Wednesday, August 17, 2022

Government to be sued over BPOMAS instruction

The arrival of Botlhe Medical aid, a new entrant to the medical aid industry, has spread panic in the public service medical insurance sector.

The Competition Authority may soon be saddled with resolving a looming dispute between the new entrant and Botswana Public Officers Medical Aid Scheme (BPOMAS) over recruitment of members from public service employees.

Botlhe is determined to end the monopoly enjoyed by BPOMAS over the years, allegedly created through a Directive from the Directorate of Public Service Management in the mid 1990s to all Permanent Secretaries advising them about government’s decision to introduce a medical aid scheme specifically for public service employees.

The announcement followed an attempt by the then Botswana Civil Service Association (now BOPEU) to form a medical aid for public servants. Thereafter, eligible public service employees were registered with BPOMAS as the only medical aid supported by government through a 50 percent contribution to monthly premiums. This decision is blamed for creating and/or promoting a monopoly in the provision of medical aid service for public service employees, distorting competition in favour of BPOMAS who currently enjoy membership of approximately 300 000 covered by subscribers in the public service. BPOMAS is 100 percent owned by government of Botswana.

Already some public service employees are disgruntled over government’s decision to “prescribe” a medical aid provider for them and are contemplating suing the employer to reverse the decision.
One of the complaints concerns the limits set for some benefits, e.g. trade unions were recently forced to assist some kidney patients after they were informed they had exhausted their BPOMAS medical aid limit. It is only a matter of time before government and BPOMAS, on one hand, and BOFEPUSU members on the other square off over the monopoly of the former.

Sources within the union leadership have indicated to Sunday Standard that they are encouraging their members to migrate their accounts from BPOMAS to a medical aid owned by their company (Botlhe) where they will enjoy better benefits. As a first in Botswana, Botlhe offers 20 percent cash back if a member has not claimed for a period of three years. It also pays 90 percent medical costs as well as 12 percent VAT on behalf of a member.

Botlhe Medical Aid is co-owned by a local investor in the transport industry – Tshesebe Motlogelwa ÔÇô under a company called Skydow Enterprises and UNIGEM, an investment company owned by five public sector trade unions under Botswana Federation of Public Sector Unions (BOFEPUSU). They hold 50 percent shareholding apiece. Botlhe, through shareholders at UNIGEM, has devised a strategy to launch a two-pronged assault on the monopoly. On one front union leaders will take the issue of the monopoly to the Public Sector Bargaining Council (PSBC) to request government to liberalise the provision of medical aid services to public service employees when discussing conditions of service.

Should government reject the suggestion the trade unions intend to declare a dispute and follow the dispute resolution mechanisms in place to resolve the issue, failing which they will approach courts for recourse. On the other hand Botlhe will invite the Competition Authority to probe the contents of the savingram introducing BPOMAS for distorting competition in the medical aid provision sector for public service employees.

Some public service employees who are BPOMAS subscribers claim to have obtained legal opinion on the matter and are convinced that the current scenario is unfair on them and contravenes the Competition Act.

Legal experts are in agreement that instructing/ influencing public servants to register only for BPOMAS, at the expense of other competitors in the health care industry encumbers competition, thus contravening the Competition Act. The Act reads: “where the authority has reasonable grounds to suspect that, in the light of observed price rigidities or other circumstances, a restriction or distortion of competition may be occurring within a particular sector of the economy the authority may initiate a market inquiry to determine whether any feature, or combination of features has the effect of preventing, restricting or distorting competition in connection with a provision of services in Botswana”.

Botlhe Director, Kenosi Radiporo, said in an interview that they have started registering members from different sectors including public service, pensioners, private sector and the general public. He said some doctors have also come on board to partner with them.

“We will have the first batch of beneficiaries in October,” he said. Although he was of the view that government does not force public service employees to register with BPOMAS he conceded that by paying 50% contribution to medical cover only when an employee registers with the latter amounts to coercing workers to join the scheme. He expressed hope that government would liberalise the provision of medical aid services to public service employees to allow for other players to compete fairly.

A local investor in the medical aid sector said: “Government has no business in business and therefore should promote the growth of the private sector by not competing against it.

Where an industry is already thriving government should restrict herself to providing regulatory framework instead of competing against private businesses”.

Sunday Standard has uncovered information showing that the hasty registration of Botlhe Medical Aid was precipitated by a discovery by UNIGEM that they were going to fail in their bid for administration services for BPOMAS. The tender was floated last year but was later withdrawn.

Following a pre-tender meeting of December 14, 2011 Board Chairperson Kolaatamo Malefo announced cancellation of the BPOMAS tender on 21 December 2011. At the time Malefo promised that “the tender will be re-advertised during the first quarter of 2012,” saying the cancellation was to input concerns raised by bidders over Terms of Reference, scope of work and the timing. Bidders had complained about ambiguities and lack of clarity in the tender documents. Other bidders were BOMAID/BOFA, Gurugroup, Momentum Botswana and AFA Botswana. The tender was never re-advertised.
However Sunday Standard learns that BPOMAS continues to be administered by Associated Fund Administrators (AFA), after they were granted an extension for the contract in the first quarter of 2012 for further three years.

AFA Directors are listed as Sesae Mpuchane (Chairperson), Keith Hollis, Blackie Marole, Lebang Mpotokwane, Rose Tatedi and Tim Rametse. The capital shareholding structure of AFA is currently 50 percent Matseno (Pty) Ltd, 25 percent Medscheme (Pty) Ltd and 25 percent Medtrack Limited. Matseno is a company owned by the local investors, Medscheme is owned by South African investors while Medtrack on the other hand is owned by United Kingdom investors.

UNIGEM Chief Executive Officer Jullian Willie flatly refused to discuss their interest in the BPOMAS tender. But impeccable sources have whispered to Sunday Standard that UNIGEM is lying low after realizing that they were going to be disqualified from the tender for lack of experience.
“Botlhe is just an instrument used to position UNIGEM to gain experience in administration of a medical aid. The big target is taking over administration of BPOMAS,” said a source.

One of the requirements in the Technical Evaluation stage of the BPOMAS tender for the five year provision of administration services was that bidders should “demonstrate past experience in fund management or such other administration experience as deemed appropriate”. Also, the bidders had to provide at least one reference of a medical aid scheme administration and a copy of audited financial statement signed by a competent auditing firm registered in Botswana. The catch is that UNIGEM does not have the requisite experience, hence the decision to hastily appoint themselves administrators of Botlhe Medical Aid.

By the time the AFA contract expires, in three years, UNIGEM would have gained enough experience to bid for the administration of BPOMAS. Willie and Radiporo dismissed this as mere speculation insisting that, through Botlhe, they only want to provide a medical aid that suits their members.

Can investing in the public sector by Botlhe- a company partly and indirectly owned by public service employees result in conflict of interest, in a case where public servants query tariffs introduced by the medical aid as it pursues business interests at market rate at all costs? “No”, argues Willie, “the intention is to provide a service to our clients at minimal rates, but not below the rates prescribed by the regulatory authority. Our tariffs will be restricted to within the set limits”. The five trade unions that collectively have shareholding in UNIGEM (Pty) Ltd are the National Amalgamated Local Central Government and Parastatal Workers Union (NALCGPWU), Botswana Public Employees Union (BOPEU), Botswana Teachers Union (BTU), Botswana Land boards, Local Authorities and Health Workers Union (BLLAWHU) and Botswana Sectors of Educators Union (BOSETU).
They represent approximately 90 000 out of an estimated 109 000 public service employees. UNIGEM are administrators of Government Employees Motor Vehicle and Residential Property Guaranteed Advance Scheme (GEMVAS).

Questions have also been raised over the rules of BPOMAS which prescribe that the Permanent Secretary in the Ministry of Health sit as the Chairman of the Management Committee of scheme.
Further, resolutions of the Annual General Meeting (AGM) of BPOMAS, purportedly the supreme body of the scheme, only amount to recommendations to the Management Committee who make the final decisions.

Therefore the board chairperson enjoys extensive powers more than the AGM, which represents the general membership. Industry insiders are adamant that the arrangement is awkward and an affront to good corporate governance.

They maintain that by sitting in the BPOMAS board, and therefore having vested interest, the Permanent Secretary in the Ministry of Health immediately becomes conflicted in disputes over medical aid provision in the public service where he is an employee.

“S/he will be compromised in situations where s/he has to defend government policy and a competitor (BPOMAS) in the health care sector at the same time,” said an observer.


Read this week's paper