Never ask a barber if you need a haircut: Profmed

‘It is essential that medical schemes have strong independent trustees and executive employees who can safeguard the interests of medical scheme members,’ said Profmed Principal Officer Graham Anderson (picured right).

‘Proposed amendments to the Medical Schemes Act, due to be passed in the current parliamentary session, include the requirement to establish and maintain an adequate and effective process for corporate governance. In terms of the proposed legislation, principal officers and trustees are obliged to manage the complexity, risks and business of medical schemes’ said Anderson.

Anderson was commenting on the slew of corporate governance failures over the last few years.

‘In the past, many boards of trustees and principal officers have passed this duty on to administrators and relied too heavily on their advice, to the detriment of medical scheme members,’ said Anderson.

‘Administrators have earned fees by performing functions such as appointing actuaries and asset managers, marketing, and advising on benefit cost and design, functions which should properly be the responsibility of executive officers of the scheme,’ said Anderson.

‘Historically many of these principal officer/ administrator relationships have been skewed; principal officers have been in the position whereby they ask the administrators for advice on which services the scheme requires. This has been just as bad as asking a barber if you need a haircut,’ said Anderson.

He commended the Registrar of Medical Schemes, Patrick Masobe on challenging errant medical schemes on their corporate governance.

Anderson noted that more medical schemes were appointing executive staff members to ensure that there was decision making capacity housed within the medical scheme offices, as opposed to the administrator and said that Profmed has had a separate executive office in place since 2003.

He said that a further example of good corporate governance was keeping up with changing legislation.

‘We have been commended by the Council for Medical Schemes for the proactive role we have taken in providing accurate data for the Risk Equalisation Fund calculations,’ said Anderson.