Debunking the Board

Medical scheme trustees are responsible for making the significant decisions about benefit changes and rate fluctuations. But what exactly is a trustee's remit and how does their role differ from that of a company director in the private sector?

It is once again that integral time of year when South Africans are preparing for the announcements by their medical schemes that will determine whether they stay with current schemes or cross the floor, so to speak. The decisions regarding benefit and rate changes rest on the shoulders of the trustees.

In simple terms, a medical scheme's Board of Trustees is responsible for the overall governance of that scheme, and most importantly, of members' funds. Effective governance inevitably contributes to business success because great value is placed on making sound decisions and making the business accountable. In this way, a scheme trustee and a company director are similar in that both have a fiduciary function, thereby making them responsible for their members' (or in the case of the director, their employees' and shareholders') financial well being.

According to Medshield Chairman, Peter Moyanga, a Board that applies the right strategy and provides the right mandate to the Principal Officer and the scheme's service providers, ultimately ensures the success of that scheme. He comments, "Medical scheme trustees need to have a passion for healthcare. And qualities such as discipline, transparency, accountability and social responsibility are integral."

Key areas

Key areas managed by the Board include product and benefit design, pricing of options, payment of claims and the appointment of administrators and other service providers. These are all fundamental aspects to the existence of a medical scheme that offers members quality healthcare and service on which they can rely.

Election of trustees

The specific criterion required of a trustee ensures a meticulous selection process. A Board is generally elected on an annual basis during a scheme's AGM. Nominations are received for the election of trustees and these nominees are then voted onto the Board by the members. A rotation system similar to that within the corporate world exists on most Boards, in that every three years a trustee will step down either for re-election or resignation from the Board.

Furthermore there is a split of member elected trustees and employer elected trustees – in most cases the majority of members are elected by members.

Requirements

In the complex and highly regulated nature of the medical scheme industry a trustee should have an excellent understanding of the healthcare industry, especially the workings of a medical scheme.

Financial management skills, experience in operational issues such as solvency and medical skills are also important requirements, as is a thorough understanding of marketing.

Trustees voted into particular roles within the Board require additional skills, such as the Chairman who speaks on behalf of the scheme via media interviews and commentary; and also the Principal Officer, who fulfils an executive role and manages the affairs of the scheme in accordance with its rules.

There is no doubt that the healthcare environment in which a medical scheme's Board of Trustees operates has become a complex and volatile one.

Regulatory requirements, compliance with the International Financial Reporting Standards as well as solvency margins make the job arduous. It calls for people who are unmistakably fit for the job.