Latest survey shows SA medical schemes are starting to bounce back

Customer Satisfaction and Loyalty of Medical Scheme Members beginning to bounce back after Covid

South African medical schemes are starting to bounce back when it comes to measuring the gap between what customers expect and what they perceive to receive in return for their premium and loyalty.  After losing ground during the past three tough Covid years, there’s a slight bounce back for the first time since 2019.

But medical schemes are not yet out of the woods. After last year’s dramatic drop to a six-year low the industry has some ground to recover. The good news is that there has been an increase in perceived value by members over the last 12 months.  Yet one of the emerging challenges is the need for the industry to improve the way complaints are handled. While medical schemes on the whole showed the first decrease in complaints in five years, the incidence of complaints in 2022 is high at 15% in comparison to the international best practice score which is below 10%.

These are just some of the findings in the latest South African Customer Satisfaction Index (SA-csi) for Medical Schemes 2022 conducted by Consulta, which provides scientific insights into the overall satisfaction of members of South Africa’s largest open medical scheme providers (by membership numbers) – Bestmed, Bonitas, Discovery and Medihelp. GEMS is the only closed medical scheme included in the survey. Consulta polled 3950 medical scheme members during the third and fourth quarter of 2022 and have announced that Bestmed emerges as the leader on overall customer satisfaction for the third year running, with all other schemes performing on, or below industry par in the 2022 index.

Abigail Boikhutso, Group Chief Executive at Consulta, explains: “Essentially the industry has levelled back to ground zero. During the pandemic, medical schemes were caught in the eye of the storm in a difficult and unsettled period where household incomes were impacted and job and financial security were in the balance. In line with this, consumer price tolerance was low and requirements may not have been perceived to have been met by members. It follows that a high rate of complaints would have a marked negative impact on customer satisfaction scores.  Now that we’ve come through the worst of Covid the industry has experienced a slight increase in perceived value by members.  However, the benchmark is low and this positive bounce is in reality, taking medical schemes back to where they were in 2019.

The industry is normalising

The strongest gauge in the Customer Satisfaction Index Model is “Customer Expectation”

because it measures customer anticipation of the quality of a company’s service. This includes non-experiential information like advertising and word of mouth, as well as a forecast of the company’s ability to deliver quality in the future. The 2022 study shows that the industry is normalising back to the relevant range of between 80.1 – 82.2.  Boikhutso explains that this range contrasts with the notably high 2020 industry expectation of 85.0, which could be linked to the Covid-19 pandemic as customers expected more from their medical aid schemes to assist them during that period. Only Bestmed and Discovery exceeded the industry benchmark in 2022. Moving forward, the challenge to meet expectations is further complicated for medical schemes by the difference in cost and benefits between the different options being offered on the market.

“It is encouraging to see that the Expectation-Quality Gap is closing in 2022 at 1.8 from 2.8 in 2021, and 2.0 in 2020. All medical schemes, apart from Bonitas, showed an increase in customer satisfaction scores compared with 2021,” says Boikhutso. “After reporting a six-year low in customer satisfaction and loyalty last year, these positive indicators are good for both the customers and the industry on the whole and the start of a bigger bounce back over the next 12 months.

Key take-outs from the SA-csi for Medical Schemes for 2022:

Customer Satisfaction – Overall Index

• Bestmed maintains its position as the leader at (78.6) and sits above the industry par (75.0).
• Discovery (74.2) and Medihelp (75.2) come in on industry par (75.0).
• Bonitas (71.8) and GEMS (72.1) are below par on overall customer satisfaction.
• All medical schemes, apart from Bonitas, showed an increase in customer satisfaction scores compared with 2021.

Customer Expectations and Perceived Quality

• The par score on Customer Expectations has not moved since 2021, and remains at (82.2) in 2022. While Perceived Quality still falls short of what customers expect in 2022, at a score of 80.4, there has been no further slide since 2021.
• Medihelp’s member expectations have exceeded perceived quality this year by (0.1) and Bestmed has the lowest Expectation-Quality gap of (-0.6) compared with the industry par score of (-1.8), followed by Bonitas (-1.1)
• Discovery and GEMS follow, both with an Expectation-Quality gap of -1.7.

Perceived Value

• Perceived value is a measure of the quality relative to the price paid. The perception of value for money is a robust predictor of future usage and company growth.
• Over the last 12 months, the industry as a whole has shown an increase in perceived value (1.9), a bounce back from last year’s drop in Value score.
• Bestmed is the solo leader in terms of the perceived value delivered to customers as they feel they receive the most value.
• All other players performed on par with the industry (an undifferentiated component).

Complaints Incidence and Handling

• There has been a drop in industry complaints to (15.1) from the highest score in four years at (20.9) in 2021. The five medical schemes surveyed are all above the industry average of 41.7% for handling complaints. The most prevalent complaints relate to claims not paid and co-payment costs.
• Medihelp was the only Medical insurance provider that was close to the 10% complaint incidence score with a score of 11.4%. The brand scored 53.1% in handling complaints in 2022.
• Bonitas had the highest complaints incidence rate, with relatively low complaints handling ratings. This reflects on their lower SA-csi score as well.
• GEMS decreased its complaint incidence significantly by 9.1 with a sore of (16.0) in 2022 from (25.1) the year before, and has a score of 42.2% for complaint handling.
• Except for Bestmed, all medical schemes have consistently recorded a decrease in complaints since 2021.
• While Bestmed had the lowest complaint incidence score of 11.6% in 2021, it is now slightly above the industry average (15.1) with a score of (16.8) in 2022.
• Discovery improved its scores from (21.0) in 2021 to (14.9) in 2022
• While the industry as a whole showed the first decrease in complaints in five years, the incidence of complaints in 2022 is high at 15.1% in comparison to the international best practice score which is below 10%.

Customer Loyalty

• Bestmed has the most loyal customers at 72.7% and is above industry par of 67.1%, up from its 2021 score of 65.7%.
• GEMS follows at 70%, well up from its 2021 score of 61,1%.
• Bonitas (63.2%) falls slightly from its 2021 score of 64.3%, while Medihelp (68.1%) has improved with customer loyalty measuring above the industry par.
• Discovery (66.8%) remains fairly static from (66.4%) in 2021, and falls just below industry par on loyalty.

Net Promoter Score

• Net Promoter Score measures the likelihood of a person recommending a brand. Overall, the industry par on NPS of 20.1% has improved well, up by 8.3% from a low of 11,8% in 2021.
• GEMS has the highest Net Promoter Score (NPS) at 29.2%, a dramatically positive turnaround from its crash to -9.2% in 2021.
• GEMS customers are active brand promoters to others, with 51% of customers recommending the brand. GEMS also has the lowest number of detractors at 22%.
• Bestmed follows with 23.7% above the industry par of 20.1% and well ahead of all other schemes. 48% of customers willingly endorse the brand to others.
• Medihelp has an NPS of 17%, an improvement on its 2021 NPS score of 10.9%, with 44.7% of customers promoting the brand and 27% detractors.
• Discovery has improved with an NPS of 14.3% since experiencing its lowest NPS score of 9.7% in 2021. 43% of customers actively promote the brand, while 29% are detractors.
• Bonitas has an NPS of 8.6%, a significant decline from its NPS score in 2021 of 20.2%. Only 40% of customers actively promote the brand, and 32% are detractors.

Treating Customers Fairly (TCF)

• The degree to which customers feel they are being treated fairly by their medical scheme is highest with Bestmed at (80.6), just above the industry average of (78.0).
• Medihelp (78.0), Bonitas (77.7) and Discovery (77.6) are on par with the industry average.
• GEMS (76.6) is slightly lower than the rest of the industry but has improved from its 2021 score of (74.00).

As a strategic tool for gauging individual firms’ competitiveness and predicting future profitability, an organisation’s customer satisfaction performance, as measured by the SA-csi methodology, provides a predictive indication of how well the firm will perform in terms of future revenue and earnings growth. Supported by both the scientific and practitioner community, the SA-csi is the first independent, comprehensive national customer satisfaction index with international comparability in South Africa. It has collected data from more than 450 000 consumers since its inception in 2012. The SA-csi forms part of a global network of research groups, quality associations, and universities that have adopted the American Customer Satisfaction Index (ACSI) methodology via its Global CSISM program.

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— Arrive Alive (@_ArriveAlive) February 7, 2023