‘Poor governance’ shuts down medical schemes

October 3, 2011

Weak corporate governance in SA’s medical scheme sector is contributing towards consolidation, and is largely responsible for the collapse of 31 schemes since 2005, warned Johann Strauss, a director of auditing firm SizweNtsaluba and Gobodo .

Mr Strauss was speaking ahead of a report to be released today, which indicates that few schemes were achieving best governance practices as set out in the King 3 code.

The Council for Medical Schemes indicated in its annual report released last month that the number of schemes operating in SA had decreased from 140 in 2001 to 99 .

Poor governance had resulted in many schemes failing to achieve a 25% minimum solvency level — a first warning that a scheme may be unsustainable in the medium term .

SizweNtsaluba concluded that in many schemes procurement policies and administration for managed healthcare services were not dealt with consistently in terms of good governance, with closed schemes being less compliant than open schemes.

The report noted that an improvement in governance in line with King 3 would address some of the cost escalations in healthcare . Health Minister Aaron Motsoaledi has described healthcare in SA as “predatory”. “The research points to widespread complacency and incestuousness between medical schemes and their service providers, ” said Mr Strauss.

Read the ~ufull article in Businessday#www.businessday.co.za/articles/Content.aspx?id=154918~

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