Fired Premier Service Medical Aid Society group chief executive officer Mr Cuthbert Dube has lost his 20 percent shareholding in Premier Service Medical Investments, PSMAS’ investment arm, after members overwhelmingly voted against his share acquisition at a special meeting held in Harare yesterday.
The previous PSMAS board led by Mrs Meisie Makeletso Namasasu had given Mr Dube 5 percent shares in PSMI for free and allowed him to purchase 15 percent shares at $6 trillion Zimbabwean currency back then.
Hundreds of PSMAS members who attended the meeting in the capital, chaired by the society’s interim manager Dr Gibson Mhlanga, felt that Mrs Namasasu’s board erred in allowing Mr Dube to own 20 percent stake in PSMI without their approval.
The members also unanimously agreed to form a holding company, which will run the affairs of the society’s current and future investments.
Dr Mhlanga said the creation of the holding company was meant to address conflict of interest between the provision of medical services and PSMAS being an insurer at the same time.
“The PSMAS-PSMI relationship as it currently stands has challenges in that it compromises governance and objectivity; it has brand contamination effects; it is regulator unfriendly; it is investor deterrent, and is generally perceived as creating a conflict of interest, yet in reality this may not exactly be the case,” said Dr Mhlanga
He said the holding company will be owned by PSMAS members and supervised by trustees.
Dr Mhlanga said while the interim management developed and adopted a turnaround strategy for PSMAS, the society continues to face cash flow challenges, resulting in it accruing huge debts.
He said with the new remuneration and organisational structure, PSMAS made projected savings to the tune of $20 million for the year 2015.
“The society’s financial position remains its biggest challenge,” said Dr Mhlanga. “This is a result of sub-economic subscription rate, failure by member organisations to remit subscriptions in time and unsustainable healthcare service provider’s tariff.”
Dr Mhlanga said a combination of factors resulted in the society’s failure to settle claims, with litigation worth $10 million now pending before the courts and, members facing challenges in accessing service from some service providers.
“The real solution to the society’s financial challenges would have been a subscription fee increase,” he said. “But given the macro-economic environment currently prevailing in the country, any increase in subscription would have resulted in a heavy burden on you, the members.”
Dr Mhlanga said PSMAS was forced to look at other alternatives such as product remodelling, introduction of point of service (POS) system and, introduction of wellness programmes.
He said the POS system, which comes into effect on July 1, will assist the society in controlling demand and supply and will help contain costs.
“Further serious discussions aimed at finding a lasting solution to the society’s financial challenges are currently underway with potential financiers,” said Dr Mhlanga. “With assistance from Government, we are confident that these discussions will yield positive results.”
Dr Mhlanga said auditors instituted under his authority had completed their task and he was in receipt of the draft report.
“Appropriate recommendations based on the final report will be made to the incoming society board of directors,” he said.
Speaking after the meeting, the society’s head of communications and stakeholder relations Ms Mavis Gumbo said they were now looking forward to the Annual General Meeting scheduled to take place on June 9.
She said the incoming board will be selected based on the new constitutional amendments, which allow civil servants to elect three representatives to the board, while private organisations will have two.
Civil servants comprise 80 percent of PSMAS members, while private organisations make up for the remaining 20 percent.
Trouble started at PSMAS after reports emerged last year that Dr Dube was earning almost $500 000 including allowances and other benefits.
His top management was also earning obscene salaries.