​Discovery Health Medical Scheme paid R56.4bn in healthcare claims in 2018

Discovery Health Medical Scheme paid R56.4bn in healthcare claims in 2018

• Discovery Health Medical Scheme (DHMS) sustained a strong performance in 2018, despite a challenging operating environment
• DHMS continues to lead the medical scheme industry with a market share of 56.6% in the open medical scheme market, net growth of over 41,000 lives in 2018 and solvency reserves of R17.6bn, and a solvency level of 27.3%

20 June 2019 – Johannesburg. Discovery Health Medical Scheme (DHMS/the Scheme), South Africa’s leading open medical scheme, today presented its results for the 2018 calendar year. Chief Medical Officer of the Scheme, Dr Unati Mahlati, said; “In tough economic times and with an increasing concern for our members’ ability to afford contributions, we have nevertheless continued to grow and attract new members. We attribute this success to our commitment to providing sustainable access to the best healthcare, connecting members and their families to an ecosystem that gives them the highest quality of care for the lowest possible cost, at every stage of their lives. This is how we define value.”

The Scheme’s results show continued growth and a strong performance in a difficult environment, as the Scheme maintained its industry-leading position with a 56.6% share of the market which was boosted by a net growth of over 41,000 beneficiaries, an increase 2.1% off an existing high membership base. More importantly, Discovery Health Medical Scheme has been successful in attracting a younger, healthier demographic profile (26.1 average age of new lives vs the current average of existing lives of 34.6). This is an important element in containing healthcare costs for all Scheme members over the long term, as average claims increase by 2.5% for every year that the average age of the medical scheme increases. The average age of the Scheme has increased by 1.3 years over a five-year period and remains lower than the industry average. The Scheme also maintained its strong financial performance with over R17.6bn in members’ funds in reserve and a solvency level of 27.3% at the end of 2018, versus the regulatory requirement of at least 25%.

Hospital admissions and cancer prevalence

Hospital admissions contributed the most to total claims costs, with R29.5bn paid for hospital admissions in 2018. In 2018, there were 671 016 hospital admissions with an average cost per admission of R43,057

Cancer is one of the greatest challenges facing the world today. Its incidence is increasing rapidly, for reasons that are not fully understood but which appear to be linked to lifestyle. Discovery Health Medical Scheme data shows that cancer cases increased by over 45% since 2011, with almost 8,500 new cases in 2018 alone. Thus, DHMS has seen an increase of over 100% in the costs of oncology-related treatment, from R1.5bn in 2011 to over R3.6bn in 2018.

Key performance highlights during 2018

In her review of Discovery Health Medical Scheme’s performance in 2018, Charlotte Sanqela, the Chief Financial Officer commented, “Our key strategic priority is to drive value-based healthcare for members. We understand that in the current economic environment, the most important concern for members is whether they are getting value for their money or not.It is therefore important for us to continuously measure the Scheme’s performance against key metrics and protect members’ funds through strong, independent governance structures.” The Scheme measures its performance against a set of key metrics that include membership size, growth, plan movements, contribution increases, absolute reserves, pricing sufficiency and prudent investment management, as well as the value provided to members by the Scheme’s administrator, Discovery Health (Pty) Ltd.

Performance highlights include:

• The Scheme delivered a positive net surplus for 2018 of R816 million. The surplus year-on-year indicates contribution levels that are in line with expected membership and claims.
• Despite volatile investment markets, the Scheme generated investment income of R1 465 million. The strong financial performance increased members’ funds to R17.6 billion, with a solvency level of 27.3%.
• The Scheme’s contributions are, on average, 16.5% lower than the next eight largest open medical schemes, which reflects value for money for members and effective risk management.
• Plan movements, an indicator of member satisfaction, stability in benefit design and appropriate pricing, were stable for the year with 94.2% of members remaining on their chosen health plans, 2.9% upgrading to better plans, and only 2.9% downgrading their plans.

For media related enquiries, please contact Thulaganyo Khensani Mthombeni on 011 529 0091 or Khensanimth@discovery.co.za