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Discovery defends admin fees

Jul 10 2012 17:45 Sapa

Company Data

DISCOVERY LIMITED [JSE:DSY]

Last traded 97.58
Change -0.03
% Change 0.00
Cumulative volume 497714
Market cap 57.75bn

Last Updated: 28/07/2014 at 03:42. Prices are delayed by 15 minutes. Source: McGregor BFA

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The Discovery Health Medical Scheme (DHMS) has defended its total administration fee of R2.8bn in the last financial year.

"(Our) administration fees are in line with the market," said principal officer Milton Streak.

The matter was raised by two members at the DHMS annual general meeting in Johannesburg last month. The board of trustees had decided at a November meeting to conduct an independent review, said Streak.

"This is not a once-off exercise, but part of a continuous process which has been highlighted at all AGMs."

Business Day reported on Tuesday that DHMS members wanted an independent review, and a detailed breakdown of administration fees paid to Discovery Health last year.

The scheme's administration fees were the second-highest in South Africa, at R102 per average beneficiary per month, according to the newspaper. Trustees were also told by members to commission an independent review of the value for money provided by Discovery Health.

Streak said while it was critical to assess the costs paid by the scheme, it should be judged by the total premiums paid related to the scheme's benefits.

DHMS's non-healthcare expenditure was below the average level charged by other open medical schemes, he said.

Administration and managed healthcare fees were within industry benchmark levels, comprising 10% and 3% of annual total contributions respectively.

Streak said fees paid to Discovery Health were increasing at a rate markedly below the consumer price index, the standard measurement for inflation.

Discovery Health, owned by JSE-listed Discovery Holdings [JSE:DSY], generates 90% of its operating profit from the scheme.

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discovery holdings  |  medical schemes
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