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optimisation and customer engagement programs, while maintaining a focus on profitable growth. When enlisting on the stock exchange, Medibank invested in a lot of marketing against their competitors and to promote to Initial Public Offering (IPO). This But Medibank managing director George Savvides, who is soon to step down from the insurer, said this was due to the company's decision not to chase growth for the sake of it, and select risk that suited the insurer's portfolio (1). Medibank Private Limited has locked in contracts with the largest hospital providers in Australia. They have locked in a total of 40 contracts with Hospitals to ensure that the hospitals are not taking more out pocket costs from insures. This is a massive competitive advantage that Medibank has over its competitors.It improves the relationship that they have with hospitals. It also helps to reduce costs by agreeing to certain policies. There has however been a downside to signing contracts directly with the hospitals. They may potentially loose many valuable customers as, Medibank is dropping its contract with Calvary hospital, as it does not cover the quality care framework for accidents occurred as a resultof being in hospital (4)As NIB is the only other competitor enlisted on the ASX, this allows MPL to take advantage of this opportunity to further maximise market share and profitability, while reconstructing policies for a more consumer friendly outlook. MPL ensures that they are providing the ultimate customer satisfaction by providing as many complementary services as possible. There are a total of 35 health insurers in Australia, which makes it hard for other companies to take over the market leader. One of the biggest risks for Medibank is that the fact that only a small number of health insurers are listed on the ASX. NIB is Medibank’s biggest competitor on the ASX. Its share price on the 30thJune 2015 was $3.19, as opposed to Medibank which closed at $1.9. However NIB has been listed as a public company on the stock exchange since November 2007, asopposed with MPL. NIB has had enough time to establish financial growth. One of the biggest risk factors is satisfying customers with the right insurance policies, to ensure that they are receiving the services that they have paid for. Another risk is that as of now the government is not the owner of the MPL (The biggest health insurance), it does not have as much of an incentive to make Medibank as profitable, as they are not receiving any direct benefits. They do nothave as much incentive to keep funding for certain health services. They have already cut funding for pathology and digital imaging (FOOL). In 2015, Complementary Services revenue decreased by $81.9 million or 11.3 percent and operating profit decreased by $12.5 million or 46.8 percent. This wasdue principally to the non-renewal of the immigration contract with the Commonwealth Government which expired with effect from July 2014. Excluding 7
the impact of this contract and the divested dental and eyewear practice, revenue was down 1.6 percent to $638.5 million, however operating profit