At least 5 000 jobs are at risk as the legal saga between Medscheme and Bonitas Medical Fund – which stripped it of long-term contracts – continues, according to Paul Hanratty, CEO of Sanlam, which owns Medscheme via its almost 60% stake in its subsidiary, AfroCentric – which owns the medical aid administrator.
News24 reports that although Hanratty said the wrangle between Medscheme and Bonitas was just an “irritation” in terms of Sanlam’s financials, the human impact could be far larger, given the roughly 5 000 people employed across AfroCentric and the medical aid administrator.
“In financial terms, it’s not that big a deal. But it’s a human tragedy because there are 5 000 people inside that business, so there could be massive job losses,” Hanratty said.
His comments came shortly after Sanlam reported an 18% drop in headline earnings to R20.08bn for the year to 31 December.
“If they lose that Bonitas contract, which currently is the idea from the trustees, then you’ll remove a massive chunk of revenue from AfroCentric and Medscheme, and they will have no choice but to retrench people,” he added.
“I think Bonitas is 40% of their revenue. There are 5 000 people in the company. So, you work out how many jobs might be lost.”
In December, Medscheme asked the Gauteng High Court to stop Bonitas from awarding tenders to competitors, saying former AfroCentric executives were influencing its procurement decisions.
But Bonitas ignored the pending court proceedings and announced in late January that Momentum Health would become its new administrator from 1 June.
Private Health Administrators (PHA) took over the provision of managed care services to Bonitas from the same date.
Medscheme had provided managed care and administrative services to Bonitas since 1982, but in April last year, Bonitas announced it would be putting the contracts out to tender, prompting claims from Medscheme that the process had been compromised.
An investigation has also been launched by the Council for Medical Schemes into Bonitas over the awarding of contracts to former AfroCentric executives and people linked to them.
See more from MedicalBrief archives:
Medscheme’s case against Bonitas off urgent roll
Medscheme, Bonitas tender battle escalates