Risk management in health care in South Africa

Abstract

Risk management strategy is a broad discipline aimed at identifying, evaluating and handling risks by both physical and financial means. The medical aid industry in South Africa has experienced a disproportionate increase in expenditure relative to the overall economic growth. These cost pressures have placed restraints on their ability to obtain new members, which is vital when subsidizing higher risks with younger healthier members, and has resulted in losses for many schemes. Compounding the problem has been political and regulatory health care reforms as well as technological advances, which have initiated a complete restructure of the industry. This dissertation reviews the risk management strategies implemented by medical insurers in South Africa. An analysis of alternate risk management strategies is taken with the view of recommending a tentative means of making medical aids more efficient in an increasingly difficult market.