2 0 1 9 WELCOME TO THE DISCOVERY HEALTH MEDICAL SCHEME ANNUAL GENERAL MEETING 20 June 2019
Agenda 1. Welcome and quorum 2. Minutes of the 2018 Annual General Meeting - for approval 3. Tabling of the 2018 Integrated Report, including the Scheme's Annual Financial Statements for the financial year ended 31 December 2018 Presentation by the Chief Medical Officer and the Chief Financial Officer of Discovery Health Medical Scheme • Presentation by the CEO of Discovery Health (Pty) Limited, the Administrator of Discovery Health Medical • Scheme 4. Governance Discovery Health Medical Scheme Trustee Remuneration Policy and approval of the 2019 Trustee Remuneration • Appointment of Auditors • 5. Motions 6. General 7. Voting and closure of the AGM Election of Trustees • 2019 Trustee Remuneration • Non-binding Advisory vote on the Trustee Remuneration Policy • Motions • 8. Member Engagement The Board of Trustees invites members to engage with the Scheme representatives and the Board of Trustees • on specific Scheme matters of their choice immediately after the closure of the AGM.
2 0 1 9 PRESENTATION BY THE CHIEF MEDICAL OFFICER AND CHIEF FINANCIAL OFFICER OF DISCOVERY HEALTH MEDICAL SCHEME 20 June 2019
We provide sustainable access to the best healthcare, connecting our members and their families to an ecosystem that gives them the highest quality of care for the lowest possible cost, at every stage of their lives. THIS IS HOW WE DEFINE VALUE 4
In 2018 87.9% of contributions are used to fund members’ healthcare claims DHMS expense breakdown (2018) 100.0% 87.9% 7.5% 2.6% 2.5% -0.5% Gross Contributions Claims Administration fees Managed care fees Financial adviser Shortfall funded and Scheme from investment expenses income Source: DHMS internal data; 2018 5
Contributions are used to fund R56 billion of healthcare claims R56.4 bn Hospitals – R29.5bn Maternity – R1.5 bn DHMS claims expenditure 52% 3% Of total claims paid Of total claims paid in 2018 (risk + MSA) 673 492 38 221 Hospital admissions Number of deliveries Oncology – R3.6 bn Screening & Prevention 6% Of total claims paid 375 914 Members performed health checks Members currently 37 264 claiming for oncology treatment Chronic – R3.3 bn Day-to-day – R18.4 bn 6% 6.4 mil Of total claims paid GP visits 705 434 Members with chronic conditions Notes: Total claims include risk and MSA claims Source: DHMS internal data; 2018 6
Caring for members with complex and emergency healthcare needs 10 highest individual member claims paid in 2018 = R 48 million 210 years Age 68: Infections R 5.6m Age 48: Long term use of a ventilator (cardiovascular related) R 5.5m worth of contributions to fund the claim Age 78: Long term use of a ventilator (gastrointestinal related) R 4.9m 3 522 Age 61: Infections R 4.9m R 4.8m Age 58: Infections individuals claimed over R500 000 R 4.7m Age 54: Respiratory related 890 Age 0: Neonate R 4.5m Age 82: Major heart procedure R 4.4m individuals claimed over R1 million Age 69: Long term use of a ventilator (respiratory related) R 4.4m R 4.2m Age 81: Long term use of a ventilator (cardiovascular related) Notes: Assumes a total contribution of R2,203 per average member per month Does not include any maternity claims Source: DHMS data 7
Hospital admissions contributing most to total claims costs Some hospital admissions are less frequent, but very costly, while R29.5bn others may cost relatively less, but can occur much more frequently Paid for hospital admissions HIGH Size of the bubble represents total cost to the Scheme Long term use of a ventilator 673 492 R1 145 158 Heart bypass surgery and heart catheterisation R497 049 hospital admissions Heart bypass surgery R425 318 Surgical procedures to fuse the spine AVERAGE R201 146 COST PER Major joint replacements: lower limbs ADMISSION Caesarean R43 860 R142 334 birth Surgical procedures on the uterus, R42 931 ovaries or fallopian tubes Pneumonia or R42 720 Average cost per admission whooping cough R32 802 Surgical procedures of the shoulder or Depression elbow R38 425 Infections of the Surgical procedures on the R70 001 digestive system lens of the eye LOW R1.1bn R27 057 R16 579 0 5 000 10 000 15 000 20 000 25 000 30 000 NUMBER OF Paid for 500 sickest families ADMISSIONS Source: DHMS internal data; All figures for the period Oct 2017 to Sept 2018 8
Increasing prevalence and incidence of cancer Top 10 most costly cancers to the Scheme in terms of average cost and R3.6bn prevalence of the cancer Paid for oncology treatment 56% Size of the bubble represents total cost to the Scheme Increase in prevalence since 2011 Leukemia HIGH R281 455 COST Multiple Myeloma Leukaemia R228 249 Central Nervous System R177 185 Top cancer type for children Lung R159 622) Colorectal Prostate cancer Haematology LOW R119 331 COST R88 719 Urinary Top cancer type for adult males R63 853 Breast Prostate R60 591 Malignant Melanoma R45 491 R60 926 Breast cancer LOW PREVALENCE HIGH PREVALENCE Top cancer type for adult females Source: DHMS internal data; All figures for the period Jan 2017 – Dec 2017 9
Increasing prevalence and cost of chronic disease R3.3bn Top 10 chronic conditions Top 10 most costly chronic conditions Members Avg cost (R’ 000) Avg age Paid for chronic claims Essential hypertension 376,341 Haemophilia 401 29 Hypercholesterlaemia 230,004 129 Cystic fibrosis 23 53% 140,196 85 Asthma Multiple Sclerosis 47 Increase in prevalence since 2009 Diabetes mellitus type 2 111,030 Ankylosing spondylitis 44 50 Hypothyroidism 65,298 Psoriasis 39 53 22% Ischaemic heart disease 63,589 35 58 Chronic renal failure Members have at least 2 chronic conditions 52,545 33 26 HIV Infection Hypopituitarism 40,199 26 49 Bipolar mood disorder Nephrotic syndrome 14% 39,190 24 Menopuase Dermatomyositis or… 56 Members have at least 34,191 21 Depression 48 3 chronic conditions Crohn's diseases Source: DHMS data; All figures for the period Oct 2017 – Sept 2018 Source: DHMS data; All figures for the period Jan 2017 – Dec 2017 10
We provide sustainable access to the best healthcare, connecting our members and their families to an ecosystem that gives them the highest quality of care for the lowest possible cost, at every stage of their lives. THIS IS HOW WE DEFINE VALUE 11
Safely guiding our members through their healthcare journey Member campaigns Disease Management Programmes Value Based Contracts DiabetesCare Surgicom Joint Arthroplasty KidneyCare 12
Driving quality through provider networks and payment models GP Networks Specialist Networks Hospital Networks Delta GP Network Specialist Networks 6 351 practices 6 927 practices 44 facilities • • • 85% within DPA 91% within DPA 20% lower contributions • • • Smart 43 facilities • 23% lower contributions • Day Surgery 90 day clinic facilities • 243 acute hospitals • 13
Higher levels of cover compared to other open schemes In-hospital claims pay-out ratio: DHMS vs all other open schemes (2017) DHMS All other open schemes 98% 96% 93% 92% 91% 88% Hospital Healthcare Professionals Overall Amount R36.5 bn R20.0 bn R56.5 bn claimed The difference in claims payout ratio equates to R1,910 per admission (assuming an average hospital bill of R40,125) or R2.5 bn over all in-hospital claims for open medical schemes Sources: Council for Medical Schemes Annual Annexures 2017-2018 14
We provide sustainable access to the best healthcare, connecting our members and their families to an ecosystem that gives them the highest quality of care for the lowest possible cost, at every stage of their lives. THIS IS HOW WE DEFINE VALUE 15
Members benefit through continuously reducing administration expenditure that is among the lowest in the industry Administration expenditure as % of gross contribution Administration expenditure as % of gross contribution income (2011 – 2018) income (2017) DHMS All other open schemes 9.4% Ranked 6 th lowest of 21 open schemes 8.9% 8.5% 8.7% 8.5% 8.3% 8.2% 8.0% 8.0% 7.8% 8.0% 7.8% 2011 2012 2013 2014 2015 2016 2017 2018 Notes: The latest CMS report is for 2017 The admin expenditure as % of GCI figure is a weighted average for all other open schemes The figure of 7.8% differs from the previous figure of 7.6% because it includes other operating expenses and net impairment losses Source: CMS Annual Report 2017-18 16
We protect our members’ funds from inappropriate use DHMS forensic savings and recoveries of R469 million in 2018; and cumulative halo effect of R4.5 billion DHMS fraud savings and recoveries (R million) 472 469 333 323 2015 2016 2017 2018 Members benefit through a 1.0% lower contribution increase every year 17
Our members receive increasing value from Discovery Health Value generated for DHMS members R2.02 R2.00 For every R1 spent R1.85 on managed care and administration fees, members of DHMS derived R1.73 R2.02 in value Reviewed by Deloitte 2014 2015 2016 2017 Source: DHMS data 18
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