When launching a new medical scheme the Board of Trustees know that, in the first few years, the scheme will traverse a financial tightrope. Just the right balance is needed in order to keep the scheme financially sound while fulfilling the scheme's statutory obligations to settle member claims, build reserves, meet the challenges presented by an unknown risk profile and continue attracting new members in an effort to reach the break even point.
The Government Employees Medical Scheme (GEMS), registered in January 2005, has safely navigated this financial tightrope within its first two years of operation. Since its inception the scheme has signed on over 230 000 principal members, with a growth rate of over 450 percent in the last year alone. Not only has the Scheme's rapid growth continued to astound the market, but the provision of comprehensive benefits and the strict containment of non-healthcare costs, significantly below the industry average, has drawn considerable interest.
Against a backdrop of the soaring cost of healthcare GEMS has maintained optimal affordability underpinned by a member-centric operational style. GEMS has, for example, never applied waiting periods or late joiner penalties. Dr Watson, Principal Officer of GEMS, believes that this is because of the vigilant pursuit of cost-efficiencies. The high value placed on the optimization of the healthcare "slice" of premiums collected is another key element in the success of the scheme. Members' monies are directed first and foremost to their healthcare needs. In this vein GEMS head office is run by a closely nit management team which ensures stringent service level management and effective medical scheme services.
"We have sound governance and management systems in place and operational activities are outsourced to enable our constant focus on the Scheme's vision and strategic plan. When we started in 2006 we expected our non-healthcare costs to run off of a higher base, as this new scheme, with new systems and processes, did not have significant bargaining power. However, once the contracts with the different service providers were established and our membership numbers started to grow, we have been able to leverage our purchasing power and keep a tight reign on non-healthcare expenditure."
More than 16 000 GEMS members moved to different options within the scheme after launching the 2008 benefits. Against the established industry trends, 80% of our members who changed options actually ‘bought up' - acquiring more comprehensive and hence more expensive healthcare cover than they had chosen in 2007. Over the past two years the benefits offered within each of the five benefit options has been significantly enhanced, with GEMS actively encouraging and drawing on member suggestions and recommendations in order to provide benefits that are appealing to members both in terms of price and healthcare coverage.
When a medical scheme grows at such an impressive rate the margin for error - in terms of claim expenditure and service levels - is significant. GEMS has succeeded in maintaining operational service levels and containing its costs.
Restricted schemes are by their very nature able to make safer projections on cost increases and pricing as a result of their controlled risk profile. However, as a brand-new scheme catering only for public service employees, many of whom have never belonged to a medical scheme before, the parameters of the GEMS risk profile were relatively unknown in the Scheme environment.
"We are comfortable with our clinical risk profile," says Dr Watson. "Compared to industry averages published by the Council for Medical Schemes in the 06/07 Annual Report, GEMS members are on average 2, 2 years younger and have slightly larger families. Our pensioner ratio is 4, 52 percent compared with the industry average of 7, 2 percent.
According to Watson the focus in 2008 will be on making the medical scheme experience of every GEMS member both "hassle free" and excellent. "We have initiated a number of member-focused initiatives which we believe will further add to the schemes' ease of use. Members must know the value they enjoy on GEMS. The couriering of chronic medication, the sending of claim alerts via SMS and the "Friends of GEMS" service enables members to find a healthcare provider in their area by sending a simple SMS are but some of the initiatives on offer".
Watson believes that dynamic offerings such as these, together with GEMS, enhanced accessibility, will continue to contribute to an ever growing base of satisfied members. "The Scheme is working well." he says.
"We will continue pursuing the scheme's policy mandate as set out by Government. We need to maintain and enhance service levels, keep an eye on the cost of care, continue to find innovative ways to keep our growing membership base satisfied and continue promoting awarenwess amongst lower income earners," concludes Dr Watson.