Almost half the Bermuda’s population has one or two chronic disease challenges, and that is a major factor in the $701 million annual cost of healthcare on the island.

Data shows that 45 per cent of the island’s residents fall into that category, and 20 per cent of the population with a chronic disease consume 80 per cent of island’s healthcare dollars, according to Alison Hill, chief executive officer of Argus Group Holdings.

As one of Bermuda’s major providers of health insurance, the company is at the forefront of efforts to address the rising cost of healthcare — a problem that is being faced around the world.

Argus is taking a two-pronged approach that is partially focused on supporting people to look after their health, and partially on finding ways to reduce healthcare costs.

Kim Wilson, Minister of Health, highlighted rising health insurance premiums — up as much as 18.5 per cent — when she spoke about the impact of the soaring costs in the House of Assembly on July 6. The Bermuda Government is working on health reform proposals, including a draft benefit package.

Ms Wilson blamed the rising costs in part on the population being sicker, older and receiving more healthcare.

Against that backdrop, Ms Hill has described efforts by Argus Group to address the challenges. She said healthcare inflation globally is about 8.4 per cent, “about three times the level of inflation. It is just not sustainable”.

Healthcare costs in the US are projected to increase 6.5 per cent this year, while the standard health benefits in Bermuda have increased by 6.4 per cent. For comparison, Bermuda’s inflation rate was 1.9 per cent last year.

Ms Hill explained that of the $701 million the island spends on healthcare, 12 per cent goes to overseas health providers, 46 per cent goes to the King Edward VII Memorial Hospital and the rest to local healthcare providers and administration.

“So there is a lot that we can do in Bermuda to bring that cost of healthcare to a more sustainable level,” said Ms Hill.

One of the things Argus is doing is working in partnership with local providers to create “a fee for health outcomes model” rather than a fee for service model.

Ms Hill said Argus was proud of the diabetes-reversal programme it is doing in partnership with Hamilton-based Premier Health.

“We are delivering real, tangible benefits. It is in its early stages, but for the cohort that has gone through we are seeing on average $1,000 per head saving on prescription drugs and we have seen an average weight loss reduction in that group of about 12.7lbs,” she said.

Another example of how the insurance company is advocating for health is its nurse case management programme, which assists insured clients with multiple chronic conditions to better manage their health. Ms Hill said that as people go through the programme the company has seen annual healthcare reductions of more than $6,500 per individual.

“So we know if we use technology and that personal touch and work with our insureds and encourage them to really adopt positive changes to their health, the economics of it work — and we offer all of this stuff essentially for free. We know that a short-term cost will generate a long-term benefit,” said Ms Hill.

A healthier population and a reduction in the cost of healthcare will also have wider benefits for the island, as it would make Bermuda a more attractive place for job creation and foreign investment, according to Ms Hill. She said: “Attracting healthy people to the island really helps address that demographic change of an ageing population and chronic disease.

“Health insurance is a huge part of the cost of employing someone. Making those health dollars work as efficiently and as cost effectively as possible is what we are constantly striving to do.”

Peter Dunkerley, chief financial officer, said: “For the company we are very optimistic for the future. The position we are in now, having taken some of the actions we have taken, is good for a very long time.”

He was referring to, in part, a restructuring of the company’s balance sheet, which included moving out of a number of noncore, illiquid assets. This involved writedowns of $19.5 million. On Friday, Argus reported a net loss of $18.6 million for the year end.

Mr Dunkerley said taking a short-term loss would “generate the best long-term value for our shareholders and all our stakeholders”.

He also said: “We can also really focus on dealing with some of these key issues that Alison has highlighted — creating seamless, cost-efficient back-office infrastructure, and working more with our clients to improve their physical health and financial health.”

Beyond health insurance, Argus Group also offers a number of other services, including property and casualty insurance, pensions and investments, and wealth management.