Willing and able trustees of medical schemes are a scarce resource

‘There are many contentious aspects about the latest version of the Medical Schemes Amendment Bill,’ says Profmed’s Graham Anderson (pictured), ‘but one of the most glaring issues is a new clause which limits periods of trustee service to a maximum of six years.’

Profmed is a restricted medical scheme open to professionals with a minimum of a four year degree. Membership of the scheme is growing steadily due to the scheme’s rich benefits, while the principal officer and trustees have managed to keep premiums within industry averages. The scheme has an A+ credit rating from international rating agency Global Credit Ratings.

‘In both the February 2007 version and June 2008 version of the Medical Schemes Amendment Bill, there are welcome attempts to improve the governance of medical schemes. This is a necessary initiative as some medical schemes have been plagued by ongoing governance issues which stem from conflicts of interest and ill-equipped trustees,’ said Anderson.

‘We therefore welcome the efforts to reduce material conflicts of interest.

‘However the June 2008 version of the proposed Bill includes a clause limiting a trustee’s period of service to no longer than six years, which may leave some medical schemes without institutional memory and trustees who are versed in the issues affecting the scheme. The direct consequence of this is that many medical schemes would face the possibility of the majority of their trustees being obliged to resign if the Bill is passed in its current form.

‘We would urge the Department of Health to bear in mind that there is a severe shortage of people that are both willing and have the necessary expertise to serve as trustees in South Africa. We would therefore encourage the Department of Health to seek alternative ways of addressing the conflicts of interest issue in a less drastic manner,’ he said.

Anderson said that Profmed was relatively well placed with respect to the new legislation, in that the medical scheme’s trustees are drawn from a well educated pool of members, many of whom are practicing doctors.

‘However we find that it takes at least two years for new trustees to become familiar with the medical schemes industry, the legislative environment in which the scheme operates, the role players and the broader issues affecting private healthcare,’ he said.