Covid-19 ups the customer satisfaction stakes

Ineke Prinsloo, Head of Customer Insights at Consulta

In March 2020, the World Health Organisation (WHO) declared the Coronavirus Disease 2019 (Covid-19) a global pandemic.

That, according to Ineke Prinsloo, Head of Customer Insights at Consulta, has thrown the spotlight on the need for medical scheme benefits and private healthcare during a crisis. However, while consumers recognise the need for private healthcare given the parlous state of public health facilities, they are still at a crossroads as to whether the price paid for medical scheme membership justifies the value and quality received – and much of this hinges on the utilisation experience of each member.

In a press release issued by Consulta, they highlighted some of the findings in the latest South African Customer Satisfaction Index (SA-csi) for Medical Schemes (2020) conducted by Consulta, which provides highly scientific insights into the overall satisfaction of members of South Africa's largest open medical scheme providers – Bestmed, Bonitas, Discovery, Medihelp, and Momentum. GEMS is the only closed medical scheme included in the survey. 

Take-outs from the SA-csi for Medical Schemes

While members acknowledge the need for medical scheme benefits, it remains a significant and expensive grudge purchase. The least satisfied customers are those with low to minimal benefit utilisation and face co-payments and out-of-pocket expenses on day-to-day primary healthcare needs and chronic medication.

Discovery, Medihelp, and Bestmed lead the way on delivering a quality experience to customers. Discovery and Medihelp (alongside GEMS) showed the most significant improvement, with Bonitas and Momentum remaining stable compared to 12 months ago.

The perception of value for money is a powerful predictor of future usage and company growth. Bestmed and Medihelp take the lead in the industry, while GEMS and Momentum score well below the industry's rest on this metric. Discovery has the most significant price versus quality gap. Although it is a trusted brand due, it is also perceived as the more expensive brand in the market.

Similar to the trends observed in the 2019 report, no outright leader was identified in this year's index. Bestmed (77.4), Medihelp (77.1), Discovery (76.8), and Bonitas (74.9) come in on industry par (76.1) on overall customer satisfaction scores. Discovery, GEMS, Medihelp, and Momentum all show improved overall customer satisfaction scores compared with 2019.

The Covid-19 pandemic has resulted in a dramatic increase in the levels of expectations South Africans have of their medical schemes. The par score on customer expectations has increased sharply to 85.0 from 81.4 in 2019. Although none of the brands measured reach expectations, Bestmed and Medihelp come closest to closing the gap with the lowest expectation-quality gap of -1.2 and -0.6, respectively.

Bestmed has the most loyal customers at 70.6%, above industry par of 68.8%, followed by Medihelp at 70.4%. Discovery (69.9%) and Bonitas (68.2%) are on par, while Gems (60%) and Momentum (59.5%) have the least loyal customers, with Momentum showing a 4% decline in customer loyalty scores from 2019.

"The trends observed in the SA-csi over the last five years points to a distinct skew in the satisfaction of members who make use of their medical scheme benefits for one-off, sizeable medical event expenses such as hospitalisation or chronic healthcare needs, versus those that primarily use the scheme benefits to fund day-to-day claims such as GP visits, optometry, and dentistry. The co-payments on day to day benefits represent out-of-pocket expenses that, within a pressured consumer budget, detract significantly from the utility value of medical schemes," explained Prinsloo.

The proverbial game-changer for schemes

"Results from our ongoing Covid tracking studies indicated that consumers are looking towards cutting back on expenses and discretionary spending as a result of the pressure on household budgets. With concerns about health care right up there with the economy's state and the ability to earn an income, consumers are reluctant to cut their medical scheme contributions. Combined with an expectation that there will be a substantial increase in healthcare expenses and spend on medicines, consumers' expectations of the value of every Rand spent on medical scheme contributions are increasing,” said Prinsloo.

“In the aftermath of Covid-19, and the economic fallout of lockdown, schemes quickly had to respond to retain contributions, while navigating a strict regulatory framework and scheme rules, to accommodate members who could no longer afford contributions due to interruption in earnings,” emphasised Prinsloo.

“October traditionally is the month where schemes announce their updated rates for the next year. The CMS called upon schemes to cap annual increases at 3.9%, with consumers facing an unprecedented affordability challenge. The major open schemes had different approaches to heed the call, with Momentum the only one to keep to the 3.9% recommendation. This year, there seems to be tangible financial relief for consumers and not, as has been the trend, more options for different affordability categories that have proven counterproductive on perceptions of value for money in the category from results of the index,” said Prinsloo.

“Focused yet simple communication is crucial to demonstrate the cover's value, especially for members with a relatively low utilisation experience. The latest SA-csi shows that many members feel trapped and stay with their current provider not out of loyalty, but because they don't see any viable alternative. Given that medical scheme cover can cost 20% or more of monthly disposable household income, and average hyper-inflationary annual increases of 8-10% amidst a jobs bloodbath, it is critical for medical schemes to focus on the customer experience and satisfaction of all members, but especially healthier members who claim less. It is vital to get benefit communications and customer experience on point," added Prinsloo.

How medical schemes demonstrate value

“Consulta conducted this year's SA-csi for Medical Schemes after the arrival of Covid-19 and national lockdown, and this has changed the trajectory somewhat from last year's survey. Given the public healthcare system's disastrous state, private healthcare is viewed as crucial and something that customers do not want to live without, albeit very expensive. The complexity of medical scheme benefits also adds tremendously to the challenge of how medical schemes demonstrate value to a consumer who does not fully grasp the regulatory environment that schemes operate within. This is amplified in consumers with lower or minimal utilisation who feel aggrieved at paying the same as everyone else regardless of usage,” said Prinsloo.

"Medical scheme members still demand curated choices on their medical scheme benefits, which is challenging on a model that is both unpredictable and relies on cross-subsidisation," added Prinsloo. 

"While medical schemes have created lower benefit options to provide greater affordability and flexibility, it has created more complexity and has made the advice process incredibly challenging. As a simple example, while a member may or may not have a clear need for maternity benefits, it gets much trickier with the 'big perils' like cancer and heart disease, which are unpredictable at best. A younger, healthy member may believe that they are not at risk for any of these, and thus, won't see the value in having the benefits to provide for such an eventuality. However, actuarial statistics clearly show that cancer and heart disease incidence occur in much younger demographics than ever before. Today these lifestyle diseases are increasingly common at younger ages,” said Prinsloo. 

"Few consumers understand, without significant counsel and advice, what they are covered for and the value of preparing for the unknown - until they experience a health crisis. The survey shows that the areas where customers (members) are least satisfied revolve around out-of-hospital costs and co-payments on primary healthcare and chronic medicine - essentially the smaller, day-to-day claims. It is this financial education and expectations gap that medical schemes must address if they are to halt the growing discontent among a significant portion of their member base who are crucial for the financial sustainability and viability of the schemes," continued Prinsloo. 

Writer’s thoughts:
It is evident from the survey that in the post Covid-19 context, sustainability is broader than just schemes’ obligations. The retention of membership is also a concern. So, how can we demonstrate value in a post-pandemic economy? If you have any questions please comment below, interact with us on Twitter at @fanews_online or email me - [email protected].