ONLY at June’s annual general meeting (AGM) will members of Discovery Health Medical Scheme (DHMS) get answers to their questions over whether they get value for money from their administrator‚ principal officer Milton Streak said on Friday.
In a rare show of activism‚ members of DHMS last year challenged the scheme’s trustees to justify the size of the administration fees paid to Discovery Health‚ a highly profitable subsidiary of the JSE-listed health and life insurance business Discovery. They also requested a targeted reduction in administration fees.
Discovery Health’s main revenue source is DHMS‚ which paid it R3.4bn in administration fees for the year to June 30 2012‚ according to Discovery’s latest annual report. Discovery Health received another R256m from 13 smaller schemes it manages.
During the period under review‚ Discovery Health made an operating profit of R1.5bn‚ or 44% of the group’s overall operating profit of R3.44bn.
Mr Streak said a governance review of DHMS conducted by Deloitte Consulting was close to finalisation‚ and its findings would be presented at the scheme’s AGM on June 20‚ when members are also expected to elect four new trustees.
Administration fees were the only component of the scheme’s spending that had declined in real terms during the past four years‚ he said.
For the year to December 31‚ the scheme paid Discovery Health R3.08bn‚ a reduction of 3% in real terms compared with the previous year‚ he said.
All medical schemes have a fiscal year ending on December 31‚ so they can report consistently to the regulator.
DHMS’s total nonhealthcare expenditure as a proportion of gross contribution income was 14.05% during the period under review. Industry data for 2012 are not yet available but in 2011 the industry average was 15%‚ according to Discovery Health.>rem 0‚0<
On Friday‚ DHMS released its annual financial results for the year to December 31 2012‚ showing it had grown its membership by 6% to 2.6-million lives.
It received a gross contribution income of R35.2bn and reported a net surplus (including investment income) of R789m for the period under review.
Reserves increased by 11% to R8.2bn‚ giving it a solvency ratio of 23.41%. This is slightly lower than the statutory minimum of 25% but Mr Streak said the scheme had agreed with the Council for Medical Schemes to reach this target by 2015.
Unlike JSE-listed companies‚ medical schemes are under no legal obligation to publish their financial statements but Mr Streak said the Council for Medical Schemes was encouraging schemes to do so to raise consumers’ awareness of what they were paying for. © BDlive 2013