Bonitas posts net surplus and more member reserves

Luke Woodhouse, the chief financial officer at Bonitas PHOTO: Supplied

Luke Woodhouse, the chief financial officer at Bonitas PHOTO: Supplied

Published Jul 14, 2023


Bonitas Medical Aid celebrated its 42nd year of existence by posting a net surplus and boosting its member reserves by more than R1 billion. Bonitas is South Africa’s second-largest open medical scheme.

Releasing its 2022 financial results this week, Bonitas said it achieved a net surplus supported by positive membership growth, boosted reserves, an increased solvency ratio and a strong investment performance. It paid out R15.8 billion in claims in the year under review.

Luke Woodhouse, the chief financial officer, said Bonitas was well aware of the affordability pressures facing South Africans, hence it strived to find the right balance between value for its members and long-term sustainability.

“To this end, we are pleased to report a record high of R8.8 billion in member reserves – up from R7.4 billion in 2021.

“We are also thrilled to confirm that we have exceeded industry benchmarks, particularly for value creation, achieving a R1.78 return for every R1 spent on administration and managed care, which is 12% higher than the industry average of R1.59," Woodhouse said.

Bonitas’s solvency levels were said to have reached an all-time high of 41.3 to 16% above the legislated 25%.

“Our objective is to sustain solvency levels above 30% and to use our bolstered reserves to benefit our members,” it stated.

Bonitas said it outperformed all expectations in 2022, in terms of all key indicators and were poised to continue on this positive trajectory.

“This performance speaks to the strategy we’ve put in place as well as the scheme’s overarching aim to make quality health care more affordable and more accessible,” said Woodhouse.

The scheme said one of the key cost drivers in medical aid contributions was health-care inflation, typically around 4% higher than the consumer price index. The CPI had exacerbated the challenge of medical schemes to remain affordable.

“We addressed health-care inflation through two pillars of our strategy: strategic purchasing and integration of the value chain.

Said Woodhouse: “We were able to restrict the average increase in membership contributions for 2023 to 4.8%, compared to CPI of 7.2% as of December 2022. To demonstrate our commitment, we introduced our first contribution increase freeze, with increases only applied from April 1, 2023, to create some financial respite for our members.”

Bonitas said the number of principal members had exceeded 353 763, with 727 041 beneficiaries at an average age of 35.5. It said that in a time when it was a challenge for schemes to acquire new members, it had a net membership growth of 4%, with 47 446 gross membership acquisitions. That excluded the 14 585 acquired from the Nedgroup Medical Aid Scheme amalgamation.

The company said it had achieved a 7.2% return on investment funds during the year under review, which was marked by high volatility and uncertain markets, domestically and abroad. The investment portfolio value for last year reached R9.97 billion.

Bonitas expected further market volatility and an increased disease burden.

The scheme said its approach to realigning Managed Care initiatives, with a particular focus on hospital negotiations, resulted in a projected negotiated savings of R260m. Strategic purchasing yielded another R441m in savings for its members.

Optimising and aligning networks was a key strategy to managing costs. It said it also regularly evaluated the quality of all service providers to ensure there was a reduced health-care risk for Bonitas and its members.

In its outlook for this year, Bonitas said its agile approach was likely to stand it in good stead, despite the expected increase in the disease burden such as mental health.

It said that for its members, affordability and quality remained top of mind.

“Private medical aid shifted from being a grudge purchase to a necessary monthly budget item during Covid-19. However, Bonitas remains committed to deliver benefit enrichment for members, which we can do through our value-added offerings, healthy reserves and high solvency level.”

Regarding the National Health Insurance Bill, Bonitas said it has done extensive scenario planning to consider best- and worst-case scenarios.

“We remain unequivocally in support of the principle of universal health care but believe that a collaborative and cohesive approach, between the private and public sector, is required to draft a bill that is fit for purpose.

“Serving approximately nine million South Africans, the private health-care sector plays a significant role in alleviating pressure on the public sector.”