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. Herald
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