Dr. Simon Tati Mangcwatywa was born in Zamdela near Sasolburg one year after the Sizwe Medical Fund was created… and 45 years later he has the title “Dr” in front of his name and is guiding the newly merged medical aid giant Sizwe Hosmed.
Dr. Mangcwatywa had always been fascinated by the sciences in school, so much so that, he was awarded two civil engineering bursaries in his matric year, but it was his deep love for medicine that saw him pursue medicine, without any bursary at the University of Cape Town.
“My passion for medicine has always been there, and I didn’t even have a bursary to study medicine,” recalls Mangcwatywa, now the Principal Executive Officer of the newly merged entity, Sizwe-Hosmed Medical Scheme.
Having made his way into medicine, it was ironically the inspiration of one , Dr Nthato Motlana,a Black business entrepreneur, community leader, political activist and an altruistic medical practitioner, that set Dr Mangcwatywa on a new career path. In the fourth year of his medical studies, he fatefully came across an article rabout an early BEE scheme headed by Dr Nthato Motlana and in that moment a flame was ignited within him.
“It inspired me so much to see a black medical doctor operating in an entrepreneurial space, and I knew I had a decision to make regarding whether to continue with medicine or to pursue a business career,” says Dr Mangcwatywa. Perhaps it was a gut reaction, or a vision of his future career path, but he decided to finish medicine even though he knew he was not going to end up treating patients through until his retirement. After graduating in 2001, he completed his internship and community service in his home town in Sasolburg, and it was then that a friend told him about an opportunity to get involved in business development, in a clinical research company. “I made the leap immediately and I have been a “corporate doctor” ever since,” smiles Dr Mangcwatywa, who was born the year after the birth of Sizwe Medical Fund. One of the founders of Sizwe’s new fund was the aforementioned Dr Motlana, and back in 1976 the Apartheid rules were so severe that they did not allow black people to have access to private healthcare.
“This group of doctors had to be innovative, including holding just normal meetings, while they were establishing Sizwe Medical Fund. And also struggled to be recognized even in the financial sector. Dr Motlana was a pioneer, an activist as well as the personal physician to Nelson Mandela at one point,” recalls Dr Mangcwatywa of the man who inspired him on his new career direction.
“I cannot believe that I have the fortune to be leading the company that he started.”
From its humble and constrained beginnings, the fund has since been running for over 40 years and is in exceptionally good financial health. It is also the only, black founded, black run and black administered medical scheme in the country. The Scheme has been administered by a black company called 3Sixty (formerly known as Sechaba) since its inception.
It was after months of hard work that the Council for Medical Schemes approved the merger Hosmed Medical Aid to create the Sizwe Hosmed Medical Scheme. It was one of the biggest mergers in the industry’s history.
“There have been quite a number of changes as a result of this merger, which is a beautiful merger. We like to think of it as a marriage made in heaven, because the two schemes were so well aligned that it was just natural that we come together,” says Dr Mangcwatywa. “Combining our two medical aids allows us to benefit from economies of scale and helps to create greater efficiencies. It also provides members with a whole lot more variety, and after the merger we moved from being able to offer members five options to 11 options and we are really proud about that.”
The cost savings that arose through being a bigger scheme following the amalgamation has moved Sizwe Hosmed up to the eighth largest open medical scheme in the country. The two boards looked for areas where they could complement each other from a point of view of experience, from a point of view of skill sets they had on board. They also then looked at all the regulatory requirements from the Companies Act through the Medical Schemes Act to ensure that not a single job was lost.
“We are a proudly black founded, black run and blackadministered scheme in the country but from our view the industry is not transformed enough. We think that businesses like ourselves should be able to enter into spaces where we currently cannot, and we think that the space could be opened up to other players to participate,” says Dr Mangcwatywa.
The merger also opened up the opportunity for them to enter the space of SALGA (South African Local Governing Association) where Sizwe had previously not been able to participate, but because Hosmed had the required accreditation and had been a player in that space it meant that the merged entity Sizwe Hosmed could participate.
“We’ve got very good competitive products in that space, so we believe that gives us a competitive advantage, and that is a benefit to members. However, while we are happy now, it makes us sad to think about the hoops we had to overcome and the hurdles just to get to this stage, and we believe this is something that the government needs to look into,” adds Dr Mangcwatywa.
Following the merger, Sizwe Hosmed brings a combined 70 years of experience to its 66 000 members (the beneficiaries), but with a burst of youthful energy compared to most of their aging competitors. Sizwe has been operational for 40 years, while Hosmed has 30 years of experience under its belt.
“We are proud to be bringing not just 70 years of experience to our members, but 70 years of black excellence! That’s why we want the public to be aware of how big this merger is and how significant it is for the industry in general, but also for the broader business community,” says Dr Mangcwatywa.
“Somebody was saying that, even besides the medical aid industry and schemes, in terms of normal business, this is a huge merger and it was done under very interesting circumstances, very difficult circumstances but we managed to pull it off.” The upshot is that Sizwe Hosmed is now sitting at reserves of around R1.4-billion, which translates into a 35% solvency ratio. That’s a full 10% above the regulated 25% solvency ratio mark.
That bodes well for their members, for the brokers, for society and the broker industry as a whole, which is one of their stakeholders. And it has placed them shoulder to shoulder with some of their competitors in the top 10, and the attitude of this pioneering company is that anybody can join their scheme.
We believe that everybody should have access to good quality healthcare and we have made it very clear to the Minister and the Department and we have even offered ourselves together with our colleagues in the industry to help the Department in terms of making sure that this becomes a success. That’s going to be a major issue in the industry and we foresee ourselves playing a role even when NHI is implemented,” says Dr Simon Mangcwatywa.
A huge concern in the industry is the fact that there are a massive number of South Africans not covered by a medical aid, in part because it is seen as a “grudge purchase” and is also not cheap. Estimates range from between 10 to 15 million people that we call “uncovered”.
“Remember there is a difference between ourselves as a medical aids and health insurance. Health insurance companies are mostly based on rand amounts and once a member has used that rand amount then their benefits are done. Whereas for us as Sizwe Hosmed, hospitalisation costs are unlimited on all 11 of our plans. So we are asking the regulator, which is the Council for Medical Schemes, to allow us to also participate in this market as we’ve got obviously the expertise and the skills, but there are people who need quality healthcare and we are willing to step in and cover these people,” says Dr Simon Mangcwatywa, referring to sectors such as the security and certain retail industries.
“I think that is one of the major, major issues in our industry and I think the CMS needs to look into this because it could turn the industry on its head. I would single out those three things going forward.
We remain concerned about the economy as it has a direct bearing on our industry, and if we don’t get people into the job market it is difficult for those people to get into the medical aid industry. So that’s also very important.
So we would really like to see the economy grow, we would like to see the job market growth and we would like to see young people participating in the medical aid industry,” add Dr Mangcwatywa.
