Sanlam is to acquire the administration and managed healthcare operations of BESTmed, an open medical scheme with more than 34 000 principal members.
Subject to approval by BESTmed’s members, the Registrar of Medical Schemes and the Competition Commission, the transaction should be implemented before the end of 2007.
Advertisement
“BESTmed will provide Sanlam with the healthcare solution it has been looking for, while the scheme will benefit from Sanlam’s extensive distribution network of financial advisors and brokers. Being part of the Sanlam brand will enhance the prominence and marketability of BESTmed and it should lead to a strong growth in membership,” says Sanlam Group Chief Executive Johan van Zyl.
“Providing a medical scheme solution has been a specific focus area in the repositioning of Sanlam’s comprehensive service offering.”
Leading financial services group
Sanlam is a leading financial services group in South Africa. Established in 1918, the Group demutualised in 1998 and Sanlam Limited then listed on the JSE in Johannesburg and the Namibian Stock Exchange.
The group conducts its business through Sanlam Limited, the corporate head office and four business clusters.
The corporate head office is responsible for the group's centralised functions such as strategic direction, financial and risk management, marketing and communications, group human resources and corporate social investment.
The life insurance cluster consists of Sanlam Personal Finance and Sanlam Employee Benefits. Personal finance provides individual life insurance and personal financial services and products in South Africa and elsewhere in Africa, the United Kingdom and India.
Employee benefits provide life insurance, investment and annuity products for group schemes and retirement funds.
In 2005 the group acquired African Life Assurance Company and a controlling interest in Channel Life, which forms the bedrock of the group’s entry-level life market strategy.
The Short-term Insurance cluster, Santam, is the leading short-term insurance company in South Africa. It is also involved elsewhere in Africa, Europe and the United Kingdom.
The Investment cluster incorporates the group's investment-related businesses in South Africa, the United Kingdom, Europe and Namibia. The services and products include asset management, other investment products, property asset management, collective investments, private client investment, stock broking and investment administration.
The Independent Financial Services cluster invests in independent entities and intermediary business in the financial services industry.
Pioneer in transformation
Sanlam is a pioneer in transformation and the Ubuntu-Botho transaction in 2004 reinforced its position as a leading financial services group, underpinned by quality BEE leadership and a comprehensive strategy to ensure meaningful and broad-based participation across South Africa.
The group is also actively involved in corporate social investment programmes with a focus in the areas of education, HIV/Aids, economic development and social development. Its corporate social investment budget equates to one percent of its net operating profit.
Provide affordable medical aid
According to Francois Marais of Strategic Business Development at Sanlam Personal Finance, medical scheme contributions are the second-largest monthly commitment - after bond repayments - of most households in the emerging and middle market.
“To reach our vision to become the leader in wealth creation, we should be able to provide in the need of our clients for a high-quality affordable medical scheme.”
“We are the only large insurer that does not offer a medial scheme solution of its own. Our competitors have focused much effort on establishing viable medical schemes, using them to increase the attractiveness of their long-term risk offering and linking this to loyalty programmes.”
“A lack of a health product limits our ability to compete effectively with such integrated risk offerings. Our marketers need to be able to provide in all their clients’ financial requirements. They are vulnerable to losing clients to other intermediaries if they cannot provide such an all-inclusive service.”
“There are a limited number of medical schemes available that are not yet aligned to a large financial services group and which would meet our need for a scheme that can carry the Sanlam brand with pride. BESTmed best met the criteria.”
“In evaluating potential medical scheme partners, we used indicators like, for example, quality administration, financial soundness, competitive benefit structure, sufficient size to make the transaction worthwhile and a good fit with our target market.”
Access to the Sanlam brand
He says the purpose of the transaction is not to gain any immediate cost synergies.
“The BESTmed operation will not be incorporated into Sanlam but will be maintained in its current premises with its current staff and systems. The purpose of the transaction for the scheme is to gain access to the Sanlam brand and distribution network in order to grow the membership aggressively. This is essential for improving the long-term financial soundness of the scheme.”
“We were actually very successful in the healthcare market for many years, but at that time we were strategically focusing mainly on life insurance as our core business. Today we are now no longer only a life insurer but have developed into a full-scale financial services provider.”
“As such we want to provide in all the financial needs of our clients, including quality medical scheme provision. With BESTmed we are purchasing one of the best tried and tested administration capacities in the business, and we plan to keep it that way.”
The best long-term prospects
In terms of the transaction, Sanlam will acquire BESTmed’s administration and managed healthcare operations, currently done in-house at BESTmed. The scheme will effectively outsource these functions to a new operating company formed and owned by Sanlam.
BESTmed Chairperson Dr Bernard Slabbert says the scheme evaluated Sanlam’s offer against strong alternatives in a thorough tender process and the trustees are confident that the transaction with Sanlam offers the best long-term prospects.
“We are particularly excited about the extensive possibilities offered via Sanlam’s distribution network, and believe that the transaction will firmly position BESTmed as a medical scheme with a long-term future in the South African healthcare environment.”
“While becoming part of the Sanlam brand, BESTmed will remain an autonomous scheme and retain its name. On conclusion of the transaction, the scheme will be available to Sanlam’s intermediaries to offer our clients a fully-integrated medical scheme option.”
According to the Head of Sanlam’s Group Human Resources, Egbert van der Straaten the company will offer BESTmed as an alternative medical scheme option to its own employees once the transaction has been finalised.
BESTmed at a glance
BESTmed is financially sound, with a solvency ratio of 46,9 percent in 2006 - compared to the legally required 25 percent - and with a credit rating of AA-.
The administration of the scheme is very efficient, the average turnaround time for claims is 48 hours and the average satisfaction rating of members in 2006 was 4,4 out of a maximum of 5. The scheme employs just over 100 employees.
The scheme has very effective managed care capabilities to reduce the cost of healthcare. This is done by way of protocols for high-cost procedures, special programmes for high-cost sickness conditions such as cancer, and the implementation of medicine formularies and wellness programmes.
This helped the scheme to achieve an increase of only 8,5 percent in hospitalisation cost for 2006. The average number of bed days per admission was 2,9 days compared to the industry average of 3,5 days.
BESTmed is currently a self-administered scheme and runs a very efficient in-house administration. The latest statistics indicate that:
5,9 million claim lines were processed compared with 3,8 million in 2005
90 percent of all claims are finalised within 15 days, and 99 percent within 30 days of receipt
the average turnaround time for a claim is 48 hours – one of the best in the market
the average queue time for a call in the call centre is 26 seconds
the average response to e-mail enquiries is 24 to 48 hours
the ratio of staff to lives administered is one staff member for every 850 lives.
What does BESTmed stand for?
BESTmed is driven by its vision of being the scheme of first choice to access quality healthcare.
It mission states that the scheme strives to provide healthcare peace of mind to its members by curbing healthcare expenditure through:
Effective operation and administration of various products and options.
Balanced and sustainable growth.
Provision of quality and cost-effective comprehensive healthcare services.
In pursuing its objectives, the scheme endeavours not to waive from its most important commitment to its members - the provision of the best medical cover coupled with service excellence and a documented track record of fast claims settlements.
Bookmark with:
What are social bookmarks?