PREMIER Service Medical Aid Society (PSMAS) and its subsidiary Premier Service Medical Investments (PSMI) channelled nearly $1 billion to their Holding Company in management fees at a time when the institution was struggling to settle about $743 million worth of service provider claims, The Herald can reveal.
Ironically, PSMAS has been struggling to have its card accepted by service providers due to delayed payments, most of which are done beyond the stipulated statutory 60-day period but has enough for the top brass, insiders said.
The institution has also been struggling to stock its pharmacies resulting in the majority of its membership being turned away without medication.
According to the organisation’s 2021 financial report, PSMAS collected nearly $8 billion during the period under review from which $ 500 million was channelled to Premier Service Holding Company in management fees alone.
Similarly, PSMI channelled almost the same amount to the same Holding Company, further financially constraining the organisation.
Oddly, during the same year, PSMI introduced co-payments to all PSMAS card-carrying members, and members are now required to pay US$5 or its equivalent for consultation fees.
Insiders at PSMAS House claim that though these management fees, which constitute five percent of all PSMAS revenue and five percent of PSMI revenue were approved by the board and are within acceptable thresholds in corporate governance, they are an unnecessary cost to members’ subscription
“Whilst some quarters are arguing that members’ subscriptions are meagre and cannot sustain either PSMAS or PSMI operations, management is busy slitting that little subscription into non-core business. The Holding Company is an unnecessary entity as it creates unnecessary expenses for the Society and with the current state of affairs, it is not clear whether the Society is still abiding by the statutory requirement of channelling 80 percent of every dollar collected towards service provision,” said the insiders.
Best practices in the medical aid industry require 80 percent of every dollar collected from a member towards payment of claims, 15 percent for administration, and 5 percent must be on reserve.
Another insider from PSMI said the management fees were unfair for workers as they have been struggling to get salaries on time yet management fees are paid religiously and on time.
“Employees from the Holding Company have never gone without a salary as they feed on these management fees, yet we can go for months on half salaries. The most painful thing is this expense is unnecessary worse now that they even want to introduce two more structures beyond the Holding Company,” said the insider.
According to the Deed of Trust document, PSMAS intends to have a Board for the Holding Company appointed by Trustees. The Trustees are appointed by members at an AGM.
While board sitting allowances do not account for a huge chunk of PSMAS expenses, some board members have a tendency of abusing their power for personal gain. Some of the cases already in the public domain include the procurement of vehicles for board members.