We are pleased to inform our brokers that the Board has appointed Katy Caldis as our new Principal Officer and Chief Executive Officer in succession to Jeremy Yatt who resigned earlier this year after nine years with Fedhealth to explore the opportunities for a LIMS (Low Income Medical Scheme) in India. Katy assumed the reins on 1 November, taking over from Peter Jordaan, the Channel Marketing Executive, who acted as PO/CEO after Jeremy's departure. The Board thanks Peter for his committed and competent stewardship in addition to carrying out his duties as CME.

Katy comes to us from Bonitas, which, like Fedhealth, is in the administration stable of Medscheme. At Bonitas she was the Business Development Director and Scheme Actuary. Prior to joining Bonitas Katy worked for the managed care arm of Medscheme as an actuarial consultant to a number of schemes including Bonitas and Sasolmed. She has previously worked for other major corporates, including Metropolitan Life, Southern Life Association and, in Harare, Southampton Assurance.

Born in Zimbabwe and educated at Arundel School in Harare, she graduated from the University of Cape Town with a Bachelor of Business Science degree with Honours in Actuarial Science and Statistics and a Major in Economics. She was admitted as a Fellow of the Actuarial Society of South Africa in 1995.

Katy is married with three children: her eleven year old daughter, Marica, and two sons, Milto (9) and Spero (4). She is a proponent of natural birth and advocates the nutritional benefits of organic food and alternative medicine. Her hobbies include NIA, yoga and organic gardening. She also has an adventurous streak. She did white water rafting on the Zambezi and this year rode in her first Argus cycle race and enjoyed it so much that she plans to ride again next year. In 1996 she fulfilled a lifetime ambition by taking a two year round the world backpacking trip with her husband, Mano. This adventure included five months absorbing the cultures of Asia and travelling in a second-hand Kombi around the huge land mass of Australia. Exploration of the Americas was interrupted when she fell pregnant with Marica and she and Mano had to return home.

We wish Katy a long, happy and successful time with the Fedhealth family.

Fedhealth, the fourth largest medical scheme in South Africa, has been rated number one for service in a recent survey by ThinkMoney.co.za, an online independent financial comparison website which compares a range of financial products including personal banking products, loans, insurance and medical aid.

The research has been carried out over the last two and a half years and the results are particularly relevant at a time when most South African consumers are making decisions about whether to switch medical aid plans in 2010. The research clearly shows that members rate the service their medical aid offers as just as important, if not more so, than the price.

Fedhealth came in at the top and scored a healthy 3.99 out of 5 for service. This score was a combination of the best service, best payouts process and best level of cover (for your money), as voted by subscribers. Added to that, 76% of those currently with Fedhealth would recommend it to friends and family. Fedhealth also scored the lowest amount of complaints compared to the rest of the schemes. Bonitas came in second, with an overall rating of 3.68 out of 5, followed closely by Medihelp, with 3.65.

Katy Caldis, CEO of Fedhealth says, "We are delighted with the result. At Fedhealth we take service very seriously. The scheme makes use of independent quarterly member satisfaction tracker studies, the results of which enable the scheme as well as the administrator, Medscheme, to identify trends and to act on any negative service related issues immediately."

National Health Insurance (NHI) has been top of mind for those of us in the industry and consumers alike. There has almost been a sense of panic in that the debate has taken place in the absence of a white paper, and has been based on a leaked document and political rhetoric. Whilst there is no question that as a country we need a more comprehensive, effective and affordable solution to healthcare, achieving our objectives is a complex challenge that requires extensive planning and debate.

It is therefore with a great sense of relief that we hear the Minister of Health, Aaron Motsoaledi's, reasonable and rational approach which has been widely quoted in the press of late. NHI is clearly still part of long term planning, but is not going to be pushed through in a rush without careful consideration and consultation. The focus in the short term will be the 10 point plan of the department of health, which includes NHI as a medium to long term objective, but it appears that there will no longer be an attempt to introduce NHI ahead of other improvements and objectives with respect to healthcare delivery. A new 25 member committee consisting of experts from both the private and public sector has been established to advise the Minister of policy, legislation and the implementation of NHI. One of the first responsibilities of this committee will be public consultation on the report produced by the ANC's NHI committee.

Of course we will continue to monitor the political and economic environment in which we operate and will engage constructively in the debate as the opportunity arises.

In terms of a broader outlook for the private healthcare sector and medical schemes in particular, affordability remains the greatest challenge. Medical inflation continues to outstrip CPI. Perversely in the healthcare area, new technology drives up the cost of treatment instead of making it more efficient and effective.

Whilst being obliged to provide a minimum level of cover to all members of medical schemes sounds like a sound principal in theory, in practice, Prescribed Minimum Benefits (PMBs) crowd out expenditure on non-PMB conditions. Equity is difficult to achieve when one provides unlimited benefits at cost for certain, often lifestyle induced, conditions at the expense of cover for often rare, but expensive congenital conditions.

In addition, it has become more difficult to provide products that are attractive to the young and healthy, who therefore opt out of the system making it more expensive for those that remain. By not being able to successfully bring in the uncovered lives, we undermine the sustainability of the industry.

It is clearly more difficult to sell a medical scheme to someone who does not have an immediate need for cover, yet this is what the industry needs most. This issue could be easily resolved by making membership compulsory for all employed people earning above a certain level of income, but unfortunately legislation of this nature is unlikely to be implemented in the short term.

We are therefore reliant in a large part on the ability of brokers to hard sell medical schemes as a grudge purchase. Unfortunately, however, schemes often find themselves at the mercy of brokers selling to individuals who have opted out of the system until they have an urgent and pressing need for cover.

Despite the challenges many schemes continue to provide peace of mind to their members and important cover in their time of need. As South Africans we remain innovative in all we do continuing to rise up to the challenges. As the industry continues to consolidate, we will see many more amalgamations and liquidations of schemes in the coming year than we have in the past. Fedhealth is not currently considering any mergers/amalgamations but will closely monitor the environment as we strive to provide excellent service and best value for money for our members.