Published on January 9, 2009
The value Brokers are adding to the Private Healthcare Environment Prepared by Andre JacobsNational Operations Manager, Aon Consulting27/06/2008 : The value Brokers are adding to the Private Healthcare Environment Prepared by Andre JacobsNational Operations Manager, Aon Consulting27/06/2008 Agenda : 2 Agenda Myths relating to brokers : 3 Myths relating to brokers Represent a medical scheme Represent an administrator Responsible for getting uncovered people covered Responsible for churn Who are our clients? : 4 Who are our clients? Employers Employees Who experience our value? : 5 Who experience our value? Payers: Employers Employees Non-Payers Medical Schemes Administrators Council for Medical Schemes National Health Policy Slide 6: 6 Hypothesis 1 – Broker relationship based on constant conflict Broker Commission Healthcare Expenditure Definition of a broker & broker services : 7 Definition of a broker & broker services Broker means a person whose business, or part thereof , entails providing broker services, but does not include- An employer or employer representative who provides service or advice exclusively to employees of that employer; A trade union or trade union representative who provides service or advice exclusively to members of that union; or A person who provides service or advice exclusively for the purpose of performing his or her normal functions as a trustee, principal officer, employee or administrator of a medical scheme. Unless person referred to a subparagraph (a), (b) or (c) elects to be accredited as a broker, or actively markets or canvasses for membership of a medical scheme. Broker services means- The provision of service or advice in respect of the introduction or admission of members to a medical scheme; or The ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical scheme. Agenda : 8 Agenda Slide 9: 9 “ … Consumers face immense difficulties in obtaining independent and sound advise on available health products” (Joint statement by the Department of Health and the Council for Medical Schemes) Slide 10: 10 “ The current medical scheme environment is characterized by a lack of general consumer awareness with regard to health products and their actual worth” (Joint statement by the Department of Health and the Council for Medical Schemes) Slide 11: 11 “The new legislation requires a greater degree of transparency, and this should allow consumers and employers to judge whether they are receiving value for money. This includes the activities of brokers who are required to provide consumers with best advise” (Joint statement by the Department of Health and the Council for Medical Schemes) 5 criteria to be met : 12 5 criteria to be met Services must be observable Services must be comparable Services must be trialable Services must have a culture fit Services must be simple Source: Diffusion of innovation Agenda : 13 Agenda Is consumer education needed? : 14 Is consumer education needed? “Some 21% of Medical Scheme beneficiaries could not recall the name of their medical scheme” Stakeholder analysis report p8 73% of members see their medical scheme as part of their financial portfolio. TWIG 2004 p30 FTP highlighted this need. Patrick Masobe, FTP, 2003 “A large number of members cannot make a distinction between their medical scheme and administrator” Many do not know how benefit options work or what they are” “Even fewer understand the notion of PMB” CMS confirmed that educating consumers is one way that brokers can add value: i.e. chronic benefits Are Medical Schemes effective in acting fair? : 15 Are Medical Schemes effective in acting fair? “44% of beneficiaries are not convinced that medical schemes serve the interest of beneficiaries” Stakeholder analysis report p17 “Poorer beneficiaries are least satisfied. The following issues and concerns account for the extent of dissatisfaction: Cost of cover Coverage of claims, specific and general Delays in payment Response to complaints A suspicion among some of corruption or mal-administration” Stakeholder analysis report p123 FTP results show that medical schemes are not always acting fair: 75 possible areas of unfairness and brokers can assist in 40 of them 52 Identified as actually unfair and brokers can assist in 29 of them Are Medical Schemes effective in acting fair? : 16 Are Medical Schemes effective in acting fair? TWIG 2004 research shows that brokers are far more effective than medical schemes Overall service level ( Good, Very good and Excellent) Brokers 86% vs Schemes 82% Excellent service level Brokers 27% vs Schemes 14% TWIG p46 Can consumers afford to pay additional fees? : 17 Can consumers afford to pay additional fees? “Financial constraints facing many beneficiaries are evident” Stakeholder analysis report p8 “Only 53% of beneficiaries stated that they were able to pay their accounts and subscriptions every month” Stakeholder analysis report p9 “ … if costs relative to incomes were to rise significantly, there would be an erosion of membership” Stakeholder analysis report p121 79 % of members believe that the broker remuneration should be paid by the medical scheme and only 6% believe the member should pay broker remuneration. TWIG 2004 p40 60 % of employers believe that the broker remuneration should be paid by the medical scheme and only 2% believe the member should pay broker remuneration and only 3% believe the employer should pay broker remuneration. TWIG 2004 p55 What members say? : 18 What members say? A broker is there to advise the member on the best cover at the most affordable price The broker has to help the member to understand the rates and the medical aid benefits The broker is there to put clients’ best interests first and find the best option for them To sell products to the public, explain and also give advice on how best to utilise the medical aid They are helpful as they can explain any terminology a person might not understand and they act as a middleman between medical aid and member TWIG 2004 p34 - 37 What members say (2)? : 19 What members say (2)? The role of the broker is as an intermediary between myself and the medical aid so that if there are any problems the broker will sort them out A broker is supposed to make life easier for me by dealing with the medical aid on my behalf I would expect honesty from a broker They keep clients educated as most people are ignorant about their medical aids they help you understand whatever changes are taking place The broker must be knowledgeable about the products his selling TWIG 2004 p34 - 37 What members say - If no brokers? : 20 What members say - If no brokers? It would be bad because if the member needs help there will be no one available because the medical aid call centers are very pathetic and slow A bad impact towards members by not being knowledgeable about what products are available I will not know what is happening as I phone my broker if I have any queries The members won’t be aware of any industry developments Bad impact because it is easier to contact the broker than the medical aid It would have a negative impact as I will be missing that personal attention that I get when I have a problem It would be aggravating and time consuming as I will have queries any problems with the medical aid which would waste my time There would be lots of problems as the medical aid cannot always give a person the answers we are looking for TWIG 2004 p38 What employers say? : 21 What employers say? Saves time, I do not need to sit on phone waiting to be helped they do all the work on my behalf and that allows me to do my work. The broker is able to source competitive medical schemes in the industry Able to sort out any queries almost immediately only need to make phone call, broker does the rest The broker always provides advice and also keeps us updated about legislation The broker takes extra work from us and we get much more competitive rates. They also help the members complete the application forms We will not receive good service As the brokers see to it that your needs are met, so if you deal direct it will not be considered as important The member would have to do their own business where the medical aid is concerned and they are not qualified enough to know if they are making the best decisions. TWIG 2004 p49 - 50 What employers say - If no Broker? : 22 What employers say - If no Broker? Larger busy schemes would need to send their staff to assist employees which will increase administration costs It will impact the scheme because it will cost them more to be able to get new business and it will be too expensive for schemes to have own sales team The schemes would need to go out and do their own leg work and this would impact on costs and we will see an increase in administration fees and contributions Schemes would become more involved in selling and serving clients Medical schemes would have more work, costs should come down schemes would need to employ own sales people and would need to interact directly with employer groups There will be more pressure on the medical scheme TWIG 2004 p58 Agenda : 23 Agenda Testing the value proposition : 24 Testing the value proposition Services must be observable Service Level Agreements Service benefits as per TWIG research Broker support (Spectra Med and Fedhealth) Media Consumers can cancel appointment of broker at will Queries: CMS, Medical Scheme, Administrator Services must be comparable Broker A vs Broker B Broker vs non broker Testing the value proposition (2) : 25 Testing the value proposition (2) Services must be trialable People contacting Hellopeter.com less than using brokers People contacting CMS less than using brokers Quality of queries relating to members using brokers vs members not using brokers Services must have a culture fit TWIG research Substantially more people appointed brokers today than 5 years ago Substantially more medical schemes use brokers today than 5 years ago Services must be simple Commission standardized, simple and transparent Improved access via internet and improved technology Section 32 b (9) : 26 Section 32 b (9) In respect of members who change medical schemes or apply as a member of a medical scheme who belonged to a medical scheme that was wound up no waiting periods may be imposed providing application for membership to the new medical scheme is made within 90 days of the former medical scheme being wound up. Section 54 : 27 Section 54 Every medical scheme must, on their website and/or on request by any person provide a list of dispute cases, the complaint, the result and detailed finding with reasons by the disputes committee. Can the broker value be sustained without fully establishing a profession? : 28 Can the broker value be sustained without fully establishing a profession? Minimum educational background – (Full Healthcare qualification - NQF5) – Possible amendment to the Act Accreditation or licensing in terms of an Act Minimum experience Proper apprenticeship possible amendment to the Act Ethical standards (Broker organisations and FAIS) Disciplinary sanction (CMS enforcement) Slide 29: 29 Hypothesis 2 – Broker relationship based on collaboration Guide Protect Educate Quality advice & informed decisions Reduce unnecessary claims Early joiners Active consumerism Stability Growth Governance Enables Means Slide 30: 30 “Not honesty alone, but the punctilio of a honor the most sensitive, is then the standard of behavior” Meinhard v Salmon N.Y 1928 (Punctilio = following the details of rules or instructions) It is an honor to be a broker today. It is an honor t be able to add value as a broker.