PSMAS salary bill slashed by $6m

US-DollarsPaidamoyo Chipunza Senior Health Reporter
The interim management for the Premier Service Medical Aid Society (PSMAS) has slashed its executives’ annual wage bill from $7 million to a million with effect from March 1, in line with the society’s new viability strategy.The interim management has also abolished all executive posts and created new posts of heads of department instead, which were offered first to incumbent executives.

In line with the new structure, some executive posts were also merged while a new post of managing director was created.

PSMAS interim manager Dr Gibson Mhlanga said the changes, which will also see regrading of some employees was meant to sustain viability of the society.

He said the new strategy and structure had resulted in a huge reduction of the executive’s annual wage bill from a high of $7,46 million to $1 million.

“I am happy that most of the managers have bought into the transformation exercise and have accepted the new structure. They have also pledged to continue working for the realisation of the society’s mission and vision,” said Dr Mhlanga.

Dr Mhlanga said it took long for the interim management to slash the obscene salaries, which were earned by the executives because they
wanted to ensure they were doing everything in a legal manner.

He said to address some of the governance issues, the interim management came up with new policy guidelines on recruitment, remuneration, motor vehicle, long service and retrenchment policies.

Before then, there were no such policies and things were done in an ad hoc manner with no specific policies.

“We had to go through a process and all that was done in a legal manner,” he said.

Dr Mhlanga said they had also put in place a performance management system which will also cascade down to the general workforce.

“The same exercise that we have done at PSMAS will also be instituted at Premier Service Medical Investments (PSMI) starting with its management and cascading down to its general employees as well,” he said.

PSMI is a subsidiary of PSMAS that is more into service provision while PSMAS is more into healthcare funding.

Dr Mhlanga, however, said while the interim management had done all it can to reduce operational costs for the society, it was still owed up to $90 million by Government in member contributions.

He said in contrast, PSMAS debt including payments to service providers was up to $144 million.

“We have written to the relevant authorities seeking an upward review of subscriptions for us to beef up our finances but we have not received a response yet,” he said.

He said according to consultations done and in line with the new tariffs gazetted by Government recently a viable subscription would be $44,50 for members on the main plan but these members are currently contributing about $27,50 per member.

“We have been operating under a deficit ever since we were appointed as interim management and the new consultation fees have worsened our situation. The main issue is that our income is not enough to sustain our operations, especially when it concerns claims coming from doctors versus contributions coming from our members,” he said.

Dr Mhlanga said an audit firm which was investigating the society’s systems had completed its task and was expected to present its findings last Friday.

He said the audit team was supposed to have presented its findings last month but was delayed by former group chief executive officer Dr Cuthbert Dube, whose input is key in the report.

The appointment of an audit firm at PSMAS followed an exposé of financial irregularities at the healthcare funder ranging from abnormal salary scales for top management to defaulting of payments to service providers.

Following the exposé Dr Dube and the society’s board chairman, Mrs Meisie Makelotso Namasasu, were forced to step down.

Subsequently, the whole management board resigned.

Government then appointed an interim management, chaired by Dr Mhlanga, to run the affairs of the society in the interim.

The interim management was therefore mandated to look into the society’s remuneration structure, critically review its financial position, its constitution and facilitate a forensic audit among other relevant matters.

The interim management was officially appointed in June last year.

By law, the management is expected to complete its task within 12 months.

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