Johannesburg - Members of the Discovery Health Medical Scheme
are demanding an independent review of the administrative fees paid to
Discovery Health, Business Day reported on Tuesday.
Members also wanted a formal assessment of whether
administrative and managed care contracts should be put out to tender.
Discovery Health Medical Scheme had 2.4 million members,
accounting for 30% of the market. The scheme's administration fees were the
second-highest in South Africa, at R102 per average beneficiary per month.
At the scheme's annual general meeting (AGM) in Johannesburg
last month, members passed a resolution asking trustees for a targeted
reduction in administration fees over the next three years, according to the
Members also asked for a detailed breakdown of the R2.8bn
spent on administration costs last year. Trustees were also told to commission
an independent review of the value for money provided by Discovery Health.
Discovery Health, owned by JSE-listed Discovery Holdings [JSE:DSY],
generates 90% of its operating profit from the scheme.
The scheme's principal officer Milton Streak welcomed the
scrutiny and said trustees had resolved at a meeting in November to commission
an independent review.
Discovery Health CEO Jonathan Broomberg said the results of
the AGM were not communicated to investors because the company did not believe
there had been a material change in the risks it faced during the planned
He said administration and managed care fees accounted for
only 11.7% of the scheme's expenditure.
Monwabisi Gantsho, registrar for the Council for Medical Schemes, the industry's watchdog, welcomed the move to encourage trustees to take a closer look at non-healthcare costs to ensure value for money.