Med schemes not delivering value for money, say members

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Consumers feel they get less value for money from medical schemes than they do with other financial services, such as short-term insurance. Business Day reports that this is according to research firm Consulta’s latest customer satisfaction index (the South African Customer Satisfaction Index -the SA-csi) which found that medical scheme members are increasingly frustrated with their rising premiums and shrinking benefits.

There has been a general decline in the customer satisfaction of members of medical schemes on an industry level in the past 12 months. This was primarily the result of members of Discovery and Bonitas, two of the biggest players in the industry, rating their schemes slightly lower on aspects relating to satisfaction and value for money.

Only two schemes managed to improve their position on ratings of customer satisfaction from last year, namely Medihelp and GEMS. As a result of this improvement, Medihelp managed to take the leadership position, with the most satisfied members in the industry. Although GEMS still remains in a below par position compared to the rest of the industry, the improvement does buck the downward trend of the last number of measures.

Members of Momentum Health have been stable in their rating of the provider, with similar scores achieved to the 2017 measure.

The industry average fell from 74.2 last year to 72.7 this year. To put this in perspective, customer satisfaction index scores for short-term insurance are typically in the mid-80s, said Consulta’s project executive PJ Claasens.

Satisfaction levels for medical schemes are substantially lower than those measured in other financial services industries. In order to understand this better, it is insightful to look at what members complain about most often. In the case of all providers, the claims process is where most frustration is felt. Members often feel that they do not receive the cover and benefits they expect from their medical scheme and this is most strongly expressed when claims are not honoured or paid in full as they expect.

This speaks to an underlying sense of complexity that exists within the industry, with many members expressing their sense of low value for money with their scheme (compared to other financial services). With more than 270 options available, choosing medical insurance products can be very confusing to customers.

Most medical scheme members only perceive the value of their cover when they face serious illness and have to submit claims for a substantial amount of money, Claasens is quoted in the report as saying.

Of the five large medical schemes Consulta surveyed, only Medihelp saw an improved index score, which rose from 72.6 last year to 75.1 this year. Discovery dropped from 74.8 to 73.1, while Bonitas fell from 73.1 to 70.2 over the period. Momentum maintained its score of 72.0.

The report says members of the Government Employees Medical Scheme were the least satisfied of all those surveyed, but the scheme, nevertheless, improved its score from 64.3 in 2017 to 68.8 in 2018.

Claasens said Medihelp had improved its standing with its members by investing in better communication with its members, and ensuring it had a stable corps of call-centre staff who could resolve queries efficiently.

Consulta’s customer satisfaction indices use the same methodology as the American Customer Satisfaction Index, which is based on interviews with consumers. The medical scheme customer satisfaction index included interviews with 1,675 randomly selected members of five of South Africa’s largest schemes, with questions about customer expectations, perceived quality and perceived value.

 

“While the market’s dominant heavyweights remain strong competitors, pack leader Discovery seem to have shifted focus to other business offerings in its product suite, including the launch of its anticipated banking services and its long- and short-term insurance offerings. This has allowed its competitors to even out the playing field in the medical product suite by delivering simpler, traditional medical insurance that is seen to be less expensive and easier to understand,” says Consulta CEO Prof Adré Schreuder.

Medihelp offers a good example – 3 years ago the scheme was in a below par position. Efforts to focus on delivering a simplified product, coupled with improved service levels, has resulted in strong improvements in the perception of value for money and overall customer satisfaction.

Now in its sixth year, the SA-csi for Medical Schemes offers impartial insights into South African medical aid schemes by measuring customers’ overall satisfaction out of 100. This satisfaction score is based on medical schemes exceeding or falling short of customer expectations and the respondents’ perception of the ideal service provider. The Index also includes, among other measures, a Customer Expectations Index, a Perceived Quality Index and a Perceived Value Index. The 2018 sample included 1675 respondents who were randomly selected from five medical schemes to participate in the survey.

“Medical premiums rose past inflation increasing on average by 9% this year, and are significantly higher than premium increases in short-term insurance and life insurance,” Schreuder says. “The cost of medical services continues to increase at a rapid rate as consumers are challenged with a supply-induced demand scenario, where medical schemes are forced to carry the cost of unnecessary treatments or admissions by doctors, which is ultimately passed on to members.”

The effect of this can best be seen in the Perceived Value Index, where Medihelp and Momentum Health share the leadership position in 2018. For both brands this came from showing remarkable increases in the year. The Medihelp score from 70.9 to 73.6 in 2018 and Momentum Health increased its score from 70.5 to 72.3 over the same period. Although not to be compared with open schemes, GEMS, which is still behind the industry average of 69.4, scored 67.5 in this measure, which was a 3.9-point jump from its 2017 score of 63.6 marking notable improvements in this year’s survey. Bonitas fell from 70.7 to 68.3 and Discovery Health dropped from 72 to 69 in its perceived value score.

In June, Minister of Health Aaron Motsoaledi announced the NHI and Medical Schemes Amendment Bill, proposing sweeping changes to the running of medical schemes. These changes are aimed at benefitting a wider range of members and paving the way for the NHI financing system for all South African citizens, not just those who can afford medical aid products. To remain relevant in the face of NHI, private medical schemes need to assess the value they provide to customers, such as quality, affordability, transparency and ease of use, which should be integrated into their daily operations.

“As the Government takes steps to roll out healthcare financing for the entire population, the central issue it will have to address is ensuring that it operates to the same level currently delivered by the private health care industry, and customer experience will be the driving force behind this,” concludes Schreuder.

Business Day report
Index


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