South African Medical Schemes Show Recovery

Financial performance for Medical Schemes improved in 2010 Global Credit Ratings collected data from 17 medical schemes in South Africa.

Thanks to an improvement in relative claims experience, some of South Africa's medical schemes showed significant financial recovery in 2010.?

This was shown by Global Credit Ratings' Medical Schemes Ratings Bulletin, which examined information from 17 of the biggest open medical schemes in South Africa.

The findings showed that some schemes applied stricter adherence to claims protocols, while others tweaked their benefit options.

A look at claims in 2009 shows that they were particularly high that year.

Other things that improved the financial performance of medical schemes included the enhancement of risk management procedures. Several of the larger medical schemes in South Africa established their own General Practitioner networks and their members were thereby restricted when it came to the choice of doctors and other service providers.

According to a spokesman of the Global Credit Ratings, "this principle is expected to be applied to specialists by certain of the large schemes going forward in order to further contain medical costs, and indicates the advantages of having scale in this regard."

Total Membership Grows

Total membership in sample medical schemes grew by 2.5% in 2010, compared to low of 1.2% in 2009.? However, the Global Credit Ratings said that the inclusion of Discovery in the sample altered the findings somewhat, as this group displayed tremendous growth compared to other medical schemes.

As such, if Discovery was removed from the sample, total membership for the other schemes would actually decline by 4.8%.

According to the report, "larger schemes also have the benefit of enhanced bargaining power with service providers and can achieve cost advantages in terms of economies of scale. Over the last couple of years, the industry has witnessed a number of mergers, as growth in membership remains a top priority for schemes to remain sustainable."

The report predicts that medical schemes will continue to face challenges in the short term, including membership growth.? "The implementation and adherence to strong governance controls is also important."

It was also predicted that the implementation of the new NHI is not expected to immediately impact the medical schemes industry but it will have long term repercussions, such as a significant decline in membership numbers.