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New survey highlights member medical scheme concerns

15 June 2011 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

The trouble with financial services surveys is they tend to ignore the views and experiences of the end user of the product in question. Research companies focus on trustees when talking to the retirement and medical schemes industries and asset managers when investigating the collective investments space. That’s why we welcome the 2010 OMAC Actuaries and Consultants Healthcare Monitor, released at a media conference in Johannesburg, 13 June 2011. The survey is based on intensive face-to-face interviews with 1,002 medical schemes members and beneficiaries. We now have a ground-level picture of the medical schemes industry.

It comes as no surprise that three quarters of survey respondents singled out cost as their major concern. The average survey respondent spent R2, 500 per month on a single-member comprehensive scheme with the payments escalating to between R5, 000 and R6,000 per month for comprehensive cover for a family comprising two adults and one child. Basic cover averaged R840 and R2, 000 per month respectively. Margaret Hulme, Head of Healthcare Consulting at OMAC Actuaries and Consultants believes many of those complaining about the cost of medical cover are on inappropriate benefit options. “It seems that members are adopting a ‘rather safe than sorry’ approach when selecting medical schemes and options, instead of trying to improve their understanding of the product,” she says. A more appropriate benefit option could reduce the cost of cover.

Compulsion not a factor

One of the interesting survey responses relates to the reason members sign up to a medical scheme to begin with. Of the 1,002 respondents 29% had joined a scheme on their own volition, 28% had to belong to a scheme of their choice and 43% had to belong to an employer-specified scheme. Despite 71% of the members surveyed being ‘forced’ to join a medical scheme, only 9% list compulsion as the reason for obtaining cover. The OMAC Healthcare Monitor uncovered two additional behavioural trends early on. First, medical scheme members are particularly loyal to their chosen scheme, with only 7% of respondents changing schemes over the past three years. And second, members are reluctant to shift from the benefit options they choose. Only 1% of respondents had changed options within a scheme over the same period.

OMAC was confident enough to draw cost and benefit conclusions from the approximate 95 persons who changed options within a scheme. Apparently 48% changed for a cheaper option, 22% opted for a more expensive option and 30% chose a similarly priced option. As for benefits, 46% opted for more benefits, 36% for similar benefits and 18% for fewer benefits. However, findings published later in the survey cast aspersion on these responses… Because only 42% of respondents ‘strongly agree’ that they know what they’re covered for, while as many as 30% find the benefit structure of their medical scheme confusing...

The designated service provider concept is misunderstood

OMAC says that cost saving initiatives by schemes, particularly the introduction of Designated Services Providers (DSP), have negatively affected member perceptions. A DSP is a medical practitioners, specialist or provider (hospital or pharmacy) singled out by the medical scheme for use by its members. A member who uses a specialist that’s not on the list will inevitably have to fund part of the specialist’s bills by way of a co-payment. “Members do not like the DSP concept,” says Hulme. “This is not because of any problem with the concept itself, but rather owing to the perceived lack of freedom of choice, particularly where it comes to general practitioners.”

Around half of the members surveyed don’t use their medical schemes’ DSPs. Statistics support that wealthier members are more inclined to choose their own healthcare professionals regardless of cost. Younger members, meanwhile, are more likely to follow the schemes’ recommendations. Member resistance to preferred suppliers could be cause for concern because more and more schemes are stipulating where their members seek assistance. The 2010 OMAC Healthcare Survey, for example, confirms that 40% of medical schemes designate hospitals, 39% point members to preferred general practitioners, 32% dentists, 31% pharmacies and 30% each to optometrists and specialists!

It seems clear from the survey results that medical schemes will have to improve their communications to members. And member guides simply aren’t doing the trick. “Only 44% of the members surveyed indicate they read their member guides thoroughly,” says Hulme. What’s missing – in our view – is face-to-face communication between member and scheme. In the past the healthcare broker could have played an important role in this process. But given today’s cap on broker commissions for selling medical schemes the responsibility for communicating scheme options and benefits falls squarely on the scheme itself.

Editor’s thoughts: After reading the survey the similarities between medical scheme cover and other insurances is staggering. Your clients purchase cover and then forget they have it until disaster strikes! And it’s this ‘I’m covered’ attitude which leads to many ‘disputes’ at claims stage... Has the regulation of healthcare broker commission impacted on your service level to medical scheme members? Please add your comment below, or send it to gareth@fanews.co.za

Comments

Added by LB, 07 Aug 2011
Most people think that your Medical Scheme's brochure tells it all . It's the clients right to get hold of there Scheme's Rules . Brochures is just an indication what will be coverd , but THe Scheme's Rules tells one how will it be covered . Most broker's are selling Medical Aids for extra income and have no qlue whats going on in The Medical Scheme Industry . It"s time that client's of Medical Schemes that are using a Broker to take on the Broker and not there Scheme's . 100% cover does not mean that your Scheme will pay the Docter or Specialist 100% for what they are charging this never been explaind by Brokers to there cliets . It's time that clients start to find out is There Scheme been run like a Company or does it do bussines AS A MEDICAL SCHEME
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Added by Charms, 29 Jun 2011
I agree with SAM . I too only do healthcare and its frightening to see how many large corp brokers do not service their cleints- esp when clients/ comapnies have branches countrywide- they see the headoffice - but foreget about the small branches! The only thing i disagree with - is our commission fee- I feel this should be more - esp for the amt of service and time we spend with clients- explaing the product after service and option changes. We have to be registered and licensed like any othr fianncial broker- yet our commission is the LOWEST! Nowadays you ahve to be specilised in your field - esp in the Financial Industry, yet there are still many brokers who have added Healthcare to their licenses- and use this as a TOP-UP for their cleints- but their knowledge on Healthcare - quite scary at times! To those brokers - leave it the Healthcare Industry to us thanx
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Added by Clayton , 25 Jun 2011
Regulated commissions has definately impacted the small broker. Large brokers houses use critical mass to cross subsidise the cost of providing support services. I will argue that as medical schemes merge and consolidate, so will brokerages.
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Added by Sam, 17 Jun 2011
I only work in Healthcare and spend at least 2 hours with each client explaining the product at take on. I believe that the recurring commission that we are paid should be incentive enough for us to do this. Yes, time is money, however, it is my belief that it is our job to offer this service. I handle all my clients queries and in fact also do their hospital authorisations for them. Most of them don't even know the medical scheme's telephone number. I cannot compete in name with the larger more well know broker house names, but I can compete with them in terms of service levels.
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Added by Gino, 15 Jun 2011
Definitely! Time is money! Too much time spent on explaining the plan detail en workings over and over increases costs. However we still do it because not all clients need this continueing education.
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Added by Mitzie, 15 Jun 2011
Yes it has affected our business. I agree with Gino!! I enjoy working in the Healthcare industry, it has just become costly to assist clients. Education, assisting with claims that client couldn't resolve on own etc etc etc etc
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Added by Anthony, 15 Jun 2011
Quite an interesting survey and I think you've hit the nail on the head with regard to the commission structure. Current commission structures do not really allow sufficient time to be spent with clients regarding their medical aid education as in the past. Some of us still continue to offer medical aid as a service to our clients which in the long run does build solid relationships between broker and client with hopeful other business as a spin off......whichever way we look at it the industry regulators are doing their best to shrink commissions across the board in the belief that the client will benefit. Judging from the amount of "free service" required from me by clients......I have my doubts.
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