Thebemed medical scheme placed under curatorship
Concerns over the scheme’s financial viability, its appalling solvency ratio and, thus, its ability to cover claims, all informed the decision
A small medical scheme called Thebemed has been placed under provisional curatorship by the Gauteng Division in Pretoria over concerns about its financial viability, following an application by the medical schemes regulator.
Its solvency ratio — a key measure of its financial health — had plummeted to an all-time low of 4.2% by the end of March, a far cry from the 25% required by the Medical Schemes Act, according to court papers.
A scheme’s solvency level is the ratio of its accumulated funds to its annualised contribution income, and the 25% threshold is intended to ensure that schemes have enough money in reserve to cover a sudden or unexpected surge in medical claims.
Thebemed is open to anyone who can afford its premiums, and had 23,511 beneficiaries at the end of 2017, according to the most recent Council for Medical Schemes (CMS) annual report. The CMS is a statutory body that oversees the medical schemes industry, and is charged with safeguarding the interests of consumers, medical schemes and their administrators.
CMS registrar Sipho Kabane made an ex parte application to place Thebemed under provisional curatorship on August 20, which meant Thebemed was not given any notice of his action. It has until September 10 to oppose the application. Neither the principal officer nor the chair of the board of the trustees have responded to requests for comment.
Kabane said the curatorship application was necessary because the scheme had failed to achieve the minimum statutory solvency ratio of 25% for the past eight years, despite numerous interventions by the regulator. Thebemed’s solvency ratio has declined rapidly since the end of 2017, when it stood at 22.3%
“The respondent’s failure to comply with the solvency ratio places its members at risk of not having their claims paid,” said Kabane in his founding affidavit.
While the schemes’ management accounts for May and June showed its solvency ratio had increased since the end of March, they remained unacceptably low at 6% and 7%, respectively, and he suspected these accounts might have been manipulated, said Kabane. He added that Thebemed had not been able to present a credible turnaround strategy, and its latest business plan had been rejected by his office in July.
“In addition, my office has consistently advised [Thebemed] that the best solution for its situation is to find a merger partner. However, despite negotiating with several different entities since 2012, the respondent has, to date, failed to merge with another medical scheme.”
In a separate development, the registrar has approved the amalgamation of CompCare and Selfmed medical schemes, which will take effect on September 1. Selfmed will be absorbed into CompCare.
CompCare principal officer Josua Joubert said in a statement that the merger would create an entity with a stronger financial base, and a solvency ratio above the 25% statutory requirement.