This week, Liberty Medical Scheme (LMS) and Spectramed Medical Scheme (Spectra) announced their intention to merge.
According to Andrew Edwards, executive principal office of Liberty Medical Scheme, this merger will provide members with the best of breed from both schemes.
Spectra have been in existence since 1957 and has evolved from a closed-scheme to an open-scheme with more than 40 000 beneficiaries. Liberty Health, through its subsidiary Vmed, is currently the administrator for a number of medical schemes including Liberty Medical Scheme and Spectramed.
“The synergy between the two schemes in providing the highest level of service to members will result in a stronger market offering. We will be in a position to enhance what is an already compelling value proposition to members by combining the first class benefits offered by both schemes,” said Edwards.
The potential merger will be subject to members’ of both schemes voting their approval. The Council for Medical Schemes and the Competition Commission’s also need to rubber stamp the move and it needs to comply with the requirements of the Medical Schemes Act.
Edwards added that the prospective combined scheme will be in a strong financial position with healthy reserves, well in excess of the legislated 25% minimum, and provide cover for approximately 150 000 beneficiaries.
“This financial strength clearly demonstrates the combined scheme’s potential to provide long-term healthcare cover for members and ensures the long-term sustainability of the merged entity.
With the intellectual property inherent in the combined entity, the scheme will be well-positioned in a competitive market because it will offer members a range of highly competitive benefits, the leading managed care and services already offered by Liberty Health, and the Liberty Own your Life Rewards programme,” said Edwards.
What will this merger mean for scheme members?
Heidi Kruger, head of communications of the board of Healthcare Funders in Southern Africa, said that although this collaboration won’t likely give bigger schemes like Discovery Health too much competition, the merger would increase the risk pool and give Liberty and Spectra more purchasing power.
“Because they are both open schemes, this collaboration will be good for their members because with their increased purchasing power, they will be able to negotiate better rates for medical specialists. This in turn could make the cost more affordable for members,” said Kruger.