Saturday 24 February 2018

We're in for a marathon, not a sprint to the finish

Addressing our issues will take time and perseverance so let's get moving and commit to reform, says GloHealth CEO Jim Dowdall

Jim Dowdall
Jim Dowdall

Kevin Beary

WHEN your job is managing and building a new business in a tough environment, turning your mind to the national road to recovery requires serious reflection and focus.

Drawing from my own business experience has provided me with some key themes which I believe Ireland Inc could usefully follow.

One year ago, we launched GloHealth into the health insurance market. Many people asked me if we were mad. The country was on its economic knees, the squeezed middle kept getting squeezed and the health insurance market was contracting due to the growing unaffordability of cover. One year later, we're not only still here but we are growing at a rate never seen before, with over 50,000 customers joining GloHealth in our first 12 months. Maybe, in a small way, we have demonstrated that you can achieve results even when people think you can't or that you shouldn't even try. This thinking can equally apply to a country which is barely in growth, still carries a budget deficit and is dependent on international markets which are slow to sluggish.

GloHealth's journey began with a simple vision – to bring innovation and real value to a market that had barely changed in 50 years. Despite the challenges people faced – in fact, in some ways it was precisely because of the challenges people faced – we felt it was the right time to take a bold step by launching into a declining market. Similarly for Government, the way out of the current economic difficulties must start with a simple vision which everyone in the country can understand and buy into.

A key ingredient is costs and their control. Our company is a lean, mean machine. It needs to be! As a relatively new company, we have no legacy issues and we have built our business to run efficiently and effectively at the lowest cost possible so that we can deliver the most value to our customers. We have also invested for the long term in our people and our technology so that we will continue to be best positioned for the future. The same cannot be said for Ireland Inc. In the Celtic Tiger years, our economy grew fat and wasteful and since then we have been too slow to react to the collapse in the public finances. When a business hits the rocks and spending exceeds income as dramatically as Ireland's has, urgent action on costs should be the first priority.

In recent years, business has seen a cut in some costs in areas supplied by the private sector like property, business services and unit labour costs. By contrast, many areas controlled by the State sector have seen cost increases, often in the guise of stealth taxes like the health insurance levy. These have impacted negatively on individual consumers and businesses alike. The fact is that every additional euro Government takes off consumers or businesses is a euro off the bottom line and a euro less to support employment.

One of the key advantages at GloHealth is that we have a core team with significant expertise in the health insurance market, blended with people who have significant experience in other areas and who can always provide an alternative view. We know our strengths and we make the most of them. Ireland's recovery will be faster if we do the same as a country.

Ireland's Live Register should not be viewed as a drain on the State. It is a resource with a wealth of experienced professionals, tradespeople and graduates – a broad mix of talented and skilled individuals who for various reasons find themselves unemployed, but willing to work.

We no longer need a passive welfare system that consigns large sections of our community to welfare dependency, inactivity, social exclusion and intergenerational poverty. It is important to remove the welfare traps that make it unaffordable for thousands of families to move off welfare and back into paid employment. Government can lead by doing more to encourage employers to hire people on welfare as well as easing the administrative burden on small start-up businesses.

I was encouraged last week to read that Minister for Social Protection Joan Burton has recommended to a Cabinet subcommittee that external private contractors provide employment activation services. A well-constructed model using a "payment-by-results" approach could deliver a win-win process with the majority of each payment to a contractor based on the company finding sustainable employment for an individual.

There is also a critical need for an infusion of fresh thinking into our policy-making system. The Irish public sector has many positive characteristics, not least having a strong sense of integrity and independence. However, flexibility and a taste for dynamic change are not qualities one would associate with the Irish public service.

Good organisations and businesses are built on a very strong customer focus. This applies as much to a government department as it does to a health insurer. In the private sector, it is critical to always remember who pays our wages or who pays the premium. In the public sector, there sometimes seems to be a disconnect between those who set policies and the citizens they are serving.

Much of the reform initiated in recent years has been driven by our masters in the troika rather than by our own public service. We need to identify and drive change ourselves. While there have been some new faces brought into the civil service from the private sector, these have tended to be the exception rather than the rule. The Government appears to have quietly dropped a commitment in its Programme for Government to bring new skills and rigour into policy-making by filling one-third of all senior management posts (principal officer and above) from outside the traditional civil service.

One of the positives of the economy in recent years has been the strength of foreign direct investment. GloHealth has partnered with a number of large multinational employers based here and I am very conscious of the attention they pay to the cost and business environment in Ireland. We have to work hard to ensure that these positives remain and that we add to our armoury of reasons to invest in Ireland – by containing, if not reducing costs like health insurance, utilities and business services. The reality is that while there are some tax incentives, the cost of doing business in Ireland continues to grow. We need to start looking at the bigger picture and consider the consequences of decisions made in isolation. An example of an unintended consequence is a Department of Health policy on health insurance which has unnecessarily forced up premiums, thereby increasing the cost of employment.

Finally, I would like to see the Government show more of the characteristics of the marathon runner than the sprinter. Addressing the issues we face will take time and perseverance. While the first two years of its tenure have been focused on restoring the country's reputation and public finances, I hope that the next three years are used to really make progress in addressing some of the long-term issues.

In my own sector, for example, we have a deeply dysfunctional market dominated by a State company that enjoys a protected and privileged position. Successive governments have not only failed to address this situation, but are exacerbating it. This contributed to a lack of innovation across the market over many years, until our entry, as well as adding to the affordability issue being faced by so many. The importance of following up on commitments and effecting structural reform is clearly in the interests of all and we cannot wait any longer.

As a country, we have shown before our capacity to come through difficult times and build a better economy and society. As a people, we undoubtedly have the talents and skills. What has been lacking in recent years has been the confidence and the positive attitude to apply those qualities collectively towards the recovery we crave. With the expected departure of our troika friends later this year, I sincerely hope that the Government, the public sector and business take responsibility to get moving and commit to becoming more reforming, more innovative and more determined to drive Ireland along the road to recovery.

To quote Roger Bannister, the athlete who ran the first sub-four minute mile in 1954, "Every morning in Africa a gazelle wakes up. It knows it must move faster than the lion or it will not survive. Every morning a lion wakes up and it knows it must move faster than the slowest gazelle or it will starve. It doesn't matter if you are the lion or the gazelle, when the sun comes up, you better be moving." The alternative is not an option.

Jim Dowdall is the chief executive officer of GloHealth

Irish Independent

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