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How much DHMS pays Discovery to administer your medical aid

And how this compares to rivals …
Discovery Health has multiple clients and provides services to more than 3.5m medical scheme members. Image: Moneyweb

Discovery Health Medical Scheme (DHMS) paid R5.389 billion to Discovery Health in administration expenses last year.

It pays the entity owned by Discovery for these services as well as for managed care for its members. During a year impacted by Covid-19, it paid Discovery R1.883 billion for the provision of the latter.

Read: Discovery: Profitable in a pandemic

Administration fees comprised 7.23% of gross contributions last year (2019: 7.38%), while managed care fees were 2.54% of gross contributions (2019: 2.53%).

Discovery Health provides administration and managed care services not only to DHMS, but another 18 restricted schemes too. These services cover over 3.5 million medical scheme members.

Administration expenditure

DHMS notes in its annual report that its “gross administration expenditure is the seventh lowest [as a percentage of gross contribution income] out of 20 schemes in the open scheme market”.

Read: Discovery Health increases medical aid contributions

The average administration fee per member in 2020 was R336.84 – 5.25% higher than the prior year, “primarily reflecting the impact of an annual CPI-linked increase”. The average administration fee per member was R366.87 on all but the scheme’s income-linked KeyCare plans (on these, the average was R106.70 for Core members and R198.81 for Start and Plus members).

DHMS says its “analysis of the CMS [Council for Medical Schemes] Annual Report 2019-2020 shows that, at 7.6% for 2019, DHMS continued to rank below the weighted average gross administration expenditure for open schemes when considered as a proportion of gross contribution income, which was 8.1% excluding the Scheme”.

“This means that the Scheme’s gross administration expenditure is the seventh lowest out of 20 open medical schemes in the market,” it added.

Source: Council for Medical Schemes Annual Report 2019-2020

Critics will point to the size of the scheme (it had a 57% share of the open scheme market as at September 30, 2020) and suggest that efficiencies at the scale at which it operates could mean this percentage ought to be lower.

Of open schemes that have at least 100 000 beneficiaries, DHMS sits fifth out of eight in terms of administration costs as a percentage of gross contribution income (or ‘fourth lowest’).

The table below compares the administration expenditure as a percentage of gross contribution income for 2019 (CMS annual reports lag reporting by each scheme, in this case DHMS’s annual report for 2020). It also includes the CMS’s calculation of administration expenses per active beneficiary per month (not per member, which is how DHMS discloses it). A member may have multiple beneficiaries.

Medical scheme Administrator Beneficiaries 2019 gross administration expenditure As % of gross contribution income Per active beneficiary per month
Makoti Medical Scheme Universal Healthcare Administrators 7 746 R9.3 million 12.6% R101.04
Genesis Medical Scheme Self-administered 21 118 R42.5 million 12.31% R165.48
Momentum Health Momentum Health Solutions 298 852 R597.1 million 11.56% R166.51
Compcare Wellness Medical Scheme Universal Healthcare Administrators 34 858 R73.6 million 11.48% R234.10
Thebemed Momentum Thebe Ya Bophelo 29 040 R42 million 11.11% R115.73
Fedhealth Medical Scheme Medscheme Holdings 156 904 R361 million 10.69% R204.71
Suremed Health Momentum Thebe Ya Bophelo 2 275 R5.8 million 10.38% R216.08
Cape Medical Plan Self-administered 9 240 R19.6 million 10.25% R172.44
Sizwe Medical Fund 3Sixty Health 111 409 R243.5 million 9.9% R180.08
Health Squared Medical Scheme Agility Health 34 936 R110.7 million 9.78% R245.35
Medshield Medical Scheme Self-administered 158 996 R287.2 million 7.87% R148.74
Discovery Health Medical Scheme Discovery Health 2 808 106 R5.3 billion 7.64% R159.11
Hosmed Medical Aid Scheme Medscheme Holdings 54 502 R99.3 million 7.25% R147.64
Keyhealth Professional Provident Society Healthcare Administrators 67 476 R153.8 million 7.09% R191.48
Bonitas Medical Fund Medscheme Holdings 722 943 R1.2 billion 7.01% R141.16
Medimed Medical Scheme Momentum Thebe Ya Bophelo 14 893 R16.7 million 7% R91.03
Medihelp Self-administered 204 305 R322.4 million 6.64% R130.76
Bestmed Medical Scheme Self-administered 199 297 R345.6 million 6.08% R145.50
TOTAL* 4 936 896 R9.4 billion 7.81% R157.31
Government Employees Medical Scheme (GEMS) Metropolitan Health Corporate + Medscheme Holdings 1 892 295 R1.8 billion 4.45% R82.61

* Topmed and Selfmed removed from this comparison as these schemes amalgamated with others during 2019.

Source: Council for Medical Schemes Annual Report 2019-2020

DHMS provides detailed disclosure to the CMS. It is one of only four open schemes to provide a breakdown of administration costs. Of the amount paid to Discovery Health, 7% is used on marketing. Contrast this with 13.3% at Sizwe Medical Fund and 22.1% at Momentum Health.

With regards to managed care services expenditure (paid to Discovery Health), DHMS says the 6.64% increase in 2020 “reflects the annual CPI-linked increase and the full-year impact of an expansion in services provided by Discovery Health during 2019 as well as further expended services during the year, including diabetes management services and Covid-19 management services”.

It says the CMS annual report for 2019-2020 “demonstrates that the Scheme’s managed care cost as a proportion of gross contribution income was 2.5%, compared to the weighted average of 3.0% (which excludes the Scheme)”.

Costs ‘slightly higher’ than those of other schemes

“Our managed care costs are slightly higher than those of other open schemes, reflecting the complexity of the Scheme’s benefits, the breadth of managed care services offered, the claims cost savings generated by the managed care services, and the overall value for money provided to our members by our administrator and managed care provider.”

DHMS says in 2019, “claims cost savings of R213.84 (2018: R199.73) per average beneficiary per month were realised through claims review processes, protocols implemented, price negotiations and drug utilisation reviews. This equates to a saving of R3.05 (2017: R2.68) for every rand paid in managed care costs, an exceptional return on investment of 305%”.

DHMS is, of course, separate to Discovery Health and is a non-profit entity regulated by the Council for Medical Schemes. The scheme belongs to its members and any surpluses generated within the scheme become reserves, also belonging to members.

It notes in its annual report that “every year, the Trustees assess the value provided by Discovery Health through their administration and managed care services to the Scheme. Since the assessment began in 2014, Discovery Health has provided more value to our members than the Scheme has paid for. In the 2019 financial year, Discovery Health added nominal value of R7.09 billion (2018: R7.34 billion). Put differently, for every R1 paid, our members received R2.03 in value”.

(The comparatives for the above as well as for the claims-cost-savings benchmarking are for the preceding year – 2019 – as “the assessment uses industry information”.)

Listen to Nompu Siziba’s interview with Professor Birgit Kuschke from the Department of Private Law at the University of Pretoria (or read the transcript here):


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So this is how they get around the whole “We a non-profit!” story, Adrian Gores had gotta get that money out somehow seeing they not spending it on paying their employees better

Medical schemes are non-profit. The administration of a scheme is for profit, and hence the charge. The Discovery members can vote for another administrative scheme to manage the medical aid, however considering they managing 3.5mil members plus dependents, they doing a fairly decent job.

Wheels within wheels. The Administrators make the money. It’s all a big scam.

Perhaps now we realize how Gore and others changed the MedAid business into a massive profitable business – not like the old days when the Fund did its own work and premiums were low – – – – – – – – – always follow the money

Have you only worked that out now? In 2015, Forbes named Mr Gore, among Africa’s 50 richest with a net worth of $480 million. Probably half a billion by now.

You don’t make that kind of money without getting it from someone else.

They are as bad as Delta Properties.


No boet, Discovery is a world class company.

Please do some research first 🙂

You have no idea how medical aid works.

Lol Adrian is that you??

Always a Discovery disciple justifying the smoke and mirrors.

Nee Boet, do some research, Discovery is very much a world class company.

Do you know the saying “You get what what you pay for”?

Discovery is not the biggest Medical aid in SA for no reason.

“World Class Comapany” is the “Best Dad in The World” of company cirlcejerking.

Please dont think the truly unearned consensus of the masses is an endorsement as the best option available. Most people cant pick who their medical aid is.

They a corporate, post profit to shareholders etc…. they will take the food out your child’s mouth to post an extra .5% on the bottom line.

Did Delta properties not get suspended from the JSE at 30c?

You are comparing Chalk and Cheese. I’ll have the Cheese

Charge an admin fee, by all means.

But then tell me why is it my job to:
1. Pay the provider directly
2. Submit the claim like a lottery ticket
3. Somehow have detailed knowledge of every service code
4. Use my time to phone and follow up
5. Fight for my own money

You do know everything is online. Click click

Pretty much the reasons why I will stay away from Discovery for the foreseeable future. They like to prescribe what you can use your medical savings for, and the conditions under which you are allowed to access it.

Many years ago, after proving my point, the call centre agent contacted me and admitted they should have paid the claim but there there was nothing he could do about it… It was like talking to a brick wall.

Then you go for an option without savings and control your own day to day expenses like many of us do. You still submit the claims to keep your out of pocket expenses in one place for tax purposes.

At the end of the day their schemes are very competitively priced and service is good. Their is a very good reason why they have 57% market share and other medical aids prefer them to administer their schemes.

But you will always find a cheaper builder and plumber.

If the Medical Schemes Act sets a fixed percentage for commission, the calculation of late-joiner penalties, the waiting periods for benefits, the list of Prescribed Minimum Benefits and many other mandatory requirements, why are management fees not regulated?

The CMS should also be focusing on the implementation of proposals contained in their Circulars 80 and 82 from December 2019 that relate to a low cost option that only covers PMB conditions, and refers indirectly to schemes that require client’s to receive their chronic medication from government as inferior products.

” It is a good thing not to put confidence in observation until they have been checked against theory”


Your report is ”incomplete” – what about the ”closed medical” schemes that are also administered by Discovery – big ones like Bankmed?

How does Vitality fit into this, is it part of DHMS or part of Discovery ? How are admin costs allocated as there must be overlap ?

Vitality is a separate company with its own registration number. Unlike the medical aid it is profit making.

That is the whole point. Nobody knows.

Is it possible that I have paid R435.28 for a Pfizer COVID-vaccine?

Interesting debate going on.
My views are:

1. Nothing is for free.
2. ‘Non-Profit’ is basically a myth. It would not exist if someone is not benefitting from it. Here I exclude those who are supposed to be benefitting from the equation.

You just have to dig deep enough.
On the comparison table, Discovery might be below the median, but that does not mean that they are value for money.

Lol… The one thing DH and DHMS seem to be reeaaaallly good at is clever accounting.

They don’t compare apples with apples and their “non profit” pays out billions in fees to their “profit”.

I like capitalism… But I don’t like being lied to and tricked.

End of comments.





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