Press release -
Fraud in the healthcare system: a lost opportunity for more investment in genuine healthcare needs
The majority of healthcare professionals are skilled, honest and work hard to provide high quality healthcare for their patients. Only a small percentage of providers, members and other parties commit fraud and other abuses which impact negatively on our healthcare system.
Discovery Health has a zero tolerance approach to fraud and uses sophisticated data analytics and the latest technology to identify fraudulent behaviour
Collaboration is key to ensuring a sustainable healthcare system
Statistics shared at the recent Board of Healthcare Funders conference on fraud estimated total fraud costs in the South African healthcare system at approximately R22 billion each year. There are no accurate statistics for the South African private healthcare system. International data suggests that losses to healthcare fraud and abuse may account for between 3% and 15.4% of claims paid - with an average of approximately 7%. Applying these estimates to South Africa is likely to give a more realistic picture, suggesting that fraud costs may vary between R3 billion and R15 billion each year.
In our view, the actual costs of fraud in South Africa’s private healthcare system are probably closer to the lower end of this range, says Dr Jonathan Broomberg, CEO of Discovery Health, and the estimate of R22bn seems extremely high and is unlikely to be accurate.
“These costs are clearly disturbing and alarming, particularly if we understand that the true cost of healthcare fraud is in the lost opportunity for investment in members’ genuine healthcare needs, and in rewarding skilled health professionals adequately for their scarce and valued skills, and for their care of patients”.
“The increasing incidence of fraud undoubtedly contributes to the cost pressures in our healthcare system, and ultimately affects all medical scheme members, health professionals and the economy at large.
For this reason, all stakeholders, including members, health professionals, and funders should take a zero tolerance approach to fraud, and should also work closely together to fight these trends. Discovery Health commits substantial resources to fighting fraud, and uses the latest big data analytics, as well as its own proprietary forensic software algorithms, to identify and prevent incidents of fraud.
Broomberg said, “Discovery Health views fraud as a serious criminal offence and we work hard every day to curb this trend. We intervene wherever we identify fraud, and act both to recover monies owed to the medical schemes we are responsible for, as well as to report perpetrators to the relevant authorities. In 2012, we recovered over R250m in fraudulent claims for the schemes under our management.
Broomberg said, “It is also very important to emphasise that the vast majority of healthcare professionals are skilled, honest and ethical, and work hard every day to provide high quality healthcare for their patients. Only a small percentage of providers commit fraud and other abuses, and in many cases, fraud is committed by criminal syndicates or individuals other than health professionals. The media reports on the BHF conference created the impression that corruption and fraud are widespread amongst healthcare professionals. This is inaccurate and unfair, and this impression must be corrected”.
For purposes of quoting please use Dr Jonathan Broomberg, CEO, Discovery Health
Discovery Media Relations Contacts
Nozuko Basson
Discovery Health Media Relations Consultant
Email: nozukob@discovery.co.za
Tel: 011 529 1450
Topics
Discovery information
Discovery is an authorised financial services provider.
Discovery operates in the healthcare cover market in South Africa, the United Kingdom and China; the life assurance market in South Africa and the United Kingdom; as well as the long-term savings and investment market, and short-term insurance market in South Africa.
Vitality, Discovery’s wellness programme, is the world’s largest scientific, incentive-based wellness solution. It provides individual and corporate wellness initiatives in South Africa, the United Kingdom, the United States and China. The global Vitality membership base now exceeds three million lives.
Discovery’s core purpose is to make people healthier, and to enhance and protect their lives through financial products that clients need and want.
South African operations
Discovery Health
- Launched in 1992, Discovery Health is South Africa’s largest healthcare funder and manager of medical schemes. It manages 14 medical schemes.
- This includes the Discovery Health Medical Scheme, which has a 50% share in the open medical schemes market, making it South Africa’s largest open medical scheme.
- The Discovery Health Medical Scheme covers more than 2.3 million lives.
- The Scheme is the only one in South Africa to enjoy an AA+ rating for its claims paying ability, the highest possible credit rating from international rating agency Global Credit Ratings.
- The Discovery Health Medical Scheme holds over R7.4 billion in reserves.
- Discovery Health pioneered consumer-driven healthcare in South Africa with the introduction of innovations like the Medical Savings Account and its wellness programme, Vitality.
- Discovery Health was voted the top medical aid brand in the Sunday Times Top Brands survey for both 2010 and 2011.
- Discovery Health was voted the top healthcare product supplier at the 2010, 2011 and 2012 Financial Intermediaries Association of Southern Africa (FIA) Awards.
Discovery Life
Discovery Life was launched in 2000 and is South Africa’s fastest growing major life assurer in the risk market, having captured 25% of the overall risk broker market.
- It was the first South African insurer to separate risk from investment, leading significant change in the industry.
- The value of its business is now more than R1.6 billion.
- Discovery Life was voted the top life assurer in the Sunday Times Top Brands survey for both 2010 and 2011.
- Discovery Life was voted the top risk and life assurance supplier at the 2010 Financial Intermediaries’ Association of Southern Africa (FIA) Awards and the top long-term insurer: recurring savings at the 2011 FIA Awards.
Discovery Invest
Discovery Invest was launched in October 2007 and declared its maiden profit in 2010.
- Discovery Invest combines the breadth and skill of the asset management industry with the existing research and development capabilities of Discovery Life.
- The company offers consumers a unique and comprehensive product range that addresses the current gaps in the market by offering greater protection against poor investment choices.
- Discovery Invest now has more than R24 billion in assets under management.
- Through Discovery Invest’s LISP platform, clients have access to over 329 local and 65 offshore investment funds.
- In 2011 and 2012, Discovery Invest received the Financial Intermediaries Association of Southern Africa (FIA) award in the investment product: recurring premium category.
- There are now more than 1.5 million Vitality members in South Africa.
- Vitality is accredited by the Sports Science Institute of South Africa.
- The HealthyLiving™ benefit offers Vitality members up to 25% cash back on HealthyCare™ products at Clicks, HealthyGear™ at adidas and TotalSports stores, and HealthyFood™ items at Pick n Pay.
- The Vitality value offering is enhanced by the DiscoveryCard, Discovery’s unique Visa credit card which gives members real cash back.
- Launched in 2004, the DiscoveryCard is the largest non-bank card in issue, with an 8.9% share of point-of-sales spend.
- Launched in 1997, Vitality is Discovery’s science-based wellness programme that underpins each of the Discovery businesses and is an international brand in its own right.
- Vitality encourages healthy behaviours that reduce long-term healthcare costs by rewarding members for improving their health.
Discovery Insure
- Discovery Insure was launched in May 2011.
- This pioneering product was created by leveraging the behavioural expertise developed in the Vitality programme with the latest telematics technology.
- The unique Vitalitydrive programme encourages and rewards better driving behaviour and ensuring that vehicles are roadworthy.
- At the heart of Vitalitydrive is the DQ-Track telematics device that measures and resports crucial aspects of driving behaviour.
- Vitalitydrive provides up to 50% fuel rewards on clients’ monthly BP fuel spend.
- Discovery Insure offers comprehensive vehicle, personal and household cover.
International operations
United Kingdom
In the UK, Discovery has a 75% shareholding in a joint venture with Prudential plc. Through PruHealth and PruProtect, the company offers healthcare cover and protection products.
PruHealth
Launched in 2004, PruHealth is the fourth largest private medical insurer in the UK and the only one that rewards people for leading a healthy lifestyle.
- It offers consumer-directed products linked to the Vitality wellness programme.
- In 2010, Discovery acquired Standard Life Healthcare, thereby leveraging the significant assets of both companies and resulting in greater scale for PruHealth.
- PruHealth has won several awards for its product innovations.
PruProtect
- PruProtect, which was launched in 2007, markets consumer-engaged life assurance products in the UK market.
- The company’s products integrate with those of PruHealth and Vitality to unlock added value and significant premium savings for clients.
- The company has become a major player in the UK protection market.
- PruProtect has received industry recognition, including awards in four categories at the 2011 Defacto Awards. The company was also named Best Individual Protection Provider in 2011 by Professional Adviser, and walked off with the Innovation Award at the 2011 Protection Review.
United States
The Vitality Group
The Vitality Group was launched in 2007 and offers a stand-alone version of the Vitality programme to self-insured, large employer groups and to healthcare carriers.
- Discovery holds a 75% share in The Vitality Group, 25% being held by Humana Inc.
- The Vitality Group has entered into a partnership with Wellness and Prevention, a subsidiary of Johnson&Johnson, the world’s premier consumer health company.
- In 2011, the group was awarded the C Everett Koop National Health Award for its work with Alcon Laboratories, a highly prestigious award recognising outstanding workplace health improvement programmes.
HumanaVitality
Launched in 2011, HumanaVitality is a joint venture between Humana Inc and Discovery (through The Vitality Group) that makes Vitality available to Humana clients with commercial medical plans.
- Discovery holds a 25% share in HumanaVitality.
- Humana Inc is the fourth largest health insurer in the US with 18 million members.
- HumanaVitality now has more than 1.1 million Vitality members.
China
Ping An Health
- Ping An Health was launched in China in 2010, after Discovery acquired a 20% share in Ping An Health Insurance Co of China Ltd, a wholly-owned subsidiary of Ping An Insurance (Group) Company of China.
- Ping An Insurance is China’s leading insurer and the second largest in the world.
- The joint venture will see Discovery’s product innovation and consumer-engaged model exported to a potential market of 83 million families.
- Vitality was launched in China through Ping An Health in May 2012.
