A SYSTEM ON ITS SICK BED
As medical aids hike their fees, the case of Bonitas raises questions about the extent to which medical aid members are being protected
ike most of the 8.9-million South Africans lucky enough to have a medical aid, you’re probably wondering why this luxury is sapping increasing amounts of your salary every month. After all, medical aids are meant to be not-for-profit entities, putting their members’ interests first.
Take the Discovery Health Medical Scheme: it is a notfor-profit entity presided over by a board of trustees, meant to look after the interests of the medical aid’s 2.8million beneficiaries. The medical aid then hires a separate administrator, which does want to make a profit and charges a fee for things like collecting contributions, paying claims, marketing and running a call centre.
In this case, the administrator is Adrian Gore’s Discovery Health Ltd, which collected R5.49bn from the Discovery medical scheme last year in “administration” and “managed care” fees. (Last week, Discovery Health Ltd reported a 10% increase in operating profit, to R1.46bn.)
So who ensures medical aid members aren’t being ripped off? Well, the first line of defence is the trustees, who are meant to be independent enough of the administrator to ask tough questions about the fees and the value members get. Even Gore’s Discovery Health Ltd can be axed as the medical aid’s administrator with just 12 months’ notice.
The problem arises when the administrator gets too cosy with the trustees, or becomes “captured”. This is why a proper board of trustees is crucial, and why a well-armed regulator, in the Council for Medical Schemes (CMS), is so vital. When both fail, it’s a free-for-all.
Now, most people focus on Discovery, given that it’s the largest scheme. But hardly anyone looks at Bonitas — the second-largest open medical aid scheme in the country, on which 728,338 people depend.
The Jse-listed Afrocentric group provides “administration” and “managed care” for Bonitas.
Yet last week, Bonitas threatened to rush to court to gag Business Day from publishing details of a muchdelayed inspection report into the medical aid’s governance compiled by the CMS. Inexplicably, the CMS never finished its report as the probe was halted.
Bonitas demanded an undertaking from the newspa-
Lper that “you will not utilise the information contained in the draft report” — a report Bonitas says was wrong.
Asked about this paranoia, Bonitas’s principal officer, Gerhard van Emmenis, said: “We didn’t try to gag them”, in reference to the gag attempt.
It was a curious move, given that you’d imagine that Bonitas’s beneficiaries would surely benefit from any conflicts of interest being ventilated.
So why was Bonitas so eager to ensure the CMS report stayed hidden? What did it contain?
Van Emmenis says the report examined, “among other things, the relationship with Afrocentric and it also has to do with governance issues, and the potential conflict that the chair has”.
As it turns out, the Bonitas chair is Stephen Claassen — the founder of Activo Health, which Afrocentric describes as a “drug importer and rights-holder for the SA market, in which Afrocentric has a 26% stake”. So, in other words, the chair of the board of trustees, mandated to do what’s best for medical aid members, has a business relationship with the administrator, Afrocentric. So how “independent” will Claassen be, given his personal reliance on Afrocentric’s business?
It’s an apposite question, since in 2017 Bonitas paid R778m in “administration fees” to Afrocentric (14% higher than a year before) and R447m for “managed care services” (a 27% jump from the previous year).
Antoine van Buuren, CEO of Afrocentric, is adamant that Bonitas is “completely independent”.
Van Buuren also rejects the view that Claassen’s independence at Bonitas was compromised. “He started Activo many years ago, and while we had a minority stake, Activo operated independently of us. It’s not like Afrocentric had any say over him,” he says.
He claims the draft CMS report is manifestly flawed, with plenty of errors.
Interestingly, when asked if Bonitas members should be worried about the CMS report, Van Emmenis replied: “Ja — but we didn’t have the opportunity to respond to it yet, because we find a lot of [it] factually incorrect.”
Van Emmenis also argues that Bonitas isn’t Afrocentric’s compliant puppy. “We’ve taken R75m back from them, whether it’s been fines, or things we’ve refused to pay — there are things that could have been done better.”
There are things Bonitas could do better too: like not indulging its base instinct to gag a newspaper. Especially since it will be Bonitas’s members who pay the legal fees.
All of this brings us to the regulator: the CMS, which is meant to act as watchdog. The problem is, it is itself going through turbulence, which places its ability to keep a check on these sorts of things in grave doubt.
Last month, CMS revealed that it had suspended its investigations unit head, Stephen Mmatli, after a whistleblower claimed he was being paid to “take decisions in favour of” certain companies. Which leaves a yawning gap in what should be a critical regulatory arm of the medical industry. If trustees are compromised, and the regulator is impotent, what hope do SA’S medical aid beneficiaries have that they’re getting a fair deal?
There are things Bonitas could do better too: like not indulging its base instinct to gag a newspaper