‘Resolution Health is operating profitably’
Medical scheme responds to solvency issues raised in CMS annual report.
Resolution Health Medical Scheme released the following statement in
response to the 2014 Annual Report of the Council for Medical Schemes’
(CMS’s) report. Read more about it here.
Nine months later the scenario has further improved and Resolution Health
wishes to take this opportunity to present a more up-to-date picture of its
financial health.
Mark Arnold, Principal Officer of Resolution Health, asserts that: “Due to the
richness of the data encapsulated in the CMS Annual Report dealing with the
period 1 January 2014 to 31 December 2014, and the extensive analysis the
data required, it’s important that the report is viewed in its correct context.”
“In reality Resolution Health is operating profitably with a positive cash flow.
The Scheme declared a year-on-year surplus of R27.4 million in 2013 and
R2.3 million in 2014, reflecting an accumulated surplus of R80.6 million in
2014. The Scheme is well poised to continue this positive trend in 2015. As
many as a third of the country’s top 15 open medical schemes have been
unable to record successive surpluses.”
“Furthermore, our reserves improved significantly between 2013 and 2014,
following the positive financial results achieved over the past two years.
Looking at our solvency ratio of 10.4% as at end July 2015, we are reflecting
a marked improvement of just over 70% between 2012 (6.1%) and our current
financials. Less than half of South Africa’s top 15 medical schemes can lay
claim to increasing their solvency ratios three years running.”
According to Arnold, during the CMS’s 2014 reporting period, Resolution
Health lost a number of members due to the protracted platinum mining strike,
which ran from 23 January 2014 for a period of approximately five months.
“As labour relations continue to normalise in the sector, we continue to see
these members return to the Resolution Health fold, which is gratifying.”
“From a risk management perspective, Resolution Health has the second lowest
claims ratio per beneficiary, indicating that our managed healthcare systems are
doing an excellent job of containing costs.”
“This brings us to the CMS’s annual report findings regarding Resolution Health
specific complaints. Here it is important to note that the CMS complaints data
includes healthcare practitioner complaints rather than just those emanating from
our members. In order to safeguard our solvency ratios to protect our members,
Resolution Health is particularly vigilant against what is known as ‘code-farming’
in the industry,” Arnold observes.
“We wish to note that our complaints per thousand beneficiaries actually reduced
from 3.5 in 2013 to 2.8 in 2014. We are also one of few medical schemes to follow
the proposed CMS recommendations with the establishment of our formal dispute
resolution committee.”
“However, as with many other schemes, these complaints are specifically related
to Prescribed Minimum Benefits (PMBs). Our robust information systems have
been designed to highlight the unacceptable practice of code-farming, code unbundling
and duplication. The administration platform has a significantly more sophisticated
claims adjudication process, which drills deeper into queries of this nature and these
are rightfully ruffling feathers among the small minority of unscrupulous healthcare
specialists, who attempt to capitalise on loopholes existent in the current PMB paradigm.”
“In layman’s terms, this means that where some specialists may try to duplicate
claims for financial gain, our system is geared towards weeding these out to ensure
that members’ interests are at all times safeguarded. It is good to see that our systems
are working for the Scheme and its members. Due to our commitment to transparency,
this kind of reporting may appear ‘overzealous’ when compared with that of some of our competitors.”
It is worth noting that the Scheme has made considerable gains in reducing its non-
healthcare expenditure since the end of 2009, following the appointment of a new
board of trustees and healthcare administrator. “When using the more accurate
measure of non-healthcare expenditure per beneficiary per month, which is in line
with the CMS measurement, Resolution Health had the eighth highest non-healthcare
expenditure of the 15 largest open schemes, which for the size of the scheme is highly
competitive,” says Arnold.
“When considering the aforementioned factors, it is evident that the implementation
of measures aimed at bolstering our reserves has delivered good results. These measures
included adjustments to our benefit design, a review of our membership growth strategy,
risk mitigation factors surrounding membership and increased managed care protocols,
as well as a further reduction in non-healthcare expenditure.”
It is also worth noting that in May 2015 Global Credit Ratings affirmed the national
scale rating assigned to Resolution Health of BBB-(ZA); with the outlook accorded
as stable.
“Within the greater industry context, Resolution Health compares most favourably
with the rest of the industry. We believe that the Scheme will continue to make a
most valuable contribution to the South African healthcare industry.”
Arnold stressed that Resolution Health was committed to achieving the same objectives
as the Department of Health and the CMS. “It is our key objective to make affordable,
lifetime healthcare available to as broad a spectrum of the South African population as
possible.”
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