The Council for Medical Schemes (CMS) has placed Sizwe Hosmed Medical Scheme under statutory management, due to the deterioration of its financial reserves and unreliable budgetary and forecasting processes.
This intervention comes three years after approval by the CMS, which positioned the merged scheme as the country’s eighth-largest open medical scheme.
The merger of Sizwe Medical Fund and Hosmed Medical Scheme in 2021 resulted in a combined membership of over 67,000 and combined reserves of R1.4bn, achieving a solvency level of 49.4%. The scheme boasted the fourth-highest solvency ratio among the 10 largest medical schemes in SA.
It was expected to yield mutual benefits by combining balance sheets and increasing membership size to unlock efficiencies and economies of scale.
Despite these promising initial indicators, the scheme’s performance has declined due to several factors, including benefit underpricing and historically unreliable budgetary and forecasting processes.
“The agreement by the board of trustees and CMS to place the scheme under statutory management is to enable the two parties to work together to stabilise the scheme, ensure its sustainability, and protect the interests of Sizwe Hosmed beneficiaries,” the CMS and board of trustees said in a joint statement on Wednesday.
The intervention is not a curatorship, where the affairs of the scheme are managed solely by a curator. Instead, it is a intervention whereby the CMS and the board of trustees will jointly manage the scheme, the duo said.
The CMS urged Sizwe Hosmed members to remain with the scheme, emphasising that this intervention aims to ensure compliance with minimum statutory solvency requirements and protect the interests of all members. The organisation also urged stakeholders to take heart and brave the storm.
“CMS strongly advises accredited healthcare brokers and brokerages to refrain from taking any drastic measures that could potentially harm both the members and the scheme.”
Joe Seoloane, who was already assisting the scheme with a turnaround strategy, has been appointed as the scheme’s statutory manager with immediate effect. He is also expected to ensure that all circumstances leading to noncompliance are fully investigated and reported to the registrar.
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