Members, hospitals get smaller slice of pie

Medical Aids Bigger chunk of contributions are being spent on salaries for principal officers and fees for trustees

Medical aids are lavishing immense salaries on their top brass from cash collected from their members - and much of this is unjustified.

This was the word from the Council for Medical Schemes, which is meant to police the 87 medical schemes registered in South Africa. The council says the public should scrutinise the salaries paid to principal officers who run schemes, as well as trustees who are meant to ensure that members get treated fairly.

The top-earning principal officer was Anton Rijnen, the former head of Medihelp, who scored a hefty R6-million last year, up 80% from the year before - cash which comes from Medihelp's 218991 medical aid members. Bestmed's Dries la Grange scored R5.6-million (his scheme has even fewer members, at 172984), and Discovery Health's Milton Streak walked away with R5.4-million last year, a 34% salary hike in a year.

The trustees, who do a part-time job to ensure the scheme is run properly, also received big bucks.

Fourteen trustees of the Government Employees Medical Scheme were paid an average of R568000 each, and the 10 trustees of Bonitas made an average of R373000.

This is just one of the many alarming aspects of this week's Council for Medical Schemes report, which indicates that people appear to be getting far less bang for their medical aid buck than before.

In all, 8.8-million South Africans paid R129.8-billion in medical aid contributions last year - 10.4% more than the previous year.

A large chunk of this money was spent by the medical schemes on "non-healthcare costs", including paying administrators and brokers, and salaries for trustees.

This means those medical aids are spending far less of the amount they are paid providing real benefits to members.

In all, medical aids spent R112.9-billion last year - 8.9% more than the previous year. A large part of this did not go to doctors or hospitals, but to brokers (which includes marketing and distribution costs), who earned 9.3% more for selling schemes to the public, as well as other "non-healthcare costs".

The amount paid to hospitals last year actually dropped 0.8% to R39.4-billion, but medical specialists got 8.4% more (R27.5-billion) and general practitioners 4.8% more (R7.4-billion). The biggest hike in money spent went to allied health professionals - such as laboratory technologists and physiotherapists - who got R9.4-billion last year, 19% more than the year before.

The push for higher membership fees and lower spending meant that medical aids saw their profit (technically, this is called a "surplus" as medical schemes are non-profit entities) shoot up dramatically.

Although the schemes made a combined "operating surplus" of only R29-million in 2012, this vaulted more than fifty-fold to R1.6-billion last year.

When investments were included, the industry made a net surplus of R5.3-billion.

This profit suggests either that people are healthier, or that medical aids are just paying out far less than they are collecting from members.

Professor Yosuf Veriava, who chairs the council, said medical schemes needed to place greater emphasis on preventative medicine and health education.

Of the 87 medical aids registered with the council, Discovery is the largest. It administers 2.9 million lives, followed by the Government Employees Medical Scheme, with 1.85 million members.