24 March 2009

New representation for med schemes

A new organisation that is to represent the interests of South African medical schemes will be established shortly

A new organisation that is to represent the interests of South African medical schemes will be established shortly.

This new organisation will be in competition with the Board of Healthcare Funders (BHF), which currently still represents this industry.

Indications are that medical schemes and administrators that represent more than 50% of the industry will join the new organisation.

The defectors are of the opinion that the BHF no longer represents the interests of medical schemes.

It will be difficult for the BHF to survive such an exodus of members, as the organisation is dependent on the membership fees of these schemes for its revenue. It already suffered a huge blow at the end of last year when Discovery Health Medical Scheme (DHMS) terminated its membership.

DHMS, the largest open medical scheme in South Africa, was therefore also proportionally the largest contributor to the BHF's membership fees.

Mr Jacky Mathekga, head of DHMS, says it had contributed around R7 million to the BHF's budget of approximately R19 million.

According to him DHMS believed the BHF does not really act in the interests of medical schemes. DHMS had therefore not received value for its contribution to the BHF and had decided to terminate its membership.

“The BHF was not effective in representing medical schemes at the department of health or the Medical Schemes Council.”

Dissatisfaction with BHF's policies
In particular, there was dissatisfaction with the BHF's negotiations on policy issues.

It was felt that the BHF followed a reactive rather than a proactive approach, which put this organisation, and consequently also the medical schemes, in a disadvantageous negotiating position.

“For example, the BHF requested the Competition Commission to meddle in the provision of healthcare services, but had not consulted the schemes about this. DHMS regards the issue of service provision as one on which all parties should rather negotiate. Healthcare service providers are a very value asset in the medical industry.

“We eventually decided that the money we contributed to the BHF was not being used to our benefit and that it could be used more effectively,” says Mathekga.

The departure of DHMS turned the whole industry on its head and other schemes such as Resolution Health also terminated their membership. Since then it has been said that a number of other schemes will also be leaving the BHF.

Their grievances include not being represented effectively on policy issues and therefore not receiving value for their contributions to the organisation. Consequently a number of medical schemes and administrators have held discussions to establish a new representative body, which will be known as the Private Funders Forum (PFF).

A role player, who wished to remain anonymous, said schemes and administrators that make up more than 50% of the South African medical schemes industry have indicated they want to join the new organisation. This would make the PFF the representative body of the medical schemes industry.

This organisation will also be more representative of the entire industry as the administrators of medical schemes can also become members of the organisation. This is not the case with the BHF.

BHF might change structure
However, the BHF might change its structure to include administrators.

Ms Heidi Kruger, spokesperson of the BHF, says they are aware of the plans to establish the PFF, but believe one representative organisation will represent the industry more effectively than a number of organisations.

“It is important to have one industry organisation, especially in the context of the changing legislative environment. One body will have a stronger voice for the schemes during interaction with the government," she says.

A meeting of prospective PFF members is to be held in Sandton on 1 April. It is believed the new organisation will officially come into operation within the next few weeks.

(Letitia Watson, Sake Rapport, March 2009)


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