21 November 2008

What makes a medical scheme successful?

The principles underpinning the success of a medical scheme are the same as that for any other organisation.

Few people appreciate the fact that medical schemes are indeed not-for-profit organizations. However, due to the tough regulatory and competitive environments in this industry, schemes are essentially run as for-profit organisations.

The principles underpinning the success of a medical scheme are therefore the same as that for any other organisation.

In the process of strategy development there is an essential process of identifying the key success factors (KSF’s) of an industry. KSF’s are those aspects of the business that; if most are conducted well, are sure to yield success, and if most are conducted poorly, are then likely to result in failure. It is therefore with these KSF’s in mind that organisations need to review their own strengths and weaknesses.

At least four areas are crucial for medical schemes to constantly review and develop, and that is; strategy evolution, customer service, administration, product development and risk management. These areas have to be integrated in a manner that is obvious and logical to everyone in the organisation.

True success is eminent when the integration is perceptible to the members in the form of the product and services that they experience.

Any scheme that freewheels without a coherent strategy is doing so at a great risk. The business environment of schemes is far too complex and precarious to allow for any level of complacency. The strategy has to be in a written form and has to be allocated a champion whose main duty is to see that the strategy is implemented as intended.

Any deviation from the strategy document should be officially amended with reasons. A strategy is not just an activity for its own sake, but rather a means to an end.

The strategy should then clearly identify the KSF’s that the schemes would like to use as a vehicle to achieve the objectives.

Customer Services
Customer service should be the common thread in strategy integration and hence should be appreciable in all functions and divisions of the schemes.

In the current economic climate and regulatory environment, it may not always be possible to harvest competitive advantage in other areas of operations in the scheme; hence executive management should leverage on customer service and turn it into an anchor for loyalty.

Customer service should be discernable to the member through every experience with the scheme. This will require that customer service should be operationalized in the value chain of the scheme. The scheme needs to set clear objectives as to how it hopes to achieve a customer oriented focus, these objectives then have to be hard coded with supporting policy, monitoring and evaluation tools.

The administration of a scheme can either be in-house or outsourced. If the administration function is outsourced, it is important that there is sufficient flexibility to accommodate the scheme’s specific strategy and processes.

The scheme has to ensure that the administration is efficient and adaptable to environmental and internal changes.

Administrators typically handle the basic operational functions of the scheme, like member contribution management, pre-authorization of admissions, case management and claims processing.

Every encounter with the scheme should be a pleasant experience for the member in order for the member to perceive the service as satisfactory or excellent.

The administration needs to appreciate customer service is a priority to the scheme and hence they need to set up their operations in a manner that meets this requirement.

Product Design
The product design process has to be customer focused. Schemes have to research the need of the current members and future markets in order to design an appropriate product. It is so much easier to sell a product that the market needs than trying to sell what the scheme thinks the market needs.

The market is increasingly looking for value products that have the features of a traditional comprehensive medical cover.

Benefits like general practitioners consultations, basic dentistry, opticals, pathology and acute and chronic medicines, should ideally be covered from the risk pool.

Risk Management
The process of risk management ensures that benefits are equitably distributed amongst the members. The process has to be transparent and in accordance with the legislation. Members want to be assured that their scheme will always be in a position to pay their healthcare costs in times of need.

The Council for Medical Schemes diligently scrutinizes schemes’ risk management processes and outcomes.

Any risk to the scheme needs to be foreseen in good time, so that the schemes can put measures in place to. All benefits accruing from meticulous risk management can then be passed on to the member in the form of improved benefits, lesser increase in contributions or both.

A scheme is heading for success when the scheme’s executives really begin to understand the environment of the industry they operate in, in order to identify the KSF’s of the industry.

The concept of key success factors of an industry is crucial to grasp and be able to incorporate in the strategy development.

Schemes must determine the level of success they would like to achieve by the strategy. This can be done by setting out clear objectives so that the scheme can be measured against its own objectives.

(Source: Pro Sano, November 2008)


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