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Reflections on an AGM!

The 82nd Fedhealth Annual General Meeting took place on Wednesday 27 June 2018 at the Johannesburg Country Club. Thank you to all our members who made the time to attend.

The year 2016 saw an industry-wide claims blowout, which caused the increase for 2017 to be above average. Just as example, during 2016, mental health admissions increased by 28% and spinal fusions with 22%.
Since 46% of claims are hospital-related, the Scheme implemented some interventions to manage the cost of care more effectively in 2017.

These included a global fee arrangement for Hip and Knee Replacements, and a Conservative Back and Neck Rehabilitation Programme amongst others. Without these interventions, which benefi t the Scheme and members alike, Risk claims in 2017 would have been at least 7.7% higher.

The Scheme also introduced weight management, smoking cessation and diabetic managed care programmes for members, which commenced in 2018. Through these cost containment initiatives, the Scheme managed to only introduce a 9.5% average contribution increase for 2018. Membership also remained stable in 2017 with 71 730 principal members.

The Scheme however managed to attract younger members onto the Scheme as the average age only increased with less than 0.5% over the last three years. Once more, we are proud of the fact that Fedhealth remains the scheme which pays more from Risk than any other scheme. Most other schemes pass costs on to members’ Savings, while Fedhealth continues to lessen the burden on members’ Savings by taking care of costs like MRI and CT scans from Risk, and not Savings.

From a financial point of view, the Scheme enjoyed positive results in 2017. The Scheme achieved a solvency rate of 32.09%, with an underwriting surplus of R389 million (R185 million in 2016), and a net surplus of R104 million (R57 million deficit in 2016). Fedhealth’s reserves increased marginally from R982 million to R1.085 billion. Accumulated funds per member increased from R13 358 to R15 079. The Scheme achieved an investment return of 10% (2016: 5.9%) against an inflation rate of 4.7% (2016: 6.6%) and a Scheme benchmark of 8.2% (2016: 10.1%).

The Scheme’s claims paying ability (from cash and short-term investments) is 4.4 months.
In addition, we’ve also retained our AA- Global Credit Rating since 2007, which confi rms our claims paying ability and stable outlook.

Finally, although we are pleased with these results, we still need to take drastic measures to attract younger, healthier members to the Scheme. At 39, our average beneficiary is four years older than the industry average. As such, we’ve been hard at work at developing a product structure that will appeal to a younger target, and have done extensive research into the millennial market. We will keep you informed of any new developments in this regard.

By order of the Board of Trustees

The following documents are available for download should you require any further information: