that the membership of the Scheme be permitted to vote on:
whether the Trustees of the Scheme should be mandated to ensure that the renewal of the contracts for the administration of the Scheme, as well for the provision of managed healthcare services, are opened up in a transparent — and competitive — manner, allowing administrators and service providers other than Discovery Health to bid for the business of the Scheme.
Per the requirements of the Medical Schemes Act, and as noted in the financial statements of Discovery Ltd, Discovery Health Medical Scheme is a legally independent entity, controlled by its members - and not by its administrator or its shareholders. As such, it should not be a given that DHMS remains administered by Discovery Health in perpetuity.
Due to the position of DHMS as the largest open medical scheme in the country, by almost an order of magnitude, certain inherent advantages result. Firstly, due to economies of scale, per member administration costs should be drastically lower than that of other schemes, intrinsically so — irrespective of administrator. Secondly, increased bargaining power, again intrinsic to the size of the membership, is made available to managed healthcare providers (at present, also Discovery Health) when negotiating with healthcare providers.
Members should therefore be given the option to see what competing administrators and managed healthcare providers are able to offer, given the inherent size advantages of the scheme, as well as whether, in the face of competition, Discovery Health is able to improve its value offering.
Should the motion carry, and should the members vote affirmatively in the resulting vote, the Trustees will be mandated to manage the open, and competitive, bid process, as well as that of bid adjudication.
The following clarifies the possible outcomes should the motion carry.
It is important to note that none of the outcomes permitted by this motion shall place any restrictions on the criteria used by the Board of Trustees to evaluate - and ultimately appoint - potential providers of administration and managed healthcare services. In keeping with Scheme Rules 19.4 and 19.6, these criteria shall remain within the sole purview of the Board of Trustees. Likewise, the decision making process, with respect to the evaluation of potential providers against these criteria, shall remain within the sole purview of the Board of Trustees. It follows, therefore, that the Board of Trustees shall retain its power to decide which provider(s) to appoint. Consequently, in making this decision, the Board of Trustees need not abdicate its fiduciary duties nor its obligations in terms of Scheme Rules 19.4 and 19.6.
If this motion is carried:
Within a reasonable and timeous timeframe, but with reasonable advance notice, a vote amongst the membership at large shall be held.
If a majority of the votes are cast in the affirmative, then:
The Board of Trustees shall decide on a reasonable date by which bids should be submitted and shall give reasonable notice to interested bidders thereof.
Once all bids have been received, members and all bidders shall be notified of the final number of bids received.
MOVER: Pierre Jansen
This motion — less the clarifications offered in the Detail section above — was submitted for presentation at the 2018 DHMS AGM.
The Board of Trustees deemed the motion invalid, thus preventing it from being presented at the 2018 AGM.
The Board’s reasons were that they considered the motion vague and that they thought that it could lead to the violation of Scheme Rules 19.4 and 19.6. The Board offered no opportunity to amend the motion to address their concerns.
This year, the motion has been amended to include clarifying details which address the Board’s concerns.
The motion has been submitted for presentation at the 2019 AGM, but thus far, no feedback has been received pertaining to its deemed validity. Last year, feedback was only provided the day before the AGM, leaving no time to confirm travel or accommodation arrangements.
Separately, a complaint was lodged with the Council for Medical Schemes seeking to have the Board’s 2018 decision overturned. The Registrar did not address the merits of the decision, noting only that the Board considered its decision justifiable in terms of Scheme rules and that the Board obtained its own legal advice confirming it as such. The Board has refused to make this legal advice available and has also refused to release the minutes of the meeting wherein the decision to find the motion invalid was taken. An appeal is currently pending legal advice.
The Scheme’s 2019 AGM takes place on Thursday, 20 June 2019.
Last year, the Scheme’s AGM took place at the headquarters of the holding company of the Scheme’s administrator.
The 2019 AGM takes place at the Hilton Hotel, Sandton. Members are encouraged to RSVP as per the Scheme’s indications here.
Regrettably, however, as of 18 June 2019, the Board of Trustees has not yet confirmed the validity of this motion. As such, it is not clear whether this motion will be permitted to be presented at this year’s AGM.
In the event that this status changes, this web page will be updated accordingly.
UPDATE 19 June 2019: The Board of Trustees has rejected the motion as invalid, thus preventing it from being presented at tomorrow’s AGM.
The rejection letter follows:
Dear Mr. P Jansen
As you are aware, the board of trustees of DHMS has considered your proposed motion for the 2019 AGM. A copy of this proposed motion is enclosed with this e-mail.
Your proposed motion is unable to be tabled for the purposes of the AGM and is rejected as a motion. Your proposed motion has been rejected because it is not within the powers of the members of the medical scheme for members to instruct the board of trustees in the manner in which your proposed motion would instruct them. In other words, the consideration of candidates to act as administrator of the medical scheme, and/or to provide managed health care, the process to be followed in relation to the appointment of any such service providers, and all matters related thereto, fall exclusively within the province of the board of trustees. It is the duty of the board of trustees to discharge these obligations based on their own discretion and decision-making processes, which cannot be in any way circumscribed or instructed by any third party, including the members of the scheme.
The above is so not only as a result of the applicable Discovery Health Medical Scheme rules, which are binding upon the scheme, all members and the trustees, but also as a result of the fiduciary and other duties of the board of trustees of Discovery Health Medical Scheme.
However, you should not take the above to imply that you are not entitled to ventilate these matters at the AGM. On the contrary, you are free to raise these matters in the general questions section of the AGM, if you are so inclined.
In short, yes.
The power to appoint the administrator remains with the Board of Trustees. As such, it is likely that the Board will use the same criteria it has previously used to appoint the administrator.
This motion changes nothing in that regard; it only adds transparency and the power of competition to the equation.
In the worst case, members will end up with the same levels of service at the same price point.
In the best case, members will end up with the same - or better - levels of service, but at an improved price point.
In short, also yes.
For reasons similar to the above, the circumstances that currently make Vitality benefits available to members are unlikely to change.
In the unlikely event that the Board does decide to appoint a different administrator, it seems inconceivable that Vitality would refuse to offer its services to members on that basis.
Discovery Vitality is a for-profit entity, with the members of DHMS forming a significant part of its customer base. It would be financially imprudent for a for-profit entity to sacrifice such a significant revenue stream.
There is no direct relationship between DHMS or the Board of Trustees and this website. This website is independently maintained by a member of DHMS.
Ideally, dhms.co.za should be the homepage of DHMS. Strangely, until early May 2019, the dhms.co.za domain was unclaimed and unused. It was subsequently purchased for its current purpose.
The official DHMS digital home currently finds itself within the website of the holding company of the Scheme’s administrator.
If the powers that be wish to re-home the Scheme’s digital presence from its current location within in discovery.co.za to its more deserved location at dhms.co.za, the domain ownership of dhms.co.za will be transferred free of charge.