The largest restricted medical scheme exclusively for professionals in the country says it is ready to take on the numerous legislative challenges that face the multibillion rand industry.
Profmed was started in 1969 specifically for the medical professional. Today the scheme is open to all professional graduates and has a principal membership of 24 000.
WHAT IT MEANS
 Ready to comply with new legislation
But has concerns with some sections
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That might soon change as the scheme plans to grow its membership by widening its eligibility criteria. This would significantly improve Profmed's potential to grow, says principal officer and CE Graham Anderson.
"A new marketing and sales programme has yielded a significant membership turnaround," he says. A new vigorous marketing effort has delivered growth over the past four years and 1 600 new principal members joined the scheme last year.
Challenging regulatory environment
The scheme's growth is despite the fact that it is operating during trying legislative times, as evidenced by the Medical Schemes Amendment Bill and National Health Amendment Bill currently before parliament.
The overhauling of the entire health-care sector means that medical schemes have to prepare to meet the new changes.
There are many aspects of the bills that are problematic. "The country needs this new environment. The mechanisms that the department of health is putting in place are required. Our only worry is that it will take the whole industry through some tough times if they don't relook the sequence," says Anderson.
"In our view, the sustainability of medical schemes is at risk unless the Council for Medical Schemes (CMS) prioritises the implementation of different aspects of the legislation.
"Mandatory membership should come first, followed by the introduction of the basic benefits package, and lastly the implementation of the Risk Equalisation Fund."
Other than these hiccups Profmed is well prepared to comply with the raft of legislation that is to be introduced.
The Prescribed Minimum Benefits (PMBs) were first introduced in 1998 and comprise a lengthy list of illnesses that schemes have to provide full cover for. The list comprises 270 conditions and is likely to form the basis of the expected "PMB package" or basic benefits package (BBP).
These developments will facilitate the implementation of the Risk Equalisation Fund (REF), which will essentially allow for cross-subsidisation between schemes.
Profmed Scheme manager Beverley Carrozzo says Profmed is well placed to meet the requirements of the PMB package. "We already have that basic cover structure in place.
"We just need to decide what additional benefits to offer our members over and above the BBP."
This is in contrast to new generation schemes that would have to start from scratch to put a basic package in place, she says.
As for the REF, medical schemes have to provide data to the Council for Medical Schemes on how many members claim for the illnesses on the PMB list.
"The REF would then evaluate a scheme's risk based on the amount of members they have claiming for these conditions," says Anderson.
Its implementation is at least two years off and the delay seems to be the fine-tuning of the mechanism to manage the REF.
Carrozzo says the end result of the REF would be that "schemes with good risk profiles" - that is schemes with members who do not claim frequently - would have to pay money into the fund. The opposite would apply to a scheme with a bad risk profile, as it would benefit from the fund.
"This creates the potential for a perverse incentive because schemes that are managing their risks well are going to be cross-subsiding members from other schemes who are high claimers," says Carrozzo.
"When the REF is implemented, Profmed will be ready to go live as over the past three years we have put the technical tools in place to be able to extract the data as accurately as possible."
Quality of good medicine at stake
The scheme is also concerned about the future of "the good doctor".
Its fear is that the proposed amendments to the National Health Act will allow for tariff setting and the establishment of a tribunal with the department of health having the last word on prices.
"There are several ways for a medical scheme to respond to this situation. We appeal to all involved to step back and recognise that we want more, not fewer medical personnel in our country. There is a global shortage of trained medical professionals. Drafters of the new legislation have to be cognisant of doctors' needs," says Anderson.
The scheme would like to see a transparent pricing system as a starting point for negotiations.
"Transparent prices will give members of schemes the tools to understand what they are paying for and to make cost-effective decisions.
"There are concerns that a regulated tariff may result in doctors simply charging the highest possible tariff permissible, which would of course defeat the objectives of the proposed tariff, which is to lower the cost of consultations and treatment, making private health care more accessible," he says.
"Current fee structures essentially recognise the market value of a doctor's experience, as well as the paying capacity of patients. Those doctors with good reputations and many years of experience are able to charge more for their time. They are able to choose to see fewer patients and spend more time with patients, while it is accepted that younger doctors building their businesses may charge less," says Anderson.
Trustees and management
Profmed also counts to its benefit the presence of strong independent trustees and executive management.
According to the latest Medical Schemes Annual Report 2007/2008, 118 schemes were placed under curatorship during the reporting period.
Four more are to respond to allegations of poor governance and six have received fines of R200 000 for failing to submit financial statements on time.
"It is essential that medical schemes have strong independent trustees and executive management who can safeguard the interests of medical scheme members. Joining our scheme to get the benefit of well-qualified trustees is a good reason to become a member of Profmed.
"We are extremely lucky at Profmed in being able to draw our member representatives from a well-educated and experienced group of members. At Profmed, our trustees are one of our strongest assets," says Anderson.
"Legislation also wants to change the tenure of trustees and that could have both negative and positive outcomes," he says.
The latest version of the Medical Schemes Amendment Bill states that trustees of medical schemes should serve for periods of no longer than six years. This may leave some medical schemes without institutional memory and trustees who are versed in the issues affecting the scheme. The direct consequence of this is that many medical schemes would face the possibility of the majority of their trustees being obliged to resign.
"On the other hand, we recognise that the purpose of this limit is to reduce conflicts of interest faced by trustees. We would propose that the six-year period in the bill should be changed to eight or nine years.
"Though we are mindful of the fact that the devil is in the detail with respect to new legislation, we are supportive of initiatives to improve the governance of schemes," he says.
He says governance and noncompliance issues bring uncertainty to scheme membership and the possibility of forced mergers with other schemes.
"We would attribute these difficulties to the shortage of good trustees and unmanaged conflicts of interest that should never have been allowed to occur," he says.
