‘Tightening control’ has helped Gems’ turnaround

Organisation: Position: Deadline Date: Location:

The Government Employees Medical Scheme (Gems) has turned its finances around by tightening control of hospital admissions and introducing new rules for public servants who hop on and off the scheme as their healthcare needs wax and wane, says its principal officer, Gunvant Goolab.

Business Day reports that Gems, the biggest restricted medical scheme in South Africa, had 1.833m beneficiaries at the end of 2016, providing cover to more than half (56.8%) of all eligible public servants. It made headlines in August 2016, when it emerged its solvency ratio was plummeting as it grappled with an unexpected surge in costly hospital admissions. Its solvency ratio plunged from 9.46% in December 2015, to an intra-year low of just under 4% in September, before recovering slightly to end the year at 6.99%, according to its recently released 2016 annual report. The solvency ratio measures accumulated funds versus annualised contribution income and should be at least 25%, according to the Medical Schemes Act.

Gems reported a net deficit of R484.7m for the year to 31 December, far shy of its budgeted surplus of R201m.

The report says the biggest contributor to Gems’s deficit was increased hospital admissions claims. The spike in utilisation was due to both supplier-induced demand as private hospitals opened more beds, and increased fraud, he said. Gems also faced unique challenges, he said.

Gems historically had a very generous approach to state employees, as it sought to extend cover to people who were previously uninsured. The report says it had consequently used a very broad definition of dependants and until recently, did not impose waiting periods on former members or their dependants if they quit and then returned to the fold when they fell seriously ill or anticipated major medical expenses.

Confronted with a situation in which monthly claims outstripped contributions, Gems moved to introduce underwriting for the first time. From October, it imposed a three-month waiting period on members and their dependants returning to the scheme after a break and on dependants who joined after the principal member. It also increased premiums for 2017 by 15% and introduced measures to combat hospital fraud and over-servicing, Goolab said.

These measures had borne fruit, he said, and Gems would make an operating surplus in 2017. It was also set to meet the Council for Medical Schemes’ 8.2% solvency target. “We see a reverse in 2017 of what we experienced last year,” he said.

The report says Gems was investigating alleged irregularities in the tender process for a R50m telemarketing contract. Two suspended senior executives resigned before a disciplinary inquiry could be held, but the investigation was continuing.

Business Day report

Receive Medical Brief's free weekly e-newsletter

Related Posts

Thank you for subscribing to MedicalBrief

MedicalBrief is Africa’s premier medical news and research weekly newsletter. MedicalBrief is published every Thursday and delivered free of charge by email to over 33 000 health professionals.

Please consider completing the form below. The information you supply is optional and will only be used to compile a demographic profile of our subscribers. Your personal details will never be shared with a third party.

Thank you for taking the time to complete the form.