The value Brokers are adding to the Private Healthcare Environment Prepared by Andre Jacobs National

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The value Brokers are adding to the Private
Healthcare Environment Prepared by Andre
JacobsNational Operations Manager, Aon
Consulting27/06/2008
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Agenda
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Myths relating to brokers

• Represent a medical scheme
• Represent an administrator
• Responsible for getting uncovered people covered
• Responsible for churn

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Who are our clients?

• Employers
• Employees

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Who experience our value?

• Payers
• Employers
• Employees
• Non-Payers
• Medical Schemes
• Administrators
• Council for Medical Schemes
• National Health Policy

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Hypothesis 1 Broker relationship based on
constant conflict
Broker Commission
Healthcare Expenditure
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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.

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Agenda
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• 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)

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• 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)

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• 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)

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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
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Agenda
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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

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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

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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

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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

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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

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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

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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 wont 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

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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

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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

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Agenda
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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

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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

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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.

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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.

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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)

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Hypothesis 2 Broker relationship based on
collaboration

• Quality advice informed decisions
• Reduce unnecessary claims
• Early joiners
• Active consumerism

• Guide
• Protect
• Educate

Means
Enables

• Stability
• Growth
• Governance

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• 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.