The British United Provident Association Limited

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The British United Provident Association Limited

BUPA House
15-19 Bloomsbury Way
London, WC1A 2BA
United Kingdom
Telephone: +44-20-7656-2000
Toll Free: 0800 00 10 10
Fax: +44-20-7656-2700
Web site: http://www.bupa.co.uk

Private Company
Incorporated: 1947
Employees: 40,000
Sales: £3.9 billion ($7.0 billion) (2004)
NAIC: 524114 Direct Health and Medical Insurance Carriers; 621491 HMO Medical Centers; 621493 Freestanding Ambulatory Surgical and Emergency Centers; 621498 All Other Outpatient Care Centers; 621512 Diagnostic Imaging Centers; 621999 All Other Miscellaneous Ambulatory Health Care Services; 622110 General Medical and Surgical Hospitals; 622210 Psychiatric and Substance Abuse Hospitals; 622310 Specialty (Except Psychiatric and Substance Abuse) Hospitals; 623110 Nursing Care Facilities; 623311 Continuing Care Retirement Communities; 623312 Homes for the Elderly; 623990 Other Residential Care Facilities

The British United Provident Association Limited (BUPA) is a leading provider of private health insurance in Great Britain. It has more than eight million customers in the United Kingdom and about 190 other countries, making it a leader in the highly fragmented global market. BUPA's largest foreign markets are Ireland and Spain, where its Spanish subsidiary Sanitas also runs a network of healthcare facilities. About one-third of BUPA's insurance is bought by individuals; the majority is provided by companies as a job perquisite. Other organizations, such as professional associations, also participate in group plans.

In addition to providing insurance, BUPA operates its own hospitals, clinics, and nursing homes. It is one of Britain's largest private companies. The insurance side operates on a nonprofit basis, and BUPA Hospitals is set up as a commercial company.

1947 FOUNDING

The British United Provident Association Limited (BUPA) was formed in 1947 by a number of regional provident associations. These were led by the Oxford District Provident Scheme, the Oxford University Provident Scheme, and others in Edinburgh and Birmingham. About 17 such associations joined. The insurer would be led for its first 30 years by Edward Webb, formerly a colonial civil servant in Tanzania. BUPA was a private company limited by guarantee. It had no shareholders, and would reinvest any surpluses in the business. (BUPA Hospitals would later be set up as a commercial company.)

The provident associations had helped to offset the risk of expensive medical treatment. As Webb later told a reporter, there was considerable doubt whether there would be any need for them after the launch of Britain's National Health Service (NHS) in 1948 to provide free medical care to citizens. BUPA was not expected to last more than a few years. Its role, however, soon became clear: to provide choice for its customers. Thirty-eight thousand signed up for BUPA's coverage the first year. Subscription income was £74,000.

BUPA had 200,000 members by the mid-1950s; 2,000 companies were providing its insurance to their workers. In 1959, the group began allowing organizational members to provide coverage to their overseas employees.

In 1957, BUPA helped launch the Nuffield Homes Charitable Trust (later Nuffield Hospitals) to support endangered private hospitals and nursing homes. It acquired seven existing hospitals and built another half dozen. A dozen more were added by the 1970s. These smaller facilities dedicated to elective surgery became known as "mini hospitals."

A desire for privacy and personal treatment were two reasons for the success of BUPA and a couple of other provident associations, observed the Times. By 1966, BUPA was covering 1.1 million people, more than twice as many as its peers. BUPA had different levels of coverage, beginning at around £5 and eight shillings a year.

The main rationale for private healthcare, noted the Times in 1972, was avoiding the NHS's long wait for elective procedures, which then stood at around two years. BUPA embraced preventive healthcare in the 1970s. It opened its first wellness screening center in London in 1969 and launched research institutions. Its annual subscription income was £13 million in 1973.

BUPA also made its first ventures into countries overseas beginning in 1971. BUPA would become the largest private insurer of Britons abroad. Its coverage would ultimately be extended to those of other nationalities. A Hong Kong unit was formed in 1976.

The NHS made a few thousand of its beds available to private, paying patients. When their availability was threatened, in 1974 BUPA opened its first hospital for subscribers in St. Marylebone. Known as the Nightingale Bupa Hospital, its predecessor, once called "The Institute for Gentlewomen during Illness," was where nurse Florence Nightingale pioneered her revolutionary methods. BUPA was investing £1.5 million on upgrading the facility.

LAUNCH OF BUPA HOSPITALS IN 1978

Britons, alarmed at labor strikes in the NHS, were turning to BUPA in increasing numbers in the late 1970s. In 1978, the association formed BUPA Hospitals. This would become a competitor with the old BUPA spinoff, Nuffield Hospitals, which by then was operating about 25 facilities.

The association's hospital side grew rapidly in the 1980s through acquisitions and building. In 1981 it opened a £4.8 million facility in Manchester said to be the largest private hospital outside London. BUPA also joined the NHS in joint ventures such as the St. Thomas' Hospital and the National Hospital for Nervous Diseases.

BUPA CEO Bob Graham complained of hospital groups from the United States and Kuwait driving up healthcare costs with their new, for-profit hospitals. At the same time, BUPA was continuing its own international development. In 1988, BUPA acquired Sanitas, the largest private health insurance provider in Spain, a popular retirement destination for Brits.

A number of hospitals were acquired in the late 1980s. Ten facilities were acquired from the Hospital Corporation of America (HCA) in July 1989. With 27 hospitals and 1,500 beds in all, BUPA was the country's largest private owner of hospitals, with a 14 percent market share. BUPA posted a £38 million loss in 1990 but was soon in the black again, and growing.

BUPA embraced the fitness ethic in the 1990s, attaching its name to a number of sporting events, including a popular series of road races called BUPA Great Runs. The legendary BUPA Great North Run in Newcastle grew to become the world's largest half marathon, attracting 50,000 runners.

BUPA began offering dental insurance in 1993. Five years later, it acquired dental services provider Barbican Healthcare. While BUPA was diversifying, other insurers were beginning to offer competing healthcare coverage. By the mid-1990s, according to the Times, BUPA's market share had plunged to 44 percent. It was then operating 30 hospitals with 1,800 beds and 30 screening clinics.

COMPANY PERSPECTIVES

BUPA's vision is "Taking Care of the Lives in Our Hands." It's a succinct description of what its people do around the world every hour of every day.

GOODING CEO IN 1996

Free gym memberships were added to BUPA's preventive health prescription in 1996. In the same year, when turnover was £1.2 billion, a dynamic new chief executive replaced Peter Jacobs, who had led the company for five years. Much would be written of Val Gooding's influence on BUPA (and still more written on her compensation, which would make her "Britain's highest-paid woman").

Gooding was a 20-year veteran of British Airways. Her training techniques included making new management hires attend surgeries, noted Campaign. "It is one way of taking people right to the heart of what the business is about," explained Gooding.

Apart from the symbolic gestures, the organization was being recast from a simple insurance company to a comprehensive healthcare provider. Much effort would go into marketing and brand communications. BUPA also was restructured into five business units.

There was a great deal of international expansion in the late 1990s. It began operating in Ireland in 1996, where it was the first foreign health insurer allowed in the country. BUPA also set up joint ventures in Saudi Arabia (BUPA Middle East) and Thailand. A short-lived health center was launched in India but folded within a few years. BUPA entered the Australian market in 2003 by buying a local company.

BUPA's turnover exceeded £2 billion in 2000. Around 2002, BUPA became one of the private providers the NHS was employing to reduce its notoriously long waiting lists. The Redwood Diagnosis and Treatment Centre was dedicated to NHS work, but this represented a tiny fraction (1 percent) of BUPA's total revenues.

BUPA was thriving in 2003 and 2004, but company officials felt the need to update its image, reported Campaign. An ad campaign was launched to get customers to think about BUPA's products before they got sick. Making the insurer seem less corporate and more approachable was another goal, though more than 90 percent of Brits were familiar with the BUPA brand. The friendlier ads included cartoon characters interacting with BUPA staff.

BULLISH IN 2005

Revenues were up to £3.9 billion ($7.0 billion) in 2005, BUPA's sixth consecutive year of growth. Insurance accounted for £2.7 billion of the total. BUPA led the United Kingdom's private insurance market, with a 40 percent share. The group had 8.2 million customers. Claims paid exceeded £2 billion, a record. BUPA Hospitals were treating more than a quarter million patients a year. Cosmetic surgery procedures were particularly in demand. BUPA's surplus was growing 30 percent a year, its finance director told Accountancy Age. A source involved with its capital raising, however, told the Banker that the group was "reasonably highly" leveraged.

BUPA sold nine hospitals for £84 million and bought three companies. ANS Care Homes, which had 44 facilities, was acquired in a deal worth £334 million. BUPA spent £206 million on two foreign insurance companies, Denmark's International Health Insurance Danmark a/s (IHI) and Amedex Insurance Company of the United States. The purchase of Amedex, which was based in Miami, made BUPA the leading health insurance company in Latin America. It was also the market leader in Spain, Australia, Ireland, Hong Kong, Thailand, and Saudi Arabia.

Gooding was bullish about BUPA's prospects in a 2005 interview with the Sunday Telegraph. Although the government was launching another, much touted plan to improve the NHS, some of BUPA's healthcare lines would not be affected at all. In addition, the NHS, which received about £70 billion a year in taxpayer funds, was planning to outsource more treatments to private hospitals to cut waiting lists. As it evolved, BUPA was planning to sell off ten smaller facilities, while upgrading its remaining 25 hospitals.

KEY DATES

1947:: Regional provident associations join to create BUPA.
1950:: BUPA is insuring one million people.
1957:: BUPA forms the precursor of Nuffield Hospitals to ensure survival of threatened private hospitals.
1978:: BUPA Hospitals is formed.
1988:: Spain's Sanitas is acquired.
1989:: Ten U.K. facilities are acquired from Hospital Corporation of America (HCA).
2000:: Revenues exceed £2 billion.
2005:: ANS Care Homes are acquired while nine hospitals are divested; insurance companies are acquired in Denmark and the United States.

PRINCIPAL SUBSIDIARIES

Blackrock Hospital Limited (Ireland; 56%); BUPA (Asia) Limited (Hong Kong); BUPA Australia Pty. Limited; BUPA Care Homes (CFG) PLC; BUPA Care Services Limited; BUPA Finance PLC; BUPA Hospitals Limited; BUPA Insurance Limited; BUPA Investments Limited; BUPA Investments Overseas Limited; Sanitas, SA de Seguros (Spain; 99%).