ANNUAL INTEGRATED REPORT 2018 Working towards a healthier you GEMS CREATIVE RATIONALE The Fibonacci sequence is an iconic shape Striving and moving upwards, representing related to the golden ratio, a proportion that growth. occurs frequently throughout the natural world and is applied across many areas of the human The Fibonacci sequence is therefore the endeavour throughout history. embodiment of both growth and stability. Both the Fibonacci sequence (shown on the The bird is a universal icon of freedom (freedom cover in the circle on the golden ratio) and to grow) and strength (stability in flight). Birds the golden ratio are used to guide design for can walk the earth and swim in the sea as TABLE OF architecture, among other things. humans do, but they also have the ability to soar into the sky. It is also consistently moving, The shape of the sequence is steady and stable always busy developing and working. CONTENTS in the centre and grows outwardly. It is also predictable and plots a clear course forward The bird displayed here shows take off, going with the set of numbers. into flight, representing growth and flying effortlessly towards stability. Birds have inspired The graph peaking upward is a clear humans throughout history with their ability to representation of GEMS’ financial performance. rise above. 1. Introduction 2 12. Performance and Outcomes 80 2. Key Business Indicators 2018 10 a. Membership Growth Performance 81 3. Chairperson Overview 14 b. Member Satisfaction Outcomes 82 4. Statement of Responsibility by the Board of Trustees 18 c. Healthcare Management Outcomes and Performance 84 5. Organisational Overview 20 d. Financial Performance 88 a. GEMS’ Head Quarters 20 e. Progress against the GEMS strategic plan performance indicators for 2018 and 106 b. Brief History of GEMS 20 relevant risk factors c. Vision, Mission and Values 20 f. Per member cost analysis 120 d. Principal activities, products offered and markets served 21 13. Annual Financial Statements 124 f. Structure and Leadership 24 14. Governance and Remuneration 194 h. Geographic areas of operation 26 a. Statement of Corporate Governance 194 i. Scale of GEMS 28 b. Structures and Processes for Governance 196 j. External Operating Context 28 c. Value Statement and Ethics 213 k. Market Positioning 31 d. Remuneration Report 215 6. Business Model and Value Creation 34 e. Data and Information Technology Governance 230 7. Corporate Citizenship 44 f. Structures and Processes for Compliance Management and Non-compliance Matters 231 8. Engagement with the Minister for the Public Service and Administration 48 15. Report of the Audit Committee 234 9. Stakeholder Relationships 50 16. AGM Notice and Preliminary Agenda 238 10. Strategy and Resource Allocation 56 17. AGM Minutes and Action List 242 11. Risk and Opportunity Management 68 18. Acronyms/abbreviations 262 19. Other Information 264 Framework in 2016, matters reported in the OUR MATERIALITY DETERMINATION Scheme’s annual reports was informed by the PROCESS. 1. INTRODUCTION Medical Schemes Act (MSA), the Registered Rules of GEMS and South African Institute of Internal Auditors (SAICA) Accounting We are committed to ensuring that our Guidelines for Medical Schemes: Appendix VIII The GEMS 2018 Annual Integrated Report is members, the Minister for the Public Service – Governance and Integrated Reporting, issued This GEMS 2018 the 13th annual report issued by the Scheme, and Administration and stakeholders have by the Council for Medical Schemes (CMS). Annual Integrated with the first report issued in the year 2007. access to accurate and reliable information. The GEMS Board of Trustees acknowledges its GEMS aims to apply best practice in integrated Report covers The report was prepared to provide members responsibility to assure the integrity of GEMS’ reporting within the boundaries of the regulatory of the Scheme; the Minister for the Public Annual Integrated Report. As such, it has framework applicable to medical schemes. the operations of Service and Administration, the Scheme’s taken responsibility for determining the matters Principal; and the Scheme’s stakeholders with that materially impact the Scheme’s ability to the Government The GEMS Board of Trustees formally adopted an assessment of the Scheme’s performance create value for its members and ensure the an Integrated Reporting Policy and Framework Employees Medical and impact for the 12-month period. It provides sustainability of the Scheme. an understanding of the Scheme’s strategic during 2016. GEMS’ Integrated Reporting Framework is entity-specific and has as its basis Scheme for the short- and medium-term approach to pertinent The purpose of the materiality process is to issues and the effectiveness of its approach. the MSA, the Registered Rules of GEMS, the ensure that matters that substantively affect financial year South African Institute of Chartered Accountants GEMS’ ability to create value are identified The Scheme’s financial year is from 1 January (SAICA) Accounting Guidelines for Medical 1 January 2018 to and reported on. A material matter will usually to 31 December. The most recent annual Schemes, and the International Integrated be one that substantively impacts, or has integrated report published by the Scheme Reporting Framework and Integrated Reporting 31 December 2018. the potential to substantively impact, GEMS’ was the GEMS 2017 Annual Integrated Report Committee (IRC) of South Africa information strategy, governance practices, performance, published on 5 June 2018. papers. The legislation and regulation are prospects or its important capitals, such as supplemented in GEMS’ Integrated Reporting financial capital, social and relationship capital, There were no significant changes during the Framework by GRI G4 Guidelines and King IV human capital and intellectual capital. reporting period in the Scheme’s business Report Recommended Practices. An Integrated model, boundaries and supply chain. The Reporting Steering Group was established The steps taken to determine materiality for Scheme’s revised organisational structure with a formal terms of reference, comprising the 2018 Annual Integrated Report include the was implemented in 2018 to optimise delivery individuals from across the business, to oversee following: under the Five-year Strategic Plan and four new the integrated reporting process. executive positions were filled (the Scheme’s leadership structure is shown on page 24). GEMS Internal Audit performed a review of STEP ONE: Identifying relevant matters the GEMS Integrated Reporting Framework in based on their ability to impact value There are no restatements of information 2018 and found it to be comprehensive and creation. provided in previous reports contained in this inclusive of the majority reporting aspects report. included in the International Integrated Reporting Framework. Recommendations A list of relevant matters was compiled with The Scheme has gradually moved towards an for improvement were made based on best consideration to: integrated reporting approach from 2011, when practice reporting. The recommendations will a sustainability reporting section was included be implemented gradually over the next two • The Scheme’s value drivers in the GEMS 2010 Annual Report. Prior to the reporting periods based on an assessment of • Matters identified during stakeholder introduction of the GEMS Integrated Reporting the Scheme’s readiness. identification and analysis 2 3 • External matters that impacted on the and through informal interactions with various Material Aspects Importance and Impact Section of Report Scheme stakeholders. 2017/18 CMS Inspections by the CMS can provide Chairperson’s • The Scheme’s internal business context inspection the Minister for the Public Service and Overview (See page • The Scheme’s performance STEP TWO: Determining material Administration, the members of the Scheme 14) aspects and information to disclose. and the Scheme’s stakeholders with Governance The matters identified typically featured in A provisional list of material aspects was assurance that the Scheme is managed well. Report (Regulatory Board and committee meeting agendas, submitted to the Scheme’s Executive Committee Addressing any gaps and issues revealed by Intervention) (See page the Scheme’s strategic risk register and risk and was assessed and finalised. The list was an inspection can improve performance and 231) appetite matrix, the Scheme’s compliments provided to the GEMS Integrated Reporting strengthens social and relationship capital, and complaints reporting, and stakeholder Steering Group to recommend the information including the regulatory relationship. feedback. Stakeholder feedback and input to be disclosed on each material aspect. The Digital First The Scheme is building advanced information Strategy and Resource have been obtained through a range of Audit Committee reviewed the list of material technology (IT) systems, a platform for Allocation (See page stakeholder activities and feedback sessions aspects and information to be disclosed. enhanced member experience and 56) decision-making and data-driven healthcare Governance Report The Board of Trustees approved the list of material aspects below on 4 March 2018 on the management. Under the digital first (Data and Information recommendation of the Audit Committee: approach, activities are gradually digitised. Governance) (See As an example, the Service Management page 230) Material Aspects Importance and Impact Section of Report Forum initiatives