In March 2020, the World Health Organisation (WHO) declared the coronavirus disease 2019 (Covid-19) a global pandemic. That has thrown the spotlight on the need for medical scheme benefits and private healthcare during a crisis. However, while consumers recognise the need for private healthcare given the parlous state of public health facilities, they are still at a crossroads as to whether the price paid for medical scheme membership justifies the value and quality received – and much of this hinges on the utilisation experience of each member.
These are just some of the findings in the latest South African Customer Satisfaction Index (SA-csi) for Medical Schemes (2020) conducted by Consulta, which provides highly scientific insights into the overall satisfaction of members of South Africa's largest open medical scheme providers – Bestmed, Bonitas, Discovery, Medihelp, and Momentum. GEMS is the only closed medical scheme included in the survey. Consulta polled 1826 medical scheme members across the leading schemes by membership numbers.
"The principle of community rating is one of the three core principles that the MSA (Medical Schemes Act) is built on: Based on this principle, schemes charge the same contributions for all beneficiaries irrespective of health status or age. These 'social solidarity' principles of medical schemes mean that all members within a scheme contribute equally to a pool of funds, whether young and healthy or elderly and sickly. It follows that everyone that contributes equally will derive equal utility value from the scheme. On the contrary, the trends observed in the SA-csi over the last five years points to a distinct skew in the satisfaction of members who make use of their medical scheme benefits for one-off, sizeable medical event expenses such as hospitalisation or chronic healthcare needs, versus those that primarily use the scheme benefits to fund day-to-day claims such as GP visits, optometry, and dentistry. The co-payments on day to day benefits represent out-of-pocket expenses that, within a pressured consumer budget, detract significantly from the utility value of medical schemes," explains Ineke Prinsloo, Head of Customer Insights at Consulta.
"Results from our ongoing Covid tracking studies indicated that consumers are looking towards cutting back on expenses and discretionary spending as a result of the pressure on household budgets. With concerns about health care right up there with the economy's state and the ability to earn an income, consumers are reluctant to cut their medical scheme contributions. Combined with an expectation that there will be a substantial increase in healthcare expenses and spend on medicines, consumers' expectations of the value of every rand spent on medical scheme contributions are increasing.
2020 has been the proverbial game-changer for schemes: In the aftermath of Covid and the economic fallout of lock down schemes quickly had to respond to retain contributions, while navigating a strict regulatory framework and scheme rules, to accommodate members who could no longer afford contributions due to interruption in earnings.
October traditionally is the month where schemes announce their updated rates for the next year. For the first time, we have not seen the perfunctory across-the-board above inflation rate increases that have been the norm that scheme members had to absorb. The CMS called upon schemes to cap annual increases at 3.9%, with consumers facing an unprecedented affordability challenge. The major open schemes had different approaches to heed the call, with Momentum the only one to keep to the 3.9% recommendation. This year, there seem to be tangible financial relief for consumers and not, as has been the trend, more options for different affordability categories that have proven counterproductive on perceptions of value for money in the category from results of the index.
Focused yet simple communication is crucial to demonstrate the cover's value, especially for members with a relatively low utilisation experience. The latest SA-csi shows that many members feel trapped and stay with their current provider not out of loyalty, but because they don't see any viable alternative. Given that medical scheme cover can cost 20% or more of monthly disposable household income, and average hyper-inflationary annual increases of 8-10% amidst a jobs bloodbath, it is critical for medical schemes to focus on the customer experience and satisfaction of all members, but especially healthier members who claim less. It is vital to get benefit communications and customer experience on point," adds Ineke.
Consulta conducted this year's SA-csi for Medical Schemes after the arrival of Covid-19 and national lockdown, and this has changed the trajectory somewhat from last year's survey. Given the public healthcare system's disastrous state, private healthcare is viewed as crucial and something that customers do not want to live without, albeit very expensive. The complexity of medical scheme benefits also adds tremendously to the challenge of how medical schemes demonstrate value to a consumer who does not fully grasp the regulatory environment that schemes operate within. This is amplified in consumers with lower or minimal utilisation who feel aggrieved at 'paying the same as everyone else regardless of usage.'
"Across all consumer product/service categories, we are seeing that customers want individual, modularised product, and service solutions that meet their specific needs now. While this is practical to deliver on a simple consumer product like a pay-TV subscription or short term insurance product like motor insurance, which is individually risk-rated, it's not manageable across a medical scheme benefit, which must cover a wide basket of regulated prescribed minimum benefits, all of which come at a fixed cost, regardless of whether members use them or not. Health is also a malleable and an unpredictable fact of life – you may be perfectly healthy today, but an accident or unexpected illness can change all of that tomorrow. Yet medical scheme members still demand curated choices on their medical scheme benefits, which is challenging on a model that is both unpredictable and relies on cross-subsidisation," says Ineke.
"While medical schemes have created lower benefit options to provide greater affordability and flexibility, it has created more complexity and has made the advice process incredibly challenging. As a simple example, while a member may or may not have a clear need for maternity benefits, it gets much trickier with the 'big perils' like cancer and heart disease, which are unpredictable at best. A younger, healthy member may believe that they are not at risk for any of these and thus won't see the value in having the benefits to provide for such an eventuality. However, actuarial statistics clearly show that cancer and heart disease incidence occur in much younger demographics than ever before. Twenty years ago, it was an absolute rarity for a 30-year old to be diagnosed with cancer or suffer a heart attack. Today these lifestyle diseases are increasingly common at younger ages.
"Few consumers understand, without significant counsel and advice, what they are covered for and the value of preparing for the unknown - until they experience a health crisis. The survey shows that the areas where customers (members) are least satisfied revolve around out-of-hospital costs and co-payments on primary healthcare and chronic medicine - essentially the smaller, day-to-day claims. It is this financial education and expectations gap that medical schemes must address if they are to halt the growing discontent among a significant portion of their member base who are crucial for the financial sustainability and viability of the schemes," adds Ineke.
Key take-outs from the SA-csi for Medical Schemes 2020
· While members acknowledge the need for medical scheme benefits, it remains a significant and expensive grudge purchase. The least satisfied customers are those with low to minimal benefit utilisation and face co-payments and out-of-pocket expenses on day-to-day primary healthcare needs and chronic medication.
· Discovery, Medihelp, and Bestmed lead the way on delivering a quality experience to customers, with GEMS, although showing improvement and Momentum struggling in this regard. Discovery and Medihelp (alongside GEMS) showed the most significant improvement, with Bonitas and Momentum remaining stable compared to 12 months ago.
· The perception of value for money is a powerful predictor of future usage and company growth. Bestmed and Medihelp take the lead in the industry, while GEMS and Momentum score well below the industry's rest on this metric.
· Discovery has the most significant price versus quality gap, which has historically been the case on many of their products. Although it is a trusted brand due to its sheer size and advice-driven business model, it is also perceived as the more expensive brand in the market. It needs to guard against complacency on this aspect when consumers are under massive financial pressure.
Customer Satisfaction – Overall Index
· Similar to the trends observed in the 2019 report, no outright leader was identified in this year's index. Bestmed (77,4), Medihelp (77,1), Discovery (76,8), and Bonitas (74,9) come in on industry par (76,1) on overall customer satisfaction scores.
· Discovery, GEMS, Medihelp, and Momentum all show improved overall customer satisfaction scores compared with 2019. Discovery is the only brand that has shown small but consistent customer satisfaction scores over three years.
· GEMS and Momentum are below par (both on 71,1).
Customer Expectations and Perceived Quality
· The Covid-19 pandemic has resulted in a dramatic increase in the levels of expectations South Africans have of their medical schemes – with health and medical care issues coming to the forefront in the first half of 2020. The par score on Customer Expectations has increased sharply to 85,0 from 81,4 in 2019.
· Although none of the brands measured reach expectations, Bestmed and Medihelp come closest to closing the gap with the lowest Expectation-Quality gap of -1,2 and -0,6, respectively.
· GEMS and Bonitas have a way to go in meeting Customer Expectations, with GEMS having a considerable gap of -6,6 and Bonitas at -3,8.
· Perceived value is a measure of the quality relative to the price paid. The perception of value for money is a robust predictor of future usage and company growth.
· Bestmed (78,0) takes the lead by a significant margin on the industry par of 72,2 and well ahead of all other schemes in terms of the value index. Medihelp also takes a leader position on Perceived Value with 74,7.
· Bonitas (73,9) and Discovery (71,4) perform on par, while GEMS (69,4) and Momentum (69,7) are below par.
· Momentum has remained on a three-year decline in this indicator. All other schemes have shown some improvement in 2019 scores.
Complaints Incidence and Resolution
· Customers complain most often about the detail and performance of their cover, the related fees and costs, additional out-of-pocket co-payments when claims are not covered, and their chronic medication not being covered as they were led to expect.
· Bestmed (26%), Discovery (24%), and GEMS (23%) have the most complaints about fees and charges, above the industry average (22%).
· Bestmed (27%) is much higher on claims complaints than the industry par of 20%.
· Regarding complaints incidence and handling, the industry average of complaints incidence is 16/100, and complaint handling is 57,6/100.
· Discovery has a lower than industry average complaint incidence at 14.6/100. The highest complaint handling of 62.7/100 suggests a very high resolution of customer complaints and that Discovery has invested significantly in complaints resolution since the 2018 and 2019 indices.
· Bonitas (24,1%) and GEMS (19,5%) have a complaint incidence much higher than the industry par (16%). While Momentum (14.1%) and Medihelp (14.4%) have lower complaint incidence rates than industry par, they also have resolution rates below par. On resolution rates, Bonitas ranks at 55,3%, GEMS at 43,7%, Medihelp at 43,1%, and Momentum at a low of 37,9%. Successful complaint resolution has a significant impact on overall customer satisfaction scores and should serve as a red flag for schemes that underperform this crucial metric.
· Bestmed has the most loyal customers at 70,6%, above industry par of 68,8%, followed by Medihelp at 70,4%.
· Discovery (69,9%) and Bonitas (68,2%) are on par, while Gems (60%) and Momentum (59,5%) have the least loyal customers, with Momentum showing a 4% decline in customer loyalty scores from 2019.
Net Promoter Score
· Net Promoter Score measures the likelihood of a person recommending a brand.
· Bestmed has the highest Net Promoter Score (NPS) at 32,3%, which is well above the industry average (22,1%). Bestmed customers are active promoters of the brand to others, with 52% of customers recommending the brand. Bestmed also has the lowest number of detractors at 20%.
· Bonitas follows with an NPS of 26,3%, also above the industry par, and has made a steady and significant improvement in its NPS score over the last three years, suggesting that its focus on benefit simplification and customer satisfaction and complaints handling are bearing fruit as 50% of customers willingly endorse it to others.
· Medihelp has an NPS of 21,4%, while 45% of customers actively promote the brand, and 24% are detractors.
· Discovery follows with an NPS of 21,4%, which, although it places just below par, is a definite improvement on its 2019 score of 14,5%. 44% of Discovery customers actively promote the brand, and 22% are detractors – both these scores have improved since 2019.
· The balance of scores see a significant drop-off on NPS performance well below industry par - Momentum has an NPS of 13,3%, which is an improvement on its 2019 NPS score of 8,4%, while 30% of customers are detractors. GEMS stagnates at -6,0%, with 40% of customers as detractors of the brand.
Treating Customers Fairly (TCF)
· The degree to which customers feel they are being treated fairly by their medical scheme is highest with Medihelp (83,2), Bestmed (82,8), and Bonitas (81,6) – all above the industry score of 80,5.
· Discovery follows with a score of 80,0, which is in line with the industry.
· GEMS (77,6) and Momentum (79,0) are lower than the rest of the industry.
· The make-up of the overall TCF score looks at seven key aspects, including:
*Fair treatment of customers
*Products and services that address customer needs
*Transparent and easy to understand information
*Advice that is suitable for the customer's circumstances
*Products and services deliver as expected.
*It is easy for customers to claim, change provides, complain, or consider other providers.
*Customers are treated with respect, and there is an open relationship.
As a strategic tool for gauging individual firms' competitiveness and predicting future profitability, an organisation's customer satisfaction performance, as measured by the SA-csi methodology, provides a predictive indication of how well the firm will perform in terms of future revenue and earnings growth. Supported by both the scientific and practitioner community, the SA-csi is the first independent, comprehensive national customer satisfaction index with international comparability in South Africa. It has collected data from more than 400 000 consumers since its inception in 2012. The SA-csi forms part of a global network of research groups, quality associations, and universities that have adopted the American Customer Satisfaction Index (ACSI) methodology via its Global CSISM program.