SA Expects Medical Scheme Mergers in Post NHI Industry

August 30 - A recent conference held in Sun City by the Board of Healthcare Funders saw the group discuss the future of medical schemes in South Africa against the backdrop of the proposed National Health Insurance scheme.

The Chief Executive Officer of TopMed, Len Deacon, himself a board member of the BHF, held an interesting session entitled "Breakthrough: Thinking from Inside the Medical Scheme Box."

Deacon discussed mergers and acquisitions and the forethought required to guarantee their success.

He said that it was "impossible to say what the NHI will look like, but that when it does happen, we expect the number of medical schemes to shrink from the present 110 to as low as 35 in the next decade, as the industry moves towards large open schemes and industry schemes."

Deacon outlined the steps that medical schemes would need to take in order to ensure sound mergers.

• To devise a clear strategy that outlines what the group is looking for.
• To locate a potential partner and spend time getting to know their strengths and weaknesses.
• To work out exactly what each partner is bringing to the table through negotiation.
• To combine assets and form a new entity in the integration stage.
• To create a post deal evaluation.

An example of a successful merger was provided when the CEO of Eternity Private Health Group, Grant Newton spoke about his group's recent partnership with Sanlam.

"Our merger gives us a fantastic foundation for growth and diversification," he said. "Eternity, with its innovative and very successful administration system, and Sanlam with its rich experience in the managed care environment."