Medical funds in need of resuscitation — urgently
Latest operational performance figures show industry and government need to enact reforms to prevent collapse, writes James Arens
The recently released annual report of the Council for Medical Schemes shows that medical schemes are under enormous trading and operational pressure, with a consequent deterioration in the financial positions of most of them. The average operating profit margins of medical schemes have worsened and in some cases, plummeted to negative levels for the reporting period 2015 compared with previous years. The operating profit margin of a medical scheme is expressed as net health-care results as a percentage of risk-contribution income. The average operating profit margin for all schemes for 2015 was -0.9%. For open schemes, the figure was -0.7%. Restricted schemes, which have a closed membership, had an average operating profit margin of -1.1%. These levels are very low and are unsustainable for some schemes. While not all schemes performed so dismally, 56% had an operating profit margin of zero or less, down to as little as -69%. This suggests a severe financial haemorrhage in the syst...
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