<\/p>\n
The day after Discovery Health announced that it would assume responsibility for the claims processing error that affected 16\u00a0500 Discovery Health Medical Scheme (DHMS) members, independent medical scheme advisory firm MediCheck announced that its intervention had led to this outcome.<\/p>\n
Its press release presents a timeline which appears to show that its engagements with the administrator \u2013 which culminated in a meeting between MediCheck, its counsel Advocate Lewis Rosen and Discovery executives on Friday (9 January) \u2013 led to the administrator absorbing the cost of the error.<\/p>\n
Read\/listen:
Error alert: Discovery Health takes a reputational hit
Discovery Health will pay for its system error itself, not members
MediCheck calls for full probe after Discovery medical aid error<\/p>\n
Neither MediCheck nor its CEO Mark Hyman disclosed details of that meeting, with Hyman telling News24 that it was \u201cwithout prejudice\u201d.<\/p>\n
The clue to what really happened across last week appears in the announcement by the Council for Medical Schemes (CMS) welcoming the \u201crecovery process termination\u201d.<\/p>\n
The CMS says it met with the scheme (not the administrator) \u2013 also on Friday.<\/p>\n
Here\u2019s the rub. It says: \u201cDuring this engagement, the Scheme informed the regulator that a solution would be announced to members shortly after the meeting and by no later than 12 January 2026.\u201d<\/p>\n
\nThis means that by last Friday (January 9), Discovery Health, and by implication the broader group, had already made the decision not to pursue the recoveries of the claims that were incorrectly processed.<\/p>\n<\/blockquote>\n
It had informed the scheme that it administers, and would\u2019ve shared with MediCheck and its counsel something similar to what the scheme then told the regulator.<\/p>\n
Given that this meeting has been described as \u201cwithout prejudice\u201d, Discovery may have well shared some additional details, particularly more technical ones (given some of MediCheck\u2019s specific concerns).<\/p>\n
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CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n
The point is Discovery had already decided on its course of action, and this was certainly not<\/em> as a consequence of its engagements with various stakeholders on Friday.<\/p>\n
Complex error<\/strong><\/p>\n
Dr Ron Whelan, CEO of Discovery Health, was at pains to tell Moneyweb editor Ryk van Niekerk on RSG Geldsake on Monday that: \u201cDiscovery will always act in accordance with its principles and values and do what\u2019s right.\u201d<\/p>\n
Despite what one reads on social media, by and large, Discovery tends to get it right more than most (or, indeed anyone else). This is a group built in the image of its founders, Adrian Gore and Barry Swartzberg.<\/p>\n
The administrator may be the first to admit that its initial response \u2013 those undated, impersonal letters to affected members \u2013 was incorrect and, perhaps, based on a limited understanding or appreciation of what had actually transpired.<\/p>\n
This was a horribly complicated error that took months to work its way through Discovery\u2019s claims system because the above-threshold benefit (ATB) works on the accumulation of various amounts through the year.<\/p>\n
\nWhelan says \u201cyou could start to see some of the impact of this error only much, much later in the year\u201d.<\/p>\n<\/blockquote>\n
Remember that Discovery Health is processing claims at tremendous scale \u2013 over 85 million every year \u2013 given that it is by far the largest administrator in the country.<\/p>\n
Even when it noticed something out of the ordinary, it took a few more months for it to identify the root cause, because the change could\u2019ve been due to something as simple as a change in medicine \u201cconsumption patterns\u201d. It eventually fixed the error in December.<\/p>\n
In that conversation with RSG Geldsake on Monday, Whelan was clear on the timelines:<\/p>\n
\n\u201cIt took us two to three days to definitively reach a conclusion, despite the legal and the legislative frameworks and the technical analysis.\u201d<\/p>\n
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CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n<\/blockquote>\n
\u201cUltimately these decisions can\u2019t simply be made on data, statistics and various other technicalities. They must be made on the basis of member experience, principles and doing what\u2019s right.\u201d<\/p>\n
Practicalities and beyond<\/strong><\/p>\n
In assessing the situation, Discovery Health executives would\u2019ve surely taken into account:<\/p>\n
\n
- The management time and operational overheads a recovery process would eat up;<\/li>\n
- The negative reputational impact;<\/li>\n
- The percentage of non-recoveries (this was never likely to be immaterial); and<\/li>\n
- The additional legal costs it would\u2019ve incurred in its various engagements with the regulator, stakeholders and potentially even affected members.<\/li>\n<\/ul>\n
They have a fiduciary duty to do so.<\/p>\n
So, yes, there is no reason to doubt Whelan when he says this was about the member experience and principles, but Discovery would\u2019ve been well aware of the cost \u2013 direct and otherwise \u2013 of pursuing its original approach.<\/p>\n
Read: Discovery Health Medical\u00a0Scheme member loss continues [Sep 2025]<\/p>\n
(As an aside, one wonders whether Group CEO Gore involved himself at any point \u2013or was asked for his counsel \u2013 or whether he elected to stay out it. Jeremy Maggs in his excellent piece on Moneyweb questions Gore\u2019s public absence, but at 61 and with a massive global business to run, Gore not being involved is a good sign. For Discovery to continue to grow and innovate as it has in the decades after the indefatigable Gore eventually retires, he needs extremely competent, experienced leaders across all its businesses.)<\/p>\n
\nOf course, the sustained pressure and, importantly, the structured engagement by MediCheck helped tremendously. For that, Hyman deserves credit.<\/p>\n<\/blockquote>\n
Media coverage, sometimes asking some very tough questions, certainly did too.<\/p>\n
Profits?<\/strong><\/p>\n
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CONTINUE READING BELOW<\/p>\n<\/p><\/div>\n<\/div>\n
Whelan also made the point that if Discovery Health, as administrator, declines a claim, this has no impact of Discovery\u2019s financials.<\/p>\n
Conversely, if it pays a claim, that also has zero impact of the group\u2019s bottom line.<\/p>\n
This is because it gets paid a monthly administration fee per member by DHMS (as well as other closed schemes which it administers, like Bankmed).<\/p>\n
There is some sleight of hand here. The problem is that Discovery Health \u2013 the administrator \u2013 paid out claims at a higher rate than it should\u2019ve.\u00a0The scheme was legally correct in seeking to recoup those funds from affected members; a mechanism exists for this and it is covered in the scheme\u2019s rules (surely, like all others).<\/p>\n
\u201cYou go through the recoveries to ensure that no members [especially others] are worse off through this,\u201d explains Whelan.<\/p>\n
Read:
Discovery sees spike in claims due to suicide for over 50-year-olds
Why your medical aid premiums go up so much every year<\/p>\nBut by funding the costs of this error, Discovery Health (and ultimately the group) will take a R125 million knock.<\/p>\n
That is a direct knock to profits, something that will be in black and white when it releases its interim results in March.<\/p>\n
Dscovery share price\u00a0<\/strong><\/p>\n
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