Questions over Psemas tender
Local medical aid administrator Prosperity Health remains optimistic that objections raised regarding the tender to administer the government medical aid would be rectified in the near future as it is in the interest of the nation.
Prosperity Health recently objected to tender conditions to administer government’s massive Public Service Employee Medical Aid Scheme (Psemas), saying tender conditions were inadvertently drafted to exclude all potential participants except the current holder of the tender, which is Methealth Namibia.
According to industry sources, Methealth Namibia was awarded the tender in 2010 to administer Psemas for a four-year period.
During the last six years, however, no new tender was awarded and Methealth have been administering Psemas on an annual extension basis.
Speaking to New Era yesterday, Prosperity Health’s director Bertus Struwig said the tender conditions were not drawn up maliciously but were rather an oversight based on ignorance of the size of the local medical aid administrative market.
“We received confirmation from the Central Procurement Board of Namibia (CPBN) that they received our letter. The last day for objections was today (yesterday) so we expect to hear from them by the end of this week,” Struwig told New Era.
He also believes the tender conditions would be rectified in the name of transparency and fairness.
In his letter to the CPBN, Struwig pointed out that the size and extent of the Psemas membership dwarfs all other medical aid funds regulated by the Namibia Financial Institutions Supervisory Authority (Namfisa).
“Our understanding is that the tender is open for submission to all Namibian medical fund administrators. It however appears as if the provisions of the tender have been inadvertently drafted in a manner that will exclude all potential participants except the current holder of the tender,” read Struwig’s letter.
Tender documents indicate that Psemas currently has about 287 000 beneficiaries, while the total private medical aid administration market in Namibia (excluding Psemas) consist of just over 201 900 beneficiaries, primarily managed by five separate administrators.
However, the CPBN’s tender document requires that the bidder in the last five years should have administered medical aid funds/ schemes half of the current size of Psemas, being 143 000 beneficiaries.
Said Struwig: “For any Namibian administrator (except the current holder of the tender) to comply with this requirement, it would require such an entity to hold a market share in excess of 70% of the (non-Psemas) private medical aid administration market. We hereby request that this condition in the tender be aligned with the market reality in Namibia. In this regard, we propose that the tender specifications are to be amended and that the number of beneficiaries to be included in the requirement is to be reduced to 50 000 beneficiaries, which is one quarter of the current market.”
The Psemas tender document further stipulates that a bidder should provide evidence adequacy of working capital. The successful bidder is also required to indicate access to lines of credit and availability of other financial resources or letter of intent from financial institutions.
Due to the number of requirements from the successful bidder, Struwig also proposed that the tender condition be amended to allow for a tender to be submitted by a joint venture in a group of entities, provided that all the entities in the joint venture be controlled by a single Namibian holding company, which would form part of the JV agreement and would take full ownership and responsibility of the successful tender.
“It is noted that the condition requires the turnaround time for payment of claims after receipt of funds from Ministry of Finance to be no more than two days. As only the current holder of the tender is able to show its current ability to pay claims on receipt of funds from Ministry of Finance, we note that we are of the opinion that this condition is prejudicial to all parties who are not the current holders of the tender,” said Struwig.