difficulty of making money from health

insurance?

The first evidence of change happened in April with the resignation of

chief executive Peter Jacobs. Jacobs was said to have disagreed with his

fellow directors about attempts to push BUPA further into the

nursing-home business and concentrate less on its traditional

health-insurance core.

Jacobs was replaced by managing director of UK operations Val Gooding, a

former British Airways marketer. Gooding decided to bring in McKinsey,

which coincided with BUPA being split into the five units of healthcare,

nursing homes, hospitals, Spanish subsidiary Sanitas, and new businesses

including dental and travel insurance.

Gooding also set about establishing a network of top marketers, all with

classic consumer goods rather than financial services experience, led by

newly promoted group marketing director Pat Stafford.

Stafford established a central brand team (led by ex-Pontin’s marketer

Simon Sheard, supported by ex-United Distillers Eileen Folan in the new

post of head of market planning), as well as separate teams for the four

UK business units.

Elaine Greenwood was poached from Grattan to lead marketing of BUPA’s

core health insurance, and more recently Howard Beveridge was brought in

from Barclaycard to head the marketing of BUPA’s hospitals and

health-screening products - another key growth area for the brand.

Diversifying business

The reason for this splitting of product responsibilities lies in the

diverse nature of BUPA, according to Stafford. BUPA is no longer just a

marketer of health insurance, mainly because that market has not grown

for years.

Despite the ageing population and the increasingly unreliable NHS, the

proportion of UK consumers who take health insurance has stayed steady

at 11% over the past few years, with the majority of this through

company schemes.

Health insurance research firm Laing & Buisson is unequivocal: ’It is

apparent that efforts from insurers to stimulate demand have not been

successful across the board.’

As if stagnant demand were not enough, BUPA, which until the mid-80s had

a 60% share of the market, has faced new competition. Insurance brands

including Norwich Union, Legal & General and Royal and Sun Alliance have

eaten away at BUPA’s market share, bringing it down to 41%. This trend

is set to continue, with Abbey National’s Abbey Healthcare predicted to

do well.

The other major problem is the proportion of customers - thought to be

around 20% - who fail to renew their health insurance policy.

Peter Bye, a partner at independent healthcare broker Private Health

Partnership, is convinced that lack of attention to logistical detail is

the reason that the main brands, BUPA included, fail customers. ’Health

insurance is a pricey business to run and these companies cut costs to

raise margins. People end up being misled by sophisticated marketing

which appears to promise to cover everything. But their expectations are

not borne out in reality.

’The public are now as cynical about health insurance as they are about

car insurance.’

Stafford agrees that her company is selling a complex product. ’Like

other financial services, people are never 100% sure what they have

bought. We need to make things clearer for the consumer, and

particularly to simplify the claims process.’

Service improvement

BUPA ploughed pounds 50m last year into installing its ’Call BUPA First’

paperless system of claims - an investment that contributed to its drop

in profits last year to pounds 68.1m, down from pounds 88.9m in

1996.

Bye believes that BUPA’s service levels are improving, putting this down

to the vigour of the company’s new management. But this can also be

attributed to an internal communications exercise that BUPA undertook in

February and March to instil ’BUPA values’ in all of its 10,500

employees.

January’s purchase of Care First made BUPA the UK’s largest owner of

nursing homes - an area identified as a great opportunity due to the

growing number of elderly people in this country.

The company has a large task integrating 210 new homes into the BUPA

way. The company will have to retrain staff in corporate procedures and

let consumers and the healthcare profession know of its strength in this

area.

But despite the different communication needs of the new units, Stafford

denies that the company is seeking solely product-specific campaigns in

the future.

’There will always be a need to maintain the healthcare credentials of

the BUPA brand - but we do have a job to do to make sure that the BUPA

name also reflects the newer parts of our business.’

New agencies to handle advertising, below-the-line and media buying will

be appointed by Christmas. Stafford plans to keep the ’You’re Amazing’

slogan on ads to maintain brand continuity, but everything else is up

for grabs.

’The challenge is simple,’ says Stafford, ’get more people to see the

benefit of our health services and, crucially, see them as worth paying

for.’

This article was first published on Marketing