PSMAS Solution Matrix Just A Red Herring
18 July 2022
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By Brian Sedze- The present and escalating debacle at Premier Service Medical Aid society that is adversely impacting service delivery to its members can not be resolved without robust decisions around the broader macro-economic quagmire this country faces.

The challenges of civil service remuneration, hyperinflation, currency and exchange rate will remain an albatross on that society. Other purported interventions are just a side show.

The blame game really is just either an attempt to shift the arena of the real challenges or its just corporate politics or at worst “politricking”. It will solve nothing! It’s just chasing symptoms not the cause.

There is an attempt to deceive members and the public that the solution is in a forensic audit, change of board and directors, management overhaul, group restructuring and tax funded freebies. It’s a complete fallacy.

The brutal truth is that the money getting into the society from broke civil servants is not enough to sustain the society to enable delivery of a remarkable service.

The civil service remuneration is the big elephant in the room. It is impossible to have members of the society to pay market driven medical aid subscriptions at the current renumerations.

It requires huge salary adjustments in thousands of percentages as other society rates are the same as the entire basic Zimbabwe dollar remuneration of civil servants.

A comparative analysis show that members are paying as little as ten percent (10%) of rates used by other medical aid societies and funds.

The members are still demanding the same level of service as other medical aid providers yet the subscriptions are really so dwarf to AHFoZ service costs.

It is not even possible and its obviously an uncomfortable truth to accept the wide chasm of subscriptions and costs.

The government must pay its employees remuneration sufficient to cover a lot of costs including medical aid societies, funeral policies, pension funds and other medium to long term savings.

Its expecting quite a lot to expect first class service at two united states dollars (US$2) monthly subscription.

Against all the bravado the Zimbabwean dollar is in intensive care. No one wants it. For a considerable time, private hospitals have been declining providing full service to local currency denominated medical aid members.

It hospitals which for intends and purposes will not require membership of a medical aid as it almost free to Zimbabwean citizens.

The employer must decide to bite the bullet by paying united states dollar subscriptions near equivalent to other societies or indexing it local currency payments with united states rates.

Indexing using real exchange rate or an alternative to the disbanded OMIR because the forex auction rate is a lie we repeat without success.

Payment to medical service providers like hospitals, pharmaceutical and surgical, medical practitioners, support services like radiography and so forth are all in foreign currency or indexed.

I just wonder why there is an expectation of members expecting the same level of service from providers such as members of alternative societies who are paying market driven rates and often stable united states dollars.

We are expecting the impossible without a complete relook at remuneration of civil servants so that they pay market driven rates and get market driven standard of service.

Without discounting forensic audit suggestions, we should know the real priority should have been to look at how to make the medical aid society prosper by deciding on a turnaround strategy. An audit is about the past.

We already know the history of forensic audits in our environment. Its witch hunting to target boards and management instead of just agreeing on exit with those they disagree with.

Regardless of the forensic audit outcome on any financial malfeasance the society will still have no money to provide expected service. It’s a shot in the dark.

We must know that the remuneration for civil servants is not enough so they pay very paltry subscriptions.

A new management will still find a society without funds to provide excellence in service. It solves nothing.

Zimbabwe operates in a hyper inflationary environment. Subscriptions lose value of between one hundred and ninety one percent (191%) and four hundred and fifty percent (450%) per annum.

If subscriptions take more than a month to be adjusted or they are outrightly rejected to the realistic expectation is service must decline at the same rate of month-on-month inflation and may grind to a halt. It costs money to provide medical care.

It doesn’t matter the cause of the inflation, instead, for service provision it is just part of the decision matrix of pricing that it is there. The rate decision must be alive to inflation and exchange rate.

It will additionally be not quite useful and quite diversionary to have an employer who fails to remit the subscriptions in time to complain the loudest. That money will suffer inflation erosion of over thirty (30) per cent on a month-to-month basis.

It will also suffer exchange losses. Without late inflation and rate adjustment of subscriptions it’s a slow poison to the medical aid society. Soon we it will get to a point of a judicial manager.

Its unfortunate that we seem impervious to the reality that suppliers in medical service are import driven and hence almost always requiring foreign currency as payment. Forex driven imports are from drugs, equipment, surgical and service of equipment. It is folly to expect to pay these using local currency in our currency economic realities.

The demand to use the rigged exchange rate will just cause withdrawal of supply.

It’s the reason why public hospitals have no basic drugs because we are in denial that our failure to undertake radical currency reform will ultimately cause shortages which are now even impacting critical health supplies.

PSMAS is too big to fail and often require government bail outs. However, it is imperative that the society has a sustainable funding model decided by members and members only, instead of dragging all tax payers to fund medical aid for members of a society they do not belong to. It must not be used as a battle ground for government failures to adequately remunerate. That interference stinks because it is impossible for a government to be a member of the society. It is a society for members not government.

It must be considered that PSMAS created value or at least preserved it by diversification into hospitals, pharmacies, physiotherapy and so forth something huge as no investors are keen to do so for the mass market like what civil service is. Private hospitals are for those outside salaries like the ones we pay civil servants.

The argument that it is bleeding the society by further diversification is lack of institutional memory and just failure to comprehend the risk reduction of conglomeratic strategy.

If PSMAS is to stick to the core of medical aid the civil servants have no need to have medical aid as they will obtain service at public hospitals for free like what all other citizens expect from their government. No one will accept such paltry amount of subscription to provide private healthcare service. That monthly subscription can’t even buy a basic anti biotic.
To deliver remarkable service the society must be funded. We must have discourse on the basics. The government must solve the broader micro economic challenges to have lasting solutions. It is important to stop the drama and red herring and seek the real issues that impact life and death of members

Brian Sedze is a strategy and tax consultant. He is also the interim president of Free Enterprise Initiative . He can be contacted on [email protected]