GEMS in 2007

Speech by the Chairperson of GEMS: Dr Richard Levin >

Thursday, 1 November 2007, Cape Town

> GEMS in 2007

Honorable Minister, Principal Officer, colleagues and members of the media, I am delighted to be here today to share the many achievements and gains made by GEMS during 2007 with you.

Governance
One of this year's strategic objectives was to ensure high standards of corporate governance and financial management.  The Board and all its structures were subjected to an independent performance review during December 2006 and the outcome of this review confirms that we have succeeded in fulfilling our fiduciary duties and acting in the best interests of members at all times.

GEMS members can be assured of the fact that their scheme has sound control systems in place to safeguard their interests.  The scheme's governance and management structure lends autonomy to its officers while guiding all scheme activities according to the principles of good corporate governance as described in the King Reports on sound corporate governance.  These principles are entrenched in the Scheme Rules and other governing documents, including the code of conduct, declaration of interest and trustee induction process that bind all officers of the scheme.

Our first trustee election was successfully undertaken during the first half of the year, through a transparent and fair election process overseen by the Election Institute of South Africa (EISA).  In July the first permanent Board of Trustees of the Scheme assumed office and the Board has ‘hit the ground running'.  The permanent Board consists of 12 trustees of whom the members of the Scheme elected six from amongst their own ranks.  The remaining six were appointed by the Minister for Public Service and Administration.

I believe that, by having chosen their own representatives to the Board, GEMS members are reassured that the money they entrust to the scheme is well looked after and that the affairs of the Scheme are handled with due care, diligence, skill and in good faith.

Finances
In 2007 we also saw the conclusion of the scheme's first financial year and the performance of our annual audit, which yielded an unqualified audit.  GEMS' first annual report was released in May and salient features of the 2006 financial performance are captured in the latest Council for Medical Schemes report.

The financial focus this year fell on sustaining the scheme's ability to fulfill its obligation to pay member's claims in accordance with their benefit entitlement, in the face of rapid member growth.  With close monitoring of our balance sheet and liquidity levels, our assets exceed our liabilities and we have recorded net cash inflows despite consistently enrolling over 12 000 principal members every month, not applying waiting periods and collecting contributions in arrears.  By the end of September GEMS had paid out over R1.3 billion in claims and still record net cash inflows of more than R120 million.

Despite the growth, the fundamentals of the GEMS business case are holding.

Member Growth
Another of the Board's strategic objectives was to continue growing the scheme so as to achieve a critical mass of members that would enable the scheme to utilise its collective purchasing power to negotiate with healthcare and non-healthcare service providers alike.  In anyone's books the extraordinarily rapid growth in membership can only be described as one of GEMS' most noticeable achievements.

A year ago, when we announced the 2007 benefit contributions at this exact venue, GEMS had less than 45 000 principal members.  Since then GEMS has grown in membership by a phenomenal 400%!  At present GEMS has almost 190,000 principal members and provides healthcare cover to more than half a million South Africans.

Whilst this rapid growth makes it impossible to compare GEMS with other medical schemes, there are a few particularly interesting achievements related to its growth that are worth noting.  In the three months since June GEMS received in excess of 45 000 applications.  In the face of adversity and against all odds, GEMS processed more membership applications during these three months than for the entire 2006!

As can be expected, the rapid growth in membership has tested the scheme's ability to deliver on its service promises.  With more members has come a greater demand for service interaction.  During the first nine months of this year the GEMS call centre received over 1 million calls, more than 40 000 emails and over 60 000 "please call me's".  Almost 100 000 interactions have taken place in the 10 regional centers.  Additionally, the Scheme processed and paid 8 million claim lines and has received applications from public servants across all salary bands, provinces and departments - DG's included.

Importantly, we are proud to report that total complaints have not exceeded 150 in any month of our operation.  In context, the percentage of complaints to total interactions is less than 0, 06% on average.  Not bad for a two year old scheme that caters for half a million people.

To support this phenomenal operational activity and the required need to continue rendering efficient operational support we also conducted a service level audit on the services rendered to members by our contracted providers.

I believe that the secret to the success of GEMS lies in its intelligent and efficient communication with both members and service providers.  The reality is that GEMS is getting the basics right and is providing its members with quality, efficient healthcare cover, backed by exceptional service.

Thank you