| Wed 7 Aug 2002, 0:00 | | New Africa Capital - News Release |
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NEW AFRICA CAPITAL - NEWS RELEASE
Alpha code NAC
ISIN code ZAE 000033361
Healthcare in perspective
South Africa`s volatile healthcare industry is increasingly under the spotlight
with greater regulatory supervision, pressure on solvency margins of schemes,
medical inflation well in excess of the consumer price index, regular rate
increases and perennial administrative disputes.
As one of the dominant players in the industry, Metropolitan Health Group, the
healthcare administration subsidiary of New Africa Capital, has also faced its
share of challenges. These include the voluntary liquidation of a scheme under
its administration, an administration fee adjustment for alleged failure to
provide a comprehensive administration service and a dispute over the transfer
of member data to a new scheme administrator.
Preston Speckmann, group finance director of New Africa Capital, assured
shareholders that the issues highlighted recently were historic, had been fully
accounted for in previous years and would have no effect on performance in the
current or subsequent financial years.
He said Metropolitan Health Group was on target to meet its profit forecasts.
Details of the financial performance of the Metropolitan Health Group cannot be
disclosed in accordance with the closed reporting period ahead of the release of
New Africa Capital`s interim results on 18 September. However, shareholders
will receive full details of the operating results of Metropolitan Health Group
at that time.
Metropolitan Health Group is the umbrella structure for MetHealth, the original
healthcare operations of New Africa Capital, and Newmed, the medical schemes
administrator bought in 2000.
Metropolitan Health Group has undergone widescale restructuring since the
acquisition of Newmed. This included the appointment of a new senior executive
team consisting of Blum Khan (chief executive), Nick Rudston (chief financial
officer) and David Watts (chief information officer). Every effort has been
made to anticipate potential issues that may arise and Metropolitan Health Group
is in regular contact with the boards of trustees of schemes under its
administration.
Speckmann stressed that healthcare is a highly emotive issue and urged the
investment community to focus on the facts.
A summary of the facts of the three MetHealth-related issues follows for record
purposes. It should be noted that none of the other closed schemes administered
by MetHealth or any of the other Metropolitan businesses were involved.
- Liquidation of Publiserve
Shareholders were advised in June 2001 that Publiserve, a medical aid scheme
administered by Methealth, had applied for voluntary liquidation. MetHealth had
provided the guarantees prescribed by the Registrar of Medical Schemes and
R4 million was paid to the liquidator. This was fully disclosed in New Africa
Capital`s 2001 annual financial statements.
Following the public hearings into the liquidation of Publiserve last month, in
which allegations were made regarding financial transactions and administration,
a non-admission of guilt settlement was reached. Metropolitan Health Group
agreed to a guarantee of up to R10 million to cover claims of members. This
amount is covered by comprehensive insurance and does not affect shareholders of
New Africa Capital.
More than a year after the liquidation of the scheme total claims amount to some
R1,5 million.
- OpenPlan Medical Scheme
MetHealth last year agreed to rebate R26 million to the OpenPlan Medical Scheme,
partly as compensation for failure to meet agreed targets in full. Owing to a
confidentiality agreement between OpenPlan and MetHealth, signed in 2001, this
fact could not be fully disclosed to shareholders. However, the total amount
was fully accounted for in 2001 and this will have no further financial
implications in the current year.
The confidentiality agreement was put in place at that time to protect the
interests of the members and the financial soundness of the scheme. This
information was disclosed at the annual general meeting of the scheme.
By retaining the administrative services of the Metropolitan Health Group, the
OpenPlan board of trustees has given a vote of confidence in the new management
team.
The year-to-date financial performance of the scheme is on track.
- Transfer of member information to Medscheme
Last year`s sale of Sanlam Health to Medscheme involved the transfer of the
administration of 45 000 members of the Selfmed and Topmed schemes. Medscheme
has questioned the completeness of the member data supplied by MetHealth. This
claim has been vehemently denied by MetHealth in the belief that all contractual
obligations have been met.
Despite the agreement between the two parties making allowance for arbitration
to settle disputes, Medscheme filed a court application to demand the release of
further historic data. This application was subsequently withdrawn and the
matter has now been referred to an arbitration hearing late in August.
Shareholders will be advised of the outcome of these proceedings.
For further information kindly contact
Blum Khan Tyrrel Murray
Chief executive officer General manager: group finance
Metropolitan Health Group New Africa Capital
082 658 4573 082 889 2167
Date: 07/08/2002 08:15:11 AM Produced by the JSE SENS Department
