FANews
FANews
RELATED CATEGORIES
Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Trustees need to adopt more strategic focus

11 June 2013 Phil Hemus, Fedhealth
Phil Hemus, Chairman of Fedhealth.

Phil Hemus, Chairman of Fedhealth.

The changing medical landscape and the introduction of a number of new regulatory issues like the Protection of Personal Information Bill (POPI), King 3 requirements, Consumer Protection Act and more recently the Competition Commissions Audit, have placed

Phil Hemus, Chairman of Fedhealth, says within this changing environment the role of trustees in medical schemes is often underestimated. Unlike a private company with executive board directors, trustees carry the ultimate accountability and responsibility for the Scheme. This is somewhat more onerous than that of company Directors in as much as Trustees, who are all non-executive, are more distant from the scheme whereas the CEO or CFO of a company are executive Directors and, by implication are closer to the entity. As a non-profit organisation, the role of the trustees is also different as they do not exist to make a profit.

They are elected by members for a three year period and are not only required by law to fulfill a number of statutory and fiduciary duties but are also responsible for providing the scheme's strategic direction, overseeing the implementation of the scheme's strategic plan by scheme Management, and overseeing the management of risk. Without the support of executive directors, requirements are slightly more onerous on trustees and they need to be just that more accountable and careful in the governance of their scheme.

Interestingly, the Medical Schemes Act only prescribes one additional structure, an Audit Committee, in addition to the board of trustees which usually comprises a minimum of 10 trustees. Hemus believes that forward-looking schemes are realising that this is not sufficient and have introduced additional structures like a Remuneration Committee, special Codes of Conduct for trustees and even a Conflict of Interest Register which is reviewed at each meeting. Individuals with specialist skills are also often co-opted onto the trustee board to assist with certain issues.

Hemus believes that ongoing training and development of trustees is absolutely critical so they can act with integrity and transparency and understand the often complex legislatory issues.
"Trustees need to have a thorough knowledge and understanding of the industry together with the skills and experience to interpret and act on financial, legal and industry specific information at the highest level," says Hemus.

Remuneration of Trustees is often a topic of debate and Hemus believes that while each case differs, the remuneration should be fair for the responsibility they carry. "One of our areas of concern is not what trustees are paid but rather on what basis. The Act still allows remuneration to be either on a retainer or a retainer and consultant fee. We don't believe the latter is sustainable and can lead to abuse in certain circumstances. We have been consulted by the Council on this already and certainly advocate a fixed retainer fee which is carefully monitored according to set performance criteria."

"Trustees of the future need to move from an operational focus to a far more strategic focus and be more discerning in questioning scheme activities so the best interests of the members can be served at all times," concludes Hemus.

 

Quick Polls

QUESTION

South Africa went to Davos to pitch itself as an investor-friendly destination, then signed an Expropriation Act. What message does this send to global investors?

ANSWER

Invest at your peril
SA is open for business
Two steps forward, one land grab back
Welcome to Hotel California
fanews magazine
FAnews February 2025 Get the latest issue of FAnews

This month's headlines

Unseen risks: insuring against the impact of AI gone wrong
Machine vs human: finding the balance
Is embedded insurance the end of traditional broker channels?
Client aspirations take centre stage as advisers rethink retirement planning
Maximise TFSA contributions before year-end
Subscribe now