| Mon 4 Mar 2002, 0:00 | | Metropolitan Health Group Restructures |
|
The Metropolitan Health Group recently completed a restructuring process
to maintain its position as a market leader.
"The Metropolitan Health Group's number of members under administration was
recently reduced as a result of the sale of Sanlam Health which led to the
transfer of the administration of its two medical schemes, Topmed and
Selfmed, previously administered by us. In addition to the loss of other
schemes, the membership of Metropolitan OpenPlan also dropped significantly.
Fluctuating membership levels are not uncommon in the healthcare industry.
"We have completed the right-sizing of our company which sees our number of
employees reducing from 1100 to 860. This is part of our long-term strategy
for growth and increased investor returns," said Blum Khan, CEO of the
Metropolitan Health Group.
In keeping with the Metropolitan Health Group's ongoing commitment to
offering a cost-effective but highly efficient service to its clients, the
decision was made to restructure operations with a strong focus on
customising service to each client scheme's specific needs.
"For us to remain dynamic and retain our edge in the marketplace we needed
to review how well we are positioned to react to the impact of the latest
external market forces on our organisation," said Khan.
He said that the right-sizing process was transparent and negotiated with
all affected staff members. Management had endeavoured to bear the needs of
staff in mind throughout and to keep the lines of communication open, also
offering staff a number of assistance programmes to aid in addressing their
career and personal needs.
Metropolitan Health Group is currently South Africa's third largest medical
aid scheme administrator with an estimated market share of some 15,5%.
"The management of Metropolitan Health Group is confident of continued
future growth, especially in the franchising of our administration system.
Other exciting business opportunities are also being actively pursued to
retain and grow business in 2002/2003," Khan added.
BACKGROUND INFORMATION
The business rationale behind the restructuring of Metropolitan Health Group
(MHG) is based on a number of factors, including the merging of three major
entities and the reduction of numbers under administration.
During 2001, MHG underwent the merging of Newmed, Methealth and Transmed.
This process required a great deal of management capacity to drive the
changes in terms of work process, organisational structuring and alignment
of organisational culture, but was successfully concluded.
Certain events also resulted in a significant loss of membership during
2001. These include:
* Voluntary liquidation of Publiserve (9000 members)
* Sale of Sanlam Health to Medscheme, effectively resulting in the loss of
administration contracts for Topmed and Selfmed (45000 members)
* Loss of members on OpenPlan due to benefit changes as well as mid-year
increases in the premiums (10000 members)
* Shoprite and Edcon contracts drew to a close in 2001, and were not renewed
as these schemes required underwriting which MHG does not offer (8500
members)
* The sale of CGU to Mutual and Federal (500 members)
MHG is a health administration organisation, with revenue streams being:
* Fees derived from members under administration
* Licensing fees derived from franchise agreements.
* Fees derived from clients who purchase managed care programmes
In spite of the above, MHG management chose not to consider rightsizing the
business at the time, as a number of business opportunities were being
actively pursued. However, these opportunities failed to materialise. This,
in addition to further significant member losses during the latter part of
2001, and early 2002, under the Metropolitan OpenPlan Scheme, signalled the
need for immediate management action (40000 members). MHG received notice of
these additional losses during November and December 2001.
ends
ISSUED BY: Sue Snow
Financial media specialist
New Africa Capital
Tel (021) 9406119
DATE: 4 March 2002
QUERIES: Ronell Boshoff
Head: corporate communications & media relations
The Metropolitan Health Group
Tel (021) 480-4509
