The IHRM (Institute of Health Risk Managers) recently held a breakfast seminar in Johannesburg aptly entitled “regulatory options for medical scheme brokers: where to from here”. Supported by the Financial Intermediaries Association of Southern Africa (FIA), the seminar addressed key issues facing healthcare brokers, looking specifically at the role of intermediaries and advisors in the context of medical schemes – an issue currently under review by the Medical Council.
Linza van Aswegen (pictured), national healthcare chair: Financial Intermediaries Association (FIA), explains that because the medical scheme market is so dependent on advice, the role of independent brokers and advisors is critical. “Advice given by intermediaries impacts directly on a member’s choice of product. Intermediaries also remain a key point of contact for members – assisting with everything including the settling of claims. The role of an intermediary in ensuring members receive the best possible product for the best possible price cannot be underestimated. Today’s seminar thus couldn’t have come at a better time for all of us.”
Protecting “independent advice” was a core theme in Alex van den Heever’s (advisor to the Registrar of the Medical Council) presentation entitled “consideration of a revised regulatory regime for medical scheme brokers”. Van den Heever looked at how the complex products being sold meant that members and employers often have difficulty in determining choices – making them dependent on advice given, with this having a direct impact on the product eventually sold.
He emphasised that “selling” was not the same as “advising”, and illustrated this in his discussion of the Medical Council’s proposed “permitted” versus “prohibited” relationships. A “prohibited” relationship is one where a broker giving ongoing advice receives fees from a medical scheme directly, resulting in a potential conflict of interest when it comes to the issue of true “independence”. A “permitted” relationship on the other hand would be one where independent advisors get their fees from the people who benefit from their advice. A discussion document relating to these and other issues will be released shortly by the Medical Council for comment.
Andre Jacobs, national operations manager: AON Consulting, raised concern regarding intermediaries who abuse independence in terms of receiving additional fees and incentives from medical schemes. His presentation, “the value brokers are adding to the private healthcare environment”, focused on the role of the broker; how they add value, as well as testing the value proposition. Jacobs countered the myths that brokers represent medical schemes, that they are responsible for getting “uncovered” people to invest in cover, and that they are responsible for churn.
Jacobs maintained that for intermediaries to add value and give independent, sound advice their services must be observable, comparable and able to be tested. There must also be a “culture fit” between members and services, and services must be simple and standardised. He looked at how consumer research supported the current model where medical schemes pay intermediaries for their services as opposed to carrying this cost themselves. Employers felt the same in this regard – being unwilling to transfer this extra cost burden onto their employees.
The seminar left everyone with much food for thought about the Medical Council’s current analysis of medical schemes and the future role of intermediaries in this regard. “We look forward to receiving the Medical Council’s discussion document and working with them to continue acting in our clients’ best interests, and adding value through our independent, sound advice,” concludes van Aswegen.