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The conflicts in the Premier Service Medical Aid Society need to be sorted out to the satisfaction of all members, the complex management structure being put in place with at least five boards that make medical aid some sort of minor subsidiary needs to be punctured, and the audit ordered by the regulator of medical aid societies needs to be completed as rapidly as possible.

PSMAS was set up in the early 1930s to provide medical insurance for those in State service, civil and uniformed, in a not-for-profit mutual society owned by its members and funded through subscriptions deducted from each member automatically by the payroll administration with, as is common in the private sector as well, having the employer pay a percentage of these subscriptions.

At present the employer, the State, is paying 80 percent of each subscription as a serious benefit to the very large number of people it employs.

The reason why civil servants and other State employees accept these deductions each month, even if they are fit and well, is because they want and expect when they fall ill that they do not have to worry about the costs of medical treatment.

They just wave their card and ID and they see the medical professionals, receive the required medication, and if necessary spend time in hospital, then sign their name and go home.

They want, and they have made this clear, no problems with that function. To have, as is common at the moment, professionals and medical centres refusing their card because PSMAS does not pay the service providers promptly, to have co-payments due before they even see the professional, and to have some of their own clinics closed for renovation does not impress them.

So from the start there is a gap between those who manage and set policy for PSMAS on one hand and those who require the services, the vast legions of State employees, on the other hand.

The second problem is that those who run PSMAS have already set up a more complex management structure, separating the actual PSMAS from its administration, now centred in something called Premier Service Medical Investments, with administrative payments going from the society to the separated administration each month.

This provides two sets of boards, and some overlap of management which, on first sight, is likely to increase administrative costs. We do not know if that is the case, hence the need for the forensic audit to see if that arrangement reduces or increases costs.

The third problem is the extension of the range of PSMAS into gold mining, micro-finance and insurance. It is easy to see how that probably came about. There would have been a desire to find extra revenue streams for PSMAS and possibly a desire to give more benefits outside medical aid for civil servants, such as micro finance.

But the money for these additions is coming from the medical aid subscriptions and that is the problem.

If civil servants, or at least a lot of civil servants, wanted to own some sort of investment trust, or if they wanted to set up a micro-finance entity, there is nothing to stop them although they would need appropriate business licences and follow different rules from the medical aid society.

They would also need to collect monthly contributions separate from medical aid, not leak medical aid money into businesses.

Medical aid societies do have a stable flow of money coming in, all those deductions and employer additions, month after month.

Their outgoings can vary with some fixed costs and a lot of variable costs depending on how many people fall ill and what they fall ill with and what other access to medical advice and services they need, such as maternity.

So a well-run society will have surpluses some months and these, especially in inflationary times, need to be invested to preserve value. Most use the equity markets since these are easy to enter and easy to exit, giving the required liquidity for when there is a pandemic or epidemic, or even the seasonal fluctuations.

PSMAS has also done more than most societies in building up an asset base of clinics, hospitals, pharmacies and laboratories.

This was part of the managed health care approach the society adopted in the 1990s to reduce costs and so keep subscriptions under control.

This approach reduced choice, since as far as possible members see professionals on salary and the profit motive in care is eliminated, but on the other hand the costs are usually cheaper than fee for service.

But not everyone lives near a PSMAS centre and so there must also be access to the private sector, which is where the need for acceptable cards comes in.

PSMAS has also had a history of financial crises. The 1990s saw a near breakdown that was fixed by a total revamp, although some opaque management at the end of that decade saw the reformers quitting.

There was the “Cuthbert Dube era” which saw a sharp rise in salary and benefits for top managers, quite legal it was found since these were approved, but as the result of an audit the management was changed, not necessarily because of dishonesty but because of bad decisions allowing administration costs to rocket out of control.

Now there is the possibility that another set of bad decisions are being made with the creation of a complex management structure, bringing in a lot of extra board members or trustees entitled to payment or perks, and medical money diverted to non-medical investments.

PSMAS will then rank as a subsidiary in this business empire, although providing all the cash flow and probably almost all the revenue.

The regulator of medical aid societies has stepped in, as that officer can step into any society, and ordered a forensic audit, that is an audit that goes beyond checking the accounts but also checks the decisions with financial implications.

For some reason this is bitterly opposed by the elected members of the PSMAS board, who have even gone to court over the matter. What have they go to hide?

That is the question civil servants and other PSMAS members are asking. People who are doing their jobs well are not worried about auditors, and in fact welcome getting a clean bill of health from an audit; it enhances their reputation.

There are curious allegations that the Government wants to take over PSMAS. Really? If that was a Government policy it could do it very quickly through a legal change or through setting up a new society and diverting its huge contribution to that new set up.

Instead it has made it clear that it wants PSMAS to continue as a non-profit mutual society owned by members, just run exceptionally well and making sure that Government workers get decent medical care on demand.

The audit needs to be pushed ahead as fast as possible so there is the full factual information available to the regulator and the members. Decisions can then be made on those facts.

Our feeling is PSMAS should do what it is supposed to do, provide medical insurance, and just medical insurance, and if anyone wants to start a co-operative business enterprise let them do it separately, perhaps even through the staff associations. Don’t mix medical aid with gold mining and don’t throw medical aid money down a mining shaft.