At Bestmed’s Annual General Meeting held on 31st May, the focus was on confronting key industry challenges, which include Prescribed Medium Benefits (PMBs) and administration costs.
According to Bestmed, the medical aid industry is faced with various challenges, one of which is the increase in the cost of PMBs. “We have noted a slightly higher actual average claims ratio of 1.5% compared to 2011. This was due to several factors, the biggest being the increase in the cost of PMBs. The PMB claim paid at a higher tariff than the scheme tariff amount has increased from R12m in 2011 to over R19m in 2012 (an increase of more than 50%),”says Dries la Grange, Chief Executive Officer of Bestmed.
Dr Boshoff Steenekamp from the Council for Medical Schemes (CMS) and Christoff Raath, CEO of the Health Monitor Group and actuary, graced the occasion and shared insight about the PMBs. Both Steenekamp and Raath explained that out of over 500 Diagnosis Treatment Pairs (DTPs), only 270 and 26 chronic diseases are covered by PMBs while other conditions may be covered at the medical schemes’ discretion. Moreover, many healthy, employed individuals opt out of their medical schemes, leaving existing members with the burden of heavy contributions. This is purely to escape the notion of cross-subsidising the sick.
According to Raath, medical aid member contributions would drop considerably (25%), if all working South Africans and especially they belonged to a medical scheme.
Bestmed, which has recorded the most significant percentage growth, compared to all open medical aid schemes in the country, paid more than R2-billion in claims in the last financial year. “During the period under review, we recorded 72,871 members in our books and that put us in the top six open medical schemes in the country. At Bestmed, our customer r intimacy philosophy sets us apart from other schemes, and this is validated by the number of members who have been with Bestmed since inception. Our 304 staff members made it possible to address over 2-million emails that members sent and 588 100 calls were taken during the 2011/2012 financial year,” adds La Grange.
In 2006, the scheme occupied the 16th position, and has since experienced consistent growth year- on- year, by way of organic growth and amalgamations to secure the sixth spot. “For a number of years, the industry has been experiencing a phase of consolidation, mostly characterised by amalgamations between schemes. A total number of open and restricted medical schemes has shrunk by 20% over the last five to six years. Bestmed has withstood the challenges that faced the industry, due to the adherence to the regulations that guide medical schemes and great corporate governance,” said Bestmed’s chairperson, Advocate George Alberts.
Furthermore, Alberts said that the medical scheme industry would operate even better when given the green light to operate in an environment where risks are assumed and managed within a legislative framework which adequately recognises: member behaviours and attitudes; benefit offerings determined by operation of market forces rather than regulation; and the right of third party funders to seek the best quality and cost-effective treatment on behalf of the members.
“Bestmed’s financial period under review (2012) was an exceptional year. It was a year of change, consolidation and rejuvenation. This flowed naturally from the fact that the Scheme returned to self-administration and implemented an integrated retail marketing and distribution strategy. The administration costs in 2012 were at 12.22% as compared to 15.7% in 2011 when the administration function was outsourced. Other contributing factors included a new board structure, which was approved and implemented during 2012. The size of the board was reduced from 20 to 12 members, which is more streamlined and has facilitated faster decision-making. We fully intend implementing further steps to enhance the effectiveness of the board,” said Alberts.
In conclusion, La Grange said that, irrespective of the growth the scheme has seen and the once-off costs associated with the reversion to self-administration, Bestmed still maintained its reserve ratios above the industry standard of 25%.
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