HCF Fit and Well : Summer 2013-14
26 FIT&WELL It is my privilege to present The Hospitals Contribution Fund of Australia Limited 2013 Annual Report to its members. HCF focuses on five key strategic principles: revenue growth; membership growth; operational excellence; people and organisation capability enhancement; and a commitment to environmental, social and community responsibility. We operate on a not-for- profit basis and have one of the lowest expense ratios in the industry, allowing us to offer more to our members. I am pleased to report that our performance in the 2013 financial year provides a platform to ensure ongoing growth and success of the organisation in serving its members. Revenue and membership recorded solid increases, while industry-leading ser vices and products and associated enhancements added during the year again demonstrated operational excellence. HCF continued to maintain industry-leading low cost structures while returning 92% of health care premium contributions as benefits to members, compared to the 87% average for the industry. Organisational capability was enhanced through a range of initiatives, including the ongoing upgrade of our core system technology and the continued implementation of electronic health records into our health centres. We again invested in employee training and engagement, knowledge sharing and leadership development through a range of programs. During the year, HCF accepted an invitation to join the newly formed Business Council of Co-operatives and Mutuals. HCF was the only private health insurance organisation on the inaugural Business Council, Chairman's REPORT in recognition of the strength and reputation of our organisation. Our Managing Director, Shaun Larkin, was appointed in April 2013 for a three-year term as a Commissioner of the Australian Commission on Safety and Quality in Health Care. This national Commission leads and coordinates improvements in a number of areas relating to safety and quality in health care across Australia. This appointment is recognition of the skills, experience and expertise of Shaun, who leads our organisation with distinction. Our Performance As a not-for-profit organisation, HCF is dedicated to delivering superior value to its members. Total revenue for HCF increased 11.5% to $2.2 billion. Group profit after ta x increased 26% to $106.5 million, primarily driven by income from investments. The HCF health management expense ratio decreased 0.2 percentage points to 7.1% , well below the industry average of 8.8% . Our leading cost control initiatives allow us to do more for our members than our peers. Our overall investment portfolio stood at $1,283 million at financial year- end while our balance sheet remains strong, with total assets steady at $1.6 billion, no debt, and net assets of $932 million. Our robust financial position provides us with the strength and flexibility to quickly take advantage of any opportunities as they arise and deal with adverse changes in economic and financial environments. HCF's share of the national health insurance market increased 0.1 percentage points to 12.6% during the 2013 financial year, reflecting a 4.1% increase in policies to 662,256. More than 1.5 million Australians are now covered by HCF health insurance. Health Insurance Industry During the 2013 financial year, the number of Australians covered by private health insurance increased by 2.9% to 12.7 million. Forty-seven per cent of the Australian population is estimated to have some form of private hospital cover, consistent with FY2012. Industry premium income increased 7.5% over the year due to a combination of membership growth and rate increases. Total benefits paid increased 12% , to $15.6 billion. Total management expense as a proportion of revenue declined half a percentage point from 9.3% to 8.8% . The industry's unaudited profit after tax increased 7.5% ($77 million) to $1.1 billion, primarily due to higher investment returns. Corporate Social Responsibility Our annual report is prepared in accordance with the Global Reporting Initiative Sustainability Guidelines. HCF is committed to following the principles of best practice corporate social responsibility, and the essence of our business success and ability to ser ve our members are linked to our sustainable future. Our activities must always be economically viable, environmentally sound and socially responsible. This year we feature the important work, and some of the key statistics, behind the HCF Research Foundation on pages 16 and 17 of our annual report. I encourage you to read that feature section to understand more about the very important work undertaken by the Foundation. HCF also contributes to several other charities, including HeartKids Australia, which supports the needs of children with childhood heart disease. Many local community events and charities are also supported by HCF.
HCF Fit and Well Winter