SA’s second-biggest medical scheme, Bonitas, has ended its more than 40-year relationship with medical scheme administrator Medscheme, appointing Momentum and Private Health Administrators (PHA) to take over its contracts.
Bonitas’ decision not only deals a blow to Medscheme, but also to its parent company, JSE-listed Afrocentric. Bonitas has more than 374,000 principal members and about 750,000 beneficiaries, making it one of Medscheme’s core clients. It has been administered by Medscheme since 1982.
The latest development comes hard on the heels of Medscheme’s failed attempt in December to secure an urgent interdict to stop Bonitas from tendering for a new administrator and managed care provider pending the outcome of a forensic investigation by the industry regulator. The matter was deemed not urgent and set down for March 3.
The Council for Medical Schemes launched a forensic investigation into Bonitas last year that centres on allegedly improper procurement processes in its appointment of PHA to administer its low-income option, Boncap, which was previously administered by Medscheme.
Bonitas announced on Thursday that it had appointed new contracts for administration and managed care services covering all its options except Boncap. The administration contract was awarded to Momentum and the managed care contract to PHA.
Benchmark contracts
Bonitas principal officer Lee Callakoppen said the industry regulator requires schemes to continuously benchmark their contracts with service providers. Evergreen contracts aren’t in members’ best interests, he said.
In anticipation of Medscheme’s five-year contract ending in May, Bonitas issued a request for proposals to assess the services provided by various companies, he said.
“Part of our review process was to extract value for our members in terms of lower non-healthcare costs,” he said.
Callakoppen declined to elaborate on the financial aspects of Bonitas’ present contract with Medscheme or the one it is entering into with Momentum.
Afrocentric in a statement on Sens shortly after the market closed alerted shareholders to the loss of the Medscheme contracts.
“The group notes that Bonitas has proceeded with the request for proposal award notwithstanding the pending court proceedings, in which Medscheme is seeking relief that directly relates to this process,” the statement reads.
“The group will await the outcome of the court process and will provide shareholders with further updates as appropriate.”
Medscheme had not responded to a request for comment at the time of publication.
It currently has 14 medical scheme clients, including the Government Employees Medical Scheme.
It said last year that its legal proceedings against Bonitas had been prompted by “concerns over ethical, contractual and statutory obligations to the scheme and its members”.
Its concerns had been heightened by media reports alleging governance failures and procurement irregularities involving senior Bonitas executives and trustees, it said at the time.
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