GEMS 2017 annual report reflects strengthened financial position

By Janice Roberts
Editor

The Government Employees Medical Scheme (GEMS), South Africa’s largest closed medical scheme, today released its annual report for 2017, reflecting a significant increase in the Scheme’s reserve ratio and surplus.    

“Following a number of challenges that came to the fore in 2016, impacting the wider healthcare funding industry, including GEMS, we embarked on a number of strategic interventions to mitigate identified risks and strengthen the Scheme’s financial position,” says Dr Guni Goolab, Principal Officer of GEMS.

“With the implementation of these measures, we have seen a major reduction in fraud, waste and abuse, and are satisfied with progress made on various fronts that have contributed positively to the sustainability of GEMS. 

“At the heart of this is the certainty that we are able to provide our members, and the assurance that proactive interventions undertaken by the Scheme continue to advance the accessibility and affordability of quality healthcare for members of the public service.”

The financial results for the period 1 January 2017 to 31 December 2017 confirm that GEMS settled 91 million claim lines, representing a total value of R29.1 billion in claims. The Scheme ended the year with a net surplus of almost R3.3 billion (R3 270 200 899) and a doubling of the reserve ratio to 15.2% up from 6.9% in 2016. The Scheme’s non-healthcare costs were 5.6% and this remains below the industry average of 8.6%*. 

“A number of Scheme innovations and efficiencies have been introduced since 2016 and these are already bearing fruit. A tangible result of this was the fact that we were able to contain contribution increases for 2018 to a highly competitive weighted average of 8.5% across benefit options. Members who opted to join the Emerald Value Option experienced an average increase, after the employer subsidy, of only 3.5%,” Dr Goolab notes.     

 A major factor influencing the Scheme’s improved year-on-year financial performance was the introduction of selective underwriting in the fourth quarter of 2016. Individuals practising anti-selective behaviour would join and leave the Scheme in a relatively short timeframe while incurring high hospital admission rates, which were on average four times higher than that of other members.

“To protect the interests of the majority of our members, decisive action was required to contain costs arising from anti-selection through the introduction of limited underwriting, including condition-specific waiting periods. During the 2017 financial year, the introduction of underwriting saved R1.1 billion for members.”

Another considerable cost driver identified in 2016 was that of fraudulent and irregular claims, and a comprehensive strategy for the identification, prevention and recovery of funds has assisted the Scheme to root out such instances to protect resources for the payment of valid claims. 

“Potential irregular claims were identified during 2017, and through engagements with healthcare providers and interventions to prevent fraud, waste and abuse we estimate that approximately R175 million has been saved.

 “More positive steps towards eliminating unnecessary costs and improving the quality of healthcare, include the continued promotion of care co-ordination and use of network providers among our members, particularly through the Emerald Value Option introduced at the beginning of 2017, says Dr Goolab. 

“As we move towards the full implementation of NHI, innovations and principles that support more efficient use of limited healthcare resources to provide access to healthcare without compromising on quality will become increasingly important. 

“Key to this is encouraging South African healthcare consumers to embrace the value of primary care as an entry point when accessing healthcare and the importance of securing specialist referrals from general practitioners. This system of care coordination is aligned to the approach for universal health coverage, which we refer to as NHI in the South African context,” he explains.

 “During 2017 we have succeeded in strengthening the Scheme’s financial position and are now focusing on refining the operational aspects to further enhance the GEMS member experience,” Dr Goolab says. 

*http://www.medicalschemes.com/files/Press%20Releases/PressRelease14Of2017.pdf

 

Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za