INDUSTRY

REPORT
2020

REGULATING
THROUGH A PANDEMIC

20
th

ANNIVERSARY

Council
for Medical Schemes
CONTENTS
2 FINANCIAL OVERVIEW OF
THE MEDICAL SCHEMES
INDUSTRY
45 Snapshot of financial results for the year ended
31 December 2020
45 Contributions
46 Relevant healthcare expenditure
47 Risk transfer arrangements
50 Accredited managed healthcare services (no transfer of risk)
51 Relationship between the risk and savings components
55 Relationship between contributions and relevant healthcare
expenditure
60 Non-healthcare expenditure (NHE)
60 Trends in non-healthcare expenditure
66 Administration expenditure
2 List of tables 69 Administration fees
4 List of figures 71 Governance related expenditure
6 List of annexures 73 Fraud detection and prevention
74 Broker costs
76 Acquisition costs

1
THE MEDICAL SCHEMES 82 Commercial reinsurance results

INDUSTRY IN 2020 82 Impaired receivables

83 Net healthcare results and net results
7 Demographic Analysis 85 Benefit options
15 Healthcare benefits 87 Accumulated funds and solvency
23 Out of pocket payments 88 Solvency
24 Prescribed minimum benefits 89 Reserves of medical schemes
25 Chronic condition benefits 91 Beneficiaries of schemes which failed to reach 25.00% solvency
26 Diagnosis and treatment pair benefits 94 Liquidity ratios
27 Utilisation of healthcare services 95 Claims-paying ability of schemes
96 Investments
99 Administrator market

www.medicalschemes.co.za
012 431 0500

[email protected]

Private Bag X34 Hatfield 0028

Industry Report 2020 1

 LIST OF TABLES
Chapter 1: The Medical Schemes Industry in 2020 Page

Table 1: Average age, pensioner ratio, and distribution 12

Table 2: Distribution of provinces by province in 2019 and 2020 14

Table 3: Growth in number of beneficiaries per province 14

Table 4: Medical schemes with fewer than 6 000 members 14

Table 5: Benefits paid for medicines dispensed – top 10 disciplines 17

Table 6: Expenditure by event and setting 19

Table 7: Patient expenditure per chronic disease list (CDL) in hospital and out of hospital 25

Table 8: Diagnosis and treatment pair benefits 26

Table 9: Utilisation of general practitioner health services in 2019 and 2020 27

Table 10: Utilisation of general dental practitioner health services in 2019 and 2020 28

Table 11: Utilisation of medical specialist health services in 2019 and 2020 29

Table 12: Utilisation of surgical specialist health services in 2019 and 2020 30

Table 13: Utilisation of dental specialist health services in 2019 and 2020 31

Table 14: Utilisation of support specialist health services in 2019 and 2020 32

Table 15: Utilisation of supplementary and allied health professional services in 2019 and 2020 33

Table 16: Analysis of all (same-day and overnight inpatient) admissions to hospitals in 2019 and 2020 34

Table 17: Analysis of all (same-day and overnight inpatient) admissions to health facilities in 2019 and 2020 35

Table 18: Analysis of overnight inpatient admissions to hospitals in 2019 and 2020 36

Table 19: Analysis of overnight inpatient admissions to health facilities in 2019 and 2020 37

Table 20: Analysis of same-day inpatient admissions to hospitals in 2019 and 2020 38

Table 21: Analysis of same-day inpatient admissions to hospitals in 2019 and 2020 39

Table 22: Hospital admissions by level of care 42

Table 23: Utilisation of medical technology 43

Table 24: Utilisation of maternal, and reproductive healthcare services 44

Chapter 2: Financial overview of the Medical Schemes Industry Page

Table 25: Significant risk transfer arrangements (2019 and 2020) 47

Table 26: Schemes with highest risk transfer arrangement losses (2020) 47

Table 27: Options with highest risk transfer arrangement losses (2020) 48

Table 28: Contracts with the highest risk transfer losses (2019 and 2020) 49

Table 29: Accredited managed healthcare service fees (no transfer of risk) for options with a claims ratio above 100% (2020) 50

Table 30: Accredited managed healthcare services (no transfer of risk) of the 10 largest schemes (2020) 50

Table 31: Contributions and relevant healthcare expenditure pabpm (2000–2020) in 2020 prices 51

Table 32: Contributions and relevant healthcare expenditure pabpm (2000–2020) in 2020 prices 53

Table 33: Open scheme deviation from industry average (2020 and 2019) 57

Table 34: Open schemes with a claims ratio increase 57

Table 35: Restricted scheme deviation from industry average (2020 and 2019) 57

Table 36: Top 10 claims ratios open schemes (2020 and 2019) 59

Table 37: Top 10 claims ratios restricted schemes (2020 and 2019) 59

2 Council for Medical Schemes

Chapter 2: Financial overview of the Medical Schemes Industry (continued) Page

Table 38: Trends in contributions, claims and non-healthcare expenditure (2000–2020) in 2020 prices 62

Table 39: Trends in claims, non-healthcare expenditure, and reserve-building as percentage of contributions among open schemes (2019 and 2020) 63

Table 40: Trends in claims, non-healthcare expenditure, and reserve-building as percentage of contributions among restricted schemes
64
(2019 and 2020)

Table 41: Gross Administration Expenditure (GAE) (2000–2020) in 2020 prices* 66

Table 42: Open schemes with administration expenditure above industry average of R165.11 pabpm (2020) 67

Table 43: The 10 restricted schemes with the highest administration expenditure above industry average of R97.31 pabpm (2020) 68

Table 44: Administration fees paid to third-party administrators pabpm (2019 and 2020) 69

Table 45: The 10 open schemes with the highest administration fees pampm (2020): industry average R305.54 pampm 70

Table 46: The 10 restricted schemes with the highest administration fees pampm (2020): industry average R153.88 pampm 70

Table 47: Top 10 open schemes with the highest governance related expenditure (pabpm) 71

Table 48: Top 10 restricted schemes with the highest governance related expenditure (pabpm) 71

Table 49: The 10 schemes with highest trustee fees (2020) 72

Table 50: The 10 schemes with highest remuneration of principal officers in 2020 73

Table 51: Expenditure on fraud detection and prevention (2020) 73

Table 52: Schemes with broker fees above the industry average of R82.75 pampm (2019 and 2020) 75

Table 53: The 10 schemes with highest marketing, advertising and broker costs (2020) 76

Table 54: Schemes paying marketing fees to administrator: five largest percentages 77

Table 55: Open schemes with highest marketing and advertising expenditure (2020) 78

Table 56: Restricted schemes with highest marketing and advertising expenditure (2020) 81

Table 57: The 13 schemes that incurred net healthcare deficits (2019 and 2020) 84

Table 58: Results of benefit options (2020) 85

Table 59: Results of loss-making benefit options (2020) 86

Table 60: Demographics of registered options at year-end (2020) 87

Table 61: COVID-19 pandemic exposure 89

Table 62: Risk claims, non-healthcare expenditure and reserve-building as a percentage of contributions (1999–2020) 90

Table 63: Prescribed solvency and number of beneficiaries (2000–2020) 91

Table 64: Summary of performance of schemes below 25% solvency in 2020 and 2019 93

Table 65: Asset distribution of the 10 largest schemes by asset base (2020) 97

Table 66 Local and foreign asset distribution of largest 10 schemes by asset base (2020) 98

Table 67: Asset base and investment income (2019 and 2020) 98

Table 68: Percentage deviation from industry average: open schemes 102

Table 69: Percentage deviation from industry average: restricted schemes 102

Table 70: Administrators with administration fees higher than the average for all administrators of R241.50 pampm 102

Table 71: Administrator market share 2020: open schemes 103

Table 72: Administrator market share 2020: restricted schemes 104

Table 73: Total fees paid to the four largest administrators (excluding accredited managed healthcare services) – deviation from average
105
per administrator (2020)

Table 74: Market share of administrators: including accredited managed healthcare services 107

Table 75: Total fees paid to administrators (including accredited managed healthcare services) – deviation from industry average (2020) 107

Industry Report 2020 3

 LIST OF FIGURES
Chapter 1: The Medical Schemes Industry in 2020 Page

Figure 1: Number of schemes by size (2000–2020) 7

Figure 2: Number of schemes by size (2002–2020) 7

Figure 3: Number of open schemes by size (2002–2020) 8

Figure 4: Number of restricted schemes by size (2002–2020) 8

Figure 5: Average number of benefit options (2002–2020) 9

Figure 6: Number of Principal members and dependants (2000–2020) 9

Figure 7: Number of beneficiaries by type (2019–2020) 10

Figure 8: Membership percentage changes by beneficiary type (2008–2020) 10

Figure 9: Membership percentage changes by beneficiary type in open and restricted schemes 11

Figure 10: Dependency ratio in schemes (2008–2020) 11

Figure 11: Age and gender distribution of beneficiaries (2015, 2019, 2020) 12

Figure 12: Distribution of beneficiaries by province 13

Figure 13: Distribution of healthcare benefits paid (2020) 15

Figure 14: Distribution of healthcare benefits paid 2020 by scheme type 16

Figure 15: Reimbursement methods for hospital services (2019–2020)(in R billions) 16

Figure 16: Benefits paid per event (visit)(2020) 18

Figure 17: Total healthcare benefits paid 2009–2020 (2020 prices*) 19

Figure 18: Total healthcare benefits paid per average beneficiary per annum 2009–2020 (2020 prices) 20

Figure 19: Expenditure per capita by age band (2020) 21

Figure 20: Expenditure by age band (2019 and 2020) 22

Figure 21: Proportion of total healthcare expenditure by age group 22

Figure 22: Out-of-pocket payments by discipline group 23

Figure 23: Out-of-pocket payment by discipline group (expenditure) 23

Figure 24: Out-of-pocket payment by scheme type 24

Figure 25: PMB expenditure by age band for 2019 and 2020 24

Figure 26: Expenditure per patient per month on CDL compared to beneficiaries registered on disease management programmes 25

Figure 27: Admission rates (per 1 000 beneficiaries) for private hospitals 40

Figure 28: Admission rates (per 1 000 beneficiaries) for provincial hospitals 40

Figure 29: Admission rates (per 1 000 beneficiaries) for day clinics 41

Figure 30: Admission rates (per 1 000 beneficiaries) for mental health institutions 41

Chapter 2: Financial overview of the Medical Schemes Industry Page

Figure 31: A snapshot of the industry – for every R100 received 45

Figure 32: Gross contributions per average beneficiary per month (2000–2020) in 2020 prices 45

Figure 33: Gross relevant healthcare expenditure (2000–2020) in 2020 prices 46

Figure 34: Risk and savings contributions and contributions pabpm (2000–2020) in 2020 prices 52

Figure 35: Risk and savings claims pabpm (2000–2020) in 2020 prices 52

Figure 36: Medical savings accounts contributions and claims pabpm (2000–2020) in 2020 prices 54

4 Council for Medical Schemes

Chapter 2: Financial overview of the Medical Schemes Industry (continued) Page

Figure 37: Risk claims ratio for all schemes (2000–2020) in 2020 prices 55

Figure 38: Seasonality of claims: 2020 compared to 2019 55

Figure 39: Seasonality of claims per month in 2019 56

Figure 40: Seasonality of claims per month in 2020 56

Figure 41: Restricted schemes with a claims ratio increase 58

Figure 42: Distribution of non-healthcare expenditure of medical schemes 60

Figure 43: Gross non-healthcare expenditure (2000–2020) in 2020 prices 60

Figure 44: Non-healthcare expenditure pabpa (2000–2020) in 2020 prices 61

Figure 45: Claims and non-healthcare expenditure pabpm (2000–2020) in 2020 prices 61

Figure 46: Non-healthcare expenditure in open and restricted schemes (2014–2020) in 2020 prices 63

Figure 47: Open schemes with high non-healthcare expenditure and solvency ratio below average (2020) 65

Figure 48: Restricted schemes with high non-healthcare expenditure and solvency ratio below average (2020) 65

Figure 49: Open schemes with the administration expenditure above industry average of R165.11 pabpm (2020) 68

Figure 50: The 10 restricted schemes with highest administration expenditure above industry average of R97.31 pabpm (2020) 69

Figure 51: Average trustee fees: 10 schemes with highest trustee fees (2019 and 2020) 72

Figure 52: Composition of trustee remuneration for 10 schemes with highest remuneration in 2020 73

Figure 53: Broker service fees pampm (2000–2020) 74

Figure 54: Broker service fees for open schemes (2000–2020) in 2020 prices 74

Figure 55: Schemes with broker fees above the industry average of R82.75 pampm (2019 and 2020) 75

Figure 56: The 10 schemes with highest marketing, advertising and broker costs (2020) 77

Figure 57: Impaired receivables (2000–2020) 82

Figure 58: Net healthcare results (2000–2020) 83

Figure 59: Risk contributions, claims, non-healthcare expenditure, and net surpluses (2000–2020) in 2020 prices 83

Figure 60: Schemes with largest net healthcare deficits and solvency levels below industry average of 44.55% (2020) 84

Figure 61: Net surplus and net assets per Regulation 29 87

Figure 62: Industry solvency of 44.55% 88

Figure 63: Industry solvency for all schemes (2000–2020) 88

Figure 64: Industry solvency ratios excluding GEMS and DHMS 91

Figure 65: Beneficiaries in schemes with solvency below 25.00% (2000–2020) 93

Figure 66: Matching of assets and liabilities (2019 and 2020) 94

Figure 67: Average gross claims covered by cash and cash equivalents (2000–2020) 95

Figure 68: Open scheme industry – investment breakdown (2020) 96

Figure 69: Restricted scheme industry – investment breakdown (2020) 97

Figure 70: Administrator market share at the end of 2020 99

Figure 71: Market share of largest administrators based on average number of beneficiaries – trend 100

Figure 72: Percentage change in administrators with largest market share for all schemes (2001–2020) 100

Figure 73: Open schemes market share of largest administrators based on average number of beneficiaries – trend 101

Figure 74: Restricted schemes market share of largest administrators based on average number of beneficiaries – trend 101

Industry Report 2020 5

 LIST OF ANNEXURES

Annexure A: Compliance with submission of audited Annual Financial Statements and statutory returns

Annexure B: Consolidated membership analysis | for the year ended 31 December 2020

Annexure C: Beneficiaries at the end of the year | for years 2015, 2019 and 2020

Annexure D: Beneficiaries by year of birth | for the years ended 31 December 2019 and 2020

Annexure E: Utilisation of healthcare services - (Prevalence of chronic disease on the Chronic Disease List) | for the years ended 31 December 2019 and 2020

Annexure F: Utilisation of healthcare services (practitioners) | for years ended 31 December 2019 and 2020

Annexure G: Admissions to hospitals by discipline code for the years ended 31 December 2019 and 2020

Annexure H: Admissions to hospitals by admission category | for the years ended 31 December 2019 and 2020

Annexure I: Admissions to hospitals by level of care | for the years ended 31 December 2019 and 2020

Annexure J: Industry total benefits paid | for the years ended 31 December 2019 and 2020

Annexure K: Industry risk benefits paid | for the years ended 31 December 2019 and 2020

Annexure L: Industry saving benefits paid | for years ended 31 December 2018 and 2019

Annexure M: Utilisation of healthcare services (selected health service indicators) | for years ended 31 December 2019 and 2020

Annexure N: Statement of financial position | as at 31 December 2020

Annexure O: Statement of comprehensive income | for the year ended 31 December 2020

Annexure P: Consolidated statement of changes in funds and reserves | for the year ended 31 December 2020

Annexure Q: Statement of comprehensive income details: registered schemes | for the year ended 31 December 2020

Annexure R: Statement of financial position details: registered schemes | as at 31 December 2020

Annexure S: Detailed financial information: registered schemes | for the years ended 31 December 2019 and 2020

Annexure T: Detailed financial ratios: registered schemes | for the years ended 31 December 2019 and 2020

Annexure U: Detailed financial information per option: efficiency discount options (EDO) | for the year ended 31 December 2020

Annexure V: Detailed financial information per option: registered schemes | for the year ended 31 December 2020

Annexure W: Fees paid to administrators: registered schemes | for the years ended 31 December 2019 and 2020

Annexure X: Selected non-healthcare expenditure: registered schemes | for the years ended 31 December 2019 and 2020

Annexure Y: Operating results and solvency: registered schemes | for the years ended 31 December 2019 and 2020

Annexure Z: Demographic profile: registered schemes | for the years ended 31 December 2019 and 2020

Annexure AA: Accredited managed healthcare services (no transfer of risk) per option: registered schemes | for the year ended 31 December 2020

Annexure AB: Significant risk transfer arrangements (excluding commercial reinsurance) per option: registered schemes | for the year ended 31 December 2020

Annexure AC: Seasonality of claims: registered schemes for the year ended 31 December 2020

Annexure AD: Seasonality of claims: registered schemes for the year ended 31 December 2019

Annexure AE: Annexure B to Regulation 30 asset allocation: registered schemes | for the year ended 31 December 2020

Annexure AF: Administrator market share and relevant cash flows under their administration | for the years ended 31 December 2019 and 2020

Annexure AG: List of accredited administrators and their accredited managed care organisations | for the year ended 31 December 2020

Explanatory notes on the Annexures | for the year ended 31 December 2020

6 Council for Medical Schemes

DEMOGRAPHIC ANALYSIS
Number of schemes and benefit options
The downward trend in the total number of registered medical schemes over the past years continued in 2020. The number of medical
schemes decreased from 144 in 2000 to 76 in 2020, as shown in Figure 1, with the highest decline occurring between 2007 and 2010.
Voluntary amalgamations mainly drive the trend in the consolidation of medical schemes. The overall number of schemes in 2020 was 76,
including 18 open schemes and 58 restricted schemes.

Figure 1: Number of schemes by size (2000–2020)

160 144 146 143

140 137 133 131
124 122 119
120 110
Number of Schemes

97 97 100 97
100 94
88 93
87
85 84 83 81 82 83 83 82
77 80 79 78 76
80 73 71 68 63 60 60 60 59 58
60 58 58
47 49 49 49 48 47 41 41 37
40 33
27 26 25 24 23 23 22 21 21 20 18
20
0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Year

open schemes restricted schemes consolidated

* Note that for 2020 CMS only received data from 76 schemes for demographic and membership information, however only 74 schemes submitted the utilisation
information (The two schemes that did not submite utilization data were Alliance-Midmed Medical Scheme and Parmed Medical Scheme. They failed to submit
data and have thus been excluded in the subsequent utilisation of health services sections).

Figure 2 depicts the trend in the distribution of medical schemes in the industry by size from 2002 to 2020, with small schemes outnumbering
medium and large schemes between 2002 and 2013. In general, the industry experienced a decrease in the number of medical schemes,
with small schemes contributing significantly to this decline. The number of small schemes remained constant between 2018 and 2020.
The average number of schemes shows a downward trend from 2002 to 2020. In 2020, the number of small schemes remained unchanged,
while the number of medium and large schemes declined.

Figure 2: Number of schemes by size (2002–2020)

80
70
60
Number of Schemes

50
40
30
20
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

Large Medium Small Average

Industry Report 2020 7

 CHAPTER 1: DEMOGRAPHIC ANALYSIS continued

Figure 3 shows the trend in the number of open schemes by size from 2002 to 2020. For the entire period, large schemes dominated both
small and medium schemes. Between 2007 and 2010, the average number of schemes decreased significantly. There was an upward trend
in the number of medium schemes from 2005 to 2007 and a downward trend in the number of large schemes in the same period. In 2020,
the number of large schemes declined, while the number of medium schemes decreased significantly, and the number of small schemes
remained unchanged.

Figure 3: Number of open schemes by size (2002–2020)

30

25
Number of Schemes

20

15

10

0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

Large Medium Small Average

Figure 4 shows the contribution of restricted schemes in consolidating medical schemes by size from 2002 to 2020, with small schemes
showing a significant drop in number from 2002 to 2014. The number of small schemes remained higher for all years, while the number of
medium schemes has shown a promising increase from 2004 to 2007. The average number of schemes remained constant from 2014 to
2017. In 2020, the number of large, medium, and small schemes remained unchanged.

Figure 4: Number of restricted schemes by size (2002–2020)

80
70
60
Number of Schemes

50
40
30
20
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

Large Medium Small Average

8 Council for Medical Schemes

Figure 5 shows the average number of benefit options in the industry with three benefit options, this has been observed consistently from
2002 to 2020. The average number of benefit options offered by open schemes were six and whiles those offed by restricted schemes was
two benefit options.

Figure 5: Average number of benefit options (2002–2020)

14

12
Average number of benefits

3.30 3.20 3.51 3.48 3.43 3.40 3.39

10
3.16 3.19 3.15 3.28 3.33
3.15 3.13 3.16 3.13 3.13
8 2.86 3.03 2.39 2.33 2.34 2.39
2.28
options

2.10 2.04 2.10 2.20 2.25 2.28

6 1.88 1.95 2.07 2.02 2.10 2.08
1.76 1.84
4
6.40 5.80 5.96 6.04 6.50 6.52 6.48 6.45 6.50
4.98 5.16 5.40 5.23 5.37 5.32 5.41 5.70 6.15 6.19
2

0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

open schemes restricted schemes consolidated

Demographic information
The number of beneficiaries covered by medical schemes has remained stagnant in the past decade, not surpassing the nine million mark.
The only significant increase in the environment was with the introduction of GEMS in 2006. The impact and effects of COVID-19 also seem
to have negatively impacted the number of lives covered.

The proportions of beneficiaries covered by medical schemes expressed as a proportion of the population in the country declined during
the period under review from 16% in 2000 to 14.78% in 2020. The number of beneficiaries covered by restricted schemes grew by
45 525 beneficiaries, and the number of beneficiaries covered by open schemes declined by 148 752 beneficiaries between 2019 and 2020.
Open schemes accounted for more than half of the medical scheme’s population (54.35%), while restricted schemes accounted for the
balance (45.65%) in 2020.

Year-on-year increases in terms of beneficiaries were only notable in three schemes, which grew by more than 5% over the period, mainly
Makoti Medical Scheme (20.3%), LA-Health (7.1%) and Building & Construction Industry Medical Aid Fund (5.9%). The Government
Employees Medical Scheme (GEMS) contributed to the increase in restricted schemes and registered 71 463 beneficiaries, with less than
5% year-on-year growth (3.8%).

Open schemes generally saw a decline in the number of beneficiaries covered in 2020 compared to 2019. Discovery Health Medical Scheme,
which accounted for the lion’s share of open scheme market, registered a loss of nearly 50 000 beneficiaries (49 770 beneficiaries), followed
by Fedhealth (13 015) and Bonitas (12 858). COVID-19 undoubtedly negatively impacted the exposure data, with many individuals being laid
off or losing their jobs, resulting in many members being unable to afford private health care.

Figure 6: Number of principal members and dependants (2000–2020)

10
8.78 8.81 8.81 8.87 8.87 8.92 8.90 8.89
9
8.07 8.32 8.53 8.68
Number of Beneficiaries (Millions)

8 7.88
7.13 7.48
7 6.73 6.77 6.71 6.67 6.67 6.84
3.25 3.52 3.77 3.92 3.93 3.91 3.87 3.92 3.91 3.95 4.01 4.06
6 2.08 2.53 2.99
2.05 2.00 1.98 1.95 1.91 1.93
5
4
3
2 4.68 4.77 4.73 4.72 4.76 4.91 5.05 4.95 4.89 4.82 4.80 4.76 4.76 4.85 4.90 4.94 4.95 4.96 4.97 4.89 4.83
1
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

open restricted consolidated

Industry Report 2020 9

 CHAPTER 1: DEMOGRAPHIC ANALYSIS continued

Figure 7 depicts the number of beneficiaries by type, broken down into principal members and dependants. Open schemes registered losses
in both principal members and dependants data. However the reverse was true for restricted schemes, which registered an increase in both.
The number of dependants and principal members covered by open and restricted schemes declined in 2020.

Figure 7: Number of beneficiaries by type (2019–2020)

4.91 4.87
5
4.08 4.02
4
Number of Beneficiaries (Millions)

3 2.58 2.50
2.40 2.33 2.33 2.37

2 1.68 1.69

0
2019 2020 2019 2020 2019 2020
consolidated open restricted

Members Dependants

Figure 8 illustrates year-on-year growth in the number of beneficiaries between 2008 to 2020. Between 2008 and 2013, the medical scheme
industry had a positive increase in members and dependants. When compared to previous years, the proportion of recipients increased
sharply in 2008. The negative growth was more evident in 2014, 2015, and 2017, with a considerable drop of 1.56% in 2020. The number of
members and dependants dropped sharply by 1.56 and 0.80 respectively.

Figure 8: Membership percentage changes by beneficiary type (2008–2020)

6%

5%

4%

3%
Percentage

2%

1%

0%

-1%

-2%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Member growth (all schemes) Dependants growth (all schemes)

10 Council for Medical Schemes

Figure 9 depicts the year-on-year growth in the number of beneficiaries per scheme type. There has been a consistent decline in the number
of dependants in open schemes from 2008 to 2012. The number of dependants in restricted schemes showed a decline in 2014, 2015, and
2017. In 2020, the numbers of members and dependents in open schemes declined significantly by 2.95% and 3.02%, respectively.

Figure 9: Membership percentage changes by beneficiary type in open and restricted schemes

14%
12%
10%
8%
Percentage

6%
4%
2%
0%
-2%
-4% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Member growth (open schemes) Dependant growth (open schemes)

Member growth (restricted schemes) Dependant growth (restricted schemes)

Figure 10 illustrates the dependant ratios in medical schemes from 2008 to 2020, measuring the number of dependants relative to principal
members. It remained constant at 1.07 for open schemes between 2019 and 2020, while it rose by 0.02 for restricted schemes.

Figure 10: Dependency ratio in schemes (2008–2020)

1.4 1.32 1.31 1.30 1.30 1.30 1.30 1.30 1.23 1.22 1.21 1.21 1.20 1.21
1.2
Dependency Ratio

1.0
0.8
0.6
0.4
0.2
1.29
1.39

1.25
1.42

1.20
1.44

1.20
1.40

1.20
1.40

1.10
1.40

1.13
1.41

1.12
1.38

1.11
1.39

1.10
1.38

1.09
1.38

1.07
1.38

1.07
1.40

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

open schemes restricted schemes consolidated

Industry Report 2020 11

 CHAPTER 1: DEMOGRAPHIC ANALYSIS continued

Figure 11 illustrates the age and gender distribution of beneficiaries of medical schemes in 2015, 2019, and 2020. A bimodal distribution is
evident for both male and female beneficiaries. There were more beneficiaries between the ages of 5 and 9 years, and fewer beneficiaries
aged 85 years and above. There is a decreasing slope between ages 5 – 9 years and 20 – 24 years, and the trend is consistent throughout
the years.

Figure 11: Age and gender distribution of beneficiaries (2015, 2019, 2020)

450
400
Beneficiaries (Thousands)

350
300
250
200
150
100
50
0
1-4
5-9

1-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85+

10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85+
Under 1

Under 1 Female Male

2015 2019 2020

Table 1 shows the average age of beneficiaries and the proportion of pensioners by scheme type and gender from 2016 to 2020. In 2020, the
industry average age of beneficiaries increased by 0.4. The average age of female beneficiaries was higher than that of male beneficiaries
from 2016 to 2020. The proportion of pensioners (beneficiaries aged 65 and above) increased to 8.9% in 2020 from 8.6% in 2019. For all the
years, the pension ratio and the average age for females was higher than that of male beneficiaries.

The average age of 35.3 years in open schemes was higher than the industry average of 33.4 years in 2020, while restricted schemes had a
lower average age of 31.2 years.

Table 1: Average age, pensioner ratio, and distribution

Average age (years)
and Pensioner
Type of Scheme Gender ratio (%) 2016 2017 2018 2019 2020

Open Schemes Female Average age 34.7 34.9 35.2 35.6 36.2
Pensioner ratio 10.1 10.9 11.6 11.3 11.8
Male Average age 33.2 33.3 33.5 33.8 34.3
Pensioner ratio 8.2 8.9 9.6 9.2 9.6
Total Average age 34.0 34.1 34.4 34.9 35.3
Pensioner ratio 9.2 10.0 10.7 10.3 10.7
Restricted Schemes Female Average age 31.9 31.8 32.1 32.2 32.7
Pensioner ratio 7.1 7.4 7.9 7.4 7.6
Male Average age 29.1 28.9 29.3 29.3 29.5
Pensioner ratio 5.2 5.4 5.8 5.3 5.5
Total Average age 30.6 30.5 30.8 31.1 31.2
Pensioner ratio 6.3 6.5 6.9 6.5 6.6
All Schemes Female Average age 33.4 33.5 33.8 34.1 34.5
Pensioner ratio 8.8 9.3 9.9 9.5 9.8
Male Average age 31.5 31.4 31.7 31.9 32.2
Pensioner ratio 7.0 7.4 7.9 7.6 7.8
Total Average age 32.5 32.6 32.8 33.0 33.4
Pensioner ratio 7.9 8.4 9.0 8.6 8.9

12 Council for Medical Schemes

Figure 12 depicts the geographic distribution of beneficiaries per province in 2020, with the data primarily based on the principal member’s
address. Gauteng (39%) province had the highest concentration of beneficiaries, followed by the Western Cape (16%) and KwaZulu-Natal
(15%). The lowest concentration of beneficiaries is in Northern Cape with 2%.

Figure 12: Distribution of beneficiaries by province

5%
Limpopo

6%
Mpumalanga
5% 39%
North West Gauteng

4%
Free State

2%
Northern Cape 15%
KwaZulu-Natal

7%
Eastern Cape
16%
Western Cape

Industry Report 2020 13

 CHAPTER 1: DEMOGRAPHIC ANALYSIS continued

Table 2 shows the number of beneficiaries per province in 2019 and 2020. Gauteng and North-West experienced a year-on-year decline in
the number of beneficiaries by 4.5% and 4.3% respectively.

The Western Cape had the largest growth, with a 4.0% rise between 2019 and 2020. Overall, the industry fell by 1.1% in 2020, compared to
0.8% in 2019. The number of beneficiaries outside South Africa decreased slightly by 3.7% between 2019 and 2020. There was a considerable
decline in the unclassified category.

Table 2: Distribution of provinces by province in 2019 and 2020

Province 2019 2020 % change

Gauteng 3 598 421 3 435 040 -4.5

Western Cape 1 333 363 1 386 299 4.0
KwaZulu-Natal 1 265 694 1 289 664 1.9
Eastern Cape 653 755 664 093 1.6
Mpumalanga 550 360 551 551 0.2
North-West 476 557 456 057 -4.3
Limpopo 460 369 472 055 2.5
Free State 390 841 396 451 1.4
Northern Cape 177 151 181 609 2.5
Unclassified 79 789 50 451 -36.8
Outside South Africa 3 806 3 664 -3.7
All provinces 8 990 106 8 886 933 -1.1

Table 3 depicts the number of beneficiaries by scheme type and province in 2019 and 2020. Restricted schemes gained in all provinces except
North-West (with a significant decline of 4.8%). In open schemes, the Western Cape saw the highest increase in the number of beneficiaries
(6.3%), followed by Limpopo and KwaZulu-Natal with 5.8% and 3.5% respectively, and Gauteng with a substantial drop of 7.7%.

Table 3: Growth in number of beneficiaries per province

2019 2020 % change

Province Open Restricted Open Restricted Open Restricted Industry

Eastern Cape 289 663 364 092 293 280 370 813 1.2 1.8 1.6
Free State 156 328 234 513 159 208 237 243 1.8 1.2 1.4
Gauteng 2 392 004 1 206 417 2 208 264 1 226 776 -7.7 1.7 -4.5
KwaZulu-Natal 663 031 602 663 686 331 603 333 3.5 0.1 1.9
Limpopo 140 099 320 270 148 251 323 804 5.8 1.1 2.5
Mpumalanga 242 252 308 108 239 810 311 741 -1.0 1.2 0.2
North-West 170 996 305 561 165 127 290 930 -3.4 -4.8 -4.3
Northern Cape 68 403 108 748 70 576 111 033 3.2 2.1 2.5
Western Cape 795 039 538 324 844 871 541 428 6.3 0.6 4.0

Table 4 depicts medical schemes with less than 6 000 members. Among the medical schemes, eight were restricted and one was open.
Overall, the nine small scheme reported a loss of 6% in membership, with Golden Arrow` Medical Fund and Grintek Electronics Medical Aid
with reporting a declined of more than ten percent, with a 14.57% and 10.32% decline in membership respectively.

Table 4: Medical schemes with fewer than 6 000 members

Beneficiaries

Medical schemes Scheme type 2019 2020 % change

GRINTEK ELECTRONICS MEDICAL AID SCHEME restricted 1 202 1 078 -10.32

SUREMED HEALTH open 2 275 2 065 -9.23
SEDMED restricted 2 371 2 349 -0.93
RHODES UNIVERSITY MEDICAL SCHEME restricted 2 414 2 439 1.04
PG GROUP MEDICAL SCHEME restricted 3 050 2 887 -5.34
BP MEDICAL AID SOCIETY restricted 3 532 3 285 -6.99
FISHING INDUSTRY MEDICAL SCHEME (FISH-MED) restricted 4 347 4 141 -4.74
GOLDEN ARROWS EMPLOYEES’ MEDICAL BENEFIT FUND restricted 5 635 4 814 -14.57
ANGLOVAAL GROUP MEDICAL SCHEME restricted 5 035 4 939 -1.91

14 Council for Medical Schemes

HEALTHCARE BENEFITS

For more information, read notes in Annexures C to K. All values in this section is stated in nominal terms unless stated otherwise.

Total healthcare benefits paid

838.17 in 2019 to R20

beneficiary dereased by 4.31% from R18 790.72 in 2019 to R17 980.26 in 2020, and the average spent from medical savings accounts pabpa
increased by only 0.04% to R2 048.37.

The proportion of healthcare expenditure on hospital services was 35.21%, with expenditure on all specialists accounting for 25.85%,
followed by medicine dispensed at 16.5%, and then supplementary and allied health professionals at 7.95%. Hospital services accounted for

supplementary and allied health professionals at 6.82%.

Medicines dispensed accounted for 40.06% of expenditure from medical savings accounts, followed by expenditure on specialists at 18.18%,
supplementary and allied health professionals at 17.81%, and general practitioners at 12.28%. Expenditure from medical savings accounts

Figure 13: Distribution of healthcare benefits paid (2020)

Total benefits paid 35% 26% 17% 8% 5% 5% 2%2%

Risk benefits paid 39% 27% 14% 7% 7% 6% 1%2%

Savings benefits paid 1% 18% 40% 18% 0% 12% 8% 3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Total Hospital Managed care arrangements (out of hospital)

All specialists General practitioner

Medicine dispensed Dentists

Supplementary and allied Health Professionals Other

* Other of consists other health services, dental specialists, ex-gratia payments and other unspecified benefits.

Industry Report 2020 15

 CHAPTER 1: HEALTHCARE BENEFITS continued

Figure 14: Distribution of healthcare benefits paid 2020 by scheme type

1%
1%
Open schemes 36% 27% 16% 8% 6% 4% 2%
1%

Restricted schemes 35% 24% 17% 8% 5% 6% 2% 2%

1%

Consolidated 35% 26% 17% 8% 5% 5% 2%2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Total Hospital General practitioner

All specialists Dentists

Medicine dispensed Other health services

Supplementary and allied Health Professionals Dental specialists

Managed care arrangements (out of hospital) Other benefits

Figure 15: Reimbursement methods for hospital services (2019–2020)(in R billions)

Fees for service ward fees R62.69

R68.42
Fees for service: Consumables R18.48
R19.29
Fee for service Theatre fees R12.84
R14.14
Other alternative reimbursement models R8.78
R10.12
Per diem R6.59
R7.06
Fixed fees R5.05
R6.35
Fee for service: Other R3.33
R3.77
Uniform Patient Fee Schedule R1.97
R2.01
Global Fees R0.28
R0.33

0 10 20 30 40 50 60 70 80

2020 2019

16 Council for Medical Schemes

General practitioners accounted for 3.77% of medicines dispensed, with all other providers making up 7.35%. The most significant year on
year increase was observed for speech therapy and audiology which increased by 13.88%. Decreases were observed for surgical specialists,
anaesthetists, pathology, general practitioners, and pathology. Table 5 lists the top 10 dispensing providers.

Table 5: Benefits paid for medicines dispensed – top 10 disciplines

2020 2019

Discipline R % of total R % of total % change

Pharmacies (60) 26 117 377 608.19 88.88 24 958 059 479.42 88.11 4.65
General Medical Practice (014) 1 107 723 437.02 3.77 1 224 338 823.20 4.32 -9.52
Clinical services (90) 541 296 021.52 1.84 570 308 841.25 2.01 -5.09
Ophthalmology (26) 336 979 847.01 1.15 376 791 913.40 1.33 -10.57
Diagnostic Radiology (38) 296 527 056.34 1.01 285 045 940.84 1.01 4.03
Independent Practice Specialist Radiation Oncology (40) 209 224 416.75 0.71 187 722 512.29 0.66 11.45
Speech therapy and Audiology (82) 141 418 196.33 0.48 131 257 029.63 0.46 7.74
Registered nurses (88) 102 168 620.85 0.35 85 443 509.56 0.30 19.57
Surgery/Paediatric surgery Independent Practice
Specialist (42) 68 842 813.84 0.23 66 310 876.34 0.23 3.82
Blood transfusion services (78) 62 046 856.56 0.21 36 607 782.98 0.13 69.49
Other 401 148 851.69 1.37 405 102 463.11 1.43 -0.98
Grand Total 29 384 753 726.10 100.00 28 326 989 172.02 100.00 3.73

There was an overall decline in the amounts paid toward specialists, hospitals, general practitioners, dentists, and dental specialists, 2.26%,
8.83%, 10.07%, 7.19%, and 5.52%, respectively. This is attributed to the varying levels of lockdowns and cancellation of elective procedures
and services during 2020 due to the COVID-19 pandemic.

The only specialist service that increased during the period under review was pathology services which amounted to R11.6 billion in 2020
and increased by 10.88% from R10.5 billion in 2019. There was a reduction in the proportion of benefits paid in-hospital, which was 48.4%
in 2020 and slightly over 55% in 2019. However, the average amount paid per visit increased considerably by close to 12% to R5 238.18 in
2020 compared to R4 682.66 in 2019. The average amount paid per visit for out-of-hospital services also increased from R3 872.80 in 2019
to R4 265.60 in 2020, representing an increase of 10.14%. Restricted schemes paid on average higher fees per event compared to open
schemes, presented in Figure 16.

Expenditure on surgical specialists decreased by 7.31% from R10.6 billion in 2019 to R9.79 billion in 2020. The average amount paid per
event in-hospital increased by 13.71% from R4 098.31 in 2019 to R4 660.07 in 2020. The average amount paid per event out-of-hospital
increased by 9.35% from R1 255.03 to R1.372.34 for 2019 and 2020.

Expenditure on anaesthetists decreased by 5.64%, from R4.1 billion in 2019 to R3.9 billion in 2020. The average amount paid per event
in-hospital increased by 15.83% from R3 580.55 in 2019 to R4 147.48 in 2020. The average amount paid per event out-of-hospital increased
by 13.98% R1 776.51 in 2019 to R2 024.82 in 2020. Restricted schemes paid slightly higher fees in-hospital per event than open schemes,
with the opposite result for events out-of-hospital.

The overall amount paid to supplementary and allied health professionals increased by only 1% from R14.01 billion in 2019 to R14.15 billion in
2020, although there was a large variation in changes per average visit. The average expenditure per event in-hospital was higher in restricted
schemes at R2 851 than R1 478 for open schemes.

Expenditure on general practitioners (GPs) decreased by 10.07% from 10.3 billion in 2019 to 9.21 billion in 2020. Hospital visits accounted for
14% of expenditure on GPs, with an average of R1 044.94 per event in 2019 to R1 203.43 in 2020, representing an 15% increase. Visits out-
of-hospital averaged at R404.62 in 2019 compared to R424.59 in 2020. Restricted schemes paid higher fees on average per event compared
to Open schemes.

Expenditure on medical specialists decreased by 2.2% from R13.4 billion in 2019 to R13.1 billion in 2020. The average expenditure per event
in-hospital increased by 10.99% from R1 549.13 2019 to R1 719.41 in 2020. The average expenditure per event out-of-hospital increased by
4.28% from R1 185.57 in 2019 to R1 236.31 in 2020.

Industry Report 2020 17

 CHAPTER 1: HEALTHCARE BENEFITS continued

Figure 16 shows benefits paid to different discipline groups per event (visit) for both in and out of hospital. Total benefits paid per event is
calculated as total benefits paid (from risk and savings) divided by the number of visits to a provider. The cost (or benefits paid) per event
must be interpreted with caution as the calculation does not consider other factors such as the number of hours spent per event. Events paid
in-hospital from medical savings accounts of beneficiaries make up a very small part of the expenditure and relate to mainly dentist visits and
dental specialist visits.

Figure 16: Benefits paid per event (visit)(2020)

Pathology R4 265.60
R5 238.18
Anaesthetists R2 024.82
R4 147.48
Surgical Specialists R1 372.34
R4 660.07
Dental Specialists R1 496.04
consolidated

R4 188.93
Supplementary and Allied Health Professionals R1 394.39
R3 658.09
Dentists R1 111.21
R2 695.96
Radiology R1 256.97
R2 181.96
Medical Specialists R1 236.31
R1 719.41
General Practitioner R 424.59
R1 203.43
Pathology R3 405.31
R4 573.64
Surgical Specialists R1 824.76
R4 386.61
Anaesthetists R2 210.28
R3 956.43
Dental Specialists R1 482.23
R4 350.74
Radiology R1 273.54
open

R2 236.42
Dentists R 926.09
R2 307.59
Supplementary and Allied Health Professionals R1 166.41
R2 113.10
Medical Specialists R1 203.56
R1 684.49
General Practitioner R 400.22
R1 086.86
Pathology R4 627.51
R5 424.37
Anaesthetists R1 959.37
R4 197.95
Surgical Specialists R1 204.86
R4 724.45
Dental Specialists R1 543.08
R4 154.04
restricted

Supplementary and Allied Health Professionals R1 485.22

R3 941.32
Dentists R1 172.91
R2 795.12
Radiology R1 253.40
R2 167.79
Medical Specialists R1 246.95
R1 731.32
General Practitioner R 433.01
R1 236.42

R0.00 R1 000.00 R2 000.00 R3 000.00 R4 000.00 R5 000.00 R6 000.00

Out-of-hospital In-hospital

18 Council for Medical Schemes

The significant increase reported for in-hospital events for supplementary and allied health professionals are attributed to significant increases
of 332.68%, 97.35% and 72.41% for in-hospital services paid to psychological counsellors, pharmacies and optometrists, respectively. These
changes are changes are listed in Table 6.

Table 6: Expenditure by event and setting

2020 2019
Setting by discipline group R R % change

Out-of-hospital
Pathology 4 265.60 3 872.80 10.14
Anaesthetists 2 024.82 1 776.51 13.98
Dental Specialists 1 496.04 1 419.00 5.43
Supplementary and allied health professionals 1 394.39 1 451.93 -3.96
Surgical Specialists 1 372.34 1 255.03 9.35
Radiology 1 256.97 1 188.25 5.78
Medical Specialists 1 236.31 1 185.57 4.28
Dentists 1 111.21 1 058.47 4.98
General practitioners 424.59 404.62 4.93
In-hospital
Pathology 5 238.18 4 682.66 11.86
Surgical specialists 4 660.07 4 098.31 13.71
Anaesthetists 4 147.48 3 580.55 15.83
Dental specialists 4 188.93 3 227.32 29.80
Supplementary and allied health professionals 3 658.09 2 000.43 82.87
Dentists 2 695.96 2 582.22 4.40
Radiology 2 181.96 2 075.91 5.11
Medical specialists 1 719.41 1 549.13 10.99
General practitioners 1 203.43 1 044.94 15.17

Trends in total healthcare benefits paid at constant prices1

Figure 17 shows trends in the distribution of healthcare benefits that medical schemes have paid to various categories of service providers
since 2009. These figures have been adjusted for inflation with 2020 used as the base year. The figures are reported in real (or constant)
terms, implying that the historical data has been adjusted to 2020 prices.

Expenditure on private hospitals decreased by 8.38% in real terms from R68.4 billion in 2019 to R62.7 billion in 2020. The annual average
increase from R23.7 billion in 2009 to R62.4 billion in 2020, was 9.18% and is illustrated in Figure 17. The proportion of benefits paid toward
private hospitals has averaged around 36.6% between 2009 and 2020. The proportions of expenditure on all specialist and medicines
dispensed reflected greater fluctuation over the period.

Figure 17: Total healthcare benefits paid 2009–2020 (2020 prices*)

80
70
Benefits paid (billions)

60
50
40
30
20
10
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Private hospitals Managed care arrangements Provincial hospitals

All specialists Other Health Services Dentists
Medicines Dispensed Dental specialists Ex-gratia payments
Supplementary and Allied Health Professionals General practitioner

* All values are adjusted for inflation using the Consumer Price Index (CPI) for 2020 as a base period.
** Historical values are revised when the base period changes and will not correspond to the values reported in previous annual reports.
1
Historical (pre-2014) provider classifications have been used in order to create continuity and preserve historical data. The groupings differ slightly with provider
classifications used in other sections of the report.

Industry Report 2020 19

 CHAPTER 1: HEALTHCARE BENEFITS continued

The bulk of medical schemes’ total expenditure continues to be paid to hospitals and specialists. Benefits paid to specialists in 2020 amounted
to R46 billion in real terms, a decrease of 2.26% in real terms when compared to 2019 and a 5.88% annualised increase over the period 2009
to 2020.

Healthcare benefits paid per beneficiary

Figure 18 shows the changes in healthcare expenditure per average beneficiary per annum (pabpa) from 2009 to 2020 in real terms
(at 2020 prices). The amount paid in real terms on private hospitals decreased by 8.7% from R7 655 pabpa in 2019 to R6 991 pabpa in 2020,
due to the effects of lockdowns and deferral of elective procedures caused by the pandemic.

The amount spent on specialists increased in real terms from R2 105 pabpa in 2009 to R5 157 pabpa in 2020, an annual average increase of
8.49%. Expenditure on GPs increased with an annual average of 3.41%. Similarly, expenditure on dentists increased with an annual average
of 3.38% between 2009 and 2020.

Figure 18: Total healthcare benefits paid per average beneficiary per annum 2009–2020 (2020 prices*)

9
8
pabpa (RANDS) Thousands

7
6
5
4
3
2
1
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Private hospitals General practitioner Other Health Services

All specialists Provincial hospitals Dental specialists
Medicines Dispensed Managed care arrangements Ex-gratia payments
Supplementary and Allied Health Professionals Dentists

* All values are adjusted for inflation using the Consumer Price Index (CPI) for 2020 as a base period.
** Historical values are revised when the base period changes and will not correspond to the values reported in previous annual reports.

20 Council for Medical Schemes

Healthcare benefits paid per age band
Figure 19 shows the per capita healthcare expenditure across healthcare services by age group. Expenditure for beneficiaries over the age
of 44 years rises above the average cost per beneficiary of R19 999, and peaks for beneficiaries in the age band 80 to 84 years at R68 944
per average beneficiary.

Expenditure on primary healthcare providers, general medical practitioners and dentists continues to be overshadowed by the expenditure on
specialists, hospitals and medicines dispensed, which, when combined, consists of over 80% of cost per age band.

Figure 19: Expenditure per capita by age band (2020)

R70 000.00

R60 000.00

R50 000.00
per capita expenditure

R40 000.00

R30 000.00
R19 080.79
R20 000.00

R10 000.00

R 0.00
Less 1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85
than years years years years years years years years years years years years years years years years years years+
one
year

Total Hospital Supplementary and Allied Health Professionals Other Health Services
All Specialists General Practitioner Dental Specialists
Medicine Dispensed Dentists papba

* Values exclude managed care fees, capitation fees, ex-gratia payments and other unspecified benefits.

Industry Report 2020 21

 CHAPTER 1: HEALTHCARE BENEFITS continued

Figure 20 highlights the differences observed in the expenditure of benefits paid by age band. Expenditure for beneficiaries over the age
of 59 increases significantly, ranging from approximately R39 000 to close to R64 000 per beneficiary per annum. Significant year-on-year
decreases were observed for the age bands between under 1 year to 10 – 14 years, ranging from 11.37% to 33.7%, with decreases ranging
from 2.37% to 6.8% for the age bands over 64 years.

Figure 20 depicts the number of beneficiaries in 2019 and 2020 against the average amount paid for benefits for each of the age bands.

Figure 20: Expenditure by age band (2019 and 2020)

R70 000,00 900 000

R60 000,00 800 000

per beneficiary per anum

Beneficiaries by age band

700 000
R50 000,00
600 000
R40 000,00 500 000
R30 000,00 400 000
300 000
R20 000,00
200 000
R10 000,00 100 000
R 0,00 -
1-4
years
5-9
years
10-14
years
15-19
years
20-24
years
25-29
years
30-34
years
35-39
years
40-44
years
45-49
years
50-54
years
55-59
years
60-64
years
65-69
years
70-74
years
75-79
years
80-84
years
85
years+
Less than
one year

Expenditure 2020 Expenditure 2019 Beneficiaries 2020 Beneficiaries 2019

* Values exclude managed care fees, capitation fees, ex-gratia payments and other unspecified benefits.

Proportionally more benefits are paid towards beneficiaries in the age bands above 44 years, with beneficiaries 65 years and older consisting
of 9.14% (8.91% in 2019) of the population consuming over 26.25% (26% in 2019) of healthcare benefits, and beneficiaries between 45 and
64 years consisting of 23.62% (23.4% in 2019) of the medical schemes’ population consuming 35.18% (34% in 2019) of healthcare benefits.

This translates to a total of 33% of the medical schemes’ population consuming just slightly over 61% of the healthcare benefits provided in
2020, demonstrating the cross-subsidisation between the young and healthy and the older and sicker beneficiaries.

Figure 21: Proportion of total healthcare expenditure by age group

100%
9.14%
90% 26.25%
80% 23.62%
70%
Percentage

60% 35.18%
50% 34.26%
40%
30%
27.42%
20% 31.01%
10% 8.25%
1.96% 2.91%
0%
Proportion of beneficiaries Proportion of expenditure

Less than one year 1-19 years 20-44 years 45-64 years 65 years+

22 Council for Medical Schemes

OUT OF POCKET PAYMENTS
Out of pocket payments (OOPs) are calculated as the difference between the claimed amount and the amount that was paid from the medical
scheme risk. This is an understatement of the true OOPs that members incur as it is likely that medical schemes do not fully capture and
submit all costs associated with seeking healthcare.

Figure 22 depicts the estimated out-of-pocket payments for 2020 (outer ring) and 2019 (inner ring). The largest component remains that of
medicines dispensed, which constituted 36% of OOPs in 2020 which is 3% higher than the 2019 with 33%.

There was a slight decrease in the portion of OOPs paid to specialists which is consistent with the decrease in total benefits paid to specialists
for 2020.

Figure 22: Out-of-pocket payments by discipline group

2.27%

5.51%

6.41%
6.02%
6.45%
Medicine dispensed Total hospital
35.68%
32.79%
9.27%
2.29% All specialists Dental specialists
9.72%
Supplementary and
Other health services
Allied Health Professionals
14.46%
14.67% General practitioner Other benefits

27.40% Dentists

25.42%

Figure 23 offers a closer look into OOPs by splitting the expenditure into the proportion from medical savings accounts (MSA) and that paid
by the member. This reveals that anaesthetics, surgical specialists and total hospitals constitute that largest proportions of expenditure paid
by members while GPs, pathology, supplementary and allied works constitute the largest expenditure from the MSA.

Figure 23: Out-of-pocket payment by discipline group (expenditure)

Grand Total R18.21 R14.49

Total Hospital R0 R0.04
Supplementary and Allied Health Professionals R0.06 R0.11
Other Health Services R0 R0.35
0ther benefits R1.40 R0.69
Medicine Dispensed R2.24 R0.79
General Practitioner R3.24 R1.55
Dentists R0.23 R1.57
Dental Specialists R7 R4.37
All Specialists R3.31 R5

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Paid from MSA Paid by member

Industry Report 2020 23

 CHAPTER 1: OUT OF POCKET PAYMENTS continued

Figure 24 depicts the split of OOPs by scheme type between 2015 and 2020. Generally, OOPs are lower in restricted schemes which,
by design, tend to be more comprehensive. The total OOP over the past five years (2016 – 2020) increased by 10% from R29.9 billion in 2016
to R32.8 billion in 2020. Note the decline between 2019 and 2020 from R35.2 billion to R32.8 billion which may be attributed to general lower
claims experience, possibly due to COVID-19.

Figure 24: Out-of-pocket payment by scheme type

R40.00
17.1
R35.00 15.8 15.7 14.6
Out of pocket expenditure

14.6
R30.00 13.3 12.8
11.6 10.7
11.1
R25.00 8.4 9.4
10.2
Billions

7.5.56
R20.00
5.2
4.6
R15.00
R10.00 3.8 4.4 4.7 4.1 4.4 3.9
2.9 3.2
R5.00 11.5 12.3 14.0 15.2 16.1 17.2 18.1 18.2 9.3 10.3 11.7 12.6 13.2 14.0 14.6 14.6
1.8 2.0 2.3 2.6 2.9 3.2 3.5 3.6
R0.00
2013
2014
2015
2016
2017
2018
2019
2020

2013
2014
2015
2016
2017
2018
2019
2020

2013
2014
2015
2016
2017
2018
2019
2020
consolidated open restricted

Paid from MSA Paid by member

PRESCRIBED MINIMUM BENEFITS

Expenditure on prescribed minimum benefits (PMBs) is mainly driven by beneficiary profile, prevalence of chronic conditions and expenditure
of treatment.

The term ‘beneficiary profile’ refers to the level of cross subsidisation between the young and old, as well as the sick and healthy. To remain
sustainable, medical schemes need membership grown in young and healthier populations.

Figure 25 depicts the relationship between medical schemes expenditure on PMBs and beneficiary profiles. Expenditure generally increases
with age, particularly beyond the ages of 40 – 44 years, while the membership growth beyond this point drops rapidly. Conversely, expenditure
increases significantly from the age of 59 years. In 2020, expenditure for the ages between 45 and 64 were slightly higher than beneficiaries
69 years and older.

Figure 25: PMB expenditure by age band for 2019 and 2020

R4 000.00 900 000

R3 500.00 800 000
700 000
PMB expenditure pabpm

Number of beneficiaries

R3 000.00
600 000
R2 500.00
500 000
R2 000.00
400 000
R1 500.00
300 000
R1 000.00 R866.02
200 000
R 500.00 100 000
R 0.00 -
1-4
years
5-9
years
10-14
years
15-19
years
20-24
years
25-29
years
30-34
years
35-39
years
40-44
years
45-49
years
50-54
years
55-59
years
60-64
years
65-69
years
70-74
years
75-79
years
80-84
years
85
years+
Less than
one year

Beneficiaries 2020 Beneficiaries 2019 Expenditure 2020 Expenditure 2019 pabpm

24 Council for Medical Schemes

CHRONIC CONDITION BENEFITS
Table 7 below lists the average per patient per month (pppm) expenditure for beneficiaries suffering from various chronic conditions who
received treatment either in hospital or out of hospital.

Table 7: Patient expenditure per chronic disease list (CDL) in hospital and out of hospital
Out-of-hospital In-hospital

Expenditure Expenditure Expenditure Expenditure

2019 2020 2019 2020
CDL condition R’000 R’000 % change R’000 R’000 % change

Haemophilia 28 202.37 31 751.97 12.59 8 390.61 7 666.48 -8.63

Chronic renal disease 4 286.91 4 946.60 15.39 5 867.68 6 136.84 4.59
Coronary artery disease 198.28 205.65 3.71 4 254.89 4 469.11 5.03
Dysrhythmias 189.13 221.33 17.02 3 886.54 4 046.44 4.11
Cardiomyopathy 178.58 189.85 6.31 3 475.44 3 620.19 4.16
Cardiac heart failure 138.89 156.58 12.74 3 110.62 3 125.00 0.46
Crohn’s disease 1 750.88 1 968.10 12.41 2 074.18 2 719.98 31.14
Bipolar mood disorder 469.78 499.95 6.42 2 296.80 2 411.51 4.99
Multiple sclerosis 4 869.76 5 191.66 6.61 2 375.98 2 384.12 0.34
Schizophrenia 644.16 688.95 6.95 1 833.35 2 008.22 9.54
Chronic obstructive pulmonary 349.25 385.13 10.27 2 051.19 1 931.95 -5.81
disease
Systemic Lupus Erythematosus 303.76 325.38 7.12 1 991.65 1 887.16 -5.25
Diabetes mellitus Type 1 414.93 453.01 9.18 1 844.38 1 867.64 1.26
Parkinson’s disease 567.79 566.48 -0.23 1 665.03 1 842.09 10.63
Epilepsy 380.97 418.02 9.73 1 837.06 1 818.25 -1.02
Bronchiectasis 170.24 248.19 45.79 1 357.85 1 709.26 25.88
Addison’s disease 134.28 145.48 8.34 1 396.05 1 667.04 19.41
Ulcerative colitis 876.69 951.12 8.49 1 268.80 1 529.69 20.56
Diabetes mellitus Type 2 282.68 309.01 9.31 1 352.40 1 296.83 -4.11
Hypertension 154.71 160.48 3.73 1 331.77 1 289.91 -3.14
Rheumatoid arthritis 606.49 592.24 -2.35 1 430.37 1 285.87 -10.10
Asthma 174.36 184.62 5.88 1 171.61 1 176.52 0.42
Glaucoma 285.39 297 4.07 1 016.55 1 075.76 5.82
HIV/AIDS 317.85 336.64 5.91 995.61 928.25 -6.77
Hypothyroidism 61.06 63.77 4.44 903.14 871.01 -3.56
Diabetes insipidus 556.89 623 11.87 849.73 776.35 -8.64
Hyperlipidaemia 62.49 65.63 5.03 526.03 503.97 -4.19

Figure 26 depicts the proportion of beneficiaries registered on schemes’ disease management programmes.

Hypertension, hyperlipidaemia and diabetes mellitus type 2 remain the most prevalent conditions on the CDL of medical schemes.
Figure 26 further shows the prevalence of chronic conditions against the expenditure per patient per month (pppm). Haemophilia had the
highest expenditure per patient registered (although it has the lowest prevalence), followed by chronic renal failure and multiple sclerosis.

Figure 26: Expenditure per patient per month on CDL compared to beneficiaries registered on disease management
programmes

R30 000.00 180.00

160.00
R25 000.00
140.00
R20 000.00 120.00
Expediture pppm

rate per 1000

100.00
R15 000.00
80.00
R10 000.00 60.00
40.00
R5 000.00
20.00
R0.00 -
CMY
BMD
HYP

GLC
DYS
TDH

CHF

CRF
PAR

BCE
ADS

HAE
EPL

SLE
COP

MSS
IHD

SCZ
DM2

RHA

DM1

CSD

DBI
HIV

IBD
HYL

AST

Expenditure pppm 2019 Expenditure pppm 2020 Registered beneficiaries 2019 Registered beneficiaries 2020

Industry Report 2020 25

 DIAGNOSIS AND TREATMENT PAIR BENEFITS
Diagnosis and treatment pairs (DTPs) are a set of procedures and treatments linked to certain prescribed minimum benefit (PMB) conditions.

Table 8 lists the top 10 expenditures on DTPs for 2019 and 2020. Default emergencies remain the most expensive DTP pabpa, followed by
pregnancy, major affective disorders and COVID-19. These four DTPs accounted for R17.6 billion in 2020.

Table 8: Diagnosis and treatment pair benefits

2020 2019

Pabpa Pabpa
Disease treatment pairs R’000 000 % change R R’000 000 R

Default emergency 5 802.44 27.36 652.74 4 556.09 510.53

Pregnancy 4 843.17 3.87 544.83 4 662.84 522.49
Major affective disorders; including unipolar and 3 568.82 -5.47 401.47 3 775.44 423.06
bipolar depression
COVID-19 3 340.05 375.74 0.00 0.00
Acute and subacute ischemic heart disease; including 2 770.11 -11.33 311.62 3 124.06 350.07
myocardial infarction and unstable angina
Metastatic infections; septiceamia 2 496.19 -5.17 280.81 2 632.29 294.96
Closed fractures/ dislocations of limb bones/epiphyses 2 128.57 -1.71 239.45 2 165.71 242.68
Respiratory conditions of the newborn 1 957.14 8.47 220.17 1 804.35 202.19
Bacterial; viral; fungal pneumonia 1 957.13 -10.04 220.17 2 175.45 243.77
Cataract; aphakia 1 843.11 -14.06 207.34 2 144.61 240.31
Cancer of breast – treatable 1 753.16 2.66 197.22 1 707.73 191.36
Cancer of the gastro-intestinal tract; including oesophagus; 1 627.58 0.20 183.09 1 624.27 182.01
stomach; bowel; rectum; anus – treatable
End-stage renal disease regardless of cause 1 429.85 1.20 160.85 1 412.97 158.33
Adult respiratory distress syndrome; inhalation and 1 393.97 6.66 156.81 1 306.88 146.44
aspiration pneumonias
Stroke (due to hemorrhage; or ischaemia) 1 317.60 -0.15 148.22 1 319.55 147.86
Life-threatening cardiac arrhythmias 1 102.82 -8.59 124.06 1 206.43 135.19
Respiratory failure; regardless of cause 1 097.45 -1.69 123.46 1 116.34 125.09
Spinal cord compression; ischaemia or degenerative 1 073.53 -5.68 120.77 1 138.20 127.54
disease NOS
Non-inflammatory disorders and benign neoplasms of 1 029.13 -15.60 115.77 1 219.42 136.64
ovary; fallopian tubes and uterus
Obstruction of the urogenital tract; regardless of cause 1 014.37 -12.32 114.11 1 156.87 129.63
Total 43 546.15 8.19 4 898.70 40 249.49 4 510.16

26 Council for Medical Schemes

UTILISATION OF HEALTHCARE SERVICES
Utilisation of general practitioner health services
The utilisation of general medical practitioner services by beneficiaries of medical schemes in 2019 and 2020 are reported in Table 9.
The proportion of GP consultations in the in-hospital setting decreased to 9.71% in 2020 from 10.84% in 2019, while out-of-hospital
consultations increased by 1.26%.

The number of medical scheme beneficiaries visiting a GP at least once a year reduced by 9.41% from 7.2 million in 2019 to 6.5 million
in 2020. The change between 2019 and 2020 was mainly driven by a significant decrease (11.71%) in GP visits by beneficiaries covered
by open schemes. In 2020 more beneficiaries covered by restricted schemes (814.84 per 1 000) visited a GP compared to open schemes
(677.92 per 1 000).

During the period under review, the average number of patients per 1 000 beneficiaries visiting GPs declined by 9.47%. The average annual
number of consultations per patient decreased by 4.54% (3.20 to 3.05 visits) between 2019 and 2020. The average amount claimed for GP
visits increased by 4.95% between 2019 and 2020 (475.21 to 498.71).

Risk benefits paid per patient to GPs increased by 4.36% from R333.19 in 2019 to R347.73 in 2020, and the average expenditure from
medical savings accounts increased by 2.87% to R111.38. The increase in the average amount paid from the risk account was higher for
restricted (3.66%) than open schemes (2.93%). The average amount paid to GPs from medical savings accounts was higher in open schemes
(R173.05) when compared to restricted schemes (R58.55) for the year 2020. Similar trends were observed in 2019. Beneficiaries in open
schemes rely more on medical savings accounts than beneficiaries in restricted schemes to fund GP consultations. This explains the richness
and the design of benefit plans offered by open and restricted schemes. Overall, OOP expenditure for GPs increased by 17.37% between
2019 and 2020.

Table 9: Utilisation of general practitioner health services in 2019 and 2020

Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

General Practitioner
Total number of visits to 3 724 435 3 288 377 -11.71 3 538 864 3 291 247 -7.00 7 263 299 6 579 624 -9.41
the provider
Average number of patients 758.82 677.92 -10.66 890.03 814.84 -8.45 817.55 740.13 -9.47
per 1 000 beneficiaries (ratio)
Average number of visits per 3.06 2.82 -8.04 3.34 3.28 -1.54 3.20 3.05 -4.54
patient (ratio)
Average amount claimed per 488.63 521.10 6.64 462.24 479.53 3.74 475.21 498.71 4.95
patient (R)
Average medical savings 161.47 173.05 7.17 56.89 58.55 2.93 108.28 111.38 2.87
account amount paid per
patient (R)
Average risk amount paid per 279.37 287.56 2.93 385.18 399.27 3.66 333.19 347.73 4.36
patient (R)
Average total amount paid per 440.84 460.60 4.48 442.07 457.82 3.56 441.47 459.11 4.00
patient (R)
Amount not paid per patient 47.79 60.49 26.59 20.17 21.71 7.60 33.74 39.60 17.37
In-Hospital utilisation 9.66% 8.41% -12.93 12.07% 11.01% -8.80 10.84% 9.71% -10.38
Out-of-Hospital utilisation 90.34% 91.59% 1.38 87.93% 88.99% 1.21 89.16% 90.29% 1.26

Industry Report 2020 27

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Utilisation of general dental practitioner health services

The utilisation of general dental practitioner services by beneficiaries of medical schemes in 2019 and 2020 are reported in Table 10. The
proportion of dental consultations that occurred in in-hospital settings declined to 1.29% in 2020 from 1.48% in 2019, while the out-of-hospital
consultations increased by 0.20%.

The number of medical scheme beneficiaries visiting a dentist at least once a year reduced by 10.78% from 1.9 million in 2019 to 1.7 million
in 2020. The change between 2019 and 2020 was similar in restricted and open schemes (about 10%). In 2020, more beneficiaries covered
by restricted schemes (216.87 per 1 000) had at least one dentist consultation compared to beneficiaries covered by open schemes
(175.34 per 1 000).

Overall, the average number of patients per 1000 beneficiaries decreased by 10.83%. The average annual number of consultations per
patient decreased by 1% (1.76 to 1.74 visits) between 2019 and 2020. The average amount claimed for dental services increased by 4.73%
between 2019 and 2020 (R1 374.84 to R1 439.82). Risk benefits paid per patient to dentists increased by 1.55% from R731.71 in 2019 to
R743.05 in 2020, and the average expenditure from medical savings accounts increased significantly by 11.23% to R466.84.

The overall increase in amounts paid from risk is driven by restricted schemes with a 3.19% increase compared to a decline of 4.11% in open
schemes. The increase in average amounts paid from savings accounts was higher for open schemes (12.51%) when compared to restricted
schemes (6.92%).

Overall, OOP expenditure for dentists increased by 2.91% between 2019 and 2020. OOPs for dental consultations was higher for beneficiaries
covered by restricted schemes, with an increase of 4.51% compared to open schemes with 3.14%.

Table 10: Utilisation of general dental practitioner health services in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Total number of visits to 952 418 850 490 -10.70 982 562 875 953 -10.85 1 934 980 1 726 443 -10.78
the provider
Average number of patients 194.05 175.34 -9.64 247.12 216.87 -12.24 217.80 194.21 -10.83
per 1 000 beneficiaries (ratio)
Average number of visits per 1.79 1.76 -1.88 1.73 1.73 -0.13 1.76 1.74 -1.00
patient (ratio)
Average amount claimed per 1 517.70 1 606.64 5.86 1 231.41 1 275.00 3.54 1 374.84 1 439.82 4.73
patient (R)
Average medical savings 753.97 848.32 12.51 84.13 89.95 6.92 419.71 466.84 11.23
account amount paid per
patient (R)
Average risk amount paid per 405.35 388.67 -4.11 1 059.37 1 093.18 3.19 731.71 743.05 1.55
patient (R)
Average total amount paid per 1 159.32 1 236.98 6.70 1 143.50 1 183.12 3.47 1 151.42 1 209.89 5.08
patient (R)
Amount not paid per patient 358.38 369.65 3.14 87.91 91.87 4.51 223.42 229.93 2.91
Out-of-Hospital utilisation 99.40% 99.45% 0.06 97.67% 97.99% 0.33 98.52% 98.71% 0.20
In-Hospital utilisation 0.60% 0.55% -9.59 2.33% 2.01% -13.91 1.48% 1.29% -13.09

28 Council for Medical Schemes

Utilisation of medical specialist health services
The utilisation of medical specialist services by beneficiaries of medical schemes in 2019 and 2020 is reported in Table 11. The proportion
of medical specialist visits that occurred in in-hospital settings declined to 35.70% in 2020 from 37.53% in 2019, while out-of-hospital
consultations increased by 2.93%.

About 2.7 million beneficiaries visited medical specialists at least once during 2020. Overall, the number of visits to medical specialists
declined by 12.11% between 2019 and 2020. A higher proportion of beneficiaries in open schemes (324.83 per 1 000) consulted a medical
specialist compared to restricted schemes (299.37 per 1 000) in 2020.

The average annual number of consultations per patient increased by 1.7% (3.37 to 3.43 visits) between 2019 and 2020. The average amount
claimed for medical specialist services increased by 8.51% between 2019 and 2020 (R1 399.76 to R1 518.82).

Risk benefits paid per patient to medical specialists increased by 9.56%, and the average expenditure from medical savings accounts,
increased significantly by 7.74% between 2019 and 2020. The increase was higher for restricted compared to open schemes.

Overall, OOP expenditure for medical specialists increased by 0.74% between 2019 and 2020. Beneficiaries in open schemes utilising
medical specialists’ services experienced higher OOPs of R200.37 compared to R87.63 for those covered in restricted schemes in 2020.

Table 11: Utilisation of medical specialist health services in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Total number of visits to 1 803 795 1 575 633 -12.65 1 364 725 1 209 205 -11.40 3 168 520 2 784 838 -12.11
the provider
Average number of patients 367.51 324.83 -11.61 343.23 299.37 -12.78 356.64 313.26 -12.16
per 1 000 beneficiaries (ratio)
Average number of visits per 3.30 3.31 0.36 3.47 3.59 3.31 3.37 3.43 1.70
patient (ratio)
Average amount claimed per 1 516.66 1 639.30 8.09 1252.92 1 373.90 9.66 1 399.76 1 518.82 8.51
patient (R)
Average medical savings 134.86 145.90 8.18 37.32 41.98 12.47 91.63 98.72 7.74
account amount paid per
patient (R)
Average risk amount paid per 1 184.05 1 293.03 9.20 1 129.85 1 244.29 10.13 1 160.03 1 270.91 9.56
patient (R)
Average total amount paid per 1 318.91 1 438.93 9.10 1 167.18 1 286.27 10.20 1 251.65 1 369.63 9.43
patient (R)
Amount not paid per patient 197.75 200.37 1.32 85.74 87.63 2.21 148.10 149.19 0.74
In-Hospital utilisation 37.43% 34.94% -6.66 37.67% 36.70% -2.57 37.53% 35.70% -4.87
Out-of-Hospital utilisation 62.57% 65.06% 3.98 62.33% 63.30% 1.56 62.47% 64.30% 2.93

Industry Report 2020 29

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Utilisation of surgical specialist health services

The utilisation of surgical specialist services by beneficiaries of medical schemes in 2019 and 2020 is reported in Table 12. The proportion
of surgical specialist visits that occurred in in-hospital settings declined to 45.37% in 2020 from 47.37% in 2019, while out-of-hospital
consultations increased by 3.81%.

About 1.6 million beneficiaries visited surgical specialist at least once during 2020. Overall, number of visits to surgical specialists declined
by 19.39% between 2019 and 2020. A higher proportion of beneficiaries in open schemes (205.45 per 1 000) consulted a surgical specialist
compared to restricted schemes (169.54 per 1 000) in 2020. The average annual number of consultations per patient increased by 2.44%
(1.88 to 1.93 visits) between 2019 and 2020.

The average amount claimed for surgical specialist services increased by 9.85% between 2019 and 2020 (from R3 232.83 to R3 551.39).
Risk benefits paid per patient to surgical specialists increased by 12.25%, and the average expenditure from medical savings accounts
increased significantly by 12.41% between 2019 and 2020. Overall, OOP expenditure for surgical specialists decreased by 2.08% between
2019 and 2020. This decrease was mainly driven by restricted schemes.

Table 12: Utilisation of surgical specialist health services in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Total number of visits to 1 238 989 996 567 -19.57 846 926 684 805 -19.14 2 085 915 1 681 372 -19.39
the provider
Average number of patients 252.43 205.45 -18.61 213.00 169.54 -20.40 234.79 189.14 -19.44
per 1 000 beneficiaries (ratio)
Average number of visits per 1.87 1.90 1.64 1.90 1.97 3.58 1.88 1.93 2.44
patient (ratio)
Average amount claimed per 3 571.67 3 929.95 10.03 2 746.51 3 021.04 10.00 3 232.83 3 551.39 9.85
patient (R)
Average medical savings 168.66 189.29 12.24 44.63 52.53 17.70 117.73 132.33 12.41
account amount paid per
patient (R)
Average risk amount paid per 2 776.24 3 122.61 12.48 2 282.46 2 560.99 12.20 2 573.47 2 888.69 12.25
patient (R)
Average total amount paid per 2944.90 3 311.91 12.46 2 327.09 2 613.52 12.31 2 691.20 3 021.03 12.26
patient (R)
Amount not paid per patient 626.78 618.05 -1.39 419.42 407.51 -2.84 541.63 530.36 -2.08
In-Hospital utilisation 49.14% 47.23% -3.89 44.78% 42.66% -4.75 47.37% 45.37% -4.23
Out-of-Hospital utilisation 50.86% 52.77% 3.76 55.22% 57.34% 3.85 52.63% 54.63% 3.81

30 Council for Medical Schemes

Utilisation of dental specialist health services
The utilisation of dental specialist services by beneficiaries of medical schemes in 2019 and 2020 is reported in Table 13. About 95% all dental
specialist consultations took place in out-of-hospital settings. The number of beneficiaries visiting dental specialists decreased by 8.62% from
384 634 in 2019 to 351 483 in 2020. The decrease between 2019 and 2020 was mainly driven by a significant decrease (9.82%) in the number
of dental specialist visits by beneficiaries covered by open schemes.

A higher proportion of beneficiaries in restricted schemes (51.45 per 1 000) had at least one dentist consultation compared to open schemes
(29.62 per 1 000) in 2020. The average number of visits per patient to dental specialists increased slightly from 1.84 to 1.88 between 2019
and 2020. The amount claimed per patient decreased slightly by 0.43% (R2 190.13 to R2 180.70) for all medical schemes during the period
under review.

The amount paid from risk benefits by medical schemes to dental specialists declined by 3.29%, while the amount paid from medical savings
accounts increased by 10.37% during the period under review. Patients in open schemes rely more on medical savings accounts to fund
dental specialist consultations when compared to restricted schemes. Overall, OOP payments declined by 5.19%.

The decline was mainly driven by a significant decline (15.67%) in OOP payments by beneficiaries covered in restricted schemes. Beneficiaries
in restricted schemes enjoyed more coverage from risk benefits and lower OOPs for dental procedures.

Table 13: Utilisation of dental specialist health services in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Total number of visits to 159 301.00 143 664.00 -9.82 225 333.00 207 819.00 -7.77 384 634.00 351 483.00 -8.62
the provider
Average number of patients 32.46 29.62 -8.75 56.67 51.45 -9.21 43.29 39.54 -8.68
per 1 000 beneficiaries (ratio)
Average number of visits per 2.13 2.17 1.82 1.63 1.67 2.73 1.84 1.88 2.15
patient (ratio)
Average amount claimed per 2 836.55 2 863.56 0.95 1 592.75 1 569.12 -1.48 2 190.13 2 180.70 -0.43
patient (R)
Average medical savings 999.77 1 117.91 11.82 109.68 122.63 11.80 537.18 592.87 10.37
account amount paid per
patient (R)
Average risk amount paid per 976.72 887.50 -9.13 1 194.39 1 203.03 0.72 1 089.84 1 053.95 -3.29
patient (R)
Average total amount paid per 1 976.49 2 005.41 1.46 1 304.07 1 325.66 1.66 1 627.02 1 646.82 1.22
patient (R)
Amount not paid per patient 860.07 858.15 -0.22 288.69 243.46 -15.67 563.11 533.88 -5.19
In-Hospital utilisation 3.67% 3.18% -13.57 5.83% 5.23% -10.25 4.94% 4.39% -11.05
Out-of-Hospital utilisation 96.33% 96.82% 0.52 94.17% 94.77% 0.63 95.06% 95.61% 0.57

Industry Report 2020 31

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Utilisation of support specialists’ health services

The utilisation of support specialists’ health services by beneficiaries of medical schemes in 2019 and 2020 are reported in Table 14. In 2020,
more beneficiaries covered by open schemes (800.70 per 1 000) had at least one visit to support specialists than beneficiaries covered by
restricted schemes (764.22 per 1 000).

The average number of visits per patient increased by 5.12% during the period under review. The average amount claimed per patient by
support specialists decreased slightly by 0.55% (R1 643.99 to R1 635.01) between 2019 and 2020. The amount paid from risk benefits by
medical schemes to support specialists increased by 0.9% while the amount paid from medical savings accounts decreased by 5.6% during
the period under review.

The total amount paid per patient to support specialists increased by a margin of 0.32%. This increase was mainly driven by open schemes
(2.50%). OOP expenditure decreased significantly by 10.24%. Beneficiaries in restricted schemes utilising support specialists’ services
experienced a significant reduction in OOPs compared to those covered by open schemes.

Table 14: Utilisation of support specialist health services in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Total number of visits to 4 178 666 3 883 928 -7.05 3 171 310 3 086 774 -2.67 7 349 976 6 970 702 -5.16
the provider
Average number of patients per 851.37 800.70 -5.95 797.59 764.22 -4.18 827.30 784.13 -5.22
1 000 beneficiaries (ratio)
Average number of visits per 2.07 2.11 2.09 2.10 2.29 8.82 2.08 2.19 5.12
patient (ratio)
Average amount claimed per 1 769.72 1 802.28 1.84 1 480.90 1 440.65 -2.72 1 643.99 1 635.01 -0.55
patient (R)
Average medical savings 202.98 199.02 -1.95 45.06 42.69 -5.25 134.23 126.71 -5.60
account amount paid per
patient (R)
Average risk amount paid per 1 388.15 1 431.82 3.15 1 356.45 1 334.42 -1.62 1 374.35 1 386.77 0.90
patient (R)
Average total amount paid per 1 591.13 1 630.84 2.50 1 401.51 1 377.11 -1.74 1 508.58 1 513.48 0.32
patient (R)
Amount not paid per patient 178.59 171.44 -4.00 79.39 63.54 -19.96 135.41 121.53 -10.24
In-Hospital utilisation 39.65% 34.01% -14.23 38.84% 33.71% -13.22 39.30% 33.87% -13.81
Out-of-Hospital utilisation 60.35% 65.99% 9.35 61.16% 66.29% 8.39 60.70% 66.13% 8.94

32 Council for Medical Schemes

Utilisation of supplementary and allied health professional services
The utilisation of supplementary and allied health professional services by beneficiaries of medical schemes in 2019 and 2020 is reported
in Table 15. The number of beneficiaries visiting any one of the supplementary and allied health professionals at least once during the year
increased by 8.64%, from 4.5 million in 2019 to 4.1 million in 2020.

In 2020, more beneficiaries covered by restricted schemes (483.39 per 1 000) had at least one visit, compared to beneficiaries covered by
open schemes (452.19 per 1 000). The average number of consultations to supplementary and allied health professionals was about three
visits per patient for the period under review.

The amount claimed by supplementary and allied health professionals increased by about 6% between 2019 and 2020 (from R 1 164.42 to
R 1 234.25). Overall, medical schemes increased payments from risk pools to supplementary and allied health professionals by 7.09%. The
increase was higher for open schemes (8.65%) than for restricted schemes (3.97%).

OOP expenditure decreased significantly by 1.2%. Beneficiaries covered by open schemes experienced a significant reduction in
OOPs (3.58%).

Table 15: Utilisation of supplementary and allied health professional services in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Total number of visits to the 2 493 017 2 193 394 -12.02 2 045 110 1 952 460 -4.53 4 538 127 4 145 854 -8.64
provider
Average number of patients 507.93 452.19 -10.98 514.35 483.39 -6.02 510.80 466.36 -8.70
per 1 000 beneficiaries (ratio)
Average number of visits per 3.13 3.23 3.20 2.76 2.89 4.39 2.97 3.07 3.46
patient (ratio)
Average amount claimed per 1 158.44 1 245.65 7.53 1 172.67 1 219.90 4.03 1 164.42 1 234.25 6.00
patient (R)
Average medical savings 335.70 367.04 9.33 108.66 113.92 4.84 240.34 254.94 6.07
account amount paid per
patient (R)
Average risk amount paid per 666.35 723.97 8.65 985.46 1 024.62 3.97 800.37 857.11 7.09
patient (R)
Average total amount paid per 1 002.05 1 091.00 8.88 1 094.12 1 138.54 4.06 1 040.72 1 112.05 6.85
patient (R)
Amount not paid per patient 156.39 154.65 -1.11 78.55 81.36 3.58 123.70 122.19 -1.22
In-Hospital utilisation 21.20% 19.83% -6.48 19.45% 18.56% -4.56 20.41% 19.23% -5.78
Out-of-Hospital utilisation 78.80% 80.17% 1.74 80.55% 81.44% 1.10 79.59% 80.77% 1.48

Analysis of admissions to hospitals

Day clinics (PCNS 076/077)
The number of admissions to day clinics decreased by 9.82% from 162 850 in 2019 to 146 858 in 2020. Open schemes had proportionally
more beneficiaries admitted to day clinics when compared to restricted schemes in 2020 (20.22 versus 16.52).

The number of admissions per patient was about 1.20 and 1.21 for 2019 and 2020 respectively. The average age of beneficiaries admitted to
day clinics was 43.50 years in 2019, and 46.06 in 2020. There was a significant decrease (10.26%) in the number of beneficiaries admitted
to day clinics.

Private hospitals (PCNS 057/058)

The average number of times a beneficiary was admitted to private acute hospitals was 1.29 for the total population during the period under
review. There was a notable reduction (25.36%) in the number of inpatient admissions to private acute hospitals between 2019 (2 366 413)
and 2020 (1 766 313) across all schemes. In 2020, proportionally more beneficiaries covered by restricted schemes (209.17 per 1 000)
compared to open schemes (189.97 per 1 000) were admitted to private acute hospitals.

Overall schemes, the share of beneficiaries to private acute hospital reduced by 25.41%, from 266.36 per 1 000 in 2019 to 198.69 per 1 000
in 2020. There was a significant increase in average length of stay (by 9.63%) between 2019 and 2020.

The average age of admitted beneficiaries increased slightly from 41.47 years in 2019 to 43.43 in 2020. The average age of admitted patients
was significantly higher for open schemes when compared to restricted scheme for the period under review.

Industry Report 2020 33

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Provincial hospitals (PCNS 056)

The number of admissions to provincial hospitals decreased by 20.71%, from 148 146 in 2019 to 117 459 in 2020. Admissions to provincial
hospitals were less common in open schemes (1.92 per 1 000) when compared to restricted schemes (26.78 per 1000) in 2020.

Open schemes accounted for only 9 294 admissions compared to 108 165 for restricted schemes in 2020. Similar trends were observed in
2019. The number of admissions per patient was about 2.23 and 2.09 for 2019 and 2020, respectively. Provincial hospitals recorded unusually
low lengths of stay compared to previous years.

The low average length of stay could be attributable to poor data quality, however. The average age of admitted beneficiaries increased
slightly from 44.03 years in 2019 to 44.34 in 2020.

Table 16: Analysis of all (same-day and overnight inpatient) admissions to hospitals in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Day clinics (076/077)

Number of admissions 109 987 98 093 -10.81 52 863 48 765 -7.75 162 850 146 858 -9.82
Number of beneficiaries 91 654 81 143 -11.47 43 844 40 452 -7.74 135 498 121 595 -10.26
admitted
Number of admissions per 22.41 20.22 -9.76 13.30 12.07 -9.19 18.33 16.52 -9.88
1 000 beneficiaries
Number of admissions 1.20 1.21 0.74 1.21 1.21 -0.02 1.20 1.21 0.49
per patient
Average length of stay (days) 0.15 0.19 29.24 0.31 0.21 -33.20 0.20 0.20 -2.06
Average age (years) 43.34 45.92 5.96 43.83 46.34 5.73 43.50 46.06 5.89
Private Hospitals A & B -
Status(057/058)
Number of admissions 1 274 679 921 463 -27.71 1 091 734 844 850 -22.61 2 366 413 1 766 313 -25.36
Number of beneficiaries 960 247 715 066 -25.53 826 291 654 932 -20.74 1 786 538 1 369 998 -23.32
admitted
Number of admissions per 259.71 189.97 -26.85 274.57 209.17 -23.82 266.36 198.69 -25.41
1 000 beneficiaries
Number of admissions 1.33 1.29 -2.92 1.32 1.29 -2.37 1.32 1.29 -2.66
per patient
Average length of stay (days) 2.89 3.18 10.09 2.86 3.13 9.17 2.88 3.16 9.63
Average age (years) 43.67 45.74 4.74 38.89 40.91 5.18 41.47 43.43 4.73
Provincial Hospitals (056)
Number of admissions 12 159 9 294 -23.56 135 987 108 165 -20.46 148 146 117 459 -20.71
Number of beneficiaries 7 329 5 635 -23.11 59 126 50 448 -14.68 66 455 56 083 -15.61
admitted
Number of admissions per 2.48 1.92 -22.66 34.20 26.78 -21.70 16.68 13.21 -20.76
1 000 beneficiaries
Number of admissions 1.66 1.65 -0.58 2.30 2.14 -6.78 2.23 2.09 -6.05
per patient
Average length of stay (days) 2.50 2.68 7.35 0.60 0.45 -24.75 0.75 0.63 -16.90
Average age (years) 41.18 43.71 6.13 44.29 44.39 0.24 44.03 44.34 0.69

34 Council for Medical Schemes

Same day and overnight
Rehabilitation hospitals and hospices (PCNS 047/059/079)
The number of admissions to rehabilitation hospitals and hospices decreased by 16.97% from 15 255 in 2019 to 12 666 in 2020.

Rehabilitation hospitals and hospices recorded about 1.37 admissions per patient with an average stay of about 16 days. The average age of
admitted beneficiaries was 50.47 and 47.80 for open and restricted schemes, respectively. There was a decrease in average length of stay
by 2.66% between 2019 and 2020.

Sub-acute facilities (PCNS 049)

The number of admissions to sub-acute facilities decreased significantly by 18.34% (from 27 848 in 2019 to 22 740 in 2020). Sub-acute
facilities recorded about 1.16 admissions per patient with an average stay of about 11 days. The average age of beneficiaries admitted was
66.78 and 58.26 for open and restricted schemes, respectively.

Significantly older beneficiaries were admitted to sub-acute facilities. There was an increase in average length of stay by 5.06% between 2019
and 2020. The proportion of beneficiaries, about two per 1 000, was the same between open and restricted schemes.

Mental institutions (PCNS 055)

About 47 171 beneficiaries were admitted to mental health institutions in 2020. The number of admissions to mental health institutions
reflected a decrease of 11.82% from 2019.

The average length of stay for all inpatient admissions (including same day admissions) was 11 and 10 days in 2019 and 2020, respectively.
The average age of beneficiaries admitted to mental institutions decreased slightly from 37.98 in 2019 to 37.83 in 2020.

Table 17: Analysis of all (same-day and overnight inpatient) admissions to health facilities in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Rehabilitation hospitals
and Hospices (047)
Number of admissions 9 823 7 907 -19.51 5 432 4 759 -12.39 15 255 12 666 -16.97
Number of beneficiaries 6 338 5 501 -13.21 4 296 3 732 -13.13 10 634 9 233 -13.17
admitted
Number of admissions per 2.00 1.63 -18.55 1.37 1.18 -13.76 1.72 1.42 -17.02
1 000 beneficiaries
Number of admissions 1.55 1.44 -7.26 1.26 1.28 0.85 1.43 1.37 -4.37
per patient
Average length of stay (days) 15.40 15.81 2.64 19.47 17.39 -10.68 16.85 16.40 -2.66
Average age (years) 47.79 50.47 5.60 46.56 47.80 2.67 47.35 49.47 4.47
Sub-Acute Facilities (049)
Number of admissions 15 884 12 779 -19.55 11 964 9 961 -16.74 27 848 22 740 -18.34
Number of beneficiaries 13 541 11 123 -17.86 10 033 8 470 -15.58 23 574 19 593 -16.89
admitted
Number of admissions per 3.24 2.63 -18.59 3.01 2.47 -18.04 3.13 2.56 -18.39
1 000 beneficiaries
Number of admissions 1.17 1.15 -2.06 1.19 1.18 -1.38 1.18 1.16 -1.75
per patient
Average length of stay (days) 11.29 11.76 4.11 10.53 11.21 6.50 10.96 11.52 5.06
Average age (years) 66.29 66.78 0.74 59.04 58.26 -1.33 63.17 63.05 -0.20
Mental Health
Institutions (055)
Number of admissions 29 505 25 877 -12.30 23 990 21 294 -11.24 53 495 47 171 -11.82
Number of beneficiaries 24 600 21 718 -11.72 21 247 19 119 -10.02 45 847 40 837 -10.93
admitted
Number of admissions per 6.01 5.33 -11.26 6.03 5.27 -12.62 6.02 5.31 -11.88
1 000 beneficiaries
Number of admissions 1.20 1.19 -0.66 1.13 1.11 -1.36 1.17 1.16 -1.00
per patient
Average length of stay (days) 10.79 10.76 -0.28 11.30 9.65 -14.55 11.02 10.26 -6.87
Average age (years) 37.92 37.64 -0.74 38.05 38.05 -0.01 37.98 37.83 -0.41

Industry Report 2020 35

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Overnight inpatient admissions

Table 18: Analysis of overnight inpatient admissions to hospitals in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Day clinics (PCNS 076/077)

Number of admissions 4 744 3 776 -20.40 5 161 3 690 -28.50 9 905 7 466 -24.62
Number of beneficiaries 4 279 3 460 -19.14 4 358 3 199 -26.59 8 637 6 659 -22.90
admitted
Number of admissions per 0.97 0.78 -19.46 1.30 0.91 -29.62 1.11 0.84 -24.67
1 000 beneficiaries
Number of admissions 1.11 1.09 -1.56 1.18 1.15 -2.60 1.15 1.12 -2.23
per patient
Average length of stay (days) 3.46 4.84 39.93 3.14 2.62 -16.58 3.29 3.74 13.66
Average age (years) 54.96 55.57 1.11 45.81 47.33 3.31 50.19 51.50 2.60
Private Hospitals A & B -
Status(PCNS 057/058)
Number of admissions 885 542 649 861 -26.61 686 399 532 066 -22.48 1 571 941 1 181 927 -24.81
Number of beneficiaries 641 034 489 706 -23.61 495 104 398 607 -19.49 1 136 138 888 313 -21.81
admitted
Number of admissions per 180.42 133.97 -25.74 172.63 131.73 -23.69 176.94 132.95 -24.86
1 000 beneficiaries
Number of admissions 1.38 1.33 -3.94 1.39 1.33 -3.72 1.38 1.33 -3.83
per patient
Average length of stay (days) 4.16 4.51 8.33 4.54 4.94 8.80 4.33 4.70 8.68
Average age (years) 44.44 46.42 4.44 40.95 42.72 4.32 42.92 44.76 4.28
Provincial Hospitals (PCNS
056)
Number of admissions 4 529 3 978 -12.17 13 124 9 674 -26.29 17 653 13 652 -22.66
Number of beneficiaries 3 267 2 588 -20.78 9 402 6 890 -26.72 12 669 9478 -25.19
admitted
Number of admissions per 0.92 0.82 -11.12 3.30 2.40 -27.44 1.99 1.54 -22.71
1 000 beneficiaries
Number of admissions 1.39 1.54 10.88 1.40 1.40 0.59 1.39 1.44 3.37
per patient
Average length of stay (days) 6.70 6.25 -6.77 6.18 5.01 -18.98 6.32 5.37 -14.97
Average age (years) 38.62 41.51 7.46 46.57 45.99 -1.26 44.54 44.68 0.33

36 Council for Medical Schemes

Table 19: Analysis of overnight inpatient admissions to health facilities in 2019 and 2020
Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

Mental Health Institutions

(PCNS 055)
Number of admissions 28058 24 741 -11.82 22 620 16 429 -27.37 50 678 41 170 -18.76
Number of beneficiaries 23724 20 972 -11.60 19 968 14 597 -26.90 43 692 35 569 -18.59
admitted
Number of admissions per 5.72 5.10 -10.78 5.69 4.07 -28.50 5.70 4.63 -18.81
1 000 beneficiaries
Number of admissions 1.18 1.18 -0.25 1.13 1.13 -0.65 1.16 1.16 -0.21
per patient
Average length of stay (days) 11.35 11.26 -0.82 11.98 12.51 4.44 11.63 11.76 1.09
Average age (years) 37.69 37.54 -0.42 37.92 37.62 -0.79 37.80 37.57 -0.60
Rehabilitation hospitals
and Hospices (PCNS 047)
Number of admissions 8812 7 063 -19.85 4 745 4 225 -10.96 13 557 11 288 -16.74
Number of beneficiaries 5840 5 096 -12.74 3 772 3 370 -10.66 9 612 8 466 -11.92
admitted
Number of admissions per 1.80 1.46 -18.90 1.19 1.05 -12.35 1.53 1.27 -16.79
1 000 beneficiaries
Number of admissions 1.51 1.39 -8.15 1.26 1.25 -0.34 1.41 1.33 -5.47
per patient
Average length of stay (days) 17.17 17.70 3.08 22.29 19.59 -12.11 18.96 18.41 -2.93
Average age (years) 45.76 48.41 5.79 45.41 46.57 2.57 45.64 47.72 4.57
Sub-Acute Facilities
(PCNS 049)
Number of admissions 15049 12 101 -19.59 10 774 8 763 -18.67 25 823 20 864 -19.20
Number of beneficiaries 12784 10 482 -18.01 9 068 7 495 -17.35 21 852 17 977 -17.73
admitted
Number of admissions per 3.07 2.49 -18.64 2.71 2.17 -19.93 2.91 2.35 -19.25
1 000 beneficiaries
Number of admissions 1.18 1.15 -1.93 1.19 1.17 -1.60 1.18 1.16 -1.79
per patient
Average length of stay (days) 11.92 12.41 4.16 11.67 12.73 9.02 11.81 12.54 6.18
Average age (years) 66.22 66.66 0.67 59.88 59.15 -1.22 63.57 63.51 -0.10

Industry Report 2020 37

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Same-day inpatient admissions

Table 20: Analysis of same-day inpatient admissions to hospitals in 2019 and 2020
Open Restricted Consolidated
Hospital group
(PCNS Number) 2019 2020 % change 2019 2020 % change 2019 2020 % change

Day clinics (PCNS 076/077)

Number of admissions 105 243 94 317 -10.38 47 702 45 075 -5.51 152 945 139 392 -8.86
Number of beneficiaries
admitted 87 375 77 683 -11.09 39 486 37 253 -5.66 126 861 114 936 -9.40
Number of admissions per
1 000 beneficiaries 21.44 19.44 -9.32 12.00 11.15962 -6.98 17.22 15.68 -8.92
Number of admissions
per patient 1.20 1.21 0.80 1.21 1.20997 0.16 1.21 1.21 0.59
Average length of stay (days) 1.00 1.00 0.00 1.00 1 0.00 1.00 1.00 0.00
Average age (years) 42.81 45.53 6.35 43.61 46.25829 6.06 43.06 45.77 6.28
Private Hospitals A & B -
Status(PCNS 057/058)
Number of admissions 389 137 271 602 -30.20 405 335 312 784 -22.83 794 472 584 386 -26.44
Number of beneficiaries
admitted 319 213 225 360 -29.40 331 187 256 325 -22.60 650 400 481 685 -25.94
Number of admissions per
1 000 beneficiaries 79.28 55.99 -29.38 101.94 77.4387 -24.04 89.42 65.74 -26.49
Number of admissions
per patient 1.22 1.21 -1.14 1.22 1.220263 -0.30 1.22 1.21 -0.68
Average length of stay (days) 1.00 1.00 0.00 1.00 1 0.00 1.00 1.00 0.00
Average age (years) 41.92 44.12 5.25 35.39 37.81256 6.83 38.59 40.75 5.58
Provincial Hospitals (056)
Number of admissions 7 630 5 316 -30.33 122 863 98 491 -19.84 130 493 103 807 -20.45
Number of beneficiaries
admitted 4 062 3 047 -24.99 49 724 43 558 -12.40 53 786 46 605 -13.35
Number of admissions per
1 000 beneficiaries 1.55 1.10 -29.50 30.90 24.38429 -21.09 14.69 11.68 -20.50
Number of admissions
per patient 1.88 1.74 -7.12 2.47 2.261146 -8.49 2.43 2.23 -8.19
Average length of stay (days) 1.00 1.00 0.00 1.00 1 0.00 1.00 1.00 0.00
Average age (years) 42.70 45.35 6.21 44.05 44.23844 0.44 43.97 44.30 0.75

38 Council for Medical Schemes

Table 21: Analysis of same-day inpatient admissions to hospitals in 2019 and 2020
Open Restricted Consolidated
Hospital group
(PCNS Number) 2019 2020 % change 2019 2020 % change 2019 2020 % change

Mental Health Institutions

(PCNS 055)
Number of admissions 1 447 1 136 -21.49 1 370 4 865 255.11 2 817 6 001 113.03
Number of beneficiaries
admitted 876 746 -14.84 1 279 4 522 253.56 2 155 5 268 144.45
Number of admissions per
1 000 beneficiaries 0.29 0.23 -20.56 0.34 1.20 249.57 0.32 0.68 112.90
Number of admissions
per patient 1.65 1.52 -7.81 1.07 1.08 0.44 1.31 1.14 -12.86
Average length of stay (days) 1.00 1.00 0.00 1.00 1.00 0.00 1.00 1.00 0.00
Average age (years) 42.35 39.98 -5.58 40.19 39.49 -1.74 41.30 39.58 -4.16
Rehabilitation hospitals
and Hospices (PCNS 047)
Number of admissions 1 011 844 -16.52 687 534.00 -22.27 1 698 1 378 -18.85
Number of beneficiaries
admitted 498 405 -18.67 524 362.00 -30.92 1 022 767 -24.95
Number of admissions per
1 000 beneficiaries 0.21 0.17 -15.53 0.17 0.13 -23.48 0.19 0.16 -18.90
Number of admissions
per patient 2.03 2.08 2.65 1.31 1.48 12.51 1.66 1.80 8.14
Average length of stay (days) 1.00 1.00 0.00 1.00 1.00 0.00 1.00 1.00 0.00
Average age (years) 65.48 67.69 3.37 54.48 57.48 5.50 61.03 63.73 4.42
Sub-Acute Facilities
(PCNS 049)
Number of admissions 835 678 -18.80 1 190 1 198.00 0.67 2 025 1 876 -7.36
Number of beneficiaries
admitted 757 641 -15.32 965 975.00 1.04 1 722 1 616 -6.16
Number of admissions per
1 000 beneficiaries 0.17 0.14 -17.84 0.30 0.30 -0.90 0.23 0.21 -7.42
Number of admissions
per patient 1.10 1.06 -4.11 1.23 1.23 -0.36 1.18 1.16 -1.28
Average length of stay (days) 1.00 1.00 0.00 1.00 1.00 0.00 1.00 1.00 0.00
Average age (years) 67.56 68.87 1.95 51.46 51.75 0.55 58.10 57.94 -0.28

Industry Report 2020 39

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Analysis of admissions to private hospitals

Figure 27 illustrates admission rates per 1 000 beneficiaries by age bands for different hospital groups. Overall, private acute hospitals show
an expected pattern with high admission rates for infants, high admission rates for female beneficiaries in the reproductive age range and very
high admission rates for elderly beneficiaries.

Admission for male beneficiaries outnumbered that of females from the age band 55 to 59 until the age band 85+. The disparities in utilisation
may be due to differences in health care seeking behaviour for men and women. The increase in the utilisation in the 20 to 40 years age band
may be explained by an increase in the utilisation of maternal health services by female beneficiaries.

Figure 27: Admission rates (per 1 000 beneficiaries) for private hospitals

900
800
700
Admission rate per 1 000

600
Beneficiaries

500
400
300
200
100
0
Less 1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85
than 1 years years years years years years years years years years years years years years years years years years+
Year
Female Male

Analysis of admissions to public hospitals

Figure 28 illustrates admission rates to provincial hospitals in 2020 per 1 000 beneficiaries. The number of admissions in public hospitals
starts to increase from beneficiaries less than one year old, until the age band 55–59, and the pattern is similar for both males and females.

During the period under review, an increase in the utilisation of public hospital services by female beneficiaries compared to males in the
15 to 59 years was observed. Additionally, more male than female beneficiaries in the older age bands (> 69 years) were admitted to public
hospitals.

Figure 28: Admission rates (per 1 000 beneficiaries) for provincial hospitals

45
40
35
Admission rate per 1 000

30
25
Beneficiaries

20
15
10
5
0
Less 1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85
than 1 years years years years years years years years years years years years years years years years years years+
Year
Female Male

40 Council for Medical Schemes

Analysis of admissions to day clinics
Figure 29 depicts the analysis of beneficiary admissions to day clinics. The highest number of admissions in day clinics was observed for the
age band 75 to 79 years.

There were more adult beneficiaries admitted to day clinics than young beneficiaries. Day hospitals offer opportunities to improve the efficiency
of the private hospital sector. The use of day hospitals has cost benefits for both beneficiaries and medical schemes.

Figure 29: Admission rates (per 1 000 beneficiaries) for day clinics

80
70
60
Admission rate per 1 000

50
Beneficiaries

40
30
20
10
0
Less 1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85
than 1 years years years years years years years years years years years years years years years years years years+
Year
Female Male

Analysis of admissions to mental health institutions

Figure 30 reflects the admission rates of beneficiaries to mental health institutions by age. Proportionally more female than male beneficiaries
are admitted to mental health institutions across all age groups. This higher admission rate of females to mental health institutions is consistent
with the high prevalence of psychiatric conditions in the female medical schemes’ populations.

The number of admissions to mental health institutions declines as the age of beneficiaries increases.

Figure 30: Admission rates (per 1 000 beneficiaries) for mental health institutions

12

10
Admission rate per 1 000

8
Beneficiaries

0
1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85
years years years years years years years years years years years years years years years years years years+

Female Male

Industry Report 2020 41

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Hospital admissions by level of care

Table 22 shows admission rates and average length of stay by level of care. General ward admissions decreased significantly by 27.14% to
131.83 per 1 000 beneficiaries in 2020, from 180.95 per 1 000 beneficiaries in 2019. The number of inpatient days per general ward increased
by 6.40% from 3.44 days in 2019 to 3.66 days in 2020.

Admissions to the high care unit declined by 16.02% (from 26.45 per 1 000 beneficiaries in 2019 to 22.21 in 2020). The length of stay in high
care units increased from 3.20 days in 2019 to 3.51 days in 2020. Admissions to the intensive care unit (ICU) decreased by 5.21%, from
11.67 per 1 000 beneficiaries in 2019 to 11.06 per 1000 beneficiaries in 2020.

The length of stay in ICU increased significantly from 4.78 days in 2019 to 5.34 days in 2020. The average number of hospital admissions in
respect of PMB conditions declined from 74.90 per 1 000 to 57.96 per 1 000 beneficiaries. The accuracy of PMB admissions data is a major
challenge, as scheme rules and systems are not set up to separate PMB admissions from non-PMB admissions.

Table 22: Hospital admissions by level of care

Open Restricted Consolidated

2019 2020 % change 2019 2020 % change 2019 2020 % change

General Ward
Number of admissions per 181.27 130.97 -27.75 180.55 132.86 -26.41 180.95 131.83 -27.14
1 000 beneficiaries
Average length of stay (days) 3.42 3.70 8.28 3.47 3.61 4.18 3.44 3.66 6.40
High Care
Number of admissions per 28.88 23.05 -20.18 23.44 21.20 -9.57 26.45 22.21 -16.02
1 000 beneficiaries
Average length of stay (days) 3.05 3.47 13.70 3.43 3.56 3.93 3.20 3.51 9.66
ICU
Number of admissions per 12.09 10.70 -11.49 11.15 11.49 3.08 11.67 11.06 -5.21
1 000 beneficiaries
Average length of stay (days) 4.88 5.66 15.82 4.63 4.99 7.83 4.78 5.34 11.89
PMB
Number of admissions per 60.06 45.91 -23.55 93.22 72.42 -22.31 74.90 57.96 -22.62
1 000 beneficiaries

42 Council for Medical Schemes

Utilisation of medical technology
Table 23 shows the utilisation of medical technology by medical scheme beneficiaries. The number of patients receiving renal dialysis increased
by 2.25% from 12.33 in 2019 to 12.60 per 1 000 beneficiaries in 2020. This increase was fuelled by an increase in restricted schemes (2.51%).

The utilisation of positron emission tomography (PET) increased by 4.18% between 2019 and 2020. The utilisation of MRI scans, angiograms,
and bone density scans declined significantly in 2020 across all schemes.

The changes observed may be explained by a decline in overall utilisation of health care services in 2020 due to the COVID-19 pandemic.
In particular, the use of bone density scans decreased significantly by 26.73%, from 47.03 in 2019 to 40.70 per 1 000 beneficiaries.

Table 23: Utilisation of medical technology

Open Restricted Consolidated

Health Technology 2019 2020 % change 2019 2020 % change 2019 2020 % change

Number of patients receiving 9.39 9.49 0.99 15.95 16.35 2.51 12.33 12.60 2.25
renal dialysis per 1 000
beneficiaries
Number of patients utilising 2.03 1.78 -12.03 1.01 0.88 -12.89 1.57 1.37 -12.67
angiograms per 1 000
beneficiaries
Number of patients utilising 7.01 5.22 -25.54 4.21 3.01 -28.37 5.75 4.22 -26.73
bone density scans per 1 000
beneficiaries
Number of patients utilising 51.73 44.61 -13.76 41.22 36.00 -12.66 47.03 40.70 -13.46
computerized tomography
scan (CT scan) per 1 000
beneficiaries
Number of patients utilising 32.32 27.14 -16.01 23.16 19.34 -16.49 28.22 23.60 -16.38
magnetic resonance imaging
(MRI) scans per 1 000
beneficiaries
Number of patients utilising 0.69 0.74 6.92 0.40 0.40 -0.38 0.56 0.59 4.18
positron emission tomography
(PET) scan per 1 000
beneficiaries

Industry Report 2020 43

 CHAPTER 1: UTILISATION OF HEALTHCARE SERVICES continued

Utilisation of maternal and reproductive healthcare services

Table 24 shows the utilisation of maternal and reproductive health services. The utilisation of maternal and reproductive healthcare services
declined during the period under review, except for four indicators. The changes observed may be explained by changes in the demographic
characteristics of beneficiaries and improvements in the quality of data over time, and some of the changes observed may be due to the
impact of COVID-19 on utilisation of healthcare services.

The number of birth admissions to women under 15 years decreased significantly by 60.27%. A significant increase (48.97%) was observed
in number of antenatal client tested for the first time during pregnancy.

Table 24: Utilisation of maternal and reproductive healthcare services

Open Restricted Consolidated

Selected Health Services 2019 2020 % change 2019 2020 % change 2019 2020 % change

Maternal health
Number of birth admissions (per 1 000 female 30.91 28.12 -9.03 25.98 24.76 -4.70 28.65 26.56 -7.32
beneficiaries)
Baby born alive in health facility who weighs less than 9.61 9.74 1.29 22.32 23.85 6.87 14.75 15.74 6.73
2500g (per 1 000 live births)
Antenatal client who was tested for the first time 355.88 268.46 -24.57 176.16 503.58 185.86 259.85 387.09 48.97
during her current pregnancy (per 1 000 HIV positive
antenatal clients)
Death of an infant 0-28 days of age (per 1 000 0.64 0.47 -26.73 0.55 0.63 13.45 0.60 0.54 -11.22
live births)
Intra Uterine Contraceptive Device (IUCD) inserted 14.96 13.38 -10.58 5.26 4.86 -7.60 10.54 9.43 -10.58
into a woman aged 15 – 49 years (per 1 000 female
beneficiaries aged 15 – 49 years)
Number of birth admissions to women between 3.70 3.58 -3.21 12.40 12.21 -1.49 8.25 8.18 -0.86
15 – 19 years (per 1 000 female beneficiaries aged
15 – 19 years)
Number of birth admissions to women under 15 years 1.40 0.19 -86.56 0.61 0.61 -0.70 1.01 0.40 -60.27
(per 1 000 female beneficiaries aged under 15 years)
Number of caesarean sections performed 651.83 699.40 7.30 558.71 556.24 -0.44 613.18 637.24 3.92
(per 1 000 birth admissions)
Number of mammograms paid for (per 1 000 female 346.93 279.88 -19.33 140.43 101.32 -27.85 259.02 202.16 -21.95
beneficiaries aged 50 – 69 years)
Number of pap smears paid for (per 1 000 female 170.21 138.29 -18.75 68.07 53.48 -21.44 124.31 99.62 -19.86
beneficiaries aged 15 – 69 years)
Postnatal visits by a mother within 6 weeks after 224.15 225.02 0.39 150.92 148.94 -1.31 193.76 191.98 -0.92
delivery (per 1 000 birth admissions)
Subdermal contraceptive implant inserted just under 0.07 0.07 -8.81 0.32 0.41 28.58 0.18 0.22 22.18
the skin of a woman aged 15 – 49 years upper arm
(per 1 000 female beneficiaries aged 15 – 49 years)
Surgical procedure to prevent a man from being fertile 7.95 5.85 -26.41 1.87 1.43 -23.63 5.43 3.97 -26.74
(per 1 000 male beneficiaries aged 15 – 49 years)
Surgical procedure to protect a woman from further 5.94 5.37 -9.56 3.55 3.18 -10.36 4.85 4.36 -10.21
pregnancy (per 1 000 female beneficiaries aged
15 – 49 years)
Termination of pregnancy at 13 – 20 weeks of 113.48 101.45 -10.60 38.41 29.62 -22.90 77.27 67.81 -12.24
pregnancy performed under safe conditions in
a health facility (per 1 000 terminations)
Termination of pregnancy in the first 12 weeks 82.25 104.35 26.86 77.24 65.35 -15.39 79.83 86.09 7.83
of pregnancy performed under safe conditions
in a health facility (per 1 000 terminations)
Termination of pregnancy performed under safe 2.05 1.93 -5.91 2.28 1.96 -14.03 1.07 0.96 -10.47
conditions in a health facility (per 1 000 female
beneficiaries)
Total number of live births (per 1 000 birth admissions) 971.87 966.47 -0.56 929.19 932.04 0.31 954.16 951.52 -0.28

*** Note: Low numbers for maternal services may be attributable to data quality issues. Efforts to improve maternal health data will continue in the current
financial year.

44 Council for Medical Schemes

SNAPSHOT OF FINANCIAL RESULTS FOR THE YEAR ENDED
31 DECEMBER 2020
Figure 31: A snapshot of the industry – for every R100 received

R10.01
Reserving

R8.61
Non-healthcare
expenditure

R81.38
Claims

Figure 31 illustrates that for every R100 received in 2020, R81.38 was spent on claims (compared to 2019’s pre-COVID-19 R90.58),
R8.61 was spent on non-healthcare expenditure, and R10.01 was allocated towards reserving.

CONTRIBUTIONS
The gross contributions received from members of medical schemes in 2020 was R219.43 billion compared with R205.83 billion in
December 2019, which is an increase of 6.61%.

Risk contributions (gross contributions excluding medical savings accounts contributions) increased by 6.66% to R199.08 billion from
R186.66 billion in 2019. The equivalent increase from 2018 to 2019 was 7.31%.

Figure 32: Gross contributions per average beneficiary per month (2000–2020) in 2020 prices

2 500.00

2 000.00
pabpm (R)

1 500.00

1 000.00

500.00

0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gross contributions

pabpm = per average beneficiary per month

The values were adjusted for CPI for 2000 – 2019

Industry Report 2020 45

 CHAPTER 2: CONTRIBUTIONS continued

Gross contributions, adjusted for lives covered (per average beneficiary per month) (pabpm) have increased by 85.15% between 2000 and
2020 in real terms.

Gross contributions pabpm rose by 6.99% to R2 053.48 in 2020 from R1 919.39 in 2019. After adjusting for inflation, this growth was 3.57%.

The increase in risk contributions pabpm was 7.03 %, rising to R1 863.04 from R1 740.60 in 2019. After adjusting for inflation, this growth
was 3.62%.

Contributions to personal medical savings accounts increased by 6.14% to R20.35 billion in 2020 from R19.17 billion in the previous year
(2019: 4.61% increase). When measured on a pabpm basis in respect of only those schemes which use medical savings accounts, the
increase was 6.30% (from R207.59 to R220.67). After adjusting for inflation, an increase of 2.90% was noted.

RELEVANT HEALTHCARE EXPENDITURE

The total gross relevant healthcare expenditure incurred by medical schemes decreased by 3.91% to R179.74 billion from R187.05 billion in
2019 (2019: increase of 7.43%). Risk claims decreased by 4.18% to R162.00 billion from R169.07 billion in 2019 (2019: increase of 7.73%).

Figure 33: Gross relevant healthcare expenditure (2000–2020) in 2020 prices*

2 000.00
1 800.00
1 600.00
1 400.00
1 200.00
pabpm (R)

1 000.00
800.00
600.00
400.00
200.00
0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Gross claims

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019

A combination of factors affected the claims experience of medical schemes over time, more so in later years. These include changing benefit
design, demographic profiles, increased utilisation of benefits and a higher number of high-cost cases. Some medical schemes were also
affected by widespread fraud and abuse of benefits, as well as wastage of resources. The change in Value Added Tax on 1 April 2018 also
had an impact on claims costs.

On average, medical schemes incurred a much lower claims experience in 2020 compared to 2019. The utilisation of services was substantially
reduced with the postponement of elective procedures in response to the COVID-19 pandemic. Gross relevant healthcare expenditure pabpm
increased by 82.04% from 2000 until 2019, before reducing during the 2020 COVID-19 pandemic, resulting in a net 69.94% increase over
the period.

The total gross relevant healthcare expenditure incurred pabpm decreased by 3.57% to R1 682.04 in 2020 from R1 744.27 in 2019.

Risk claims pabpm decreased by 3.84% to R1 516.10 from R1 576.61; after adjusting for inflation, a decline of 6.90% was noted.

Claims paid from medical savings accounts decreased by 1.38% to R17.73 billion in 2020 from 2019’s R17.98 billion (2019: 4.68% increase).
On a pabpm basis for schemes which offer medical savings accounts, medical savings accounts claims decreased by 1.24% to R192.28 from
the previous year’s R194.69 (2019: 2.32% increase). When adjusted for inflation, savings claims pabpm decreased by 4.39%.

46 Council for Medical Schemes

Risk transfer arrangements
In the past few years, medical schemes have increasingly undertaken risk transfer arrangements to manage their insurance risks. Table 25
reflects the main components of such arrangements:

• The capitation fees which schemes paid to third parties to manage their risks;
• The estimated costs which schemes would have incurred had they not used risk transfer arrangements; and
• The net effect thereof.

The “net income/(expense)” column reflects the value derived from the risk transfer arrangement.

Table 25: Significant risk transfer arrangements (2019 and 2020)

Capitation fees Estimated recoveries Net income (expense)*

2020 2019 % 2020 2019 % 2020 2019 %

R'000 R'000 growth R'000 R'000 growth R'000 R'000 growth

Open schemes 2 611 639 2 185 255 19.51 2 688 478 2 328 978 15.44 83 313 148 618 -43.94
Restricted schemes 2 010 039 1 821 187 10.37 1 948 048 1 860 337 4.71 (31 649) 46 868 -167.53
All schemes 4 621 678 4 006 442 15.36 4 636 526 4 189 314 10.68 51 664 195 486 -73.57

*T
 he net income/(expense) on risk transfer arrangements includes an amount of R36.8 million in respect of profit- and loss-sharing agreements (2019: R12.6 million).
These arrangements are not allowed in terms of Section 26(5).

Table 26 lists the ten schemes that incurred the biggest losses in respect of their significant risk transfer arrangements, and Table 27 details
the 10 benefit options that reported the greatest losses.

Table 26: Schemes with highest risk transfer arrangement losses (2020)
Net income/
(expense)
Capitation Estimated Net income/ as% of
Beneficiaries fees recoveries (expense) capitation fees
Ref. no. Name of medical scheme 31 Dec 2020 R'000 R'000 R'000 %

1167 Momentum Medical Scheme 293 457 426 252 355 178 (71 074) -16.67
1580 South African Police Service Medical Scheme (POLMED) 502 631 958 560 860 065 (68 742) -7.17
1591 Impala Medical Plan 26 607 191 298 174 716 (16 581) -8.67
1279 Bankmed 218 930 168 058 158 691 (9 367) -5.57
1486 Sizwe Medical Fund 115 156 56 295 48 721 (7 574) -13.45
1537 Hosmed Medical Aid Scheme 53 255 26 988 20 766 (6 222) -23.05
1145 LA-Health Medical Scheme 222 882 25 048 20 154 (4 894) -19.54
1271 Fishing Industry Medical Scheme (Fishmed) 4 141 18 079 13 722 (4 357) -24.10
1043 Chartered Accountants (SA) Medical Aid Fund (CAMAF) 47 345 12 218 8 791 (3 427) -28.05
1583 Platinum Health 92 255 10 565 7 217 (3 349) -31.70

The effect of lockdown is evident on the results of capitation arrangements. The decreased utilisation resulted in 42 medical schemes
(or 71.19% of those schemes who had capitation agreements during the year) incurring losses on their capitation arrangements during 2020
(2019: 35 schemes, or 55.56%).

Industry Report 2020 47

 CHAPTER 2: RELEVANT HEALTHCARE EXPENDITURE continued

Table 27: Options with highest risk transfer arrangement losses (2020)
Net income/
Average (expense) as%
age per Capitation Estimated Profit/ Net income/ of capitation
Name of Name of Beneficiaries beneficiary fees recoveries (loss) (expense) fees
Ref. no. medical scheme benefit option 31 Dec 2020 Years R'000 R'000 sharing R'000 %

1580 South African Police Service Aquarium 174 574 22.69 293 769 104 266 4 099 (185 403) -63.11
Medical Scheme (POLMED)
1167 Momentum Medical Custom 163 786 32.79 185 743 156 174 – (29 569) -15.92
Scheme
1167 Momentum Medical Ingwe 52 186 27.81 142 496 116 431 – (26 065) -18.29
Scheme
1512 Bonitas Medical Fund BonComprehensive 8 898 53.30 49 445 29 534 – (19 912) -40.27
1591 Impala Medical Plan Impala Medical Plan 26 607 30.95 191 298 174 716 – (16 581) -8.67
1167 Momentum Medical Incentive 67 775 39.04 83 303 68 965 – (14 338) -17.21
Scheme
1149 Medihelp Prime 1 62 094 33.16 14 041 4 296 – (9 745) -69.40
1279 Bankmed Bankmed Basic 41 697 25.55 142 452 133 338 – (9 114) -6.40
1486 Sizwe Medical Fund Copper Core Plan 14 702 29.83 56 295 48 721 – (7 574) -13.45
1145 LA-Health Medical Scheme LA Focus 46 220 26.65 14 006 8 837 – (5 169) -36.91

Momentum Medical Scheme and POLMED is listed in both Tables 26 and 27 as the biggest loss-makers.

The Prime 1 option of Medihelp suffered the biggest loss in terms of the percentage of capitation fees paid (69.40%; 2019: 55.56%) followed
by the Aquarium option of POLMED (63.11%; 2019: 21.36%), as shown in Table 70.

Table 71 lists the 10 contracts on which schemes incurred the biggest losses in respect of their significant risk transfer arrangements, with
comparative 2019 figures. Two Preferred Provider Negotiators (Pty) Ltd contracts feature on this list, as well as two Dental Risk Company
(Pty) Ltd (DRC) contracts.

48 Council for Medical Schemes

Table 28: Contracts with the highest risk transfer losses (2019 and 2020)
2020 2019

Net income/ Net income/

(expense) (expense)
Profit/ Net as% of Profit/ Net as% of
Capitation Estimated (loss) income/ capitation Capitation Estimated (loss) income/ capitation
Ref. Name of Contract fees recoveries sharing (expense) fees fees recoveries sharing (expense) fees
no. medical scheme name R'000 R'000 R'000 R'000 % R'000 R'000 R'000 R'000 %

1167 Momentum Momentum 403 360 (330 664) – (72 696) -18.02 418 051 (333 132) – (84 919) -20.31
Medical Scheme Health
Solutions
(Pty) Ltd
1580 South African Scriptpharm 743 750 (677 780) (27 601) (38 369) -5.16 494 500 (469 075) (700) (24 725) -5.00
Police Service Risk
Medical Scheme Management
(POLMED) (Pty) Ltd
1580 South African Preferred 214 810 (182 285) (2 152) (30 373) -14.14 207 041 (183 231) (6 860) (16 950) -8.19
Police Service Provider
Medical Scheme Negotiators
(POLMED) (Pty) Ltd
1591 Impala Medical Impala Medical 191 298 (174 716) – (16 581) -8.67 174 649 (163 339) – (11 310) -6.48
Plan Services
1125 Discovery Health Dental Risk 135 101 (119 354) – (15 747) -11.66 133 274 (130 678) – (2 596) -1.95
Medical Scheme Company (Pty)
Ltd (DRC)
1486 Sizwe Medical Intelihealth 9 199 – – (9 199) -100.00 52 795 (41 462) – (11 333) -21.47
Fund Africa
Managed Care
Organisation
(Pty) Ltd
1279 Bankmed Discovery 160 730 (149 755) – (10 975) -6.83 159 834 (179 573) – 19 738 12.35
Health (Pty)
Ltd
1512 Bonitas Medical Europ 9 953 (1 201) – (8 752) -87.94 – – – – –
Fund Assistance
Worldwide
(South Africa)
Services
(Pty) Ltd
1149 Medihelp Dental Risk 122 427 (115 014) – (7 414) -6.06 125 260 (144 734) – 19 474 15.55
Company (Pty)
Ltd (DRC)
1537 Hosmed Medical Preferred 26 988 (20 766) – (6 222) -23.05 25 776 (20 496) – (5 280) -20.48
Aid Scheme Provider
Negotiators

Industry Report 2020 49

 CHAPTER 2: RELEVANT HEALTHCARE EXPENDITURE continued

Accredited managed healthcare services (no transfer of risk)

Accredited managed healthcare services increased by 6.01% to R4.97 billion in 2020 from R4.69 billion in 2019. In 2020, 8 825 689 average
beneficiaries (or 99.11% of beneficiaries) were covered by these managed healthcare arrangements.

Table 29: Accredited managed healthcare service fees (no transfer of risk) for options with a claims ratio above 100% (2020)
Accredited managed healthcare
services fees (no transfer of risk) Risk claims
Number
R'000 pmpm R'000 % of RCI Beneficiaries of options

Open schemes 35 297 119.45 1 598 891 109.76 47 880 10

Restricted schemes 116 451 82.43 6 430 470 110.27 283 758 20
All schemes 151 748 88.84 8 029 361 110.17 331 638 30

pmpm = per member per month

RCI = risk contribution income

Table 29 shows the number of benefit options with claims ratios greater than 100% and their expenditure on managed healthcare services.
There were 30 options in this category, which accounted for 1.25% of beneficiaries in respect of whom such expenditure was incurred
(2019: 80 options, or 11.53% of beneficiaries). The decrease is mainly due to the decreased utilisation as result of the pandemic, and not
because of the outcomes of the managed care interventions themselves.

Table 30: Accredited managed healthcare services (no transfer of risk) of the 10 largest schemes (2020)
Accredited managed
Average healthcare services
Ref. no. Name of medical scheme Type beneficiaries Claims ratio as % of RCI

1125 Discovery Health Medical Scheme open 2 764 994 76.18 3.07
1598 Government Employees Medical Scheme (GEMS) restricted 1 924 569 84.73 2.00
1512 Bonitas Medical Fund open 714 989 83.00 3.10
1580 South African Police Service Medical Scheme (POLMED) restricted 504 758 90.53 1.45
1167 Momentum Medical Scheme open 293 884 72.28 3.16
1279 Bankmed restricted 219 807 83.15 2.68
1145 LA-Health Medical Scheme restricted 219 725 76.03 2.23
1252 Bestmed Medical Scheme open 202 386 76.71 2.44
1149 Medihelp open 197 621 79.00 1.31
1140 Medshield Medical Scheme open 154 459 78.99 1.64

Table 30 depicts the ten largest schemes (by number of average beneficiaries) and shows their total expenditure on accredited managed
healthcare services. The industry accredited managed healthcare services average was 2.51% of Risk Contribution Income (RCI).

50 Council for Medical Schemes

RELATIONSHIP BETWEEN THE RISK AND SAVINGS COMPONENTS
Table 31 shows the different components of contributions and claims for open and restricted schemes pabpm.
Table 31: Contributions and relevant healthcare expenditure pabpm (2000–2020) in 2020 prices*
Risk contributions Savings contributions Risk claims Savings claims
pabpm % pabpm % pabpm % pabpm %
R change R change R change R change

Open schemes
2000 971.46 134.25 851.49 120.27
15.44 8.12 7.40 6.92
2001 1 121.47 145.15 914.51 128.59
2002 1 188.29 5.96 151.25 4.20 957.75 4.73 130.29 1.32
2003 1 279.68 7.69 176.36 16.60 989.09 3.27 145.77 11.88
2004 1 352.17 5.66 188.93 7.13 1 029.91 4.13 160.66 10.21
2005 1 345.03 -0.53 206.30 9.19 1 102.53 7.05 176.47 9.84
2006 1 332.41 -0.94 215.46 4.44 1 139.18 3.32 208.93 18.39
2007 1 368.43 2.70 196.42 -8.84 1 142.94 0.33 186.25 -10.86
2008 1 357.82 -0.78 201.37 2.52 1 141.87 -0.09 192.98 3.61
2009 1 420.72 4.63 211.46 5.01 1 229.77 7.70 204.28 5.86
2010 1 484.57 4.49 224.91 6.36 1 257.69 2.27 214.42 4.96
2011 1 538.56 3.64 230.24 2.37 1 299.27 3.31 218.37 1.84
2012 1 548.98 0.68 241.56 4.92 1 308.16 0.68 227.07 3.98
2013 1 591.14 2.72 240.47 -0.45 1 332.64 1.87 224.39 -1.18
2014 1 610.88 1.24 259.46 7.90 1 413.85 6.09 231.54 3.19
2015 1 657.50 2.89 267.96 3.28 1 470.04 3.97 254.98 10.12
2016 1 661.94 0.27 268.77 0.30 1 484.07 0.95 255.50 0.20
2017 1 737.59 4.55 274.45 2.11 1 515.15 2.09 262.52 2.75
2018 1 765.27 1.59 273.84 -0.22 1 586.02 4.68 259.95 -0.98
2019 1 815.48 2.84 265.17 -3.17 1 622.01 2.27 252.41 -2.90
2020 1 899.30 4.62 274.90 3.67 1 484.90 -8.45 242.84 -3.79
Restricted schemes
2000 1 050.67 194.23 970.01 171.23
9.00 -9.07 2.67 -6.69
2001 1 145.20 176.61 995.91 159.78
2002 1 234.75 7.82 176.25 -0.20 1 055.22 5.96 152.26 -4.71
2003 1 304.05 5.61 187.35 6.30 1 089.46 3.24 159.15 4.53
2004 1 369.36 5.01 204.47 9.14 1 154.29 5.95 164.19 3.17
2005 1 353.68 -1.15 217.45 6.35 1 210.01 4.83 175.79 7.06
2006 1 346.14 -0.56 225.92 3.90 1 268.15 4.80 202.17 15.01
2007 1 304.99 -3.06 175.48 -22.33 1 211.26 -4.49 153.92 -23.87
2008 1 264.33 -3.12 137.95 -21.39 1 162.64 -4.01 120.64 -21.62
2009 1 323.79 4.70 114.02 -17.35 1 243.28 6.94 105.47 -12.57
2010 1 410.31 6.54 102.62 -10.00 1 287.03 3.52 94.26 -10.63
2011 1 472.65 4.42 96.22 -6.24 1 315.20 2.19 86.85 -7.86
2012 1 502.12 2.00 88.70 -7.82 1 378.97 4.85 79.24 -8.76
2013 1 538.02 2.39 63.61 -28.29 1 382.41 0.25 56.76 -28.37
2014 1 554.25 1.06 93.91 47.63 1 472.85 6.54 57.69 1.64
2015 1 608.49 3.49 101.92 8.53 1 526.10 3.62 89.32 54.83
2016 1 630.54 1.37 107.72 5.69 1 559.55 2.19 94.81 6.15
2017 1 715.12 5.19 111.96 3.94 1 554.20 -0.34 101.83 7.40
2018 1 745.63 1.78 119.23 6.49 1 583.48 1.88 105.73 3.83
2019 1 776.26 1.75 123.85 3.87 1 636.81 3.37 109.41 3.48
2020 1 819.51 2.43 128.00 3.35 1 553.55 -5.09 105.83 -3.27
pabpm = per average beneficiary per month
pasbpm = pabpm in respect of schemes which had savings transactions
* Values were adjusted for CPI for 2000–2019

Industry Report 2020 51

 CHAPTER 2: RELATIONSHIP BETWEEN THE RISK AND SAVINGS COMPONENTS continued

In the open scheme industry, the increase in both the risk and savings components of claims pabpm outpaced that of the relevant contributions
pabpm component from 2000 to 2019, until the decreased utilisation in 2020 resulted in a reversal of the trend.

Contrary to this trend, the savings contributions and claims pabpm in restricted schemes decreased by 36.2% and 36.1% respectively from 2000
to 2019, the main period of reversal coinciding with the registration of GEMS in 2006. This reversal is clearly evident in both Figures 34 and 35.

The risk claims ratio decreased in both open and restricted schemes from 2019 to 2020. It reduced to 78.18% for open schemes, and 85.38%
for restricted schemes.

For the savings pool, 88.34% of contributions received from members of open schemes was paid out in claims, compared with 82.68%
for restricted schemes.

The contributions and expenditure on savings in open schemes are much higher than in restricted schemes. This is due to differing benefit
designs in the two industries. Restricted schemes generally have more traditional and richer options.

Figures 34 and 35 show the relationship between the risk and savings pools for contributions and claims respectively.

Figure 34: Risk and savings contributions and contributions pabpm (2000–2020) in 2020 prices*

274.90
265.17
2 500.00

273.84
274.45

128.00
123.85
268.77
267.96

119.23
111.96
259.46
240.47
230.24
241.56

107.72
101.92
224.91
211.46

2 000.00

63.61
93.91
204.47
217.45
225.92

102.62
196.42
201.37

88.70
188.93
206.30
215.46

96.22
187.35

175.48
176.36

114.02
176.25

137.95
151.25

176.61
145.15

194.23
134.25

1 500.00
pabpm (R)

1 000.00
1 121.47
1 188.29
1 279.68
1 352.17
1 345.03
1 332.41
1 368.43
1 357.82
1 420.72
1 484.57
1 538.56
1 548.98
1 591.14
1 610.88
1 657.50
1 661.94
1 737.59
1 765.27
1 815.48
1 899.30

1 050.67
1 145.20
1 234.75
1 304.05
1 369.36
1 353.68
1 346.14
1 304.99
1 264.33
1 323.79
1 410.31
1 472.65
1 502.12
1 538.02
1 554.25
1 608.49
1 630.54
1 715.12
1 745.63
1 776.26
1 819.51
971.46

500.00

0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
open schemes restricted schemes

Risk contributions Savings contributions

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019

Figure 35: Risk and savings claims pabpm (2000–2020) in 2020 prices*
252.41
259.95
262.52

109.41
242.84
254.98
255.50

105.73
101.83

105.83
2 000.00
231.54

94.81
224.39
227.07

89.32
218.37

57.69
214.42

1 800.00
202.17
204.28

79.24
56.76
175.79

153.92

105.47
208.93

86.85
186.25
192.98

94.26
164.19
176.47

120.64

1 600.00
159.15
152.26
160.66

159.78
145.77
130.29

171.23
128.59

1 400.00
120.27

1 200.00
pabpm (R)

1 000.00
800.00
600.00
1 029.91
1 102.53
1 139.18
1 142.94
1 141.87
1 229.77
1 257.69
1 299.27
1 308.16
1 332.64
1 413.85
1 470.04
1 484.07
1 515.15
1 586.02
1 622.01
1 484.90

1 055.22
1 089.46
1 154.29
1 210.01
1 268.15
1 211.26
1 162.64
1 243.28
1 287.03
1 315.20
1 378.97
1 382.41
1 472.85
1 526.10
1 559.55
1 554.20
1 583.48
1 636.81
1 553.55
851.49
914.51
957.75
989.09

970.01
995.91

400.00
200.00
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

open schemes restricted schemes

Risk claims Savings claims

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019

52 Council for Medical Schemes

Table 32: Contributions and relevant healthcare expenditure pabpm (2000–2020) in 2020 prices *
Risk contributions Savings contributions Risk claims Savings claims

pabpm % pabpm % pabpm % pabpm %

R change R change R change R change

2000 996.80 146.19 889.63 130.46

13.23 3.63 5.60 3.43
2001 1 128.65 151.50 939.07 134.94
2002 1 201.93 6.49 156.30 3.17 986.03 5.00 134.59 -0.26
2003 1 286.85 7.07 178.51 14.21 1 018.73 3.30 148.64 10.44
2004 1 357.11 5.46 191.99 7.55 1 066.19 4.70 161.36 8.56
2005 1 347.54 -0.71 208.57 8.64 1 133.27 6.30 176.47 9.36
2006 1 336.34 -0.83 217.42 4.24 1 175.56 3.70 207.62 17.65
2007 1 346.88 0.79 191.74 -11.81 1 165.71 -0.80 179.14 -13.72
2008 1 323.37 -1.75 183.87 -4.10 1 149.52 -1.40 173.12 -3.36
2009 1 382.77 4.49 180.52 -1.82 1 235.07 7.40 173.00 -0.07
2010 1 453.91 5.14 181.64 0.62 1 269.82 2.80 172.13 -0.50
2011 1 509.82 3.85 181.50 -0.08 1 306.30 2.90 170.41 -1.00
2012 1 527.99 1.20 182.72 0.67 1 339.80 2.60 170.15 -0.15
2013 1 567.10 2.56 191.96 5.06 1 355.15 1.10 177.97 4.60
2014 1 585.59 1.18 198.08 3.19 1 440.19 6.30 184.78 3.83
2015 1 635.83 3.17 208.12 5.07 1 494.73 3.80 195.29 5.69
2016 1 648.20 0.76 210.11 0.96 1 517.37 1.50 197.30 1.03
2017 1 727.65 4.82 215.71 2.67 1 532.42 1.00 204.50 3.65
2018 1 756.59 1.68 218.31 1.21 1 584.89 3.40 204.57 0.03
2019 1 798.00 2.36 214.46 -1.76 1 628.60 2.80 201.11 -1.69
2020 1 863.04 3.62 220.67 2.90 1 516.10 -6.90 192.28 -4.39

pabpm = per average beneficiary per month

pasbpm = pabpm in respect of schemes which had savings transactions
* Values were adjusted for CPI for 2000–2019

Table 32 shows the use of medical savings accounts in the benefit designs of medical schemes since 2000.

Between 2003 and 2006 medical savings accounts contributions and claims increased at greater rates than those recorded for the risk
components. In 2000, savings contributions made up 12.79% of gross contributions, and increased to 13.99% of gross contributions at the
end of 2006. The higher increases in the savings components are partly due to several schemes introducing savings on existing options and
is indicative of a move towards benefit designs which requires a greater proportion of benefits to be funded out of members’ personal savings
accounts than from the general risk pool of the scheme.

The figures for the period 2007 to 2012 reflect a change in this trend. At the end of 2012, savings had declined to 10.68% of gross contributions.
The decrease is in part due to a decision by the CMS not to allow variable savings rates on an option, which resulted in several medical
schemes no longer offering savings plan accounts.

At the end of 2020, savings contributions represented 10.59% of gross contributions.

When adjusted for inflation, the increase in claims (both risk and savings) outpaced that of contributions until 2019. Risk contributions and
claims increased by 80.38% and 83.06% respectively on a pabpm basis; and medical savings account contributions and claims rose by
46.70% and 54.15% respectively.

The decreased utilisation in 2020 resulted in an inverse experience for the period: risk contributions and claims increased by 86.90% and
70.42% respectively from the year 2000 on a pabpm basis; and medical savings account contributions and claims rose by 50.95% and
47.39% respectively.

Industry Report 2020 53

 CHAPTER 2: RELATIONSHIP BETWEEN THE RISK AND SAVINGS COMPONENTS continued

Figure 36: Medical savings accounts contributions and claims pabpm (2000–2020) in 2020 prices*

250.00 15.01 16.00

13.47 13.32
12.79 12.56 12.73
13.14 13.09
12.29
14.00
200.00 12.01
13.40 13.99 11.94 11.54 11.61 11.37 11.56 11.51 11.77 11.43 11.26
12.79 12.18 12.39 12.46 12.20
11.27 10.99 12.00
11.83 11.51 11.55 11.11 11.29 11.31
11.11 11.10 11.05
10.00
pabpm (R)

10.91
150.00 10.73 10.68 10.66 10.59

8.00

%
100.00 6.00
4.00
50.00
165.30

181.50
170.41
182.72

191.96

198.08
184.78
208.12
195.29
210.11
197.30

204.50

204.57
214.46
201.11
220.67
192.28
172.13

177.97
146.19
130.46
151.50
134.94

134.59
178.51
148.64
191.99
161.36
208.57
176.47
217.42
207.62
191.74
179.14
183.87
173.12
180.52
173.00
181.64

215.71

218.31
2.00

17015
0 0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Savings contributions Savings claims % of gross contributions % of gross claims

pabpm = per average beneficiary per month

* The values were adjusted for CPI for 2000 – 2019

The proportion of claims paid from medical savings accounts as a percentage of gross healthcare expenditure increased until 2006,
after which a reversal in the trend is observed. The 2020 experience is an outlier due to the postponement of elective (risk) procedures where
the ratio increased again to 11.26%, from 2019’s 10.99%.

For open schemes, the proportion of claims paid from medical savings accounts increased from 13.47% in 2019 to 14.06% in 2020.
The medical savings accounts claims ratio decreased to 88.34% from 95.19% in 2019.

For restricted schemes, the proportion of claims paid from medical savings accounts increased from 6.27% in 2019 to 6.38% in 2020.
The medical savings accounts claims ratio decreased to 82.68% from 88.34% in 2019.

54 Council for Medical Schemes

RELATIONSHIP BETWEEN CONTRIBUTIONS AND RELEVANT
HEALTHCARE EXPENDITURE
Figure 37 shows the relationship between risk contributions and claims paid over the last 21 years. All figures have been adjusted for inflation.

Figure 37: Risk claims ratio for all schemes (2000–2020) in 2020 prices*

2 000.00 95.00
92.06
1 800.00 90.83
91.37
90.23 90.58
89.25 88.70
1 600.00 87.97
89.32
87.68
90.00
87.34
86.86
1 400.00 86.55 86.52 86.48

1 200.00 84.10 85.00

pabpm (R)

83.20 82.04
1 000.00 81.38

%
800.00 79.16 80.00
600.00 78.56

400.00 75.00

1 628.60
1 201.93

1 286.85

1 357.11
1 066.19
1 347.54
1 133.27
1 336.34
1 175.56
1 346.88
1 165.71
1 323.37
1 149.52
1 382.77
1 235.07
1 453.91
1 269.82
1 509.82
1 306.30
1 527.99
1 339.80
1 567.10
1 355.15
1 585.59
1 440.19
1 635.83
1 494.73
1 648.20
1 517.37
1 727.65
1 532.42
1 756.59
1 584.89
1 798.00

1 863.04
1 516.10
1128.65

1018.73
996.80
889.63

939.07

986.03

200.00
0 70.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Risk contributions Risk claims Risk claims ratio

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019

The Medical Schemes Act (No. 131 of 1998) was promulgated in 2000, and schemes had to reach the minimum required reserve levels by
2004. This resulted in a period of reserve building, which seemed to be at the expense of claims. The year 2004 saw the deregulation of pricing
by the Competition Commission, which had the opposite effect than what was intended. This phenomenon, together with the PMB and CDL
amendments that came into effect during that year, resulted in a rapid increase in claims ratios.

In 2006 deductibles and self-payment gaps were introduced by the industry to try and stem the increased claims.

In later years, the higher claims ratios reflect inter alia the tariff pricing problems and the ageing population.

During 2020 the utilisation of services was substantially reduced with the postponement of elective procedures in response to the COVID-19
pandemic; some of the pent-up demand was released during the last quarter of the year (refer to Figure 38 below). The claims ratio therefore
decreased significantly from 2019 (90.58%) to 2020 (81.38%).

Figure 38: Seasonality of claims: 2020 compared to 2019

110.00

100.00

90.00 94.17
90.11 90.25 89.93
80.00 86.86 86.50 85.75
%

70.00 75.32 78.99

71.11 71.98
60.00
55.67
50.00
Jan Feb Mar April May June July Aug Sep Oct Nov Dec

All schemes Claims ratio % 2020 All schemes Claims ratio % 2019

Industry Report 2020 55

 CHAPTER 2: RELATIONSHIP BETWEEN CONTRIBUTIONS AND RELEVANT HEALTHCARE EXPENDITURE continued

Figure 38 illustrates the effect of lockdowns on the seasonality of the 2020 year’s claims when compared to the 2019 experience.

Figure 39 and Figure 40 show the seasonal pattern in monthly claims (as a percentage of monthly contributions) for each industry during 2020
and 2019, respectively.

Figure 39: Seasonality of claims per month in 2019

105.00
100.00 99.09
97.97 96.33
95.00 93.44 93.49
90.00 89.87 90.72 89.55 90.24
88.07
85.00 86.93
%

80.00
75.00
70.00 71.24

65.00
Jan Feb Mar April May June July Aug Sep Oct Nov Dec

open schemes restricted schemes All schemes Linear (All schemes)

Both open and restricted schemes follow the same general trend: an increase in claims in the first quarter of the year as members gain access
to new benefits, increases in claims over the winter months, and a downward trend in the last quarter of the year.

Figure 40: Seasonality of claims per month in 2020

110.00

100.00
94.17
90.00 90.11 90.25 89.93
86.86 86.50 85.75
80.00 78.99
%

75.32
71.11 71.98
70.00

60.00
55.67
50.00
Jan Feb Mar April May June July Aug Sep Oct Nov Dec

open schemes restricted schemes All schemes Linear (All schemes)

56 Council for Medical Schemes

The 2020 year is an exception to this general trend. The effect of lockdowns is clearly demonstrated by the dip in the claims ratios in April
2020, with some of the pent-up demand being released during the last quarter of the year (the downward trend was not as noticeable as
during previous periods).

Table 33 shows the percentage deviation of the open scheme that experienced an increase in its claims ratio from 2019 to 2020, from the
industry average of 78.18% and 89.34% for 2020 and 2019, respectively.

Table 33: Open scheme deviation from industry average (2020 and 2019)
% deviation from % deviation from
average claims average claims
% change in ratio of 89.34% ratio of 89.85%
Ref. no. Name of medical scheme claims ratio 2020 2019

1506 Medimed Medical Scheme 2.41 18.60 1.34

Medimed Medical Scheme obtained an exemption to reduce its contributions by 50% on all options for two months, which subsequently
resulted in an increased claims ratio.

Table 34 provides comparative information in respect of Medimed Medical Scheme.

Table 34: Open schemes with a claims ratio increase

Claims ratio Average age per beneficiary Solvency
Prescribed
Ref. no. Name of medical scheme 2020 2019 2020 2019 2020 2019 solvency

1506 Medimed Medical Scheme 92.72 90.54 31.53 30.23 110.18 92.65 25.00

Medimed Medical Scheme was able to utilise its high level of reserves to provide COVID-19 relief to its members in the form of
contribution holidays.

Table 35 shows the percentage deviation of restricted schemes, that experienced an increase in its claims ratio from 2019 to 2020, from the
industry average of 85.38% and 92.15% for 2020 and 2019 respectively.

Table 35: Restricted scheme deviation from industry average (2020 and 2019)
% deviation from % deviation from
average claims average claims
% change in ratio of 92.15 ratio of 90.71
Ref. no. Name of medical scheme claims ratio 2020 2019

1548 Medipos Medical Scheme 87.98 71.09 -15.67

1579 Tsogo Sun Group Medical Scheme 13.61 26.84 3.45
1591 Impala Medical Plan 0.25 14.00 5.36

Industry Report 2020 57

 CHAPTER 2: RELATIONSHIP BETWEEN CONTRIBUTIONS AND RELEVANT HEALTHCARE EXPENDITURE continued

When compared with open schemes, a greater number of restricted schemes had experienced increases in their claims ratios.

Medipos Medical Scheme’s increased claims ratio is attributable to the non-receipt of a number of months’ contributions from its
employer group.

Tsogo Sun Group Medical Scheme received an exemption for a three-month contribution holiday during 2020.

Figure 41 depict medical schemes that had the highest increases in claims ratios, from 2019 to 2020.

Figure 41: Restricted schemes with a claims ratio increase

160 100
146.08
90
140
80
120
Claims per ratio and Average age

67.70 108.30
70
97.33
100
60

Solvency ratio
80 50
41.47
37.50
40
60 27.62 32.77

30.95 30
40
20
20
10

0 0
Medipos Medical Scheme Tsogo Sun Group Medical Scheme Impala Medical Plan

Claims Ratio 2020 Claims Ratio 2019

Average age per beneficiary 2020 Average age per beneficiary 2019
Solvency 2020 Solvency 2019

58 Council for Medical Schemes

All the schemes whose claims ratios increased during 2020 have solvency ratios that are above the minimum required statutory level of 25%.

The top 10 schemes with the highest claims ratios for both open and restricted schemes in 2020 are shown in Table 36 and Table 37.

Table 36: Top 10 claims ratios open schemes (2020 and 2019)
Average age
Claims ratio per beneficiary Solvency

Ref. no. Name of medical scheme 2020 2019 2020 2019 2020 2019

1506 Medimed Medical Scheme 92.72 90.54 31.53 30.23 110.18 92.65
1141 Health Squared Medical Scheme 89.92 92.61 46.68 50.27 17.32 15.42
1034 Cape Medical Plan 87.26 100.02 41.49 39.57 98.69 94.42
1466 Makoti Medical Scheme 86.74 91.06 32.17 30.88 65.03 73.62
1486 Sizwe Medical Fund 85.86 100.17 31.90 34.23 38.62 36.48
1537 Hosmed Medical Aid Scheme 85.61 95.77 33.58 32.50 38.74 33.69
1202 Fedhealth Medical Scheme 84.29 93.33 40.14 38.07 44.66 43.43
1512 Bonitas Medical Fund 83.00 92.26 34.11 34.60 32.66 24.85
1464 Suremed Health 82.96 95.21 40.36 38.65 115.04 99.32
1491 Compcare Wellness Medical Scheme 81.75 87.91 41.78 38.43 49.51 58.31

Medimed Medical Scheme obtained an exemption to reduce its contributions by 50% on all options for two months.

Table 37: Top 10 claims ratios restricted schemes (2020 and 2019)
Average age
Claims ratio per beneficiary Solvency

Ref. no. Name of medical scheme 2020 2019 2020 2019 2020 2019

1548 Medipos Medical Scheme 146.08 77.71 37.50 35.54 67.70 90.54
1270 Golden Arrow Employees’ Medical 111.19 160.31 35.38 34.67 270.42 210.52
Benefit Fund
1579 Tsogo Sun Group Medical Scheme 108.30 95.33 27.62 26.08 41.47 60.31
1237 BP Medical Aid Society 106.89 130.50 47.02 46.35 142.43 129.60
1591 Impala Medical Plan 97.33 97.09 30.95 30.21 32.77 26.73
1507 Barloworld Medical Scheme 96.07 102.03 33.85 32.90 68.99 67.58
1012 Anglo Medical Scheme 95.56 122.28 42.79 42.19 450.02 433.63
1068 De Beers Benefit Society 94.09 109.42 49.76 48.22 182.09 162.43
1568 Sisonke Health Medical Scheme 93.92 108.46 33.89 32.27 29.08 25.38
1571 Anglovaal Group Medical Scheme 93.23 99.97 40.88 40.30 100.37 106.44

Medipos Medical Scheme’s increased claims ratio is attributable to the non-receipt of number of months’ contributions from its
employer group.

Tsogo Sun Group Medical Scheme received an exemption for a three-month contribution holiday.

Industry Report 2020 59

 NON-HEALTHCARE EXPENDITURE (NHE)
Non-healthcare expenditure consists of the result of commercial reinsurance agreements, administration expenditure, broker costs and
impaired receivables.

The non-healthcare expenditure for all medical schemes at the end of 2020 was reported at R17.14 billion, an increase of 3.55% from
R16.55 billion in 2019.

The non-healthcare ratio (as % of RCI) decreased from 8.87% in 2019 to 8.61% in 2020.

Figure 42: Distribution of non-healthcare expenditure of medical schemes

1.46%
(R250 770)
Net impairment losses:
trade and other receivables
14.81%
(R2 539 205)
Broker fees and distribution costs

83.73%
(R14 350 377)
Administration expenditure

Administration expenditure is the biggest component of NHE (83.73%), followed by broker fees and other distribution costs (14.81%) and
impaired receivables (1.46%).

Trends in non-healthcare expenditure

Figure 43: Gross non-healthcare expenditure (2000–2020) in 2020 prices*

240.00

220.00

200.00
pabpm (R)

180.00

160.00

140.00

120.00
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gross non-healthcare expenditure

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019

60 Council for Medical Schemes

Until 2005, non-healthcare expenditure increased at rates that exceeded the rate of increase in contributions until 2005. The rate of increase
displayed a downward trend until 2013, when it started increasing marginally again. The large variance from 2013 to 2014 was because of the
reclassification of accredited managed healthcare expenditure (refer to Figure 44).

Gross non-healthcare expenditure pabpm (adjusted for inflation) has increased by 7.28% since 2000. In the interest of member protection, it
is important that such expenditure be associated with a discernible value proposition.

Figure 44: Non-healthcare expenditure pabpa (2000–2020) in 2020 prices*

3 000

2 000
pabpa (R)

1 000

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Gross administration expenditure Managed care: management services

Broker fees and distribution costs Net reinsurance
Impaired receivables

pabpa = per average beneficiary per annum

* Values were adjusted for CPI for 2000 – 2019

Circular 56 of 2015 was issued by the CMS in respect of reclassification of managed healthcare services to relevant healthcare expenditure.
Only the benefit management services of a non-healthcare nature remained in the basket of non-healthcare expenditure.

This had the effect of reducing non-healthcare expenditure (2014 non-healthcare expenditure pabpa figure was downward adjusted with
21.49%). This can be clearly observed in Figure 44: non-healthcare expenditure pabpa decreased from R2 297.72 in 2013 to R1 812.93 in
2014. Thereafter a marginal increase in non-healthcare expenditure occurred; from R1 812.93 pabpa in 2014 to R1 924.82 pabpa in 2020.

Figure 45: Claims and non-healthcare expenditure pabpm (2000–2020) in 2020 prices*

2 500 100.00%

2 000 80.00%

1 500 60.00%
pabpm (R)

% of GCI

1 000 40.00%
500 20.00%

0 0.00%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Gross contributions Risk claims Gross claims ratio

Savings claims Gross non-healthcare expenditure Gross non-healthcare expenditure ratio

pabpm = per average beneficiary per month

GCI = Gross Contribution Income
* Values were adjusted for CPI for 2000 – 2019

Due to the increase in gross contributions outpacing that of non-healthcare expenditure, the ratio diminished over time – resulting in a gross
non-healthcare expenditure ratio of 7.81% at the end of 2020.

Industry Report 2020 61

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Table 38 shows how non-healthcare expenditure outpaced contributions and claims in most years until 2005. Total non-healthcare expenditure
has increased marginally over the past seven years.

Table 38: Trends in contributions, claims and non-healthcare expenditure (2000–2020) in 2020 prices*
Gross contributions Gross claims Gross non-healthcare expenditure

pabpa % pabpa % pabpa %

R growth R growth R growth

2000 13 309.09 11 877.56 1 794.12

13.11 -5.60 22.07
2001 15 053.26 11 212.00 2 190.03
2002 15 990.32 6.22 13 185.43 17.60 2 185.10 -0.23
2003 17 254.65 7.91 13 730.20 4.13 2 383.77 9.09
2004 18 242.00 5.72 14 437.37 5.15 2 525.45 5.94
2005 18 304.82 0.34 15 403.32 6.69 2 709.87 7.30
2006 17 963.07 -1.87 15 947.99 3.54 2 593.18 -4.31
2007 17 886.24 -0.43 15 597.08 -2.20 2 463.56 -5.00
2008 17 516.20 -2.07 15 328.68 -1.72 2 300.87 -6.60
2009 18 254.73 4.22 16 412.70 7.07 2 327.52 1.16
2010 19 186.49 5.10 16 885.78 2.88 2 299.77 -1.19
2011 19 942.55 3.94 17 387.84 2.97 2 251.73 -2.09
2012 20 191.21 1.25 17 807.38 2.41 2 252.19 0.02
2013 20 731.45 2.68 18 043.24 1.32 2 296.93 1.99
2014 21 017.15 1.38 19 128.99 6.02 1 813.13 -21.06
2015 21 766.58 3.57 19 941.35 4.25 1 867.43 2.99
2016 21 943.87 0.81 20 241.98 1.51 1 887.64 1.08
2017 22 889.32 4.31 20 434.53 0.95 1 914.18 1.41
2018 23 300.19 1.80 21 100.11 3.26 1 913.55 -0.03
2019 23 792.27 2.11 21 621.54 2.47 1 913.34 -0.01
2020 24 641.75 3.57 20 184.45 -6.65 1 924.82 0.60
since 2000 85.15 69.94 7.28

pabpa = per average beneficiary per annum

* Values were adjusted for CPI for 2000 – 2019.

The increase in non-healthcare expenditure was consistently higher than the Consumer Price Index (CPI) prior to 2006. The rate
of increase was reversed in 2006 (due in part to GEMS coming into operation) and, since then, there has been a real decrease in
non-healthcare expenditure, from R2 709.87 pabpa in 2005 to R2 296.93 pabpa in 2013 (prices adjusted to 2020 prices). Marginal
increases were experienced subsequently.

62 Council for Medical Schemes

Figure 46: Non-healthcare expenditure in open and restricted schemes (2014–2020) in 2020 prices*

250.0

200.0
pabpm (R)

150.0

100.0

50.0

0
2014 2015 2016 2017 2018 2019 2020

open schemes: NHE (inflation adjusted) pabpm restricted schemes: NHE (inflation adjusted) pabpm

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019

Based on Figure 46 above, which shows a comparison of non-healthcare expenditure between open and restricted schemes, it is evident that
expenditure in restricted schemes is much lower than in open schemes on a pabpm basis. This is partly because restricted schemes do not
incur the same level of marketing (including advertising) expenditure and broker fees as the open scheme industry.

Table 39 shows the nine open schemes with non-healthcare expenditure greater than the industry average of R208.80 pabpm and highlighted
those schemes exceeding the open schemes average of 10.99% when expressed as a percentage of Risk Contribution Income (RCI).

Table 39: Trends in claims, non-healthcare expenditure, and reserve-building as percentage of contributions among open
schemes (2019 and 2020)
Net non-healthcare Net claims Net non-healthcare
expenditure incurred expenditure Reserve-building

2020 2019 2020 2019 2020 2019

2020 2019 As % As % As % As % As % As % %
Ref. no. Name of medical scheme pabpm pabpm of RCI of RCI of RCI of RCI of RCI of RCI change

1141 Health Squared Medical Scheme 303.05 302.29 89.92 92.61 12.11 12.94 -2.04 -5.54 63.18
1491 Compcare Wellness Medical Scheme 261.85 256.51 81.75 87.91 13.16 13.91 5.09 -1.82 379.67
1464 Suremed Health 257.00 247.45 82.96 95.21 12.81 12.87 4.23 -8.08 152.35
1202 Fedhealth Medical Scheme 256.80 252.09 84.29 93.33 12.63 13.53 3.08 -6.86 144.90
1087 Keyhealth 239.62 219.79 77.81 89.91 9.22 8.70 12.96 1.40 825.71
1486 Sizwe Medical Fund 221.60 215.12 85.86 100.17 11.31 11.83 2.83 -12.00 123.58
1537 Hosmed Medical Aid Scheme 218.64 188.55 85.61 95.77 9.96 9.30 4.43 -5.07 187.38
1125 Discovery Health Medical Scheme 215.05 205.35 76.18 87.73 11.65 12.04 12.17 0.24 4 970.83
1167 Momentum Medical Scheme 214.72 199.85 72.28 84.23 14.75 14.68 12.97 1.09 1 089.91
Industry average – open schemes 208.80 199.15 78.18 89.34 10.99 11.33 10.83 -0.67 1 716.42

pabpm = per average beneficiary per month

RCI = Risk Contribution Income

Industry Report 2020 63

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Table 40 shows the 10 restricted schemes with highest non-healthcare expenditure pabpm. These schemes’ non-healthcare expenditure
exceeded the industry average of R102.31 pabpm. Table 40 furthermore highlighted those schemes exceeding the restricted schemes
average of 5.62% when expressed as a percentage of Risk Contribution Income (RCI).

Table 40: Trends in claims, non-healthcare expenditure, and reserve-building as percentage of contributions among
restricted schemes (2019 and 2020)
Net non-healthcare Net claims Net non-healthcare
expenditure incurred expenditure Reserve-building

2020 2019 2020 2019 2020 2019

2020 2019 As % As % As % As % As % As % %
Ref. no. Name of medical scheme pabpm pabpm of RCI of RCI of RCI of RCI of RCI of RCI change

1523 Grintek Electronics Medical Aid 267.88 188.52 78.82 102.69 9.99 7.70 11.19 -10.39 207.70
Scheme
1194 Profmed 261.15 252.28 82.21 93.07 11.69 12.12 6.09 -5.20 217.12
1237 BP Medical Aid Society 236.28 288.46 106.89 130.50 9.12 12.49 -16.01 -42.99 62.76
1579 Tsogo Sun Group Medical Scheme 213.31 122.50 108.30 95.33 26.46 12.01 -34.76 -7.34 -373.57
1068 De Beers Benefit Society 202.69 192.42 94.09 109.42 6.72 6.90 -0.81 -16.32 95.04
1043 Chartered Accountants (SA) Medical 189.23 189.33 76.03 85.83 8.17 8.54 15.80 5.63 180.64
Aid Fund (CAMAF)
1441 Parmed Medical Aid Scheme 185.09 200.30 85.60 92.86 3.49 4.06 10.91 3.07 255.37
1145 LA-Health Medical Scheme 176.62 170.55 76.03 84.33 11.88 12.20 12.09 3.47 248.41
1597 Umvuzo Health Medical Scheme 158.11 146.94 78.41 87.69 10.47 10.79 11.12 1.51 636.42
1012 Anglo Medical Scheme 156.86 146.99 95.56 122.28 6.53 6.80 -2.10 -29.08 92.78
Industry average – restricted schemes 102.31 98.61 85.38 92.15 5.62 5.73 8.99 2.12 324.06

pabpm = per average beneficiary per month

RCI = Risk Contribution Income

64 Council for Medical Schemes

Figure 47 depicts those open schemes whose non-healthcare expenditure as a percentage of risk contribution income exceeds the industry
average of 10.99%, while their solvency ratio is below the open schemes average of 38.71%.

Figure 48 shows the restricted schemes whose non-healthcare expenditure as a percentage of risk contribution income exceeds the industry
average of 5.62%, while their solvency ratio is below the restricted schemes average of 52.51%.

It is concerning that some of these medical schemes fall below the 25.0% solvency target yet exhibit high levels of non-healthcare expenditure.
This is an area that needs to be continually assessed and reviewed to ensure efficiencies.

Figure 47: Open schemes with high non-healthcare expenditure and solvency ratio below average (2020)

50.00 7 450.74 8 000

40.00 6 000
38.71 38.62
36.93
% of RCI

30.00 4 000

Millions (R)
20.00 22.88 2 000
17.32
10.00 12.11 44.74 74.94
10.99 12.18
11.65 11.31 0
(19.97)

0.00 -2 000
Industry average Health Squared Thebemed Discovery Health Sizwe Medical Fund
Medical Scheme Medical Scheme

Non-healthcare expenditure as % of RCI Solvency ratio Net healthcare result

RCI = Risk Contribution Income

Figure 48: Restricted schemes with high non-healthcare expenditure and solvency ratio below average (2020)

60.00 200
152.6
50.00 52.51 150
112.4
40.00 41.47
40.86 100
74.8 39.91 Millions (R)
% of RCI

30.00
29.08
26.46 50
20.00 22.37

10.00 (0.0 ) 0
10.47
8.22 7.92 (37.3)
5.62 6.08
0.00 -50
Industry average Transmed Sisonke Health Platinum Health Umvuzo Health Tsogo Sun Group
Medical Fund Medical Scheme Medical Scheme Medical Scheme

Non-healthcare expenditure as % of RCI Solvency ratio Net healthcare result

RCI = Risk Contribution Income

Industry Report 2020 65

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Administration expenditure
Administration expenditure, being the largest component of non-healthcare expenditure in all medical schemes, grew by 3.67% to
R14.35 billion from R13.84 billion between 2019 and 2020.

Open schemes increased their administration expenditure by 2.9% to R9.62 billion from R9.35 billion in 2019. Administration expenditure in
restricted schemes increased by 5.29% from R4.49 billion in 2019 to R4.73 billion in 2020.

Administration expenditure accounted for 6.54% of GCI in 2020 (2019: 6.72%). Five open schemes (representing 7.40% of all average
beneficiaries) and nine restricted schemes (representing 4.41% of all average beneficiaries) had an overall administration expenditure greater
than 10% of Gross Contribution Income (GCI) in 2020.

Table 41 shows administration expenditure by type of scheme administration.

Table 41: Gross Administration Expenditure (GAE) (2000–2020) in 2020 prices*

Open schemes Restricted schemes

Self-administered Third party Self-administered Third party

pabpm % pabpm % pabpm % pabpm %

R change R change R change R change

2000 91.73 108.04 64.36 76.30

55.83 26.43 13.63 9.95
2001 142.94 136.60 73.13 83.89
2002 121.46 -15.03 142.67 4.44 84.59 15.67 97.72 16.49
2003 142.43 17.27 150.79 5.69 72.17 -14.68 103.47 5.89
2004 153.83 8.00 162.54 7.79 88.10 22.08 106.71 3.13
2005 156.43 1.69 170.78 5.07 81.74 -7.22 122.05 14.37
2006 153.37 -1.96 171.67 0.52 70.80 -13.38 115.25 -5.57
2007 154.53 0.76 166.94 -2.76 73.40 3.67 105.12 -8.78
2008 147.79 -4.36 160.36 -3.94 60.68 -17.33 90.39 -14.02
2009 154.53 4.56 164.11 2.33 64.79 6.76 91.63 1.37
2010 143.11 -7.39 160.33 -2.30 75.41 16.39 89.83 -1.95
2011 134.33 -6.14 161.82 0.93 74.51 -1.20 86.85 -3.33
2012 147.24 9.61 160.84 -0.61 79.39 6.55 86.04 -0.93
2013 151.97 3.21 158.68 -1.34 78.15 -1.55 87.24 1.40
2014 146.19 -3.80 158.31 -0.23 93.51 19.65 90.61 3.87
2015 161.63 10.56 158.86 0.35 85.16 -8.93 97.63 7.75
2016 159.04 -1.60 156.43 -1.53 89.00 4.51 102.75 5.24
2017 155.14 -2.45 159.31 1.84 88.25 -0.84 102.95 0.20
2018 149.76 -3.47 163.61 2.70 116.62 32.14 96.42 -6.34
2019 148.71 -0.70 164.72 0.67 121.33 4.04 94.70 -1.78
2020 150.21 1.01 167.15 1.48 121.54 0.17 94.96 0.27

pabpm = per average beneficiary per month

* The values were adjusted for CPI for 2000 – 2019

66 Council for Medical Schemes

Open schemes
During 2020, there were five self-administered open schemes (2019: 6), representing 584 305 average beneficiaries (2019:  607 898), and
13 third-party-administered open schemes (2019: 14), representing 4 273 471 average beneficiaries (2019: 4 347 162).

Self-administered open schemes experienced a real increase of 1.01% in spending on administration expenditure (from R148.71 pabpm
in 2019 to R150.21 pabpm in 2020) while third-party-administered open schemes increased their expenditure by 1.48% in real terms to
R167.15 pabpm from R164.72 pabpm in 2019. Third-party-administered open schemes paid 11.28% more for administration expenditure than
self-administered open schemes. This figure was 10.77% higher in 2019.

Restricted schemes
During 2020, there were 10 self-administered restricted schemes (2019: 9), representing 357 197 average beneficiaries (2019: 345 886), and
48 third-party-administered restricted schemes (2019: 49), representing 3 689 706 average beneficiaries (2019: 3 635 377).

Self-administered restricted schemes spent on average 27.99% more on administration expenditure at R121.54 pabpm compared with the
R94.96 pabpm of third-party administered restricted schemes (2019: 28.12%).

The GAE pabpm in the open scheme industry is significantly higher than that of the restricted scheme industry. The same trend is also
noted when comparing the costs incurred in respect of third party administered and self-administered schemes respectively between the two
industries. This is partly because restricted schemes do not incur the same level of marketing (including advertising) expenditure and broker
fees as the open scheme industry.

Table 42 shows the open schemes with the highest administration expenditure pabpm. A high cost per life covered is sometimes the function
of a low average of beneficiaries, rather than high absolute administration costs. Schemes need to operate with a certain number of lives for
average operational costs to be lower and make the business more profitable and sustainable into the long term.

Table 42: Open schemes with administration expenditure above industry average of R165.11 pabpm (2020)
Administration expenditure

Average pabpm % of
Ref. no. Name of Scheme Name of administrator beneficiaries R’000 R GCI

1141 Health Squared Medical Scheme Agility Health (Pty) Ltd 32 610 101 702 259.89 9.81
1491 Compcare Wellness Medical Scheme Universal Healthcare Administrators 33 348 93 225 232.96 10.54
(Pty) Ltd
1464 Suremed Health Momentum Thebe Ya Bophelo (Pty) Ltd 2 096 5 547 220.54 10.13
1087 Keyhealth Professional Provident Society 67 709 172 447 212.24 7.64
Healthcare Administrators (Pty) Ltd
1202 Fedhealth Medical Scheme Medscheme Holdings (Pty) Ltd 148 189 358 773 201.75 9.68
1486 Sizwe Medical Fund 3Sixty Health (Pty) Ltd 112 802 251 500 185.80 9.47
1167 Momentum Medical Scheme Momentum Health Solutions (Pty) Ltd 293 884 629 288 178.44 11.64
1537 Hosmed Medical Aid Scheme Medscheme Holdings (Pty) Ltd 54 253 112 453 172.73 7.84
1125 Discovery Health Medical Scheme Discovery Health (Pty) Ltd 2 764 994 5 566 420 167.76 7.47

GCI = Gross Contribution Income

pabpm = per average beneficiary per month

Industry Report 2020 67

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Figure 49: Open schemes with administration expenditure above industry average of R165.11 pabpm (2020)

300.00 3 000 000

Average beneficiaries
250.00 2 500 000
200.00 2 000 000
pabpm

150.00 1 500 000

100.00 1 000 000
50.00 500 000
0 0

Discovery Health
Medical Scheme
Medical Scheme

Compcare Wellness
Medical Scheme

Suremed Health

Scheme

Momentum Medical
Scheme

Hosmed Medical Aid

Scheme
Health Squared

Keyhealth

Sizwe Medical Fund

Fedhealth Medical
Average beneficiaries Administration expenditure pabpm R

pabpm = per average beneficiary per month

Table 43 shows the 10 restricted schemes with the highest administration expenditure pabpm.

Table 43: The 10 restricted schemes with the highest administration expenditure above industry average of R97.31 pabpm (2020)
Administration expenditure

Average pabpm % of
Ref. no. Name of Scheme Name of administrator beneficiaries R’000 R GCI

1194 Profmed Professional Provident Society 74 630 219 585 245.19 10.98
Healthcare Administrators (Pty) Ltd
1237 BP Medical Aid Society Momentum Health Solutions (Pty) Ltd 3 402 9 692 237.41 9.16
1523 Grintek Electronics Medical Aid Universal Healthcare Administrators 1 095 1 500 228.31 8.52
Scheme (Pty) Ltd
1068 De Beers Benefit Society Self-Administered 9 144 22 229 202.58 6.71
1043 Chartered Accountants (SA) Medical Self-Administered 48 303 109 566 189.03 7.56
Aid Fund (CAMAF)
1441 Parmed Medical Aid Scheme Medscheme Holdings (Pty) Ltd 4 721 9 866 174.15 3.29
1012 Anglo Medical Scheme Discovery Health (Pty) Ltd 17 937 33 462 155.46 5.64
1582 Transmed Medical Fund Momentum Health Solutions (Pty) Ltd 31 978 58 268 151.84 8.22
1571 Anglovaal Group Medical Scheme Discovery Health (Pty) Ltd 4 996 9 000 150.12 6.28
1520 University of Kwa-Zulu Natal Medical Discovery Health (Pty) Ltd 6 848 12 125 147.55 5.56
Scheme

GCI = Gross Contribution Income

pabpm = per average beneficiary per month

68 Council for Medical Schemes

Figure 50: The 10 restricted schemes with the highest administration expenditure above industry average of R97.31 pabpm (2020)

300.00 80 000
250.00 70 000

Average beneficiaries
60 000
200.00 50 000
pabpm

150.00 40 000
100.00 30 000
20 000
50.00 10 000
0 -
Profmed

Grintek Electronics
Medical Aid Scheme

Medical Scheme
Society

(SA) Medical Aid Fund

(CAMAF)

Parmed Medical Aid

Scheme

Anglo Medical Scheme

BP Medical Aid Society

Transmed Medical Fund

Anglovaal Group

University of Kwa-Zulu
Natal Medical Scheme
De Beers Benefit

Chartered Accountants
Average beneficiaries Administration expenditure pabpm R

pabpm = per average beneficiary per month

Administration fees
Administration and co-administration fees paid to third-party administrators were the main component of Gross Administration Expenditure
(GAE). It grew by 3.85% to R10.36 billion in 2020 from R9.97 billion in the previous year. These fees represented 81.08% of the GAE of
schemes which incurred this expenditure in 2020 (2019: 81.06%).

Table 44 shows the gross administration fees paid to third-party administrators. These fees are the sum of administration fees, co-administration
fees, and other indirect fees paid to the administrator.

Table 44: Administration fees paid to third-party administrators pabpm (2019 and 2020)
Open schemes Restricted schemes

2020 2019 2020 2019

pabpm pabpm % pabpm pabpm %
R R variance R R variance

Third party
Administration fees 147.62 140.15 5.33 59.40 58.18 2.10
Co-administration fees – – – 6.85 6.65 3.01
Total 147.62 140.15 5.33 62.98 61.58 2.27

pabpm = per average beneficiary per month

On average, third-party-administered open schemes spent 134.39% more per beneficiary on administration fees than third-party-administered
restricted schemes (2019: 127.59%).

Industry Report 2020 69

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Tables 45 and 46 show the 10 schemes with the highest gross administration fees paid to its administrators (pampm).

Table 45: The 10 open schemes with the highest administration fees pampm (2020): industry average R305.54 pampm
Administration fee
Average pampm
Ref. no. Name of Scheme Name of administrator members R

1125 Discovery Health Medical Scheme Discovery Health (Pty) Ltd 1 333 237 336.84
1167 Momentum Medical Scheme Momentum Health Solutions (Pty) Ltd 153 064 330.12
1202 Fedhealth Medical Scheme Medscheme Holdings (Pty) Ltd 76 215 309.26
1491 Compcare Wellness Medical Scheme Universal Healthcare Administrators (Pty) Ltd 20 791 282.71
1141 Health Squared Medical Scheme Agility Health (Pty) Ltd 19 063 247.52
1087 Keyhealth Professional Provident Society Healthcare 32 747 225.01
Administrators (Pty) Ltd
1464 Suremed Health Momentum Thebe Ya Bophelo (Pty) Ltd 1 047 220.55
1512 Bonitas Medical Fund Medscheme Holdings (Pty) Ltd 335 425 217.75
1506 Medimed Medical Scheme Momentum Thebe Ya Bophelo (Pty) Ltd 5 685 206.11
1486 Sizwe Medical Fund 3Sixty Health (Pty) Ltd 47 575 198.86

pampm = per average member per month

The definition of services provided by medical scheme administrators is currently not standardised. The bouquet of services offered by
the administrators as both core and non-core administration and related cost structures differs across entities and is therefore not directly
comparable. Circular 77 of 2019 (with effective date 1 January 2021) was issued to standardise the contracting and reporting of accredited
administration services and other administration services; thereby ensuring transparency which would allow for more efficient monitoring and
comparability across the industry of the individual services contracted.

Table 46: The 10 restricted schemes with the highest administration fees pampm (2020): industry average R153.88 pampm
Administration fee
Average pampm
Ref. no. Name of Scheme Name of administrator members R

1194 Profmed Professional Provident Society Healthcare 35 667 320.43

Administrators (Pty) Ltd
1145 LA-Health Medical Scheme Discovery Health (Pty) Ltd 88 145 319.39
1520 University of Kwa-Zulu Natal Medical Scheme Discovery Health (Pty) Ltd 3 451 292.79
1571 Anglovaal Group Medical Scheme Discovery Health (Pty) Ltd 2 501 269.99
1523 Grintek Electronics Medical Aid Scheme Universal Healthcare Administrators (Pty) Ltd 496 265.46
1441 Parmed Medical Aid Scheme Medscheme Holdings (Pty) Ltd 2 507 254.65
1241 Naspers Medical Fund Discovery Health (Pty) Ltd 3 558 248.62
1572 Engen Medical Benefit Fund Discovery Health (Pty) Ltd 3 444 246.61
1590 Building & Construction Industry Medical Universal Healthcare Administrators (Pty) Ltd 4 424 246.59
Aid Fund
1507 Barloworld Medical Scheme Medscheme Holdings (Pty) Ltd 4 815 242.44

pampm = per average member per month

Although the services provided by the various administrators of schemes as well as the benefit option design may vary, there does not seem
to be correlation between the scheme size and the administration fees charged in the restricted scheme environment.

70 Council for Medical Schemes

Governance related expenditure
During the past few years governance related expenditure incurred by medical schemes came under scrutiny.

Table 47: Top 10 open schemes with the highest governance related* expenditure (pabpm)
Total
Investigation governance
Consulting Trustee fees (fraud related
Average PO fees Legal fees fees remuneration and other) expenditure
Ref. no. Name of medical scheme beneficiaries R’000 R’000 R’000 R’000 R’000 pabpm

1464 Suremed Health 2 096 594 – 49 1 167 – 71.96

1034 Cape Medical Plan 8 783 1 786 412 1 213 – 22.89
1141 Health Squared Medical 32 610 2 308 2 447 636 3 303 – 22.22
Scheme
1554 Genesis Medical Scheme 21 056 2 811 – 1 801 585 – 20.57
1486 Sizwe Medical Fund 112 802 4 546 8 001 8 997 3 768 1 271 19.64
1537 Hosmed Medical Aid Scheme 54 253 2 531 2 005 261 7 084 – 18.25
1491 Compcare Wellness Medical 33 348 1 990 – 426 3 416 – 14.57
Scheme
1087 Keyhealth 67 709 3 580 86 5 638 1 633 – 13.46
1140 Medshield Medical Scheme 154 459 6 126 3 082 4 080 4 317 2 466 10.83
1466 Makoti Medical Scheme 8 989 351 – – 700 – 9.74

pabpm = per average beneficiary per month

** For purposes of this report, any expenditure on structures related to the governance of medical schemes is included in “governance related expenditure”.

Table 48: Top 10 restricted schemes with the highest governance related* expenditure (pabpm)
Total
Investigation governance
Consulting Trustee fees (fraud related
Average PO fees Legal fees fees remuneration and other) expenditure
Ref. no. Name of medical scheme beneficiaries R’000 R’000 R’000 R’000 R’000 pabpm

1237 BP Medical Aid Society 3 402 345 3 183 – 707 – 103.74

1465 Alliance– Midmed Medical 3 723 410 851 94 – – 30.32
Scheme
1291 Witbank Coalfields Medical Aid 24 646 4 257 906 2 142 21 – 24.77
Scheme
1012 Anglo Medical Scheme 17 937 2 431 971 – 1 158 – 21.19
1547 Malcor Medical Scheme 11 289 697 1 843 – 98 – 19.47
1441 Parmed Medical Aid Scheme 4 721 969 – – 6 35 17.83
1186 PG Group Medical Scheme 2 969 611 – – – – 17.15
1068 De Beers Benefit Society 9 144 1 302 – 12 295 – 14.67
1582 Transmed Medical Fund 31 978 4 564 – – 748 – 13.84
1523 Grintek Electronics Medical Aid 1 095 120 – 23 – 19 12.36
Scheme

pabpm = per average beneficiary per month

** For purposes of this report, any expenditure on structures related to the governance of medical schemes is included in “governance related expenditure”.

Industry Report 2020 71

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Remuneration and other considerations of trustees accounted for 0.62% of GAE. Table 50 and Figure 51 show the 10 schemes with the
highest average trustee fees. Figure 30 shows the breakdown of trustee remuneration for the 10 schemes with the highest remuneration.

Table 49: The 10 schemes with highest trustee fees (2020)

Trustee remuneration & Average fee
other considerations No. of trustees per trustee

2020 2019 2020 2019

Ref. no. Name of medical scheme Type R’000 R’000 2020 2019 R’000 R’000

1598 Government Employees Medical Scheme restricted 8 322 7 682 12 13 694 591
(GEMS)
1125 Discovery Health Medical Scheme open 8 028 9 720 7 8 1 147 1 215
1537 Hosmed Medical Aid Scheme open 7 084 4 953 10 13 708 381
1580 South African Police Service Medical Scheme restricted 6 577 5 148 17 14 387 368
(POLMED)
1512 Bonitas Medical Fund open 5 635 4 634 10 12 564 386
1202 Fedhealth Medical Scheme open 5 314 4 980 14 13 380 383
1140 Medshield Medical Scheme open 4 317 4 437 12 8 360 555
1194 Profmed restricted 3 805 3 929 9 11 423 357
1486 Sizwe Medical Fund open 3 768 4 731 12 12 314 394
1491 Compcare Wellness Medical Scheme open 3 416 3 557 10 11 342 323

Figure 51: Average trustee fees: 10 schemes with highest trustee fees (2019 and 2020)

1 400 17 18
1 215
1 200 1 147 16
14
14
Average fee per trustee (R'000)

12 12
1 000 12
12
10 10 10

No. of trustees
Thousands

800 694 9 10
708
591
7 564 555 8
600
423
381 387 368 386 380 383 394 6
360 357 342 323
400 314
4
200
2

0 0
Government
Employees Medical

Discovery Health
Medical Scheme

Hosmed Medical

Medshield Medical
Scheme (GEMS)

Service Medical

Scheme

Profmed

Sizwe Medical

Compcare Wellness
Medical Scheme
Aid Scheme

Scheme (POLMED)

Bonitas Medical
Fund

Scheme
Fedhealth Medical

Fund
South African Police

Average fee per trustee 2020 Average fee per trustee 2019 No. of trustees 2020

72 Council for Medical Schemes

Figure 52: Composition of trustee remuneration for 10 schemes with highest remuneration in 2020

9 000
8 000
7 000
Thousands

6 000
5 000
4 000
3 000
2 000
1 000
0
meetings

consulting

Allowances

Training

and meals
holding office

Conference

expenses

per trustee
fees

Other
Telephone

Accomodation
Fees for

Fees for

Fees for

Average fee
Government Employees Medical Scheme (GEMS) Discovery Health Medical Scheme
Hosmed Medical Aid Scheme South African Police Service Medical Scheme (POLMED)
Bonitas Medical Fund Fedhealth Medical Scheme

The remuneration of principal officers of medical schemes amounted to 0.94% of GAE in 2020. The fees of principal officers amounted to
0.59% of GAE in 0pen schemes (2019: 0.57%) and 1.66% in restricted schemes in 2020 (2019: 1.70%).

Table 50: The 10 schemes with the highest remuneration of principal officers in 2020
Principal Officer remuneration

Average 2020 2019 %

Ref. no. Name of medical scheme beneficiaries R’000 R’000 change

1598 Government Employees Medical Scheme (GEMS) 1 924 569 9 128 6 053 50.80
1252 Bestmed Medical Scheme 202 386 6 491 – 100.00
1140 Medshield Medical Scheme 154 459 6 126 5 914 3.58
1580 South African Police Service Medical Scheme (POLMED) 504 758 5 756 5 282 8.97
1512 Bonitas Medical Fund 714 989 5 512 6 103 -9.68
1125 Discovery Health Medical Scheme 2 764 994 4 932 8 888 -44.51
1582 Transmed Medical Fund 31 978 4 564 4 651 -1.87
1486 Sizwe Medical Fund 112 802 4 546 3 438 32.23
1597 Umvuzo Health Medical Scheme 75 724 4 363 4 143 5.31
1145 LA-Health Medical Scheme 219 725 4 283 4 228 1.30

Fraud detection and prevention

Fraud, waste and abuse of resources is a perennial challenge in many sectors, including the healthcare sector. It is an area that has recently
come under the spotlight, particularly against the backdrop of increasing costs.

Table 51 depicts monies spent by open and restricted schemes in respect of their fraud interventions, including investigating and identifying
fraudulent claims, recoveries; and recovery administration fees paid to third parties. It should be noted that a significant number of medical
schemes have such fees included in the composite administration fee paid to third party administrators.

Table 51: Expenditure on fraud detection and prevention (2020)

Investigation Forensic
fees (fraud) recoveries
(expense) income
R’000 R’000

Open schemes 12 012 131 914

Restricted schemes 18 049 121 548
All schemes 30 061 253 462

Industry Report 2020 73

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Broker costs
Broker costs includes all broker service fees (or broker commissions) and other distribution costs.

Broker costs represented 14.81% of total non-healthcare expenditure in 2020, while accounting for 14.80% in 2019. Broker costs increased
by 3.63% from R2.45 billion in 2019 to R2.54 billion in 2020 (2019: 9.19%).

Broker service fees as a percentage of GCI decreased slightly from 1.19% in 2019 to 1.16% in 2020.

For schemes that pay broker service fees, the amounts paid on a per average member per month (pampm) basis increased to R82.75 pampm
in 2020 from R78.53 pampm in 2019, representing an increase of 5.37%.

Figure 53 illustrates the increase in broker service fees pampm in those schemes that incurred this expenditure (the data is limited to the
extent that it is based on full scheme membership and not restricted to members who incurred this expenditure), relative to the statutory limit
imposed.

Figure 53: Broker service fees pampm (2000–2020)

120.00

100.00
81.41 85.36
80.00 75.30
70.67
64.74
59.71
53.02 56.96
pampm

60.00 55.63
48.72 50.56
43.30 43.05 46.15 44.18 48.62
35.99 36.12 38.61 34.55
38.73
40.00 31.09 30.93
26.32
20.99 25.34 28.62 28.68
15.58 16.80 16.97 15.28 18.73 15.08 18.07
20.00 10.39 12.49
1.33 1.55 5.74 2.93 3.86
0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Statutory fee limit pmpm Broker fees restricted pampm Broker fees open pampm

Figure 54 illustrates the increase in broker service fees relative to the number of members of open schemes that pay brokers.

Figure 54: Broker service fees for open schemes (2000–2020) in 2020 prices

90.00 2.30 2.33 2.50

1.94 2.17
80.00
70.00 2.00
Average members

60.00
1.50
pampm (R)

50.00 1.23
Millions

40.00
1.00
30.00
20.00 0.50
45.43
46.36
42.93
62.85
73.26
81.97
78.65
78.49
78.91
73.51
75.74
76.07
74.80
74.10
75.07
75.21
76.67
79.52
75.30
84.09
85.36

10.00
- 0.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Per average member per month Average members

* Values were adjusted for CPI for 2000 – 2019

The data is limited to the extent that it is based on full scheme membership and not restricted to members who incurred this expenditure.

There is no clear correlation between the average number of scheme members and the fees paid to brokers.

74 Council for Medical Schemes

Table 52 shows schemes that had broker service fees higher than the industry average of R82.75 pampm during 2020 (2019: R78.53 pampm).
These five schemes (2019: 5) represented 77.39% (2019: 70.38%) of total membership that paid for broker service fees, and 84.47%
(2019: 78.41%) of total broker service fees paid. One of these schemes paid at a level of 18% greater than the industry average.

Table 52: Schemes with broker fees above the industry average of R82.75 pampm (2019 and 2020)
Broker service fees*

2020 2019
pabpm pabpm %
Ref. no. Name of medical scheme Type R R change

1537 Hosmed Medical Aid Scheme open 97.99 91.39 7.22

1145 LA-Health Medical Scheme restricted 93.55 97.36 -3.91
1125 Discovery Health Medical Scheme open 93.12 90.17 3.27
1486 Sizwe Medical Fund open 84.61 81.63 3.65
1512 Bonitas Medical Fund open 83.18 80.05 3.91

pampm = per average member per month

* excluding distribution costs

Figure 55: Schemes with broker fees above the industry average of R82.75 pampm (2019 and 2020)

150.00

100.00
82.75 78.53
pampm (R)

50.00

0
2020 2019

Industry average Hosmed Medical Aid Scheme

LA-Health Medical Scheme Discovery Health Medical Scheme

pampm = per average member per month

Industry Report 2020 75

 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Acquisition costs
Table 53 indicates the ten schemes with the highest marketing, advertising, and broker costs, which represents the expenditure incurred by
schemes when recruiting new members. The majority of these are open medical schemes.

The membership statistics show that the number of principal members in open schemes decreased by 2.01% from 2019 to 2020 (2018 to
2019: 0.36%) in respect of those schemes that incurred broker fees, marketing and advertising expenditure. Member growth in this instance
is not confined to new members who were not previously covered by a scheme as it includes members who moved from other schemes.

Table 53: The 10 schemes with the highest marketing, advertising and broker costs (2020)
Marketing,
advertising Net new
and broker costs member growth*
Ref. no. Name of medical scheme pampm %

Industry average 81.44 -0.87

1537 Hosmed Medical Aid Scheme 169.55 -1.00
1486 Sizwe Medical Fund 169.45 2.70
1141 Health Squared Medical Scheme 156.63 -7.50
1145 LA-Health Medical Scheme 141.68 6.30
1167 Momentum Medical Scheme 141.58 -2.90
1202 Fedhealth Medical Scheme 131.91 -6.70
1512 Bonitas Medical Fund 129.71 -1.70
1597 Umvuzo Health Medical Scheme 124.86 -5.20
1125 Discovery Health Medical Scheme 116.70 -1.60
1087 Keyhealth 109.38 1.30

* Net new member growth is calculated as the number of members at year-end compared with that of the previous year
pampm = per average member per month

76 Council for Medical Schemes

Figure 56 illustrates the information contained in Table 96.

Figure 56: The 10 schemes with the highest marketing, advertising and broker costs (2020)

180 6.30 8.00

160 6.00

Net member growth (%)

140 2.70 4.00
1.30
120 2.00

156.63
pampm (R)

-0.87 -1.00

131.91
100 -2.90 -1.70 -1.60 0
80 - 2.00
-5.20
60 - 4.00
40 - 6.00
169.55

169.45

Scheme 141.68

Scheme 141.58

Fund 129.71

Medical Scheme 124.86

Medical Scheme 116.70

Keyhealth 109.38
81.44

20 -6.70 - 8.00
-7.50
0 - 10.00
average

Aid Scheme

Fund

Medical Scheme

LA-Health Medical

Momentum Medical

Bonitas Medical
Fedhealth Medical
Scheme

Discovery Health
Hosmed Medical

Sizwe Medical
Industry

Health Squared

Umvuzo Health
Marketing, advertising and broker costs Net new member growth

pampm = per average member per month

Table 54 provides information relating to the marketing fees paid to schemes’ administrators.

Table 54: Schemes paying marketing fees to administrator: five largest percentages
Total marketing,
Marketing component advertising and
of administration fee broker costs
Ref. no. Name of medical scheme % pampm pampm

1167 Momentum Medical Scheme 22.11 72.99 141.58

1145 LA-Health Medical Scheme 15.00 47.91 141.68
1125 Discovery Health Medical Scheme 7.00 23.58 116.70
1599 Lonmin Medical Scheme 3.00 2.11 2.11
1209 South African Breweries Medical Aid Scheme (SABMAS) 1.01 2.03 2.02

pampm = per average member per month

Industry Report 2020 77

78
Tables 55 and 56 show open and restricted schemes with the highest marketing and advertising expenditure.

Table 55: Open schemes with highest marketing and advertising expenditure (2020)*

Marketing expenditure
(including advertising) Broker costs paid Average members Expenditure
per
2020 2019 % 2020 2019 % % Name of main advertising and provider %
Ref. no. Name of medical scheme pabpm pabpm change pabpm pabpm change 2020 2019 change marketing provider(s) R’000 of total fees

Ad-hoc expenditure 11 720 64.61%

Print Joint 3 276 18.06%
1537 Hosmed Medical Aid Scheme 71.56 44.46 60.95 97.99 98.24 -0.25 21 125 21 444 -1.49
Moralo Business Enterprise 2 939 16.20%
Ideas Wise and Wonderful 205 1.13%
Ad-hoc expenditure 7 311 15.09%
1486 Sizwe Medical Fund 84.85 78.27 8.41 84.61 80.82 4.69 47 575 47 321 0.54
3Sixty Marketing Pty Ltd 41 127 84.91%
Ad-hoc expenditure 11 041 46.50%
1141 Health Squared Medical Scheme 103.79 93.18 11.39 52.83 51.75 2.09 19 063 21 272 -10.38
CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Agility Channel (Pty) Ltd 12 703 53.50%

Ad-hoc expenditure – 0.00%
1167 Momentum Medical Scheme 72.98 67.60 7.96 68.60 63.04 8.82 153 064 156 841 -2.41
Momentum Health Solutions (Pty) Ltd 134 051 100.00%
Ad-hoc expenditure – 0.00%
1202 Fedhealth Medical Scheme 53.05 66.92 -20.73 78.87 74.28 6.18 76 215 74 613 2.15
The Cheese Has Moved (Pty) Ltd 48 515 100.00%

Council for Medical Schemes

Ad-hoc expenditure 16 410 8.76%
Afrocentric Distribution Services (Pty) Ltd 109 391 58.42%
Meta Media Pty Ltd 24 736 13.21%
Adclick Africa Pty Ltd 14 344 7.66%
Paed-IQ Pty Ltd 8 572 4.58%
1512 Bonitas Medical Fund 46.52 46.35 0.37 83.18 78.93 5.38 335 425 336 651 -0.36 The Media Shop Pty Ltd 4 463 2.38%
Joe Public 3 852 2.06%
Comrades Marathon Association 2 376 1.27%
Du Maurier Communications 1 164 0.62%
Medquote Pty Ltd 1 075 0.57%
Hippo Comparative Services (PTY) Ltd 874 0.47%
 Marketing expenditure
(including advertising) Broker costs paid Average members Expenditure
per
2020 2019 % 2020 2019 % % Name of main advertising and provider %
Ref. no. Name of medical scheme pabpm pabpm change pabpm pabpm change 2020 2019 change marketing provider(s) R’000 of total fees

Ad-hoc expenditure – 0.00%

1125 Discovery Health Medical Scheme 23.58 22.41 5.22 93.12 89.65 3.87 1 333 237 1 342 758 -0.71
Discovery Health (Pty) Ltd 377 221 100.00%
Ad-hoc expenditure 2 260 10.27%
Brand ET AL 16 549 75.17%
1087 Keyhealth 56.02 49.66 12.81 53.36 56.21 -5.07 32 747 32 450 0.92
I Lead ET AL 2 266 10.29%
Varsity Cup Club 941 4.27%
Ad-hoc expenditure 1 899 5.82%
Omnicom Group 16 670 51.06%
Promise Brand Specialists 4 134 12.66%
University Of Pretoria 3 198 9.80%
Nelson Mandela Metropolitan University 1 400 4.29%
Promo Distributors 1 343 4.11%
Hectic Promotions 832 2.55%
Brandman Business Development 629 1.93%

Industry Report 2020

The Cycle Labuschagne Brothers 570 1.74%
Kamageba Holdings 396 1.21%
1252 Bestmed Medical Scheme 28.20 31.26 -9.79 73.67 71.04 3.70 96 489 94 527 2.08
Signage Production Studio 376 1.15%
EPH Events 237 0.73%
Inkhazi 189 0.58%
The Media Image 189 0.58%
Consulta – SA Customer Service Index 144 0.44%
Unisa 120 0.37%
Baviaans To Bay Adventures T/A St
115 0.35%
Francis Sport
BTI Branding Solutions – Rand Trust 110 0.34%
Road Rangers 100 0.31%

79
80
Marketing expenditure
(including advertising) Broker costs paid Average members Expenditure
per
2020 2019 % 2020 2019 % % Name of main advertising and provider %
Ref. no. Name of medical scheme pabpm pabpm change pabpm pabpm change 2020 2019 change marketing provider(s) R’000 of total fees

Ad-hoc expenditure 408 2.66%

Coffee Creative Studio 6 915 45.08%
Kaizer Chiefs 4 371 28.49%
WSE Stone Consulting 884 5.76%
EOH 824 5.37%
Adesign Branding 690 4.50%
1140 Medshield Medical Scheme 16.57 23.52 -29.55 82.10 77.31 6.20 77 146 80 213 -3.82
Meltwater 537 3.50%
Y Groenewald 250 1.63%
Flow Communications 208 1.36%
Hi Performance Supplies 182 1.19%
CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Neon Printers 45 0.29%

Maverick Laboratories 25 0.16%
Ad-hoc expenditure 877 28.10%
1592 Thebemed 20.58 35.65 -42.27 72.12 67.69 6.54 12 643 13 854 -8.74
Momentum Thebe Ya Bophelo (Pty) Ltd 2 245 71.90%
Open scheme industry average* 33.65 32.96 2.09 85.37 81.41 4.86 2 338 012 2 378 345 -1.70

Council for Medical Schemes

pampm = per average member per month
* The industry averages are based only on those schemes which incurred the specific type of expenditure.
 Table 56: Restricted schemes with highest marketing and advertising expenditure (2020)

Marketing expenditure
(including advertising) Broker costs paid Average members Expenditure
per
2020 2019 % 2020 2019 % % Name of main advertising and provider %
Ref. no. Name of medical scheme pabpm pabpm change pabpm pabpm change 2020 2019 change marketing provider(s) R’000 of total fees

Ad-hoc expenditure 234 0.46%

1145 LA-Health Medical Scheme 48.13 46.51 3.48 93.55 88.27 5.98 88 145 81 753 7.82
Discovery Health (Pty) Ltd 50 677 99.54%
Ad-hoc expenditure – 0.00%
1597 Umvuzo Health Medical Scheme 58.44 55.09 6.08 66.42 57.25 16.02 38 915 39 422 -1.29
Rain Catchers 27 291 100.00%
Ad-hoc expenditure 6 663 32.47%
Faith and Fear 12 824 62.49%
1194 Profmed 47.95 54.22 -11.56 30.89 29.02 6.44 35 667 34 344 3.85 MSL 835 4.07%
YKnot Online 133 0.65%
Novus Group 67 0.33%
1038 SAMWUMed 19.17 16.62 15.34 7.96 7.43 7.13 34 520 33 421 3.29 Ad hoc expenditure 7 941 100.00%
Ad-hoc expenditure 38 640 23.28%
Government Employees Medical
1598 18.75 18.64 0.59 – – – 737 796 713 646 3.38 Healthi Choices (Pty) Ltd 71 370 42.99%
Scheme (GEMS)
Assegai Strategic Investments (Pty) Ltd 56 004 33.73%

Industry Report 2020

Building & Construction Industry
1590 11.32 18.27 -38.04 6.63 6.91 -4.05 4 424 4 836 -8.52 Ad-hoc expenditure 601 100.00%
Medical Aid Fund
1547 Malcor Medical Scheme 2.08 1.98 5.05 11.43 13.77 -16.99 4 670 4 768 -2.06 Ad-hoc expenditure 116 100.00%
1600 Motohealth Care 1.67 3.22 -48.14 11.47 13.14 -12.71 18 394 20 030 -8.17 Ad-hoc expenditure 369 100.00%
Ad-hoc expenditure 1 246 66.81%
1568 Sisonke Health Medical Scheme 9.83 22.53 -56.37 – – – 15 799 16 131 -2.06
Brandcode 619 33.19%
South African Police Service
1580 9.52 0.35 2 620.00 – – – 175 728 177 430 -0.96 Ad-hoc expenditure 20 078 100.00%
Medical Scheme (POLMED)
Restricted scheme industry
16.82 15.48 8.66 55.63 49.32 12.79 1 545 714 1 542 397 0.22
average*

pampm = per average member per month

* The industry averages are based only in respect of those schemes which incurred the specific expenditure.

81
 CHAPTER 2: NON-HEALTHCARE EXPENDITURE (NHE) continued

Commercial reinsurance results

Thebemed has had a reinsurance contract in place since 1 July 2018. The scheme incurred a net income on commercial reinsurance of
R460 000 (2019: -R9 000).

Impaired receivables
Impaired receivables decreased by 3.65% to R250.77 million for the year under review from R260.27 million in 2019. This represents 1.46%
of total non-healthcare expenditure (1.57% in 2019).

It took schemes an average of 9.26 days to collect debts (contributions from their members) in 2020, an improvement of 10.88% from
10.39 days in 2019. This collection period falls well outside the legal provisions which require that members pay all contributions to their
medical scheme not later than three days after the payment is due. The associated risks of not paying and collecting contributions timeously
are the possible impairment of the debtor and paying claims when contributions have not been received.

Figure 57 shows the trend in impaired receivables over the past 21 years, also expressed as a percentage of total non-healthcare expenditure.

Figure 57: Impaired receivables (2000–2020)

350 6.00

300 4.80 5.00

250 3.90 3.70

As a % of total NHE
4.00
Millions (R)

200
2.50 3.00
150 3.00
1.97
1.50 1.60 1.50 1.70 1.83 1.57 1.46 2.00
100 2.30 1.40 1.30 1.30 1.50
0.90 1.00 0.90
50 1.00

311
152

200
155

197

137

321

213

202

145

177

168

105

190

188

2016 241

2017 275

2019 260

2020 251
74

94

0 0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2018
Total impaired receivables Total impaired receivables as % of non health expenditure

82 Council for Medical Schemes

NET HEALTHCARE RESULTS AND NET RESULTS
The net healthcare result of a medical scheme indicates its position after relevant healthcare expenditure and non-healthcare expenditure are
deducted from contribution income.

The net healthcare result for all medical schemes combined reflected a surplus of R19.93 billion in 2020 (2019: R1.03 billion surplus). Open
schemes incurred a net healthcare surplus of R11.99 billion (2019: R0.71 billion deficit), and restricted schemes generated a combined net
healthcare surplus of R7.95 billion (2019: R1.74 billion surplus). The improved performance is because of the lower utilisation of benefits
during the pandemic.

The financial market was hit by wholesale selling during Quarter 1 of 2020. South Africa fared worse than most countries due to its deteriorating
economic fundamentals, which were exacerbated by Moody’s downgrade of its sovereign credit rating to below investment-grade status in
late March 2020. Even though the financial markets demonstrated its resilience by rebounding during the latter part of 2020, lower investment
income was accrued than in 2019. Net investment and other income, as well as expenditure, decreased by 18.66% from R6.04 billion in
2019 to R4.92 billion in 2020.

The net surplus of all schemes combined, after investment income and consolidation adjustments, was R24.85 billion (2019: R7.08 billion).
open schemes made a R14.45 billion surplus (2019: R2.24 billion) and restricted schemes had a surplus of R10.40 billion (2019: R4.84 billion).

The net healthcare and net results of all schemes since 2000 are reflected in Figure 58.

Figure 58: Net healthcare results (2000–2020)

30 000
24 848.25
25 000
20 000
19 932.86
15 000
Millions (R)

10 000
5 000 2 851.48
167.07
0
(1 019.74) (459.46)
-5 000
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Net healthcare result Net surplus / (deficit)

Figure 59 depicts information on contributions, relevant healthcare expenditure, non-healthcare expenditure, and net results pabpm. There is
a direct correlation between the net results pabpm and the relationship between contributions and claims. Non-healthcare expenditure pabpm
seemed to have stabilised and has a minimal impact on scheme results.

Figure 59: Risk contributions, claims, non-healthcare expenditure, and net surpluses (2000–2020) in 2020 prices*

2 000

1 500
pabpm (R)

1 000

500

0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Risk contributions Claims Non-healthcare expenditure Net surplus/(deficit)

pabpm = per average beneficiary per month

* Values were adjusted for CPI for 2000 – 2019.

Industry Report 2020 83

 CHAPTER 2: NET HEALTHCARE RESULTS AND NET RESULTS continued

A total of 11.11% (2 of 18) of open schemes and 18.97% (11 of 58) of restricted schemes showed net healthcare deficits during the year.

Table 57 shows the 13 schemes which incurred net healthcare deficits during 2020. Investment income has generally boosted the performance
of schemes.

Table 57: 13 schemes incurring net healthcare deficits (2019 and 2020)
Net healthcare result Solvency ratio

2020 2019 % 2020 2019

Ref. no. Name of medical scheme Type R’000 R’000 growth % %

1548 Medipos Medical Scheme restricted (184 859) 115 228 -260.43 67.70 90.54
1579 Tsogo Sun Group Medical Scheme restricted (37 304) (10 217) -265.12 41.47 60.31
1141 Health Squared Medical Scheme open (19 967) (58 442) 65.83 17.32 15.42
1237 BP Medical Aid Society restricted (16 935) (42 457) 60.11 142.43 129.60
1270 Golden Arrow Employees’ Medical restricted (11 052) (32 362) 65.85 270.42 210.52
Benefit Fund
1012 Anglo Medical Scheme restricted (10 837) (138 058) 92.15 450.02 433.63
1293 Wooltru Healthcare Fund restricted (6 024) (11 372) 47.03 54.25 56.91
1600 Motohealth Care restricted (4 805) (13 204) 63.61 63.49 52.87
1506 Medimed Medical Scheme open (3 545) 1 792 -297.82 110.18 92.65
1068 De Beers Benefit Society restricted (2 678) (51 831) 94.83 182.09 162.43
1507 Barloworld Medical Scheme restricted (2 632) (24 519) 89.27 68.99 67.58
1571 Anglovaal Group Medical Scheme restricted (912) (9 052) 89.92 100.37 106.44
1568 Sisonke Health Medical Scheme restricted (10) (93 154) 99.99 29.08 25.38

Medipos Medical Scheme’s increased claims ratio is attributable to the non-receipt of number of months’ contributions from its
employer group.

Tsogo Sun Group Medical Scheme received an exemption for a three-month contribution holiday.

Motohealth Care obtained an exemption to reduce its contributions by 50% on all options for three months.

Medimed Medical Scheme obtained an exemption to reduce its contributions by 50% on all options for two months.

Figure 60 shows the schemes with the largest net healthcare deficits and whose solvency levels are below the industry average of 44.55%
at the end of 2020.

Figure 60: Schemes with largest net healthcare deficits and solvency levels below the industry average of 44.55% (2020)

120 25 000
19.94
108.46

20 000
108.30

100
95.33

93.92
92.61
90.58

15 000
89.92

80
Millions (R)
81.38
Ratio (%)

60 10 000
(37.30)
60.31

(20.00) (00.00)
40 5 000
44.55

41.47
12.01

12.94
12.11
35.61

20 0
29.08
8.87
8.61

25.38
26.46

8.02
6.08
17.32
15.42

0 -5 000
Industry Average Tsogo Sun Group Health Squared Medical Sisonke Health Medical
Medical Scheme Scheme Scheme

Net claims ratio 2020 Net claims ratio 2019 NHE ratio 2020 NHE ratio 2019

Solvency ratio 2020 Solvency ratio 2019 Net healthcare results

84 Council for Medical Schemes

BENEFIT OPTIONS
Table 58: Results of benefit options (2020)
Open Restricted
schemes % representing schemes % representing Total

All options
Number of options 118 46.46 136 53.54 254
Members represented 2 329 424 57.91 1 693 173 42.09 4 022 597
Number of schemes 18 23.68 58 76.32 76
Net healthcare result (R’000) 11 985 500 7 947 356 19 932 856
Gross non-healthcare as % of GCI 9.61 5.36 7.81
Gross claims ratio (%) 79.46 85.26 81.91
Gross claims incurred pbpm 1 736.82 1 620.45 1 683.65
GCI pbpm 2 185.67 1 900.67 2 055.44
Options with members >= 2 500
Number of options 77 48.13 83 51.88 160
Members represented 2 280 608 58.20 1 637 739 41.80 3 918 347
Net healthcare result (R’000) 11 712 375 7 853 636 19 566 011
Gross non-healthcare as % of GCI 9.64 5.33 7.82
Gross claims ratio (%) 79.38 85.08 81.86
Gross claims incurred pbpm 1 720.00 1 605.42 1 677.95
GCI pbpm 2 166.85 1 886.85 2 049.71
Options with members < 2 500
Number of options 41 43.62 53 56.38 94
Members represented 48 816 46.83 55 434 53.17 104 250
Net healthcare result (R’000) 286 092 91 751 377 843
Gross non-healthcare as % of GCI 8.52 6.00 7.36
Gross claims ratio (%) 82.15 90.21 86.32
Gross claims incurred pbpm 2 596.98 2 152.92 2 385.31
GCI pbpm 3 161.11 2 386.49 2 763.44

GCI = Gross Contribution Income

pbpm = per beneficiary per month

During 2020, there were 254 registered benefit options (2019: 271) operating in 76 medical schemes (2019: 78).

Open schemes accounted for 46.46% or 118 of the registered benefit options during 2020 (2019: 49.82% or 135 options). On average, open
schemes had 6.56 options per scheme (2019: 6.75) and an average of 19 741 members per option at year-end (2019: 17 611).

Restricted schemes had 136 options during the year, representing 53.54% of all options (2019: 136 options or 50.18%). Restricted
schemes had an average of 2.34 options per scheme (2019: 2.34), with an average of 12 450 members per option, as of
31 December 2020 (2019: 12 389).

Of the 254 benefit options during the year, 94 (37.01%) had fewer than 2 500 members per option (2019: 109 or 40.22%). Of these 94 options,
29 (30.85%) incurred net healthcare losses in 2020, compared with 69 of these options (63.30%) incurring losses in 2019.

• At the end of 2020, there were 41 options in open schemes with fewer than 2 500 members (2019: 58). They had an average of
1 190.63 members per option (2019: 927.78) and represented 34.75% (2019: 42.96%) of all open scheme options.
• Restricted schemes had 53 options with fewer than 2 500 members (2019: 51). The average number of members per option was
1 045.92 (2019: 1 053.94) and these options represented 38.97% (2019: 37.50%) of all restricted scheme options.

The remaining 160 options (2019: 162) had more than 2 500 members per option. Of these, 16.88% or 27 options incurred net healthcare
losses (2019: 55.56% or 90 options).

Industry Report 2020 85

 CHAPTER 2: BENEFIT OPTIONS continued

Table 59: Results of loss-making benefit options (2020)

Open Restricted
schemes % representing schemes % representing Total

Total loss-making options

% of total options 18.64 25.00 22.05
Number of options 22 39.29 34 60.71 56
Members represented 316 225 61.67 196 568 38.33 512 793
Net healthcare result (R’000) (636 873) (975 439) (1 612 312)
Gross non-healthcare as % of GCI 11.06 5.70 8.44
Gross claims ratio (%) 94.38 103.47 98.82
Gross claims incurred pbpm 1 466.53 1 932.40 1 672.80
GCI pbpm 1 553.90 1 867.60 1 692.80
Loss making options with members >= 2 500
Number of options 11 40.74 16 59.26 27
Members represented 304 364 62.95 179 112 37.05 483 476
Net healthcare result (R’000) (554 831) (802 753) (1 357 584)
Gross non-healthcare as % of GCI 11.01 5.71 8.52
Gross claims ratio (%) 93.91 102.85 98.11
Gross claims incurred pbpm 1 443.68 1 826.85 1 609.96
GCI pbpm 1 537.31 1 776.29 1 641.02
Loss making options with members < 2 500
Number of options 11 37.93 18 62.07 29
Members represented 11 861 40.46 17 456 59.54 29 317
Net healthcare result (R’000) (69 072) (172 686) (241 758)
Gross non-healthcare as % of GCI 12.16 5.57 7.58
Gross claims ratio (%) 100.77 108.10 105.86
Gross claims incurred pbpm 1 969.00 3 264.86 2 740.52
GCI pbpm 1 953.87 3 020.23 2 588.76

GCI = Gross Contribution Income

pbpm = per beneficiary per month

Of the 254 benefit options registered and operating during 2020 (2019: 271), 56 (22.05%) incurred net healthcare losses. In 2019, 159 options
(58.67%) incurred net healthcare losses.

In the year under review, 22 options (2019: 87), representing 39.29% of loss-making options (2019: 54.72%), were in open schemes and
34 (2019: 72), representing 60.71% of loss-making options (2019: 45.28%), were in restricted schemes.

Net healthcare losses pbpm in options with fewer than 2 500 members were 2.94 times greater (2019: 2.99) than those for options with more
than 2 500 members – an average of R-687.20 pbpm compared with R-234.00 pbpm (2019: R-848.75 pbpm and R-283.99 pbpm respectively).

86 Council for Medical Schemes

Table 60 shows option results by demographics.

Table 60: Demographics of registered options at year-end (2020)

Open Restricted Total

Average age pb 35.30 31.47

Net healthcare result pb 206.74 162.92
Number of options with average age greater than or equal to the industry average 72 77 149
Number of options incurring net healthcare results better or equal to the industry average 37 31 68
Number of options incurring net healthcare results worse than the industry average 35 46 81
Number of options with average age below the industry average 46 59 105
Number of options incurring net healthcare results better or equal to the industry average 12 26 38
Number of options incurring net healthcare results worse than the industry average 34 33 67

pb = per beneficiary

There were 72 options with an average age above the 35.30 years for options in open schemes, and 46 benefit options with beneficiaries
younger than the average in open schemes.

In the restricted schemes market, 77 benefit options had beneficiaries with an average age higher than the 31.47 years for all options in
restricted schemes. A total of 59 options had younger beneficiaries.

As expected, options covering older and sicker lives are more likely to incur worse net healthcare results than the rest of the industry.

ACCUMULATED FUNDS AND SOLVENCY

Figure 61 below shows that all medical schemes incurred a surplus of R24.85 billion compared with R7.08 billion in 2019, representing an
increase of 251.15%.

The net assets in terms of Regulation 29 of the Medical Schemes Act increased by 33.60% from R73.29 billion in 2019 to a reported
R97.92 billion in 2020.

Figure 61: Net surplus and net assets per Regulation 29

120.00
97.92
100.00

80.00 73.29

60.00
R'billions

40.00
24.85
20.00 7.08

0.00
Net surplus Net assets per Regulation 29

2020 2019

Industry Report 2020 87

 CHAPTER 2: ACCUMULATED FUNDS AND SOLVENCY continued

Solvency
The 2020 industry solvency ratio of 44.55% exceeds the minimum required Regulation 29 ratio of 25.00% (2019: 35.61%).

Figure 62: Industry solvency of 44.55%

Industry solvency: 44.55%

The solvency ratio of open schemes increased by 31.89% to 38.71% in 2019 (2019: 29.35%). Restricted schemes experienced an increase
of 18.51% in their solvency ratio, 52.51% from 44.31% in 2019.

Figure 63: Industry solvency for all schemes (2000–2020)

70 63.50 64.70
58.80 58.70
60
49.60 49.70 52.51
50 44.31
41.30 42.50 44.55
Solvency (%)

41.94
36.30 38.60 38.30
40 37.30 39.10 37.90 38.00 36.60 37.40 38.20 37.80 37.50 35.80 38.06 35.61
34.20 32.90 33.30 33.20 32.60 31.60 33.19 34.54
29.30 31.80 32.50 32.60 38.71
30
22.90 29.60 29.80 29.10 29.70 30.00 29.20 28.60 29.73 29.27 29.35
27.70 28.60 27.40 27.60 28.70
20.20 20.40 28.50
20
20.90
10 13.30 13.50 15.10

0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Year

Prescribed solvency level Industry average (all schemes)

Industry average (open schemes) Industry average (restricted schemes)

The overall industry average solvency ratio increased consistently from 2000 to 2005. Schemes were required to have reached the 25.00%
minimum solvency ratio in 2004.

As indicated in Figure 63, the open industry remained fairly constant between 2004 and 2019, slightly above the 25% solvency ratio prescribed
by the Medical Schemes Act.

The restricted industry was at its peak in 2006 and declined from 2007 onwards. This is mostly due to the denominator that is used in the
solvency calculation (gross contributions), which is affected by membership growth. The Government Employee Medical Scheme (GEMS),
which is the largest restricted scheme, has shown exceptional membership growth following its registration and this resulted in an overall
deterioration in the solvency level of the restricted schemes industry. This subsequently improved between 2016 and 2019, largely due to the
turnaround in financial performance of GEMS, which reported an increase in solvency levels from 6.98% in 2016 to 31.53% in 2019.

The 2020 solvency levels increased significantly in both industries due to the higher net surpluses incurred.

88 Council for Medical Schemes

Reserves of medical schemes
The reserves of medical schemes serve to protect members’ interests and to guarantee the continued operation of schemes. They also serve
as a buffer against unforeseen, large-scale health events such as the COVID-19 pandemic.

Schemes provided various financial relief measures to members during the COVID-19 pandemic, such as utilising personal medical savings
accounts to offset contributions, the relaxation of credit policies, contribution holidays and lower future contribution increases.

A pandemic without lockdown measures to curb its spread would have been detrimental to scheme reserves, as the cost per hospitalisation
event increased drastically in 2020. It is further envisaged that scheme reserves will be utilised when the pent-up demand is released in
coming years. The decrease in screening activities during 2020 would also affect downstream costs as early detection normally results in
lower costs and better clinical outcomes. The full impact of the pandemic is therefore not confined to the COVID-related claims itself.

Table 61: COVID-19 pandemic exposure

Total lives infected by COVID-19 422 894

Total lives recovered from COVID-19 383 585
Mortality rate 3.02%

During 2020 CMS collected unaudited data relating to schemes’ COVID-19 exposure. A total 73 of the 75 schemes (representing 99.84% of
medical scheme beneficiaries) submitted data for the year ending 31 December 2020.

• 19 914 members were granted contribution deferrals to the value of R586.90 million.
• 16 654 members received relief via personal medical savings account utilisation to the value of R180.11 million.
• 30 725 members received relief via rule amendments; its impact was R133.31 million.
• 5 447 members received other types of relief such as debt policy relaxation to the value of R53.68 million.

COVID-19 claims to the value of R10.10 billion were received during 2020.

Industry Report 2020 89

 CHAPTER 2: ACCUMULATED FUNDS AND SOLVENCY continued

Reserve building
Table 62: Risk claims, non-healthcare expenditure and reserve-building as a percentage of contributions (1999–2020)
Non-healthcare Reserve-
Risk claims expenditure building
% of RCI % of RCI % of RCI

1999 91.50 12.70 -4.20

2000 89.30 14.50 -3.70
2001 83.20 16.20 0.60
2002 82.10 15.20 2.80
2003 79.20 15.40 5.40
2004 78.60 15.50 5.90
2005 84.10 16.80 –
2006 88.00 16.20 -4.10
2007 86.50 15.20 -1.80
2008 86.90 14.50 -1.40
2009 89.30 14.00 -3.30
2010 87.30 13.20 -0.50
2011 86.50 12.40 1.10
2012 87.70 12.30 –
2013 86.50 12.20 1.30
2014 90.80 9.50 -0.40
2015 91.40 9.50 -0.90
2016 92.10 9.50 -1.60
2017 88.70 9.23 2.07
2018 90.23 9.08 0.70
2019 90.58 8.87 0.55
2020 81.38 8.61 10.01

RCI = Risk Contribution Income

Table 62 illustrates the relationship between risk claims, non-healthcare expenditure and reserve building. Risk claims have a greater impact
on reserve building than non-healthcare expenditure. During periods of high claims, the industry experienced a reduction in reserves, while in
periods with lower claims, reserves increased.

90 Council for Medical Schemes

Figure 64: Industry solvency ratios excluding GEMS and DHMS

70 64.20 61.20 63.30

58.30 60.30 58.20 59.80 60.30 60.90 60.60 58.80 57.80
60 55.50 56.60 56.10
64.70 52.51
50 58.70 44.31
42.50 38.20
Solvency (%)

38.60 38.30 37.40 37.80 37.50 38.06 41.94 41.30

49.70 35.80
40 34.10 33.10 35.10 36.00 35.20 31.93
32.50 30.20 33.50 33.30 31.50 32.70 32.00
30 29.00 38.71
29.80 29.10 29.70 30.00 29.20 29.73 29.27 29.35
20 27.70 28.60 27.40 27.60 28.70 28.60

10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

Solvency - all schemes Solvency - open schemes excl. DHMS Solvency - open schemes
Solvency - restricted schemes excl. GEMS Solvency - restricted schemes

The solvency of both industries is positively correlated to the movement in the solvencies of the biggest medical scheme in the relevant
industry: Discovery Health Medical Scheme (open scheme) and the Government Employees Medical Scheme (GEMS) (restricted scheme).

Beneficiaries of schemes which failed to reach 25.00% solvency

Table 63 and Figure 65 show both the number of medical schemes that have yet to attain the prescribed solvency ratio of 25% and the
number of beneficiaries in those schemes.

Table 63: Prescribed solvency and number of beneficiaries (2000–2020)

Number of open schemes Number of restricted schemes

Below Above Below Above

prescribed prescribed prescribed prescribed
Year level level level level

2000 15 33 15 86
2001 19 29 11 83
2002 24 25 7 86
2003 19 29 7 80
2004 18 30 4 81
2005 17 29 4 79
2006 18 23 4 79
2007 18 23 7 74
2008 14 21 8 71
2009 16 17 3 71
2010 12 15 7 66
2011 9 17 5 66
2012 7 18 4 63
2013 6 18 3 60
2014 5 18 2 58
2015 3 19 3 57
2016 3 18 3 57
2017 3 18 3 56
2018 4 17 3 55
2019 3 15 1 57
2020 2 16 1 56

Industry Report 2020 91

 CHAPTER 2: ACCUMULATED FUNDS AND SOLVENCY continued

Number of beneficiaries in open schemes Number of beneficiaries in restricted schemes

Above Above
Below prescribed Below prescribed
prescribed level level prescribed level level

Year At end % At end At end % At end

2000 2 385 051 51.01 2 291 048 839 029 40.86 1 214 412
2001 2 650 934 55.60 2 117 142 576 462 28.88 1 419 862
2002 3 519 329 74.39 1 211 882 251 050 12.66 1 731 873
2003 3 426 988 72.62 1 291 809 222 430 11.39 1 730 574
2004 2 534 273 53.29 2 221 030 80 160 4.20 1 827 100
2005 2 783 108 56.73 2 122 444 36 359 1.88 1 893 710
2006 3 218 382 63.72 1 832 056 145 369 7.00 1 931 536
2007 3 139 176 63.40 1 812 141 689 865 25.99 1 964 054
2008 1 076 450 22.02 3 812 456 981 977 32.89 2 003 943
2009 992 523 20.61 3 822 811 1 254 151 38.55 1 999 020
2010 2 918 055 60.79 1 881 860 1 684 682 47.92 1 831 121
2011 2 855 072 59.98 1 905 042 1 865 313 49.53 1 900 982
2012 2 796 583 58.75 1 963 411 1 978 668 50.45 1 943 538
2013 2 860 768 59.02 1 986 141 1 994 813 50.74 1 936 586
2014 212 169 4.33 4 687 806 1 914 481 48.91 2 000 002
2015 177 807 3.61 4 743 470 1 943 387 50.20 1 927 683
2016 811 038 16.42 4 129 033 1 908 478 48.62 2 016 423
2017 779 925 15.72 4 180 530 1 876 641 47.98 2 034 940
2018 365 535 7.36 4 604 086 1 900 775 48.16 2 046 299
2019 786 919 15.94 4 149 977 34 703 0.86 3 981 477
2020 52 056 1.08 4 779 065 30 211 0.74 4 034 834

* Community Medical Aid Scheme (COMMED) was excluded from this table for the 2015 – 2017 years.

The Medical Schemes Act (No. 131 of 1998) was promulgated in 2000, and schemes had to reach the minimum required reserve levels
by 2004.

The total number of schemes below 25% has declined significantly since then: this was not only because of amalgamations, but also due to
growth in scheme reserves.

Open schemes
In the period since 2000, a high proportion of beneficiaries in the open industry have been covered by schemes with reserves below 25%. This
was mainly due to DHMS, the biggest scheme in South Africa, failing to attain the minimum prescribed solvency ratio. When DHMS reached
the solvency ratio of 25% – in 2008, 2009, 2014 to 2020 – the number of beneficiaries in schemes with reserves below the prescribed level
fell significantly. In 2015 this figure was a mere 3.61% compared with 59.02% in 2013.

In 2016, 2017 and 2019, Bonitas Medical Fund fell below 25%, increasing the percentages again.

A total of 1.08% of beneficiaries in open schemes (2019: 15.94%) was covered by the two open schemes (2019: three) which failed to meet
the prescribed solvency level in 2020. The remaining beneficiaries belonged to the other 16 open schemes (2019: 15) which had attained the
prescribed solvency level of 25%.

Restricted schemes
Government Employees Medical Scheme (GEMS) was registered in 2006, and its effect on the number of beneficiaries in restricted schemes
with solvencies below the minimum level is evident. The scheme was able to meet the required minimum 25% during 2019.

Of the 57 restricted schemes at the end of 2020, only one had a solvency ratio below 25%. This scheme accounted for only 0.74% of all
beneficiaries in restricted schemes.

92 Council for Medical Schemes

Figure 65: Beneficiaries in schemes with solvency below 25.00% (2000–2020)

10 000 000
9 000 000
8 000 000
7 000 000
6 000 000
Beneficiaries

5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Total beneficiaries below 25% Total beneficiaries

Table 64 provides a summary of performance of schemes that were below the required statutory minimum solvency of 25% as of
31 December 2020.

The CMS closely monitors schemes below the 25% solvency ratio by having regular meetings with them to assess their performance against
their business plans.

Table 64: Summary of performance of schemes below 25% solvency in 2020 and 2019

Average Average Pensioner

beneficiaries age pb ratio Net claims ratio Net healthcare result Solvency ratio

2020 2020 2020 2019 2020 2019 2020 2019

Ref. no. Name of scheme 2020 years % % % R'000 R'000 % %

1141 Health Squared 32 610 46.68 25.14 89.92 92.61 (19 967) (58 442) 17.32 15.42
Medical Scheme
1582 Transmed Medical 31 978 56.04 47.08 81.23 100.20 74 752 (67 663) 22.37 11.38
Fund
1592 Thebemed 25 736 29.43 0.51 75.26 83.64 44 738 5 190 22.88 9.41

pb = per beneficiary

Both Health Squared Medical Scheme and Transmed Medical Fund have worse demographic profiles than the industry averages (open
scheme industry average age of 35.30, pensioner ratio of 10.82%) (restricted schemes industry average age of 31.47 years, pensioner ratio
of 6.77%).

Schemes with higher demographic profiles are at particular risk of the so-called “death spiral”, where adjustments to price appropriately
for the profile of its members might result in the unaffordability of contributions and the subsequent loss of its younger members, therefore
exacerbating the effect.

Thebemed was placed under curatorship during 2019.

Industry Report 2020 93

 CHAPTER 2: ACCUMULATED FUNDS AND SOLVENCY continued

Liquidity ratios
Figure 66 compares the matching of assets and liabilities in open and restricted schemes.

Figure 66: Matching of assets and liabilities (2019 and 2020)

80
67.51
70 60.80
60 51.16 48.33
50
Billions (R)

37.31 40.21
40 34.63
30 26.25
20 17.05 17.16 15.24 15.32
10.76 10.86 8.69 8.81
10
0
2020 2019 2020 2019
Open schemes Restricted schemes

Current assets Current liabilities Total assets Total liabilities

The total-asset-to-total-liability ratios for open and restricted schemes in 2020 were 3.9:1 (2019: 3.3:1) and 5.6:1 (2019: 5.5:1) respectively.

The current-assets-to-current-liabilities ratio in open schemes was 2.2:1 in 2020 (2.6:1 in 2019). It was 3.2:1 (2019: 3.1:1) in restricted
schemes in 2020.

The principle of matching assets with liabilities is particularly important in the context of sufficient liquidity to cover liabilities as and when they
arise. The scheme’s outstanding claims liability is a provision based intrinsically on the provision of Regulation 6(1) of the Medical Schemes
Act (No. 131 of 1998), in which all accounts must be submitted within four months. Section 59(2) requires all claims be settled within 30 days
of being received. Medical scheme liabilities are accordingly short-term in nature.

The liquidity of medical schemes is further assured by the minimum requirement imposed by Explanatory Note 2 of Annexure B – where 20%
of a scheme’s Regulation 30 reserves need to be invested in cash and cash equivalents.

94 Council for Medical Schemes

Claims-paying ability of schemes
The financial soundness of a medical scheme is also measured by its ability to pay claims from cash and cash equivalents.

Figure 67 depicts the claims-paying ability of schemes measured in months of cover, which is the number of months for which the scheme
can pay claims from its existing cash and cash equivalents.

Figure 67: Average gross claims covered by cash and cash equivalents (2000–2020)

187.05

179.74
174.12
200 7.00

160.53
180 6.07

150.96
5.76 6.00

138.91
160 5.35 5.17

127.61
5.06
4.22 5.00

112.98
140 4.41 4.15

103.70
4.09 4.04 4.30
120 3.78
Billions (R)

93.63
3.55 3.60 4.00

84.91
100 3.34 3.12

76.28
2.62 3.66 3.56 2.80

64.85

64.39
3.00

58.64

58.85
80 1.95
57.09
51.11

48.13
45.60
40.78
38.22

36.14
60
35.22

35.50

35.24
2.00

33.50
30.72

32.38
28.01

31.61
27.34

28.97
27.31

24.59
22.77
20.64

21.90

40
10.26

13.44

1.00
6.71

20
4.45

0 0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Cash and cash equivalents Gross claims incurred Months of cover

The length of cash coverage increased from 3.80 months in December 2019 to 4.30 months in December 2020.

Payment cycles of medical schemes in 2020 were an average of 13.41 days compared with the 11.84 days in 2019.

Industry Report 2020 95

 INVESTMENTS
Figures 68 and 69 provide information on the detailed breakdown of the investments of medical schemes as at the end of the 2020 (investments
in policies of insurance were broken down into its underlying assets).

Only 5.70% of open scheme investments were in policies of insurances (2019: 11.45%), where 9.65% of restricted scheme industry assets
were invested in policies of insurance (2019: 10.98%).

Medical schemes had investable assets* to the value of R120.6 billion. 96.66% of these assets are invested in local assets, while 3.35% is
invested in foreign assets.
* Investable assets comprise total assets excluding trade and other receivables, personal medical savings account trust investments, International Framework of
Reporting Standards (IFRS) 16 right of use assets, intangible assets and encumbered assets.

Figure 68: Open scheme industry – investment breakdown (2020)

5.70%
Properties

16.44%
Equities 32.96%
Cash and
cash equivalents
0.39%
Debentures

44.13%
Bonds

Open schemes invested assets to the value of R62.1 billion (2019: R46.7 billion). 95.91% of these assets are invested in local assets, while
4.10% is invested in foreign assets.

The majority of the investments in open schemes were in category 2 assets (bonds) – 44.13% (2019: 40.21%), followed by category 1 assets
(cash and cash equivalents) – 32.96% (2019: 31.56%) and category 4 assets (equities) – 16.44% (2019: 19.95%). 5.70% of assets were
invested in category 3 (property) (2019: 7.31%).

96 Council for Medical Schemes

Figure 69: Restricted scheme industry – investment breakdown (2020)

2.89%
Properties
14.63%
Equities

0.15%
Debentures

51.58%
Cash and
cash equivalents

30.10%
Bonds

Restricted schemes invested assets to the value of R58.5 billion (2019: R46.0 billion). The majority of these assets (97.44%) are invested in
local assets, while 2.56% is invested in foreign assets.
Restricted schemes held a large proportion of their investments (51.58%) in cash or cash equivalents (2019: 51.82%). Their bonds accounted
for 30.10% (2019: 26.26%) and equities for 14.63% (2019: 16.88%). 2.89% of assets were invested in category 3 (property) (2019: 4.07%).

The following tables list the asset distribution of the 10 largest schemes by asset base per asset category listed under Annexure B of the
Regulations, as well split by local and foreign, and investment income:

Table 65: Asset distribution of the 10 largest schemes by asset base (2020)
Total Category***
investable
Name of Average assets 1 2 3 4 5 6** 7
Ref. no. medical scheme beneficiaries R’millions % % % % % % %

1125 Discovery Health Medical 2 764 994 35 606.03 29.41 49.91 7.19 12.57 0.60 3.12 0.31
Scheme
1598 Government Employees 1 924 569 22 482.36 61.57 26.11 3.15 8.39 0.00 0.00 0.77
Medical Scheme (GEMS)
1512 Bonitas Medical Fund 714 989 7 800.27 22.15 46.36 5.73 25.97 0.15 3.61 -0.36
1580 South African Police 504 758 5 942.24 34.87 50.21 3.54 11.19 0.35 0.00 -0.16
Service Medical Scheme
(POLMED)
1279 Bankmed 219 807 3 980.07 44.59 28.10 2.37 22.22 0.48 9.09 2.24
1252 Bestmed Medical Scheme 202 386 3 205.53 43.11 37.81 3.90 12.99 0.00 24.71 2.18
1012 Anglo Medical Scheme 17 937 3 138.43 26.07 37.35 0.83 35.14 0.00 0.00 0.62
1167 Momentum Medical 293 884 2 765.78 32.34 41.44 2.83 23.02 0.00 0.00 0.36
Scheme
1149 Medihelp 197 621 2 612.52 63.17 16.73 1.25 18.26 0.00 9.37 0.59
1145 LA-Health Medical Scheme 219 725 2 553.60 92.72 6.51 0.76 0.00 0.00 0.00 0.01

** Category 6 investments’ underlying assets were also included in the relevant categories.
*** Categories are referred to in Annexure B of the Act, read in conjunction with Regulation 30.

Industry Report 2020 97

 CHAPTER 2: INVESTMENTS continued

Table 66: Local and foreign asset distribution of largest 10 schemes by asset base (2020)
Total
investable
Average assets Local** Foreign**
Ref. no. Name of medical scheme beneficiaries R’millions % %

1125 Discovery Health Medical Scheme 2 764 994 35 606.03 94.49 5.51
1598 Government Employees Medical Scheme (GEMS) 1 924 569 22 482.36 97.59 2.41
1512 Bonitas Medical Fund 714 989 7 800.27 99.85 0.15
1580 South African Police Service Medical Scheme (POLMED) 504 758 5 942.24 99.89 0.11
1279 Bankmed 219 807 3 980.07 97.18 2.82
1252 Bestmed Medical Scheme 202 386 3 205.53 96.84 3.16
1012 Anglo Medical Scheme 17 937 3 138.43 90.07 9.93
1167 Momentum Medical Scheme 293 884 2 765.78 91.79 8.21
1149 Medihelp 197 621 2 612.52 100.00 0.00
1145 LA-Health Medical Scheme 219 725 2 553.60 100.00 0.00

** T
 he definitions of local and foreign assets refer to investments made within the Republic and outside the Republic as referred to in Annexure B of the Act, read
in conjunction with Regulation 30.

The following table illustrates the total net investment income of the industry split between open and restricted scheme:

Table 67: Asset base and investment income (2019 and 2020)
Net investment income as % of total
Total investable assets Net investment income** investable assets

2020 2019 % 2020 2019 % 2020 2019 %

R’millions R’millions growth R’millions R’millions growth % % growth

Open schemes 62 071.87 46 705.45 32.90 2 817.63 3 192.43 -11.74 4.54 6.84 -33.63
Restricted schemes 58 538.96 45 982.34 27.31 2 244.97 3 051.76 -26.44 3.84 6.64 -42.17
All schemes 120 610.83 92 687.79 30.13 5 062.60 6 244.20 -18.92 4.20 6.74 -37.69

** Net investment income represents investment income after considering asset management fees

The financial market was hit by wholesale selling during the first quarter of 2020 which resulted in a significant drop in the JSE All-Share Index
(33.50% from December 2019 to mid-March 2020). The JSE All-Share Index recovered during the latter part of the year and ended up growing
with 4.07% during the 2020 year (JSE All-Share Index grew by 8.24% during 2019).

98 Council for Medical Schemes

ADMINISTRATOR MARKET
Figure 70 shows the market share of medical scheme administrators and self-administered medical schemes based on the average number
of beneficiaries administered at the end of 2020.

Figure 70: Administrator market share at the end of 2020

3.98%
4.80% Momentum Health Solutions (Pty) Ltd
Other
8.69%
Self - administered
32.80%
Medscheme Holdings (Pty) Ltd

17.77%
Metropolitan Health
Corporate (Pty) Ltd

31.96%
Discovery Health (Pty) Ltd

Four third-party administrators continued to dominate the market in 2020, namely (in order of market share):

• Medscheme Holdings (Pty) Ltd;

• Discovery Health (Pty) Ltd;
• Metropolitan Health Corporate (Pty) Ltd; and
• Momentum Health Solutions (Pty) Ltd.

Collectively these companies administer 86.51% of the market (excluding self-administered medical schemes).

The Government Employees Medical Scheme (GEMS) had a joint administration contract in place since 2012. Medscheme Holdings (Pty) Ltd
was responsible for its contribution and debt management as well as correspondence services, and Metropolitan Health Corporate (Pty) Ltd
was responsible for member and claims management services as well as the provision of financial and operational information. The membership was
included for both administrators.

Industry Report 2020 99

 CHAPTER 2: ADMINISTRATOR MARKET continued

Figure 71 depicts the changes in market share of all medical schemes over the last 20 years, based on the average number of beneficiaries
administered by the various parties at the end of each year.

Figure 71: Market share of largest administrators based on average number of beneficiaries – trend*

35% 32.80%
31.96%
30%
25%
20% 17.77%

15%
10% 8.69%
4.80% 3.98%
5%
0%
Medscheme Discovery Health Metropolitan Health Self-administered Other Momentum Health
Holdings (Pty) Ltd (Pty) Ltd Corporate (Pty) Ltd Solutions (Pty) Ltd

2001 2005 2010 2015 2020

* The membership is based on the medical schemes administered at the end of the period and was not adjusted to reflect changes in administrators during the year

Figure 72 shows the change in market share for the administrators with the largest share of the market for all schemes, between 2001
and 2020.

Figure 72: Percentage change in administrators with largest market share for all schemes (2001–2020)

Momentum Health Solutions (Pty) Ltd

Other

Self-administered

Metropolitan Health Corporate (Pty) Ltd

Discovery Health (Pty) Ltd

Medscheme Holdings (Pty)Ltd

-100% -50% 0% 50% 100% 150%

The administrator with the highest growth in market share is Discovery Health (Pty) Ltd which grew by 121.94% over the period with a
market share of 32.80% at the end of 2020. Discovery Health (Pty) Ltd is currently the second largest administrator.

100 Council for Medical Schemes

Figure 73 indicate the changes in administrator market share over the last 20 years for open medical schemes.

Figure 73: Open schemes market share of largest administrators based on average number of beneficiaries – trend*

60% 56.92%

50%

40%

30%

20% 18.89%
12.03%
10% 6.11% 6.05%
0%
Discovery Health (Pty) Medscheme Holdings Self-administered Other Momentum Health
Ltd (Pty) Ltd Solutions (Pty) Ltd

2001 2005 2010 2015 2020

* The membership is based on the medical schemes administered at the end of the period and was not adjusted to reflect changes in administrators during the year.

Discovery Health (Pty) Ltd’s share of the open schemes market increased by 193.40% from 19.4% in 2001 to 56.92% at the end of 2020.

Medscheme Holdings (Pty) Ltd has the second largest share in the open schemes administration market at 18.89% (2001: 26.1%); its market
share declined by 27.62% over the period.

Figure 74 indicate the changes in administrator market share over the last 20 years for restricted medical schemes.

Figure 74: Restricted schemes market share of largest administrators based on average number of beneficiaries – trend*

70%
60%
50% 44.13%
40%
32.23%
30%
20%
11.66%
10% 5.98% 3.71% 2.29%
0%
Medscheme Metropolitan Health Discovery Health Self-administered Other Momentum Health
Holdings (Pty) Ltd Corporate (Pty) Ltd (Pty) Ltd Solutions (Pty) Ltd

2001 2005 2010 2015 2020

* The membership is based on the medical schemes administered at the end of the period and was not adjusted to reflect changes in administrators during the year.

Medscheme Holdings (Pty) Ltd has the biggest share in the restricted schemes administration market at 44.13% (2001: 28.9%).
Medscheme Holdings (Pty) Ltd has been responsible for GEMS’s contribution and debt management as well as correspondence services
since 1 January 2012. This administrator’s market share increased by 52.70% over the period.

Metropolitan Health Corporate (Pty) Ltd has the second largest share of the restricted schemes market at 32.23% (2001: 26.4%) This
administrator had seen a significant increase in market share with the registration of GEMS, which had subsequently been shared
with Medscheme Holdings (Pty) Ltd as a co-administrator.

Industry Report 2020 101

 CHAPTER 2: ADMINISTRATOR MARKET continued

The definition of services provided by medical scheme administrators is not standardised, and therefore not directly comparable.
The implementation of Circular 77 of 2019 (effective date 1 January 2021) will ensure comparability across the industry of the individual
services contracted.

Administrators often provide other services such as call centre fees and marketing expenditure. These expenditures were included in the
“fees paid to administrators” figures in Table 73.

Table 68 shows the four administrators who had higher administration costs and fees than the industry average of R129.87 pabpm in respect
of fees paid to administrations in respect of open schemes.

Table 68: Percentage deviation from industry average: open schemes

Gross
administration Administration Fees paid
Market share costs fees paid* to administrators
% % % %

Momentum Health Solutions (Pty) Ltd 6.05 8.07 32.39 32.39

Discovery Health (Pty) Ltd 56.92 1.60 25.06 25.06
Universal Healthcare Administrators (Pty) Ltd 0.87 22.35 17.35 17.35
Agility Health (Pty) Ltd 0.67 57.41 11.41 11.41

* Excluding co-administration fees

Table 69 shows the seven administrators of restricted schemes with higher administration costs and fees than the industry average of
R38.91 pabpm in respect of fees paid to administrators in respect of restricted schemes.

Table 69: Percentage deviation from industry average: restricted schemes

Gross
administration Administration Fees paid
Market share costs fees paid* to administrators
% % % %

Professional Provident Society Healthcare Administrators (Pty) Ltd 1.25 271.78 317.28 293.57
Liberty Health Administration (Pty) Ltd 0.22 88.10 185.40 169.19
Discovery Health (Pty) Ltd 11.66 73.22 174.88 159.26
Momentum Health Solutions (Pty) Ltd 2.29 104.22 168.15 152.92
Universal Healthcare Administrators (Pty) Ltd 1.25 57.70 116.73 104.42
Momentum Thebe Ya Bophelo (Pty) Ltd 1.00 -5.50 19.84 13.03
Metropolitan Health Corporate (Pty) Ltd* 32.23 19.82 12.56 6.17

* Excluding co-administration fees

Table 70 lists the administrators whose composite administration fees exceed the industry average of R241.50 pampm. It is important to note
that the composite administration fee includes such other services such as actuarial fees and marketing expenditure (where applicable).
It is therefore not directly comparable with administrators who do not provide these services. For the breakdown of the various services
provided by each administrator, reference can be made to Annexure AF.

Table 70: Administrators with administration fees higher than the average for all administrators of R241.50 pampm
Administration
No. of medical Average Average Market share fees
Administrator schemes members beneficiaries % pampm

Discovery Health (Pty) Ltd 19 1 652 188 3 461 328 31.96 314.33
Momentum Health Solutions (Pty) Ltd 10 224 083 430 644 3.98 285.55
Professional Provident Society Healthcare
Administrators (Pty) Ltd 2 68 414 142 339 1.31 274.76
Agility Health (Pty) Ltd 1 19 063 32 610 0.30 247.52

pampm = per average member per month

102 Council for Medical Schemes

 Tables 71 and 72 show administrator market share based on the average number of beneficiaries to whom services are being delivered by third-party administrators and medical schemes under self-
administration. The tables also show the average cost of administration. Gross administration costs are costs charged to both risk pools and savings accounts. For the breakdown of the various services provided
by each administrator, reference can be made to Annexure AF.

Table 71: Administrator market share 2020: open schemes

Gross Administration Total fees paid
administration costs fees paid* to administrators** Gross
Beneficiaries contributions Risk
Nr. of Market share pabpm As % pabpm As % pabpm As % pabpm claims ratio
Name of administrator schemes % R of GCI R of GCI R of GCI R %

3Sixty Health (Pty) Ltd 1 2.32 185.80 9.47 83.87 4.28 83.87 4.28 1 961.26 85.86
Agility Health (Pty) Ltd 1 0.67 259.90 9.81 144.69 5.46 144.69 5.46 2 649.28 89.93
Discovery Health (Pty) Ltd 1 56.92 167.76 7.47 162.42 7.23 162.42 7.23 2 246.46 76.18
Medscheme Holdings (Pty) Ltd 3 18.89 153.79 7.15 109.13 5.07 109.13 5.07 2 151.19 83.36
Momentum Health Solutions (Pty) Ltd 1 6.05 178.44 11.64 171.94 11.22 171.94 11.22 1 532.38 72.28
Momentum Thebe Ya Bophelo (Pty) Ltd 3 0.86 108.64 8.52 75.01 5.88 75.01 5.88 1 275.71 81.12
Professional Provident Society Healthcare
Administrators (Pty) Ltd 1 1.39 212.24 7.64 108.83 3.92 108.83 3.92 2 777.44 77.81
Self-Administered 5 12.03 150.21 6.78 – – – – 2 214.68 78.04
Universal Healthcare Administrators (Pty) Ltd 2 0.87 202.01 10.57 152.40 7.97 152.40 7.97 1 912.01 82.24
Average 18 100.00 165.11 7.60 129.87 5.97 129.87 5.97 2 173.68 78.18

* Excluding co-administration fees

** Administration fees including co-administration fees

Industry Report 2020

pabpm = per average beneficiary per month
GCI = Gross Contribution Income

103
104
Table 72: Administrator market share 2020: restricted schemes
Gross Administration Total fees paid
administration costs fees paid* to administrators** Gross
Beneficiaries contributions Risk
Nr. of Market share pabpm As % pabpm As % pabpm As % pabpm claims ratio
Name of administrator schemes % R of GCI R of GCI R of GCI R %

Discovery Health (Pty) Ltd 18 11.66 114.24 5.78 100.88 5.11 100.88 5.11 1 975.33 82.50
Liberty Health Administration (Pty) Ltd 1 0.22 124.05 5.22 104.74 4.40 104.74 4.40 2 377.78 80.83
Medscheme Holdings (Pty) Ltd** 11 44.13 26.18 1.35 48.71 0.68 18.14 0.93 1 942.17 86.34
Metropolitan Health Corporate (Pty) Ltd*** 1 32.23 79.02 4.03 41.31 2.11 41.31 – 1 961.48 84.73
Momentum Health Solutions (Pty) Ltd 9 2.29 134.68 7.72 98.41 5.64 98.41 5.64 1 745.06 86.72
Momentum Thebe Ya Bophelo (Pty) Ltd 3 1.00 62.32 5.26 43.98 3.71 43.98 3.71 1 184.09 93.14
Professional Provident Society Healthcare
Administrators (Pty) Ltd 1 1.25 245.19 10.98 153.14 6.86 153.14 6.86 2 233.34 82.21
CHAPTER 2: ADMINISTRATOR MARKET continued

Self-Administered 10 5.98 121.54 7.31 – – – – 1 662.71 83.11

Universal Healthcare Administrators (Pty) Ltd 5 1.25 104.00 5.83 79.54 4.46 79.54 4.46 1 783.43 83.39
Average 59 100.00 65.95 5.10 36.70 2.84 38.91 3.01 1 293.87 85.38

* Excluding co-administration fees

** Administration fees including co-administration fees
pabpm = per average beneficiary per month
GCI = Gross Contribution Income
** The GEMS co-administration fee was included in the cash flows under administration; the GEMS average beneficiaries were included.
*** The GEMS administration fee was included in the cash flows under administration; the GEMS GCI was included.

Council for Medical Schemes

Table 73 indicates the total fees paid to the top four administrators in terms of market share for all schemes, as well as the schemes falling
under their administration.

Table 73: Total fees paid to the four largest administrators (excluding accredited managed healthcare services) – deviation
from average per administrator (2020)
Total fees paid Deviation
to administrators Average per from
administrator average per
Average pampm As % pampm administrator
Ref. no. Name of medical scheme Name of administrator members R of GAE R %

1125 Discovery Health Medical 1 333 237 336.84 96.81 314.33 7.16
Scheme
1145 LA-Health Medical Scheme 88 145 319.39 94.87 1.61
1520 University of Kwa-Zulu Natal 3 451 292.79 100.00 -6.85
Medical Scheme
1571 Anglovaal Group Medical 2 501 269.99 90.03 -14.11
Scheme
1241 Naspers Medical Fund 3 558 248.62 87.02 -20.90
1572 Engen Medical Benefit Fund 3 444 246.61 85.81 -21.54
1578 TFG Medical Aid Scheme 3 070 246.61 89.48 -21.54
1516 Quantum Medical Aid Society 3 445 237.74 85.22 -24.37
1176 Retail Medical Scheme 12 507 232.33 100.00 -26.09
1579 Tsogo Sun Group Medical 5 026 230.34 81.81 -26.72
Discovery Health (Pty) Ltd
Scheme
1430 Remedi Medical Aid Scheme 20 961 224.59 93.18 -28.55
1547 Malcor Medical Scheme 4 670 206.89 76.73 -34.18
1526 BMW Employees Medical Aid 3 224 204.28 93.77 -35.01
Society
1209 South African Breweries 11 714 200.57 78.23 -36.19
Medical Aid Scheme
(SABMAS)
1012 Anglo Medical Scheme 8 789 196.11 61.81 -37.61
1253 Glencore Medical Scheme 8 017 174.95 92.52 -44.34
1584 Netcare Medical Scheme 17 298 169.52 91.31 -46.07
1279 Bankmed 107 563 162.51 81.05 -48.30
1599 Lonmin Medical Scheme 11 568 70.29 92.42 -77.64

Industry Report 2020 105

 CHAPTER 2: ADMINISTRATOR MARKET continued

Total fees paid Deviation

to administrators Average per from
administrator average per
Average pampm As % pampm administrator
Ref. no. Name of medical scheme Name of administrator members R of GAE R %

1202 Fedhealth Medical Scheme 76 215 309.26 78.84 201.39

1441 Parmed Medical Aid Scheme 2 507 254.65 77.65 148.17
1507 Barloworld Medical Scheme 4 815 242.44 86.12 136.27
1424 SABC Medical Aid Scheme 4 329 225.96 76.00 120.21
1005 AECI Medical Aid Society 5 967 219.57 86.18 113.98
1512 Bonitas Medical Fund 335 425 217.75 71.73 112.21
1039 MBMed Medical Aid Fund 4 105 213.46 85.68 108.03
1566 Horizon Medical Scheme Medscheme Holdings 3 805 192.16 82.84 87.27
102.61
(Pty) Ltd
1548 Medipos Medical Scheme 13 240 170.59 77.87 66.25
1537 Hosmed Medical Aid Scheme 21 125 166.15 37.46 61.92
1469 Nedgroup Medical Aid Scheme 27 083 161.13 81.51 57.03
1234 Sasolmed 29 229 149.00 76.65 45.21
1580 South African Police Service
Medical Scheme (POLMED) 175 728 102.00 51.26 -0.59
1598 Government Employees
Medical Scheme (GEMS) 737 796 107.77 48.11 5.03
1598 Government Employees Metropolitan Health
107.77
Medical Scheme (GEMS) Corporate (Pty) Ltd 737 796 107.77 48.11 –
1167 Momentum Medical Scheme 153 064 330.12 96.36 15.61
1186 PG Group Medical Scheme 1 389 230.26 74.73 -19.36
1563 Pick n Pay Medical Scheme 7 396 225.17 79.87 -21.15
1293 Wooltru Healthcare Fund 9 774 214.60 80.29 -24.85
1600 Motohealth Care 18 394 201.32 78.19 -29.50
1559 Imperial and Motus Medical Aid Momentum Health 7 149 176.96 60.19 -38.03
285.55
Solutions (Pty) Ltd
1270 Golden Arrow Employees’
Medical Benefit Fund 2 617 172.05 86.67 -39.75
1582 Transmed Medical Fund 20 798 168.42 72.14 -41.02
1237 BP Medical Aid Society 1 716 168.03 35.70 -41.16
1271 Fishing Industry Medical
Scheme (Fishmed) 1 786 93.09 60.95 -67.40

GAE = Gross Administration Expenditure

pampm = per average member per month

106 Council for Medical Schemes

Table 74 shows the market share of administrators including accredited managed healthcare services.

Table 74: Market share of administrators: including accredited managed healthcare services
Accredited
Accredited managed
managed healthcare
Total fees healthcare services
paid to Net relevant services (no (risk transfer
administrators healthcare transfer of arrangement):
Beneficiaries (various expenditure risk) capitation fee Total fees
Market services)* incurred received* received* received*
Nr. of share pabpm pabpm pabpm pabpm pabpm
Name of administrator schemes % R R R R R

3Sixty Health (Pty) Ltd 1 1.04 83.87 1 682.33 92.53 – 176.40

Agility Health (Pty) Ltd 1 0.30 144.69 2 249.45 61.76 – 206.45
Discovery Health (Pty) Ltd 19 31.96 150.04 1 407.32 53.57 60.94 207.47
Liberty Health Administration (Pty) Ltd 1 0.12 104.74 1 615.30 46.42 – 151.16
Medscheme Holdings (Pty) Ltd** 14 32.80 41.64 1 714.87 31.40 – 73.04
Metropolitan Health Corporate (Pty) Ltd 1 17.77 41.31 1 614.50 1.98 – 43.30
Momentum Health Solutions (Pty) Ltd 10 3.98 148.59 1 159.74 38.02 119.52 289.09
Momentum Thebe Ya Bophelo (Pty) Ltd 6 0.94 56.73 1 034.99 31.90 – 72.18
Professional Provident Society
Healthcare Administrators (Pty) Ltd 2 1.31 132.06 1 924.28 39.93 – 171.99
Self-Administered 15 8.69 – 1 494.20 28.86 – 14.01
Universal Healthcare Administrators
(Pty) Ltd 7 1.08 105.97 1 382.95 44.76 – 147.28
Average 77 100.00 108.41 1 516.10 42.53 97.71 117.85

pabpm = per average beneficiary per month

The above table reflect market share based on the number of beneficiaries administered during the year (i.e. includes mid-year administrator changes)
* Excluding co-administration fees
** Only the GEMS co-administration fee was included in the cash flows under administration; the GEMS average beneficiaries were included.

Table 75 shows the four administrators who had the highest deviation from the 2020 industry average of R117.85 pabpm in respect of total
fees received by administrators.

Table 75: Total fees paid to administrators (including accredited managed healthcare services) – deviation from industry
average (2020)
Accredited
Accredited managed
managed healthcare
Total fees healthcare services
paid to services (no (risk transfer
administrators transfer of arrangement):
(various risk) capitation fee Total fees
services)* received* received* received*
% % % %

Momentum Health Solutions (Pty) Ltd 37.06 -10.60 22.32 145.30

Discovery Health (Pty) Ltd 38.40 25.96 -37.63 76.05
Agility Health (Pty) Ltd 33.47 45.22 -100.00 75.18
Professional Provident Society Healthcare Administrators (Pty) Ltd 21.82 -6.11 -100.00 45.94
Liberty Health Administration (Pty) Ltd -3.39 9.15 -100.00 28.26
Universal Healthcare Administrators (Pty) Ltd -2.25 5.24 -100.00 24.97

* Excluding co-administration fees

Industry Report 2020 107

 8.9 million
members

Regulates
75
medical schemes

25
administrators

41
managed care
organisations

949
broker organisations

3 596
individual brokers

medicalschemes.co.za
ISBN: 978-0-621-49482-2 RP168/2021