MEDSCHEME
MEDSCHEME
Creating a World of Sustainable Healthcare PRODUCTION: Manelesi Dumasi
Medscheme, part of the AfroCentric group, touches more than 3.2 million lives. As the largest health risk management services provider and second largest medical aid administrator in South Africa, this expert business is doing all it can to delight its clients and members while growing during challenging economic conditions. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
//
There is no question – change is coming to South Africa’s healthcare industry. For too long, the public space has been underfunded and understaffed, and for too long, the private sector has only been accessible for those that can afford it. While a number of different solutions have been suggested over the years, progress has been slow, and South Africa’s people have been those that suffer. The current system comes highly criticised by users and those working within it. Patient care at public hospitals can be inadequate, care at private hospitals can be too expensive, ethical doctors can find themselves the subject of medical negligence claims which threaten their position in the industry, and even those active within the country’s medical aid schemes find that their claims only stretch so far. The industry is at a turning point, and change is inevitable. It is now all but certain that National
4 / www.enterprise-africa.net
Health Insurance (NHI) will be rolled out across South Africa sooner rather than later, and Health Minister Zweli Mkhize has described the idea as a type of social solidarity where the rich help the poor and the health subsidising the sick. For the country’s medical aid schemes, now is a time of uncertainty. The largest health risk management services provider in South Africa is Medscheme. The company administers medical aid schemes that cover more than three million people and has a network of branches across South Africa, as well as Botswana, Namibia, Swaziland, Zimbabwe and Mauritius. Part of the wider AfroCentric group - a JSE-listed, blackowned service provider to the healthcare sector - Medscheme’s reach is wide. When NHI is introduced to South Africa, the role of the medical aid provider will change. Mkhize said, at the Board of Healthcare Funders conference in July, that medical aids would complement the provision of NHI.
Medscheme CEO Anthony Pedersen tells Enterprise Africa that the company is fully behind the roll out of South Africa’s NHI. “National Health Insurance is needed in this country to make access to quality healthcare much easier – as a company we are committed to working with and partnering with the government to make it a reality,” he says. “The public-private partnerships can ensure that the resources and skills are brought together to ensure that prospects of NHI success are significantly increased.” INDUSTRY LEADING Medscheme was established in 1971 by Keith Hollis and has been instrumental in offering affordable health insurance ever since. “Keith was a successful and visionary entrepreneur, who has effectively pioneered private healthcare funding,” says Pedersen. “Over the years, Medscheme has
MEDSCHEME
// MEDSCHEME, LIKE OTHER PLAYERS IN HEALTHCARE, IS ALSO LOOKING AT WAYS TO KEEP HIGH INCREASES AT BAY //
evolved to ensure that it is aligned the evolving needs and context of the market.” Medscheme’s establishment was a flagship moment for the development of the private healthcare industry in South Africa. Focussed on the corporate medical scheme market, Medscheme holds the vision of creating a world of sustainable healthcare. Today, medical aid schemes currently under the company’s umbrella include: AECI Medical Aid Society, Barloworld Medical Scheme, Bonitas, Fedhealth, Government Employees Medical Scheme, Medshield, Nedgroup Medical Aid Scheme, SABC Medical Scheme, Sasolmed, South Africa Police Service (POLMED), and many more. “With over 40% of lives covered by medical schemes in our books, we are certainly a leading player in the market – it is a position we do not take for granted and we are constantly looking at ways to improve our competitiveness and leadership in the
market,” details Pedersen. This is an important line of thinking for Medscheme as the market remains on rocky ground. The continued uncertainty over the future of NHI combined with an unstable market emanating from an unpredictable economy make for a situation where no one, not even the biggest and best, can rest of their laurels. HURTING ECONOMY According to Stats SA, the country’s economy contracted by 3.2% in 2019’s first quarter. Both manufacturing and mining showed big slumps, and this resulted in an announcement in July that unemployment was up, now sitting at around 29%. For Medscheme this is not good news, and caps off what has been a difficult period for the company following an extended phase economic uncertainty. “Over the last five years or more, we have seen a significant consolidation of medical schemes and administrators. With a customer base of less than 10 million
(for the last 10 to 20 years) the players have mainly competed for a limited customer base that is not really growing,” says Pedersen. “The general trend under tough market conditions is that our client scheme’s customers would often change their scheme options to more affordable options or to look for options that provide better value for money. “The country’s economy has been subdued growing at less than 5% and when the economy is not growing, there is less likely to be a significant increase in the number of companies or individuals getting employed. Affordability of the customer impacts us directly, if people cannot afford to join, or remain in, a medical scheme – then the impact is direct on us. However, we have remained wellfocused to maintaining efficiencies in how we administer the medical schemes and in the process, we have assisted our client schemes to keep
www.enterprise-africa.net / 5
INDUSTRY FOCUS: FINANCE
their prices within the inflation rate of less than 6%. This goes a long way in helping our client schemes to keep their members and as we generate revenue per member – we can also ensure that our performance remains solid,” he adds. Fortunately, being part of the AfroCentric group of companies, Medscheme is ready to combat the negativity of a weak economy. Diversification alongside maximum effort with customer retention is helping the company to excel, despite
the tough trading conditions. “As part of a bigger AfroCentric Group, the company supports our broader Group with diversifying our revenue streams in the healthcare sector – however our challenge is to ensure that we retain the over 3.7 million lives under our care – achieving this means that we continue to have a significant leadership position and that we continue to outplay our competitors. “AfroCentric has a value chain optimisation strategy which looks at
expanding our services in the broader healthcare sector. Over the years, the acquisitions have gone beyond our traditional business of healthcare administration,” says Pedersen. MINIMISING FWA In an effort to ensure price rises are infrequent and minimal, Medscheme has placed a large emphasis on weeding out fraud, waste and abuse (FWA) in the claims process. “All medical schemes are obliged by law to look after the funds of the
Turning on Africa’s Technology Johannesburg-based Tendai ICT is celebrating five years in business by continuing to grow its partnerships with some of the country’s biggest corporates including Medscheme, MTN, Mercantile Bank and Bonitas.
Andrew Maringa - Managing Director
Founded in 2014 by Andrew Maringa, Tendai ICT has gained a reputation as a leading provider of technology solutions for companies across South Africa. Tendai ICT is Empowered by Afrocentric Group and Black Umbrellas - A partner entity of the President Cyril Ramaphosa Foundation. A 100% owned and managed BEE company, Tendai ICT holds the vision of taking ICT to under privileged people of Africa. Among the services that Tendai ICT has capacity to deliver on are data communication and networking, IT managed services, fibre optic network solutions, datacentre and facilities integrated ecosystems. “We are privileged to partner with Huawei in building Transport Networking for WAN applications, Multi- service Transmission Platforms and 5G product solutions,” says the Founder. Maringa – who has experience working with some of the biggest names in the industry including Sahara Computers, Mthombo IT Services, Dimension Data, Bytes Technology, Siemens, Medscheme, and Helios IT Solutions – is currently working towards a Postgraduate Diploma in Management Practice from Henley Business School before starting a MBA. “For as long as I can remember, I have always wanted to start my own business. Although money and success are important, I believe in purpose-led enterprises,” he says. Andrew’s goal for the future is to play a significant role in the eradication of unemployment in the country. “My biggest goal is to be one of the biggest contributors in employment creation, not just in South Africa, but globally. I truly believe that entrepreneurship is a solution to many of Africa’s unemployment issues,” says the CEO. “Our management philosophy forms part of our value system, namely: Simply doing things right, the first time and all the time. “Exercising personal and business integrity, quality workmanship, building strong relationships with our customers and our vendors, as well as valuing our employees highly including their potential, motivation, training, and contributions these are ethos engrained in Tendai ICT`s DNA. “We are highly pleased with the company’s growth rate. We also highly value among others our strong relationship with Medscheme and other big corporates.” 010 590 5555 / info@tendaiict.com / www.tendaiict.com
6 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
members and, due to the set-up of our industry, the claim validity is done retrospectively not upfront unlike other insurance sectors. The FWA initiative is within itself a process of that help alleviate major losses for the schemes and their members. By keeping FWA low, the schemes can help members by not having significant premium increases on an annual basis,” details Pedersen. “Minimising FWA is a process that feeds into a bigger strategy that seeks
// AFFORDABILITY OF THE CUSTOMER IMPACTS US DIRECTLY, IF PEOPLE CANNOT AFFORD TO JOIN, OR REMAIN IN, A MEDICAL SCHEME – THEN THE IMPACT IS DIRECT ON US //
8 / www.enterprise-africa.net
to reduce costs of healthcare, bring efficiencies and provide schemes as well as their members with innovative products.” Medscheme is an award-winning business, with state-of-the-art technology and ISO 9001:2015 certification and, as such, is working hard to align itself with quality principles that reduce FWA. Ultimately, this helps to keep pricing stable for customers and members. “It is an element that all schemes are monitoring and we encourage the scheme members to anonymously report such instances where observed – ultimately, this is one of the major ways that high increases in prices can be avoided,” says Pedersen. Price rises in previous years have been criticised by the public, and by companies offering out medical aid schemes. Currently, medial inflation is running higher than CPI. Between 2008 and 2018, it is estimated that medical inflation (the annual increase in claims received by medical schemes) increased by an average of 11.3% per year. This is
// BY KEEPING FWA LOW, THE SCHEMES CAN HELP MEMBERS BY NOT HAVING SIGNIFICANT PREMIUM INCREASES ON AN ANNUAL BASIS // more than 5% above the CPI (according to Discovery). It is these increases that are fuelling higher prices, but Medscheme is happy that its pricing has remained relatively stable in the past 12-months. “There are many factors that contribute to the high costs, and the industry realises that high prices are a threat to the sustainability of the industry. Medscheme, like other players in healthcare, is also looking at ways to keep high increases at bay. We are proud that in the last financial year, most of our client schemes managed to keep their increases below 10%,” says Pedersen.
MEDSCHEME
ONE SIMPLE TRAVEL TECHNOLOGY PLATFORM
Blending technology with the human touch With 20 years’ experience in South Africa, we know you require an integrated technology suite that provides an easy way for your travellers’ to research, approve and book their travel. This combined with the specialist support of a dedicated travel expert will provide your business with the perfect blend of personal service and automation to deliver real value and savings.
For more info, visit
corporatetraveller.co.za or call 0877 40 50 90
COMPETITIVE ADVANTAGE There are a number of medical aid scheme administrators active in South Africa but few have the reach that Medscheme can boast. A 48-year history, a trusted brand, and a deep knowledge of the industry have all contributed to the recognition of Medscheme as an industry leader. “Our competitive advantage is how we merge the strong skills of our people, together with the technologies that bring innovation and efficiencies – this supported by our strong understanding of the needs of our client schemes and their members, means that we can remain ahead of the curve in terms of the changing needs of the market,” explains Pedersen. Enhancing reputation among the country’s healthcare providers (HCPs) has also been important for Medshceme. Even with a strong number of lives under care,
the scheme would fail without a supply of effective HCPs. In the last decade, a trend of large negligence claims against doctors has resulted in some scaling back their activity or even being forced to leave the profession. At Medscheme, the aim is to create sustainable partnerships with HCPs to build a more efficient industry. “We pay over 25,000 HCPs each month and claims are being processed daily. Medscheme regards HCPs as our partners in the provision of healthcare – speedy claim processing is a priority in our business,” confirms Pedersen. “When we conduct retrospective assessments of the validity of claims, we find that generally the disputes are with 2-4% of HCPs and usually we would interact with them with a view of ironing out the questions or verifications we require on their submitted claims.” As the details surrounding the roll
out of NHI begin to become clearer, it will be important for medical aid schemes to demonstrate their ambitions. For Medscheme this has always been clear: to create access to sustainable, affordable, quality healthcare through the use of innovative expertise. We deliver this as an efficient, seamless experience. According to Pedersen, universal access to quality, affordable healthcare should be non-negotiable. “This has to be an idea we all aspire to – it will be influenced by the sustained economic growth, especially factors such as employment, sustained GDP growth of over 5% and innovations that lower the structural cost drivers of healthcare,” he concludes.
WWW.MEDSCHEME.COM
www.enterprise-africa.net / 9
Published by CMB Media Group Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Rouen House, Rouen Rd, Norwich NR1 1RB T. +44 (0) 1603 855 161 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. Š CMB Media Group Ltd 2019
AS FEAT UR ED IN
ENTERPRISE AFRICA
AUG UST 2019