Q&A: Discovery health CEO

Discovery Health, a medical aid scheme administrator, charges too much, underpays doctors, blames specialists for the high costs of healthcare and forces people into the Discovery Medical Aid Scheme.

These are the range of claims hurled at Discovery Health, a financial services company that is part of the JSE-listed Discovery Limited.

Many of the claims are not backed up by evidence.

The week of mud-slinging between doctors and the administrator began when ear, nose and throat surgeon Martin Young used social media to challenge Discovery Health about the profits it makes.

The South African Medical Association joined in the fray when spokesperson Dr Mzukisi Grootboom said yesterday that medical aid rates paid to doctors were so low that that doctors were forced to work harder to break even and sacrifice quality for quantity of patients. 

The Times put the questions to CEO of Discovery Health Dr Jonathan Broomberg.

Q: Patients and doctors get upset when claims for medical services are not paid in full.  Does Discovery Health make money when it does not pay claims?

Discovery Health charges Discovery Health Medical Scheme a fixed administration fee per member per month. This fee is to perform services that include claims processing and payment.

The administrator does not make additional money when a claim is not paid in full.  It gets a set monthly fee per member of approximately R170.

Almost 89% of a person’s medical aid premium is used for medical costs.

Discovery Health made a 40% profit administering the Discovery Health Medical Aid in the last financial year. Discovery Health took home R1.5 billion. Some doctors are angry because they feel Discovery Health makes a lot of money, while they complain that medical aid rates are too low.

Discovery Health (DH) charges a fixed administration and managed care fee per member. The administration fees are not the reason that medical schemes cannot afford to pay doctors significantly more. If schemes paid doctors more, premiums would increase by more than they are at the moment, which consumers cannot absorb.

Over the past six years, 800,000 members have left all other open medical schemes; 600,000 of these have joined Discovery Health Medical Scheme.  New members mean increased income for Discovery Health.

Are your administration fees too high?

Administration fees paid by DHMS is the only component of medical scheme spend that is coming down.

SAMA accuses you of paying brokers the highest fees out of any medical aid to send members your way.

This is entirely untrue. The commission payable to brokers is regulated by the Medical Schemes Act, and equals 3% of member contributions, capped at R60 per member per month. 

DHMS adheres strictly to the law regulating broker commission.

Have you accused doctors of overcharging as suggested by SAMA?

None of Discovery Health’s media releases or statements has ever blamed medical professionals for rising costs.

Why are medical costs going up? 

Rising healthcare costs are a global phenomenon.

Discovery Health data shows people are visiting doctors more each year, making more hospital visits per year and this is leading to pressure on medical aids to cover costs.

Our data shows that this is due to an ageing population, an increase in chronic diseases of lifestyle such as high blood pressure or diabetes among members and an increasing incidence of cancer, as well as the high costs of new technologies.