27 November 2009
	MEDICAL AID Size counts By Sasha Planting

When it comes to medical aid schemes, bigger is certainly better. With this in mind, SA's 10th- and 11th-biggest schemes have merged. Combined, the Liberty and Medicover medical schemes, whose merger will take effect from January, will become the fourth-largest in SA. It will operate under the Liberty brand and have a member base of 200 000 lives. Bestmed, which is administered by Sanlam Health, and TeleMed recently announced that they would amalgamate, also in January. There are 119 medical schemes in SA. This includes open schemes like Discovery, Momentum, Fedhealth and Bonitas, and closed schemes such as that run by Foschini for its employees. But the number of schemes is steadily declining. Andrew Edwards - Smaller schemes will not survive Andrew Edwards, the executive principal officer at the Liberty medical scheme, says: "Scale and critical mass are crucial to the sustainability of a scheme." The setting up of Gems (Government Employees Medical Scheme) has created change, but rising medical and administration costs have also meant that amalgamation between schemes is important for their sustained growth. The merger of the Liberty and Medicover schemes means that as a bigger player it may win better rates when it negotiates with providers. The schemes will have a bigger risk pool (additional and more diverse members), which should help ensure sustainability and bring down costs. Long-term thinking around the proposed national health insurance scheme also motivated the merger. "Let's assume private health care will be a building block in the provision of services to middle-income individuals," he says. "In this scenario only the big schemes will be used. Which means the smaller schemes will not survive."