GEMS surpasses the one million life mark and delivers ‘a fine set’ of financial results

The Government Employees Medical Scheme (GEMS) recently released its Annual Report for the 2008 financial year. The scheme, which is registered as a restricted membership medical scheme for public service employees only, also announced that it now had well over 360 000 principal members, culminating in more than one million beneficiaries being covered.

Dr Eugene Watson, Principal Officer of GEMS said that the membership growth of the scheme remained brisk with well over 500 new membership applications being processed each day. In fact, GEMS has grown by more than 1000 lives each day since inception. GEMS is at present the largest restricted membership medical scheme and the second largest medical scheme overall in South Africa.

The 2008 Annual Report presents the Scheme’s financial results for the year ending 31 December 2008 as well as information on how the scheme is fulfilling its mandate to extend affordable, quality healthcare benefits to all employees in the public service equitably. The Report furthermore outlines a number of important successes in respect of efficiency and sustainability, namely:

o over one-third of all eligible public service employees are enrolled on GEMS;

o of those employees who were employed in the public service since February 2006, 26% are now members of GEMS and 27% who had no cover in 2006 now have cover
on GEMS;

o 25% of employees who were employed since February 2006 and who were covered on other medical schemes, are now members of GEMS;

o over 130 000 (or 32%) of public service employees on salary levels 1 to 5 are members of GEMS. Of those level 1 to 5 employees who were employed since 2006 and
had no cover in 2006, 31% are now members of GEMS; and

o GEMS now provides cover to 2% of the South African population and when one considers that 55% of GEMS members did not have cover previously – it is noteworthy
that GEMS has introduced medical scheme benefits to approximately 1% of the population in a period of three years.

Commenting on the financial results, Dr Watson said: “The scheme delivered a meaningful surplus of R508 million for the year ended 31 December 2008 in its third year of operation. This represents an increase in excess of 250% compared to the net surplus of R132 million recorded for the year ended 31 December 2007”.

“The Scheme collected over R5,5 billion in member contributions during 2008 – an increase in excess of 220% over that of the R2,5 billion collected in 2007. At the same time the value of claims paid increased from R2,1 billion in 2007 to R4,7 billion in 2008. Our reserve ratio at the end of 2008 was 12.91%, which is considerably higher than the reserve ratio of 6.20% approved for the Scheme by the Registrar for Medical Schemes for the financial year ended 31 December 2008.”

He added that a rigorous audit cycle ensured that member funds were treated with due care and diligence while the Scheme’s record of unqualified audits provides assurance that the required controls and systems are in place. “It is particularly noteworthy that the Scheme received unqualified audit reports for the three consecutive years of its existence,” said Dr Watson.

Commenting on what he referred to as a ‘fine set of financial results’ Prof Richard Levin, Chairperson of GEMS said: “Member growth, financial sustainability and efficient service are without doubt important, but it is the Scheme’s governance structure that ultimately provides both members and the employer with assurance that their interests are being protected on a sustainable basis.”

“The Scheme’s second board effectiveness assessment was conducted during 2008. The performance of the Board as a whole, the Committees of the Board and the Chairperson of the Board were subjected to an independent and thorough review. Individual trustees were further subjected to a peer review process. The overall finding of the assessment was that the Board of Trustees of GEMS is a good Board with the essential structures and processes in place in accordance with Corporate Governance best practice.”

“The assessment further found that the GEMS Board functions effectively, has a good understanding of the business and key issues facing GEMS, and has satisfactorily discharged its responsibilities. The assessor’s findings in respect of the Committees of the Board were similar. The Scheme practices sound corporate governance with strict adherence to ethical governance controls that are in place,” added Prof Levin.

Another significant highlight was the fact that despite considerable growth, an independent service level audit performed during the year confirmed effective operations and the rendering of services in accordance with the service level agreements in place between the Scheme and its contracted service providers.

GEMS said that it attended to more than 2.7 million calls and increased activity was also experienced at the regional walk-in centres and in respect of correspondence items received during 2008. The total helpdesk activity across the country equated to close on 180 000 face-to-face visits - this reflected a 31% increase over that of the previous year.

The number of general written correspondence items received increased by 48% to in excess of 150 000 items received during the year. According to Watson the Scheme’s inaugural member satisfaction survey conducted in August 2008 found that 79% of members surveyed were satisfied with GEMS while 50% were delighted with the overall service experience.

Despite a rapidly growing operational environment, the Scheme has continued to innovate and recently introduced examples are the SMS-based claim alerts, provider identification and benefit check services.