MEDIBANK Private (ASX: MPL) has reported a 46.4 per cent increase in net profit after tax, although its new CEO is realistic about the challenges ahead for the business that is currently tied up in Federal Court.
Australia's leading health insurer took in $417.6 million for the full year to June 30.
Medibank paid out a record $5.1 billion in claims over the period. At the same time, and at a time the market 'experienced the lowest growth in the past decade', Medibank saw its revenue grow 4 per cent.
The company was impacted by a 'below market performance in both the acquisition and lapse of members', but saw growth, although slow, in its cheaper brand, ahm.
Medibank CEO Craig Drummond, who commenced his role in July 2016, says the 'business is strong' with a 'healthy balance sheet and a leading market position', but customer satisfaction is proving a challenge.
He says Medibank is still rating lower than major competitors for customer satisfaction.
Drummond said in a conference call this morning that the ACCC also didn't do Medibank any favours on this front.
"We can't make any comment on that because it is before the courts, but for us the timing of the announcement wasn't great because it came in June, the middle of our biggest selling period," said Drummond.
"Some challenges remain with the value we offer to our customers. What is clear is that we need to put our customers at the centre of everything we do.
"We know that we need to do more, and that we need to be easier to deal with.
"We have probably underinvested in our customer offering. There are points of frustration and processing issues as we transition a 40-year-old system into a new one. Investing in a higher benefit schedule [though] will play into the customer and policy numbers we end up with.
"It's hard for me to comment on the history, all I'm saying is, that we have to do a better job.
"We need to reorientate the organisation towards our customers. I don't think I could be any stronger on that."
Medibank is banking on its new system, which is currently being developed by IBM, to patch up points of customer frustration. But he also says 'a number of frustrations are actually industry-related issues', referring to cost inflation in the healthcare system.
Medibank's new core policy management system, Project DelPHI, is scheduled for rollout at the end of this calendar year.
Drummond says Medibank is also looking to announce its latest hire - a new head of technology and operations - sometime next week.
The CEO also says in 2017, a net promotor score measurement will be introduced into the determination of management incentives, so 'if customers don't get what they need, then executives will miss a good portion of their bonus'.
Medibank will pay a fully franked final dividend of 6c per share. This takes the full year dividend to 11c per share.
Read about Medibank refuting claims by the ACCC in June this year.
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