Up, up and away
Government medical scheme shows healthy growth
THE LONG-AWAITED Government Employees Medical Scheme (GEMS) is up and running and staking its claim in a competitive medical scheme environment. Principal officer Dr Eugene Watson answers Finweek’s questions.
Q: Gems is now a year old. Are you satisfied with the scheme's growth; has it reached critical mass? A: By the end of 2006, GEMS was among the 10 largest medical schemes in the country with 70 000 registered principal members representing about 200 000 covered lives. The scheme showed growth every working day of the year and we are now processing well over 850 applications a day. This growth was achieved from a base of zero membership and did not involve overt marketing expenditure.
A year is not a long time to introduce a medical scheme to one million employees, 40% of whom had not been medical scheme members, in more than 120 departments and over 40 000 work sites. It should also be borne in mind that the new medical subsidy policy aligned to GEMS was only announced six months ago. Q: What were the highlights over the past year? A: The fact that 50% of GEMS members did not previously access the employer sub- sidy counts as a definite highlight. It shows the scheme is making significant progress towards correcting the imbalances of the past and promoting equitable access to the employer subsidy.
By the end of 2006, the scheme complied with the statutory reserve ratio and had recorded good underwriting results. The financial management of the scheme was indeed a highlight. Collecting contributions in arrears, not applying waiting periods or penalties and allowing cover on registration necessitated sound financial planning and administration.
In line with this, our Sapphire option, aimed specifically at those who could previously not afford any medical scheme cover, has grown more than 80% each month for the past four months.
We are also experiencing excellent collaboration with the public health sector, which bodes well for opportunities and the goal of broadening access to medical scheme benefits for a wider spectrum of the population. Q: What measures were put in place to ensure excellent service, sound operational processes and good governance? A: The affairs of the scheme are governed by an interim board of 11 trustees appointed by the Minister for the Public Service and Administration. The board is authorised to perform in accordance with the scheme’s rules and we are confident the trustees, from various backgrounds ranging from economics to finance to governance to HR, will continue doing a superb job in governing its affairs.
An efficient executive structure, led by the principal officer, implements the strategic objectives and directives of the board of trustees. Strategy, business plans and operational directives are developed and implemented internally and appropriate resources dedicated to the sole purpose of providing State employees with affordable, quality healthcare. The “locus of control” rests firmly within the scheme.
The principles of sound corporate governance are entrenched in the scheme rules and other governing documents, including the code of conduct that binds all trustees and employees. The declaration of interests is a standing item on the agenda of all trustee meetings. Ensuring independent decision-making is critical and demonstrates we are on track towards fulfilling our fiduciary duty of protecting members’ interests at all times and setting a benchmark in the healthcare funding industry.
We selected, after a transparent tender process, “best of breed” healthcare partners through which the schemes deliver professional healthcare-related services to its members. These partners are: • Metropolitan Health Group ( MHG), which handles the scheme’s administration Netcare 911, which delivers emergency medical services Prime Cure, which offers primary healthcare and hospital services for two of the options, and Solutio, which offers managed care services and an HIV/Aids management programme
Medipost, which provides chronic medication to members on Onyx, Emerald and Ruby. Together, they provide a unique and powerful service to all GEMS members. Service providers render a seamlessly integrated service to members and cooperation is contractually stated.
GEMS’s overall strategic objective is to be an excellent medical scheme for its members. Our governance and management structure, as well as our contractual partnerships, ensure member service excellence is foremost in our work.
Have the benefit options for 2007 been approved by the CMS, and what do they entail?
A: Yes. Our submission was made before 30 September in line with council requirements.
GEMS offers members five different benefit plans -– Onyx, Ruby, Emerald, Beryl and Sapphire. These plans are 10% to 25% cheaper, with similar or increased benefits than other medical schemes.
Sapphire and Beryl are the entry-level options, with cover from designated provider networks. Sapphire was specifically designed to be inexpensive and it achieves this by providing out-of-hospital care at private facilities and in-hospital cover at public facilities. Emerald is the traditional option and has been designed to resemble the medical scheme plan most public service employees are enrolled in. Ruby offers members a savings account for day-to-day medical expenses as well as a hospital plan. Onyx is the top of the line, comprehensive option.
For 2007, the changes in Sapphire include a new optical benefit and a contraceptive benefit, while all other benefit limits increased 5%. In addition, members on this option can select to access private hospitals under specific circumstances. Beryl has been improved to include the contraceptive benefit and also offers an overall benefit increase of 5%.
The Ruby option now offers a revised advanced radiology (eg MRI, CTI scans) limit as well as the overall benefit limit increase of 5%. At the request of members, significant changes have been made to the Emerald option. It will offer an enhanced GP and specialised dentistry benefit, as well as a larger advanced radiology benefit and a separate limit for pathology and basic radiology. The Onyx option sees benefit limits enhanced by 5%.
What are your plans for 2007 and beyond?
A: This year, GEMS introduced a designated service provider (DSP) to provide chronic medication to Ruby, Emerald and Onyx members registered on the chronic medicine programme. Members will now have their chronic medicine delivered to their homes at no additional charge.
More strategically, GEMS aims to continue growing its membership throughout the year. We will place more emphasis on Sapphire to reach more people who couldn’t afford any medical scheme cover in the past – employee education on medical scheme membership (large numbers have never been scheme members) and on their subsidy
benefits will form an integral part of our plan for 2007.
We will continually evaluate our service level agreements with our contracted service providers and ensure they adhere to our relentless pursuit of excellence. We will not tolerate inadequate service from any of them.
We will continue to strengthen our governance function by introducing a formal trustee appraisal system.
In line with the requirements of the Medical Schemes Act, GEMS members will during the year elect 50% of the trustees to serve on the board of trustees. The rules of the scheme have been amended to ensure a fair and transparent election process, overseen by an independent body. In so doing, scheme members will have a tangible say in how it is run. Members will be empowered through the knowledge that the money they entrust to GEMS is looked after and spent with due care, diligence, skill and in good faith.
Where do you see GEMS in terms of membership at the end of the year, as well as its ability to leverage its numbers and buying power?
A: We exist, first and foremost, to render a service to our members and our first focus will be on servicing them, irrespective of how many there are. GEMS will grow as it continues to market itself to public service employees. In the first few days of January we have grown by more than 6 000 principal members and we expect to reach a total of 100 000 principal members quite soon.
Regarding leverage, the growth in membership will definitely help the scheme to further negotiate with service providers. The more its membership grows, the more buying and bargaining power it will have to continue sustaining the ideals it upholds, especially those of offering employees value for money. GEMS already enjoys favourable healthcare and non-healthcare rates with sector participants and it is clear that greater value will be unlocked as the
To what extent is GEMS affecting schemes that traditionally had a large number of Government employee members?
We appreciate our existence may well affect other schemes but we are not in the market to compete with them. Our mandate is clear in that we have been established by Government to offer Government employees equitable and affordable access to comprehensive healthcare cover.
Keep in mind that in 2004 Cabinet assessed the overall effect on schemes and service providers. While some organisations will be negatively affected, the overall effect on the market will be positive as the medical schemes population will increase 14% once GEMS is fully implemented. GEMS sets an example for large employers in terms of how to improve the delivery of healthcare benefits to all employees, and for industry in respect of providing lower cost options.
We are fulfilling our fiduciary duty of protecting members’ interests. Eugene Watson