NAMAF CONFERENCE SEPTEMBER 2014 “OTHER DRIVERS OF HEALTHCARE COSTS. WHAT STORY DO THE NUMBERS TELL.” Koos du Toit CA (NAM) CA (SA) COP Financial Director Paramount Healthcare Group
OTHER COST DRIVERS – THE STORY NUMBERS TELL MY MENU • Benchmark for comparison • Basic MAF Income Statement • Administration cost • Drilling down into the numbers • The MAF industry in comparison
OTHER COST DRIVERS – THE STORY NUMBERS TELL SOURCES • CMS Annual Report 2012/13 (December 2012) information – report issued 03/09/2014 • Audited annual financial statements for the year ended 31 December 2013 of 4 Namibian Open Funds • SA Statistics Bureau 2011 population census • Namibian Bureau of Statistics 2011 population census • NAMFISA 2013 Q4 Statistics Bulletin • ONLY DISCUSSING OPEN FUNDS
OTHER COST DRIVERS – THE STORY NUMBERS TELL CHOOSE A BENCHMARK COMPARABILITY CREATES RELEVANCE
OTHER COST DRIVERS – THE STORY NUMBERS TELL BASIC COMPARISON OF MAF SECTOR Reflection of state of economic development ? Definitely scope for growth if economic maturity was the same.
LOOKING AT ADMINISTRATION COST • NEED TO UNDERSTAND FIXED VS PER CAPITA COST • FIXED COSTS: • Don’t change significantly if size changes e.g. audit fees vs. NAMAF membership fees n$ 5.70 / pmpm • PRIMARY PER CAPITA COSTS: • Managed Care • Administration fees
DRILLING DOWN INTO THE NUMBERS ECONOMIES OF SCALE: THE LARGER THE VOLUME OF TRANSACTIONS, THE CHEAPER THE COST PER TRANSACTION?
DRILLING DOWN TO THE NEXT LEVEL WHAT DO ADMINISTRATORS GET? Nam administrators highly effective
MEDICAL AID VS SHORT TERM INSURANCE (1/2) • Demarcation debate • Where do the profits go?
MEDICAL AID VS SHORT TERM INSURANCE (2/2) Where does profit go?
OTHER COST DRIVERS - STORY THE NUMBERS TELL SOME CONCLUSIONS: → Broker costs, on top of existing premiums will add to affordability challenges → Fixed overhead costs in smaller industry will remain a challenge → Trustees remuneration very low in relation to responsibilities → Principal Officer costs low in relation to SA funds → Growing Technology costs are a fact of life TRUSTEES AND ADMINISTRATORS NEED TO CONTINUALLY EVALUATE ALL COSTS VS BENEFITS TO ACHIEVE LOWEST COST OPERATIONS
OTHER COST DRIVERS - STORY THE NUMBERS TELL UNDERSTAND THE NUMBERS AND BEWARE OF FAIRY TALES OR URBAN MYTHS Questions ?? w