By Tamar Kahn
The curator of Sizwe Hosmed has pushed back against critics, saying legal attempts to liquidate her business and sequestrate her estate are private matters that have no bearing on her ability to stabilise the troubled medical scheme.
“Any attempts to sensationalise or distribute information about these proceedings are not only disingenuous but also reflect panic on the part of those who feel threatened,” said Lebogang Mpakati, who is a registered business rescue practitioner.
Sizwe Hosmed, administered by 3Sixty Health, was placed under curatorship last year to address long-running concerns about its financial viability.
Mpakati is under fire from the scheme’s suspended board of trustees, who have taken legal action to try and oust her on the grounds that she failed to disclose her own legal troubles.
In December a provisional liquidation order was granted against her business rescue firm, Indalo Business Consultancy, and a provisional sequestration order was granted against her estate.
The orders arose from applications brought by Catai Logistics and its liquidators that claim Mpakati’s company had received R2.34m more than the fees she was entitled to as a business rescue practitioner.
Since then the liquidators for another company called Seratime — for which she was the business rescue practitioner five years ago — have joined the matter, which is due to be finalised on February 20.
Mpakati said Sizwe Hosmed’s financial difficulties were partly due to the “extremely high” non-healthcare expenses charged by its administrator, 3Sixty Health. “As a result, we have had to terminate some of these non-healthcare services,” she said.
“Other root causes include the high number of claims, duplicate payments and the fact that the scheme’s contributions were underpriced. We are now dealing with all these issues, hence the improved solvency ratio,” she said.
Sizwe Hosmed’s solvency ratio was 14% on December 31, a significant improvement on its 5% solvency ratio when she was appointed curator, she said. A scheme’s solvency ratio is a measure of its claims-paying ability and is the ratio of its accumulated funds to its annualised contribution income. The Medical Schemes Act says schemes must have a solvency ratio of at least 25%.
Sizwe Hosmed’s administration, managed care, and marketing fees were all significantly higher than the industry average for open medical schemes in 2021, 2022 and 2023, according to data from the Council for Medical Schemes (CMS) industry reports. For example, in 2022 Sizwe Hosmed paid managed care fees of R105.15 per beneficiary per month, compared to the R60.43 average for open medical schemes.
In that year, it paid R224.81 per beneficiary per month for administration, 23.6% more than the open scheme average, and R120.84 per beneficiary per month for marketing, more than any other scheme and four times the open scheme average.
The suspended chairperson of Sizwe Hosmed’s board of trustees, Luyolo Makwabe, had not responded to Business Day’s request for comment at the time of publication.
CMS investigates allegations
The CMS said preliminary reports from the curator’s investigations into procurement practices at the scheme raised serious concerns and had prompted the CMS to initiate its own enquiries.
“We have also recently been made aware of allegations that employees linked to a service provider have defrauded the scheme... of about R10m, and we are following up on the investigation after arrests were made in November,” it said.
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