Annual Performance Highlights 2015
COMMENTS FROM OUR MEMBERS AFTER THE SERVICE AND HELP WE RECEIVED WHEN MY WIFE WAS DIAGNOSED WITH CANCER AND EVEN MY OPERATION, I LL ALWAYS BE YOUR BIGGEST FAN AND HAVE REFERRED LOADS OF FRIENDS AND FAMILY TO YOU. I AM VERY HAPPY ABOUT BONITAS MEDICAL AID OUR QUERIES WHICH WE HAVE FACE WAS SORTED WITH 12HR PERIOD. NEXT DAY MY CHRONIC MEDICINE WAS DISPATCHED. WELL DONE! THE BEST MEDICAL AID TO CONSUMER RELATIONSHIP. I GET FEEDBACK REAL SOON WHENEVER I HAVE A QUERY. THANK YOU. I AM VERY HAPPY WITH BONITAS AS MY MEDICAL AID. THEY NEVER FAILED ME TO THIS DAY! BEST MEDICAL AID EVER. COULDN T ASK 4 MORE. We would like to thank all our members for sharing their thoughts with us. We are currently reviewing your feedback as a means to improve our service and offerings. Page 2
CONTENTS INDEX Principal Officer s Review 4 Board of Trustees 5 1 Overview Facts and figures of material importance Applying members resources 6 7 8 2 Presentation of financial information 10 3 Statements of financial position as at 31 December 2015 11 4 Statements of comprehensive income for the year ended 31 December 2015 12 5 Statements of changes in members funds and reserves for the year ended 31 December 2015 13 6 Investment portfolio 14 7 Solvency ratio 15 8 Operational statistics 16 9 Non-compliance matters 18 Our plans 19 Page 3
PRINCIPAL OFFICER S REVIEW The Board of Trustees and executive management team are pleased to report to our valued members and supportive stakeholders on the performance of the Bonitas Medical Scheme ( Bonitas or the Scheme ) for the financial year ended 31 December 2015. Over the past year, we ve worked towards improving the products, benefits and services we bring to our members. Much like other industries in South Africa, we re operating in an environment where the costs of providing quality medical cover continue to rise. The industry remains highly competitive and consumers in South Africa are focused on deriving value for their hard-earned income. We remain committed to supporting our members in these challenging economic circumstances and have developed and implemented a strategy which we believe will enhance the Scheme s financial and operational performance over the next few years. OPERATING ENVIRONMENT The medical aid industry continues to experience the impact of macro-economic effects such as: unemployment leading to a smaller pool of consumers being able to afford medical cover; rising cost of living leading to more expensive technology, treatment, and less affordability; and the general prevalence of lifestyle diseases such as diabetes and hypertension. At an industry level, the consolidation of medical schemes remains active as schemes seek to create bigger risk pools to support their membership base. Members of medical schemes are buying down due to economic pressures and in some cases, individuals are opting for hospital insurance instead of medical aid. Fraud by members and providers is a growing risk in the industry and creates significant challenges for schemes in identifying and eliminating these events. Regulation, as with many other industries, is constantly changing and compliance requires management to focus their effort on ensuring members are part of a scheme considered to be a good corporate citizen. Opportunities exist with more young professionals entering commerce and also a growing number of individuals taking purposeful steps towards leading a more active lifestyle. Despite the factors mentioned above, the South African healthcare industry provides remarkable healthcare options to consumers and compares favourably, in terms of cost, facilities and treatment, when compared to countries on the continent and globally. FINANCIAL AND OPERATIONAL PERFORMANCE Our financial and operational performance largely reflects the challenges faced by our industry. As a means to support and retain our membership, we limited the extent of our benefit option increases in 2015, whilst still providing value for money through appropriate healthcare quality. We have also focused on strengthening our financial controls, particularly in the space of outstanding contributions and payments to creditors. 2015 was a tough financial year for the Scheme. We experienced a slight decrease in our membership base (0.6%); limited increases in benefit options to keep our plans affordable; higher claim volumes and costs of private hospitals and medical specialists rose above inflation. Our non-healthcare costs increased by 11.8% compared to the previous year. Our standard non-healthcare costs had inflationary increases, however additional non-healthcare costs were incurred this year. This was due to legal and investigation fees for dealing with the Council for Medical Schemes inspection notice and strategic initiatives taken to curb future costs. Our investments produced fair Page 4 returns which would have been higher but were impacted by the decrease in financial markets in December 2015. Overall, we made a net deficit for the year, however, the Scheme has a strong financial strategy to navigate through this difficult period. The deficit resulted in a decrease in our solvency to 26.1% but we are pleased it remains above the required minimum of 25%. Our liquidity position remains strong and we are confident of retaining our AA- Global Credit Rating in the next rating period. Operationally, management has developed partnerships with various organisations such as Sanlam Reality which we believe will provide members with great health benefits, and Improved Clinical Pathway Services ( ICPS ) to create a hip and knee replacement programme. The ICPS work according to standardised clinical care pathways which hase been developed in accordance with evidence based outcomes to ensure that the quality of the replacement is of the highest standard and the best health outcomes. The silent killer, diabetes, continues to be a challenge in our society and we have included a benefit with the Centre for Diabetes and Endocrinology on all our plans to empower our members to manage this condition. We re always working behind the scenes to find ways to improve our members experience. One of the key ways we do this is through co-ordination of care. Co-ordination of care aims to improve the quality of healthcare and lower overall health expenditure by bringing various healthcare providers and services together to create an integrated healthcare system. This encourages high collaboration and sharing of information between the patient and the various healthcare providers that make up a team including family practitioners, specialists, nurses and pharmacists. GOVERNANCE Corporate governance remains a key focus of the Board of Trustees ( Board ) in order to achieve our operational and financial objectives. In 2015, the Board continued to provide effective oversight and leadership throughout the year. I would like to thank Eckard van Staden and Marcel Visagie for their contributions towards the corporate governance of the Scheme over their tenure. I am pleased to welcome two new Board members, Rodney Cowlin and Oupa Komane, and look forward to working with them in 2016. OUTLOOK The Board and I maintain a positive outlook on the Scheme s future and sustainability in the years to come. Our 34 years of experience in the healthcare industry means that we have experienced difficult operating conditions before and we are confident we can use that experience to overcome current trading conditions. APPRECIATION Thank you to the Board, its subcommittees, the executive management team, Bonitas staff, our members, various business partners and healthcare professionals, for your effective contributions during this difficult year. I look forward to your continued support to make 2016 a successful year for the Scheme. PRINCIPAL OFFICER
BOARD OF TRUSTEES DR J. RAMPEDI Chairperson of the Board S. CLAASSEN L. KOCH M. LESUNYANE Y. MBULI T. ZWENI New members and resignations Oupa Komane was appointed on 2 January 2016 Rodney Cowlin was appointed on 2 January 2016 Eckard van Staden resigned on 28 January 2015 Marcel Visagie resigned on 5 February 2016 F. MARTIN J. USHER Appointed 7 July 2015 Committee represented by Trustees Audit & Risk Committee Remuneration & Nomination Committee Investment Committee Working & Strategy Committee Page 5
1. OVERVIEW 2015 proved to be as challenging as 2014, for the Scheme and for many enterprises and individuals in South Africa. In spite of this, Bonitas managed to maintain its position as one of the leading medical schemes in South Africa. The Scheme is pleased to present its Annual Performance Report to its members for the year ended 31 December 2015. Bonitas has maintained its purpose to support the lives of its members and their dependants through wellness initiatives and high-quality healthcare. The growth and retention of our membership has been a priority for the Scheme for many years. Over the last few years and in 2015, the competitive medical scheme environment and challenging economic pressures have resulted in lower membership growth over the last three years and a slight decrease in 2015. Mining companies, amongst others, were forced to retrench staff and the Scheme felt the burden of these decisions on the retention of members. The Board continued ensuring the implementation of good corporate governance principles and maintaining these throughout the year. The Scheme also recovered R29 million from the administrator for a failure in updating in the operating systems for a change in benefit design. Management have focused on continually improving the operational, financial and strategic position of the Scheme to ensure sustainability of Bonitas over the near future. The Board approved a revised strategy, focusing on three fundamental pillars: i. becoming a strategic purchaser ii. connecting with the Scheme s members iii. boosting business development Some of the key results from this have been noted below. i. Becoming a strategic purchaser The Scheme negotiated multiple contracts with healthcare service providers resulting in increases lower than inflation. The Scheme sees further opportunities in this area and management Page 6 will continue its efforts to minimise costs while offering quality medical cover to its members. ii. Connecting with the Scheme s members In a fast-changing communication landscape, connecting with customers can be the difference between successful organisations and those that become irrelevant. The Scheme has developed platforms to deliver important medical and lifestyle information to its members and also receive valuable feedback and insights from stakeholders. This has been achieved through a more dynamic quarterly member magazine and also the re-design of its website; all in an effort to better communicate with its members. We encourage all our members to obtain a copy of our latest publication and review our website and provide us with feedback, we re looking forward to hearing what you have to say! iii. Boosting business development A new benefit option, BonFit, was introduced on 1 January 2016 in order to provide essential medical cover at a cheaper rate. To develop the Scheme further, Bonitas launched an exciting lifestyle venture with Sanlam Reality, which offers a loyalty programme to members. This programme should assist in retaining the Scheme s existing membership base and attracting new members. Through various communication channels, the Scheme has received feedback affirming the valuable work provided by its staff and healthcare providers. Satisfying progress has been made on our co-ordination of care approach, which coordinates the healthcare services provided by practitioners, making sure the services are not only appropriate but also necessary. The initiative has fostered closer working relationships with our service providers. Members benefits are being properly managed and patient management is being enhanced. Overall Bonitas is pleased with the early results of its new strategy, which will serve the Scheme well in the coming years; delivering the desired results to place Bonitas on a differentiated level as one of the largest schemes in South Africa.
1.1 Facts and figures of material importance Membership per benefit option 2015 Financial stability 2% From a financial reporting perspective, the financial results and position are a reflection of the economic challenges faced by the industries and individuals. The Scheme reported an increase in risk contribution of 6.7% to R10.6 billion mainly due to approved benefit price increases. The decrease in our membership had the effect of reducing this amount, resulting in significant pressure on cost containment. The volume of claims substantially increased in 2015 compared to the previous year, in addition, private hospitals and medical specialist had increases above inflation. These two factors led to the net healthcare loss of R494.3 million (2014: R247.6 million). The Scheme, through its strategic purchaser pillar and work undertaken to analyse the claims patterns, is seeking to improve the net healthcare result going forward. 11% 13% 47% 4% 1% 22% Membership per benefit option 2014 Standard Option Primary Option BonComprehensive Opt BonClassic Option BonCap Option BonSave Option BonEssential Option Non-healthcare costs increased by 11.8% which is above inflation. Standard operating non-healthcare costs had inflationary increases overall. The Scheme incurred additional non-healthcare costs relating to the Trustee election held in December 2015, we invested in technology to curb fraud, waste and he other significant cos in responding to the CMS inspection notice as well as developing strategic initiatives to curb future costs and retain members. The Scheme investments produced an income of R307.0 million (2014: R279.1 million). This was below the target set by management and was impacted by the decrease in the local financial markets during December 2015 due to personnel changes in the National Treasury. 2% 14% 5% 10% 20% 1% 48% Standard Option Primary Option BonComprehensive Opt BonClassic Option BonCap Option BonSave Option BonEssential Option Overall the Scheme achieved a deficit of R288.7 million (2014: surplus R21.4 million) after taking into account realised and unrealised gains and losses for the year. The deficit adversely impacted members funds, which decreased by 8.7% from R3.3 billion in 2014 to R3.0 billion as well as the solvency ratio which decreased by 4.6% to 26.1% (importantly, the solvency ratio remains above the required minimum of 25% required by the Medical Scheme s Act [the Act ]). In terms of outlook, the Scheme maintains a positive outlook on its future and sustainability in the years to come. With years of experience in the healthcare industry, the Scheme has experienced difficult operating conditions before and is confident it can use that experience to ensure sustainability of the Scheme. Membership and contributions The Scheme s membership decreased by 0.6% (2014: increased by 1.2%) from 297,242 members in 2014 to 295,488 members in 2015. This is the first time the Scheme has experienced a decrease in membership since 2012, indicating the economic challenges faced by members and employers groups in 2015. Total Membership growth Number of Members 300 000 295 000 290 000 285 000 280 000 275 000 270 000 265 000 260 000 Contributions The Scheme reported an increase in risk contribution income of 6.7% (2014: increased by 9.0%) from R9.9 billion in 2014 to R10.6 billion in 2015. As the Scheme maintained a similar average number of members throughout the year, this increase in risk contribution income was mainly attributable to approved benefit price increases. Pegma Thirty Six Investments Proprietary Limited ( Pegma ) The Scheme is pleased to report the successful finalisation of the de-registration of Pegma on 9 November 2015. The 2015 annual financial statements are no longer consolidated as required by International Financial Reporting Standards following the concluding of this transaction. Going forward, an unconsolidated set of financial statements will be prepared on an annual basis. Credit rating During July 2015, Global Credit Ratings ( GCR ) affirmed the national scale claims paying ability of Bonitas which the Scheme is renowned for. A credit rating of AA-, with an outlook accorded as stable was assigned to the Scheme. This rating was achieved based on the Scheme s strong business profile as well as its large and diversified membership base. 255 000 250 000 2010 2011 2012 2013 2014 2015 Financial Year Page 7
1.2 Applying members resources Claims expenditure breakdown 2015 Membership administration The administration of member s funds is a significant responsibility of the Scheme and one which management and the Board continually focus on. Working with the administrator, initiatives were implemented in 2015 to improve the recovery of outstanding debt and ensure creditors are paid as swiftly as possible. This included revising the credit control policy and streamlining the process of allocating receipts. At the end of the year, the Scheme reduced the outstanding deposit value by approximately R40.0 million, achieved a significant decline in the value of debtors by R84.0 million and reduced the outstanding debtors days period from 20 days to 16 days. The Scheme is working towards fully implementing an alternative payment facility, such as EASYPAY, in 2016 which will allow paying for outstanding contributions easier for members. Claims 20% 0% 46% 11% 8% 15% Claims expenditure breakdown 2014 Hospitals Medicines Medical Practition Medical Specialists Dentistry Other During 2015, 36.0 million claims (2014: 35.7 million claims) were submitted, 98.3% of which were submitted via electronic channels. The Scheme managed to improve its performance in 2015, with 99.9% (2014: 95.0%) of all claims being processed within ten days of the claim being received. The Scheme s average turnaround time of approved claims was just over five days (2014: four days) from receipt to payment. Membership statistics Number of members 350 000 300 000 250 000 200 000 150 000 100 000 50 000-2012 2013 2014 2015 Total members Municipalities Tertiary Institutions Financial year Government employees Corporates Direct paying members Net claims incurred during the year increased by 8.7% from the prior year, higher than the expected inflationary increase of 6.5%. As 2015 only saw a slight increase in the volume of claims, this rise in costs was unexpected. Upon further investigation, it was identified that the cost of private hospital and medical specialists have risen above inflation across South Africa, an issue that will also affect other schemes within the industry. The Scheme has, however, continued to aim to achieve cost-saving outcomes through the review and renegotiation of major contracts and managed care programmes. Strict service level agreements ensure quality and value for the Scheme s members; accordingly by managing contracts more closely, the Scheme is also able to identify any unusual or erroneous transactions. 0% 11% 10% 19% 15% Personal Medical Savings Account 45% Hospitals Medicines Medical Practition Medical Specialist Dentistry Other Unutilised savings amounts are accumulated for the long-term benefit of the member and interest is allocated monthly on the balances at the rate specified in the Scheme Rules which is not less than the average rate applicable to cash and cash equivalents. The liability to the members in respect of the personal medical savings plan is reflected as a financial liability in the annual financial statements, repayable in terms of Regulation 10 of the Act. New membership administration New members are critical to the sustainability of any scheme. In 2015, the Scheme processed and approved 40,717 new membership applications, an increase of 21.7% from 2014. An increase in new members to the Scheme, especially in the current economic environment, is testament to the Scheme s continued focus on membership growth and the positive brand of Bonitas in the market. New and existing members require affordable plans with attractive benefits and need to ensure that they get as much value as they can afford for every rand spent. In a number of cases, members decided to buy down to more affordable options that still provide benefits that are effective in ensuring they maintain a healthy lifestyle with peace of mind that they are medically covered. Page 8
Non-healthcare expenditure The Scheme s non-healthcare costs increase has been outlined above. Overall as can be seen in the graphs below, the category spend has been consistent with the nature of spend in the prior year. Non-healthcare expenditure breakdown 2015* Administration expenditure Administration expenditure as a proportion of non-healthcare costs remained consistent with the prior year. The graphs below provide members with an overview of the administration expenditure cost components. Administration expenditure breakdown 2015 64% 21% 15% Managed care: management services Broker service fees Administration expendi 2% 1% 13% 17% 67% Administrator's fees Investigation fees Marketing, advertising promotion fees Legal fees Other expenditure Non-healthcare expenditure breakdown 2014* Administration expenditure breakdown 2014 63% 22% 15% Managed care: management services Broker service fees Administration expendi 1% 0% 16% 13% 70% Administrator's fees Investigation fees Marketing, advertising promotion fees Legal fees Other expenditure *The graphs exclude impairment of healthcare receivables Financial and operational indicators 2015 2014 Movement Members funds R3.0 billion R3.3 billion (8.7%) Solvency ratio 26.1% 30.7% (15.0%) Gross contribution income R11.2 billion R10.2 billion 9.9% Risk contribution income R10.6 billion R9.9 billion 6.7% Average accumulated funds per member at year-end R10,281 R10,506 (2.1%) Average accumulated funds per beneficiary at year-end R4,643 R4,757 (2.4%) Average net claims per member per month R2,577 R2,318 11.2% Average risk contribution per member per month R2,885 R2,660 8.4% Outstanding claims provision R368.6 million R335.6 million 9.8% Non-healthcare expenditure R1.4 billion R1.3 billion 11.8% Page 9
2. PRESENTATION OF FINANCIAL INFORMATION The financial information presented in this Annual Performance Report for the year ended 31 December 2015 has been extracted from Bonitas signed statutory annual financial statements for the year ended 31 December 2015, which have been filed with the Council for Medical Schemes. The following primary financial statements have been presented: Statements of financial position as at 31 December 2015 Statements of comprehensive income for the year ended 31 December 2015 Statements of changes in members funds and reserves for the year ended 31 December 2015 Page 10
3. STATEMENTS OF FINANCIAL POSITION as at 31 December 2015 Rand 000 2015 2014 Assets Property and equipment 3,486 6,014 Investment properties 86,400 86,100 Available-for-sale investments 1,241,248 1,190,364 Investment in subsidiary - 2,250 Non-current assets 1,331,134 1,284,728 Available-for-sale investments 1,523,894 1,821,278 Insurance, trade and other receivables 466,132 550,943 Cash and cash equivalents 854,767 737,289 Cash and cash equivalents - Scheme 607,294 549,401 Cash and cash equivalents Personal Medical Savings Accounts 247,473 187,888 Current assets 2,844,793 3,109,510 Total assets 4,175,927 4,394,238 Accumulated funds 2,935,237 3,140,797 Available-for-sale fair value reserve 107,013 190,135 Members funds 3,042,250 3,330,932 Outstanding risk claim provision 368,639 335,595 Personal Member Savings Account trust liability 256,016 193,652 Insurance, trade and other payables 509,022 534,059 Current liabilities 1,133,677 1,063,306 Total members funds and liabilities 4,175,927 4,394,238 Page 11
4. STATEMENTS OF COMPREHENSIVE INCOME for the year ended 31 December 2015 Rand 000 2015 2014 Risk contribution income 10,560,509 9,895,559 Relevant healthcare expenditure (9,933,400) (9,155,088) Net claims incurred (9,516,632) (8,758,361) Risk Claims incurred (9,578,269) (8,783,439) Third party claim recoveries 61,637 25,078 Accredited managed healthcare services (301,464) (284,927) Net expense on risk transfer arrangements (115,304) (111,800) Risk transfer arrangement fees/premiums paid (764,796) (771,675) Recoveries from risk transfer arrangements 649,492 659,875 Gross healthcare result 627,109 740,471 Broker service fees (202,946) (188,118) Administrative expenditure (905,047) (815,165) Net impairment losses on healthcare receivables (13,395) 15,267 Net healthcare result (494,279) (247,545) Other income 324,874 302,231 Investment income - Scheme 307,036 279,098 Investment income Personal Medical Savings Accounts 14,592 10,552 Change in fair value of investment property (1,064) 5,400 Sundry income 4,310 7,181 Other expenditure (36,155) (29,242) Asset management fees (16,492) (12,862) Interest expense (14,592) (10,552) Impairment charge of investment in subsidiary - 39 Operating expenses on rental of investment property (5,071) (5,867) (Deficit)/Surplus for the year (205,560) 25,444 Other comprehensive loss (83,122) (4,049) Unrealised fair value gains on available-for-sale investments 10,114 72,752 Reclassification of gains on disposal of available-for-sale investments (93,236) (76,801) Total comprehensive income for the year (288,682) 21,395 Page 12
5. STATEMENTS OF CHANGES IN MEMBERS FUNDS AND RESERVES for the year ended 31 December 2015 Rand 000 Accumulated funds Available-for-sale fair value reserve Revaluation reserve Total Balance as at 31 December 2013 3,105,100 194,184 10,253 3,309,537 Total comprehensive income 25,444 (4,049) - 21,395 Surplus for the year 25,444 - - 25,444 Other comprehensive loss - (4,049) - (4,049) Transfer of reserve 10,253 - (10,253) - Balance as at 31 December 2014 3,140,797 190,135-3,330,932 Total comprehensive loss (205,560) (83,122) - (288,682) Deficit for the year (205,560) - - (205,560) Other comprehensive loss - (83,122) - (83,122) Balance as at 31 December 2015 2,935,237 107,013-3,042,250 Page 13
6. INVESTMENT PORTFOLIO At the 31 December 2015 the Scheme s investment portfolio was valued at R 3.5 billion. The table and investment chart show the nature of the investments. The Scheme continues to seek the most favourable return on investment at minimal cost without exposing the Scheme to undue investment risk. Rand 000 2015 2014 Comprising Listed equities 647,247 703,405 Unit Trusts 183,527 239,240 Bonds 1,198,617 922,585 Money market instruments 722,406 1,134,512 Investment properties 86,400 86,100 Unlisted equities 13,345 11,900 Cash and cash equivalents 607,294 549,401 3,458,836 3,647,143 Financial & operational indicators 2015 2014 Movement Average return on investments as a percentage of investments 8.0% 7.2% 10.8% Portfolio structure at 31 December 2015 Portfolio structure at 31 December 2014 21% 19% Equities Bonds Unit trusts 31% 20% Equities Bonds Unit trusts Investment properties Investment properties 18% 2% 5% 35% Cash and cash equivalent Money market instrumen 15% 2% 7% 25% Cash and cash equivalen Money market instrume Page 14
7. SOLVENCY RATIO In accordance with Regulation 29(2) of the Act a medical scheme must maintain a minimum solvency ratio of 25%. Bonitas maintained its solvency ratio above the minimum required as shown in the table below. Rand 000 2015 2014 Members funds per the statements of financial position 3,042,250 3,330,932 Adjusted for: Movement in reserves of subsidiaries - 172 Unrealised fair value reserve (107,013) (190,135) Cumulative net losses on re-measurement to fair value of investment properties included in the accumulated funds (19,174) (20,238) Accumulated funds per regulation 29 2,916,063 3,120,731 Gross contributions 11,161,965 10,155,696 Solvency ratio (%) 26.1% 30.7% Page 15
8. OPERATIONAL STATISTICS The table below provides the members with an overview of the key operational statistics of the Scheme, and outline the statistics per benefit option for the following statistical categories: THE BONITAS FAMILY 2015 Standard BonSave Primary BonCap BonComprehensive BonEssential BonClassic Total Average number of members during the year 140,217 30,526 63,970 39,497 4,029 4,161 13,062 295,462 Number of members at 31 December 138,632 30,815 65,421 39,299 3,940 4,641 12,740 295,488 Average number of beneficiaries during the year 324,612 71,854 154,824 59,425 8,311 9,570 25,593 654,190 Number of beneficiaries at 31 December 320,896 72,764 157,835 59,492 8,089 10,534 24,774 654,384 Proportion of dependants at the end of the year 1.31 1.36 1.41 0.51 1.05 1.27 0.94 1.21 Average beneficiary age 33 27 27 33 43 31 45 32 Pensioner ratio (%) at 31 December 7.10% 2.82% 2.69% 6.41% 19.20% 5.97% 21.68% 6.18% Chronic profile (%) at 31 December 20.00% 8.15% 7.40% 8.27% 39.62% 7.13% 37.03% 15.39% Risk contributions per average member per month 3,754 2,311 2,533 1.071 5,293 2,005 3,760 2,979 Risk contributions per average beneficiary per month 1,622 982 1,047 712 2,566 872 1,919 1,345 Healthcare expenditure per average beneficiary per month 1,516 856 918 820 3,071 796 1,961 1,265 Non-healthcare expenditure per average beneficiary per month 151 146 141 88 166 142 163 143 Relevant healthcare expenditure as a % of gross contributions 89.77% 72.44% 87.74% 115.20% 95.79% 91.26% 86.83% 88.99% Non-healthcare expenditure as a % of gross contributions 8.97% 12.36% 13.50% 12.33% 5.17% 16.28% 7.20% 10.07% Page 16
BONITAS FACT SHEET With 34 years of experience, Bonitas Medical Fund offers medical aid plans that are designed to give our members more value for money and meet their healthcare needs. OUR APPROACH OUR MEMBERS R Committed to making quality healthcare more accessible Plans for all South Africans Simple, easy-to-understand benefits the best of care and focus on getting better. 295 439 Main members 358 502 Beneficiaries 653 941 Total lives covered 32.7 years age NEW plans to meet all needs Carefully designed benefits to give members more value 2.2 6% years) 1.2 Number of dependants per member 46 years member WHY BONITAS OUR FINANCES R We re financially sound (good We re reliable (claims payout above We re experienced (since 1982, in the We care about our members (oncology, chronic medicine and and benefits. AA- Global Credit Rating 26% Solvency R2.9 billion Low expense MORE VALUE OUR ADMINISTRATION The largest GP network in SA and a specialist network so members don t have to pay more Dental, maternity, wellness and preventative care benefits paid from risk so benefits last longer members get more value free Benefits for mental health, cancer and HIV/AIDS expectations. 96% quality 90% of claims processed within 5 days 93% of calls answered within 20 seconds 91% page 91% Assistance R of claims paid within 5 days in 11 languages in call centre Cover for up to 62 chronic conditions Cover for cochlear implants and 60 Walk-in centres one-on-one assistance Page 17
9. NON-COMPLIANCE MATTERS The following areas of non-compliance with the Act were identified during the course of the financial year: 1. Contravention of section 33 of Act In terms of section 33 of the Act, the Registrar may withdraw the approval of such benefit options which in his opinion are not financially sound. For the year ended 31 December 2015 there was a net healthcare deficit on seven of the Scheme s benefit options: Standard, Primary, BonComprehensive, BonClassic, BonSave, BonEssential and BonCap. These loss making benefit options eroded the solvency margin of the Scheme. However, due to the historical member reserves coupled with an efficient return on investments, the Scheme was able to absorb these losses. The Scheme is monitoring the performance of these options on a monthly basis. There are also quarterly operational meetings held with the regulator advising on the performance of these options. The Scheme has adopted a long-term strategy to correct the loss-making options in the future, particularly the Standard, BonCap and BonComprehensive options. The Scheme has appointed a task team to drive initiatives which will reduce both healthcare and non-healthcare costs over the next 12 months. These cost saving measures are expected to have a positive impact across all options. 2. Contravention of section 26(7) of the Act Section 26(7) of the Act requires that all subscriptions and contributions be paid directly to a medical scheme not later than three days after payment thereof becomes due. The Scheme has aged debtors of up to 120 days for both the Scheme and Direct Paying Members and is thus in breach of the three-day rule. Significant debt with members could affect the liquidity of the Scheme and its ability to service members and potential non-recoverability of such debtors. For the 2015 financial period, the Scheme incurred bad debt write offs of R14.8 million which equals 0.14% of risk contribution income. It is not possible to receive all contributions within three days of becoming due, as there may be economic circumstances whereby contributions cannot be paid as per Section 26(7). In such instances members are notified of the breach. In addition, the Scheme has mitigating controls in place to address the non-payment of contributions, which include the enforcement of the Scheme s Credit Control Policy. Other interventions include direct Scheme management engagement with affected groups to resolve such. 3. Contravention of section 26(11) of the Act As a result of the amalgamation between the Scheme and Protector Health on 1 January 2006, a post-retirement health obligation arose with reference to the provisions stipulated in Protector Health s prior amalgamation agreement with Vaalmed. This resulted in an unavoidable contravention of section 26(11) of the Act as retirement funding of any sort is not considered to be the business of a medical scheme. 4. Contravention of section 28(b) of the Act Section 28(b) of the Act prohibits a person to be admitted as a dependant of more than one principal member of a particular medical scheme. The Scheme has two beneficiaries linked to more than one principal member of the Scheme. The risk of this is that the Scheme will receive contributions and pay claims for these beneficiaries on more than one membership. Mitigating controls are in place whereby monthly exception reports are generated and reviewed for possible duplicate memberships. Communication is sent out to possible duplicate members monthly and terminations are processed after 90 days. 5. Contravention of section 35(8) of the Act Section 35(8) of the Act prohibits a medical scheme from investing any of its assets in the business of or granting loans to: (a) an employer group who participates in the medical scheme or any administrator or any arrangement associated with the medical scheme; (b) any other medical scheme; (c) any administrator; and (d) any person associated with any of the above. The Scheme has invested with various entities associated with the Scheme s administrator and the Scheme s employer groups during the financial year. The Scheme obtained an exemption in terms of section 35(8) of the Act from the Council for Medical Schemes in respect of the non-compliance noted. 6. Contravention of Regulation 10(6) of the Act Regulation 10(6) of the Act prohibits the funding of a Prescribed Minimum Benefit ( PMB ) from the members medical savings accounts. An automated error occurred where potential PMB claims were processed as non-pmb related claims and paid incorrectly, from members medical saving accounts, instead of being paid from the Scheme s risk reserves. This error was limited to two benefit options. The non-compliance with Regulation 10(6) may result in escalation of member complaints whose claims were incorrectly paid from their medical savings accounts, and causing members out-of-pocket expenses to increase. The errors were rectified when the incorrect automated claims process was identified. The claims that may potentially be PMB based on level of care, that were affected by the error, have been identified, manually reviewed and re-processed for payment, where the claims indicate PMB level of care. The effected members medical savings accounts were credited with the respective amounts, where applicable. All PMB claims that are effected by the error have been rectified. There is little negative impact to any members of the Scheme as the Scheme is currently honouring its obligation to the three members affected by these amalgamations. The Scheme obtained an exemption notice on 1 June 2010 in terms of section 8(h) of the Act from the Council for Medical Schemes, in respect of non-compliance raised. Page 18
OUR PLANS We offer a range of 8 products that are simple to understand, easy to use and give our members more value for money. Standard Get peace of mind knowing that your family s general medical needs are covered with the Standard Option. It offers savings and day-to-day benefits, chronic cover and extensive benefits in-hospital plus benefits for dentistry, GP consultations and optometry. Primary This simple medical aid plan offers affordable healthcare for you and your loved ones when you need it. It includes unlimited chronic cover for 27 conditions, hospital cover and generous day-today benefits, GP benefits and cover for optometry and basic dentistry. BonComprehensive Our premium product, BonComprehensive, is designed to meet the most arduous healthcare needs. It features quality benefits for young and old alike, including comprehensive cover for chronic conditions, rich savings, unlimited above threshold benefits and extensive hospital cover. BonClassic BonSave BonFit * This new generation plan offers a wide range of benefits to meet the needs of you and your loved ones. It includes generous savings and chronic cover plus added benefits for blood tests, x-rays, dentistry and optometry. Take control of your benefits with BonSave - the flexible option that lets you decide how to use your savings. Designed to offer you cover when you need it most, BonSave offers extensive hospital cover and unlimited cover for 27 chronic conditions. The perfect fit for the young and healthy, BonFit is designed for those who want basic cover out of hospital and more cover for major medical events. It offers savings to use as you choose, unlimited cover for 27 chronic conditions and robust benefits at network hospitals. *Introduced 1 January 2016 OUR CONTACT INFORMATION BonEssential A hospital plan with a difference, BonEssential offers top-quality hospital cover, unlimited cover for 27 chronic conditions as well as added benefits for maternity, wellness and preventative care. BonCap This entry-level option offers access to network providers and hospitals. It features basic day-to-day benefits and hospital cover as well as cover for 27 chronic conditions. Call 0860 002 108 Visit www.bonitas.co.za Facebook Bonitas-Medical-Fund Page 19
Where to obtain a full set of Annual Financial Statements Copies of the consolidated financial statement of Bonitas Medical Fund is available on the website and may be inspected during normal business hours at the registered office of Bonitas: 135 Patricia Road Freestone Park Sandton 2199 Bonitas Medical Fund I 0860 002 108 I www.bonitas.co.za