Members want probe into Discovery fee

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 newspaper.

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 review.

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.

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