04 September 2012

SA medical schemes: the facts

Here are some really interesting facts on SA medical schemes and their members in SA for the 2011-2012 financial year. This report has just been released by the CMS.


Here are some really interesting facts on medical schemes and their members in SA for the 2011-2012 financial year. This report has just been released by the Council for Medical Schemes. 

The report, consisting of three separate documents, can be downloaded from Council’s website( 

Council is the regulator of the medical schemes industry.The report contains an overview of the operations of medical schemes in their 2011 financial year as well as a summary of Council’s activities in its financial year spanning 1 April 2011 to 31 March 2012. 

The report reveals the following stats on 7 aspects of medical schemes in SA:


Fewer schemes but more beneficiaries

  • In 2011, the number of medical schemes continued to drop, but the number of beneficiaries continued to grow.
  • At the end of 2011 there were 97 medical schemes registered in South Africa, compared to 100 schemes at the end of 2010.
  • From 144 schemes in the year 2000 to the current 97, the trend is likely to continue. However, the industry is far from being an oligopoly. Consolidation is the result of amalgamations and liquidations (voluntary and involuntary) due to the prevailing economic circumstances in the medical schemes industry; it is not driven by Council.
  • In 2011, the number of principal members increased by 3.3% to 3 730 565 and that of dependants increased by 2.0% to 4 795 844, resulting in the total number of beneficiaries increasing by 2.5% to a total of 8 526 409.


Open schemes are older and restricted schemes are younger

  • In 2011 open medical schemes continued to grow older while restricted medical schemes continued to grow younger.
  • The average age of beneficiaries in open schemes increased from 31.5 years in 2006 to 33.3 years in 2011.
  • The average age of beneficiaries in restricted schemes was 32.1 years in 2006; this dropped to 31.1 years in 2011.


Contributions and benefits

  • Medical schemes received 11.3% more in contributions in the 2011 financial year compared to 2010, or a total of R107.4 billion.
  • Of this, R93.6 billion was paid out in healthcare benefits. This was an increase of 10.3% on the R84.9 billion paid out in the previous year.
  • The total benefits paid per beneficiary per month increased by 7.8% from R856.6 in 2010 to R923.7 in 2011.


Expenditure on hospitals and specialists

  • Of the total benefits paid to healthcare providers, medical schemes spent R34.1 billion or 36.6% on hospital services.
  • Expenditure on private hospitals accounted for R33.8 billion, an increase of 9.7% from 2010.
  • Public hospitals were paid R304.1 million in the 2011 financial year.
  • Payments to medical specialists accounted for R21.3 billion or 22.8% of benefits paid in 2011, a year-on-year increase of 13.5%.


Other healthcare expenditure

  • General practitioners received R6.8 billion (7.3%) of the total benefits paid by medical schemes to healthcare
  • providers. This was an increase of 9.7% on 2010.
  • Benefits paid to dentists accounted for R2.6 billion in 2011, an increase of 1.7% on 2010.
  • Supplementary and allied health professionals received R7.3 billion from medical schemes in the year 2011, compared to R6.7 billion in 2010.
  • Expenditure on medicines dispensed by pharmacists and providers other than hospitals increased by 8.6% on 2010 to R15.2 billion. This amounted to 16.3% of scheme benefits paid in 2011.


Non-health expenditure

  • Administration expenditure of all medical schemes rose by 4.7% from R7.8 billion in 2010 to R8.2 billion at the end of 2011.
  • Expenditure on managing benefits (managed healthcare management fees) grew by 8.3% to R2.4 billion.
  • Brokers were paid an additional 5.0% or R1.4 billion in 2011.
  • Impairment losses on receivables (previously known as bad debts) decreased by a significant 37.8% to R104.7 million compared to the R168.2 million recorded at the end of 2010.
  • Total non-health expenditure (i.e. administration fees, fees paid for managed care, broker fees, impairments, and reinsurance) rose by 4.8% to R12.1 billion in 2011 from R11.6 billion in 2010.
  • Since 2005, when Council started to apply more pressure on medical schemes to reduce their non-health expenditure, there has been a gradual decline in non-health costs in real terms (after adjusting for inflation).


Net results, reserves, and solvency

  • The net healthcare result of all medical schemes changed from a deficit of R459.6 million observed in 2010 to a surplus of R1.0 billion in 2011. This substantial improvement can be largely attributed to the fact that medical schemes had a lower claims ratio in 2011: 86.5% compared with 87.3% in 2010.
  • Investment and other income amounted to R3.4 billion and resulted in medical schemes making a final surplus of R4.3 billion in 2011.
  • Net assets or members’ funds, defined as total assets less total liabilities, rose by 13.0% to R36.8 billion in 2011.
  • Reserves (accumulated funds) grew by 13.9% to R35.0 billion from the R30.7 billion recorded in 2010. This translated into an industry average solvency ratio of 32.6% at the end of 2011 compared with 31.8% in 2010, an increase of 0.8%. This level is still higher than the prescribed solvency level of 25.0% and is largely explained by the continued growth in the membership of the Government Employees Medical Schemes (GEMS).
  • The solvency ratio of open schemes increased by 3.6% to 28.6% while that of restricted schemes decreased from 38.6% in 2010 to 38.3% in 2011.

(Press release from the Council for Medical Schemes, September 2012)


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