Southern Cross Steps in New Direction

News release
22 December 2011

Southern Cross Steps in New Direction

Southern Cross Health Trust announces 2011 annual results

An enhanced role for primary care is essential for New Zealand to get better value for money from its health spend, says Southern Cross Health Trust.

The Charitable Trust has released its Annual Report for the year ending 30 June 2011, reporting for the first time on its new subsidiary Southern Cross Primary Care (SCPC). The Trust is also the owner of Southern Cross Hospitals, the country’s largest network of private hospital facilities, and Southern Cross Travel Insurance.

The beneficiaries of the Trust are all New Zealanders. All Trust businesses either directly or indirectly support the charitable purpose of the Trust to ‘assist in the provision of medical facilities and research to supplement those provided by the public health system’. The objects of the Trust include the provision of medical facilities and services, the employment of medical, nursing and other staff, and the provision of medical training opportunities.

Trust Chairman Graeme Hawkins said SCPC had been established after looking at how the Charitable Trust could apply its expertise and experience to bring cost savings, innovation and improved access to other areas of healthcare.

“For more than 30 years, the Trust’s activities have centred on the provision of high quality, cost-effective, elective surgical services. However, we share the Government’s view that a bigger role for primary care is essential to improve health outcomes for New Zealanders, and to get the best possible value for money from future health spending.”

“SCPC provides a vehicle through which partnerships can be formed with general practices around the country. Our initial aim is to develop a nationwide network of Foundation Partners with whom we can develop new approaches that create added value for patients and general practices. This includes such things as expanded patient services, operational support services, and more sustainable ownership and remuneration options.”

The Trust is one of two key organisations that make up the Southern Cross Healthcare Group, the other being Southern Cross Medical Care Society, New Zealand’s largest health insurer. Though they share a common brand and not-for-profit philosophy, all Southern Cross businesses operate independently and at arm’s length from the others.

Trust and subsidiary overview for the year ending 30 June 2011:

Southern Cross Hospitals
The performance of the Southern Cross Hospitals business was resilient in a challenging and highly competitive environment. Like other providers across the sector, patient volumes were down on 2010. This was due primarily to the drop in the number of ACC-funded elective surgical patients, leading to a reduction in the number of private hospital procedures being contracted by ACC to Southern Cross. However, tight cost management resulted in better than anticipated financial results.

Southern Cross Primary Care
The 2011 financial year saw Southern Cross Primary Care in the early stages of network building. In May the business signed its first partnership agreement, taking a 20% stake in a partnership set up to run Silverdale Medical in Auckland. By year end, the business had appointed a small management team and was in varying stages of partnership discussions with a number of practices around the country.

Southern Cross Travel Insurance
Southern Cross Travel Insurance achieved excellent growth over the year. Total policy sales were up 19% on 2010, and market share grew in both New Zealand and Australia. After projecting a surplus of $3m, a number of large claims for medical treatment received in the last half of the year and claims related to a Chilean volcanic eruption resulted in a small deficit.

Trust financial results for the year ending 30 June 2011
• Operating revenue was $233.0m, up 1.7% on the 2010 year.
• Net surplus was down 19.3% from 2010 to $12.4m.
• Southern Cross Hospitals’ revenue was $195.6m, down 1.1% on 2010.
• Travel Insurance reported strong growth over the year with premium income at $38.9m, up 19.5% on 2010. However because of significant claims events, Travel Insurance ended the financial year with a small deficit of $0.24m.
• During the year $7.6m was invested in the enhancement and expansion of Trust subsidiaries, including the establishment of Southern Cross Primary Care, hospital upgrades and investments, and a major upgrade to IT infrastructure for Travel Insurance.

The full annual report can be viewed at www.southerncross.co.nz/annualreport

- ends -

© Scoop Media