Survey presents skewed picture of SA’s medical schemes environment

Patrick Masobe, chief executive officer of Agility Health.

Simplistic GTC Survey concludes ‘big is best’ without consideration of industry’s complexities.

Fundamental flaws in the methodology underpinning the recently released GTC Survey have given rise to considerable concerns among industry pundits by disregarding the very essence of medical scheme sustainability in a rapidly-changing private healthcare landscape.

“Not only are the criteria for rating medical schemes and the benefit options they offer highly subjective, the GTC Medical Aid Survey also fails to take into account the complexities of the medical schemes environment,” says Patrick Masobe, chief executive officer of Agility Health and former Registrar of the Council for Medical Schemes.

“This is not constructive commentary for either the industry or medical scheme members, particularly at this juncture. It is deeply concerning that the healthcare consulting wing of GTC, formerly Grant Thornton Capital, apparently did not apply appropriate analytical rigour in the development of its recent survey of medical schemes, yet presents its findings publicly as if these were grounded in objective facts.

“Attributing equal credence to HelloPeter ratings and a medical scheme’s net healthcare outcomes over four years defies logic, and it is the inferences drawn from reasoning such as this that undermines the credibility of the report. It is also worth noting that much of the information is drawn from last year’s CMS Annual Report, which was based on industry information from 2016.

“With the next CMS report due for release in just a few months and given the dynamic nature of the medical schemes environment, the source data for the GTC Survey is significantly out of date. What’s more, a framework that equates the size of membership with negotiation of sound value for healthcare spend is obsolete, as the strength of data and managed care systems are key differentiators that have emerged in the evolution of medical schemes – yet these factors are magnificently ignored in GTC’s survey.

“The point is that negotiating good rates does not depend on the membership size of a medical scheme alone. Strong systems, including effective coding systems to manage information and monitor quality of care and new technology, are critical to measuring health outcomes. This is an essential aspect of negotiating meaningful value for members, as comparing costs and quality of care are important when contracting healthcare providers, which has been completely overlooked in the research design.”

According to Masobe, the emphasis on membership growth or decline fails to take into account that not all segments of the population covered by medical schemes conform to a similar risk profile. “A scheme can grow in acquiring bad risk, or its membership can shrink through shedding bad risk – hence not all growth is unequivocally positive. This is the danger of drawing simplistic conclusions on the basis that ‘bigger is better’.”

He also questions the weight the survey places on solvency levels, as there is a growing consensus that the 25% requirement is not an appropriate measure of a schemes’ capacity to meet its liabilities. “A risk-based capital approach, which takes into account the sum risks and approach to risk management that are inherent in each scheme’s profile, should rather be considered in terms of a scheme’s liquidity and sustainability,” Masobe notes.

“Certain schemes have opted to cut members’ benefits to build or maintain their solvency levels and/or maintain lower year-on-year contribution increases, yet neither the macro nor micro ratings in the survey appear to take this into account. Frankly, the GTC Medical Aid Survey reveals more about the researchers’ ignorance of the medical schemes environment than it does about the schemes it praises or besmirches,” Masobe concluded.