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Transformation leads to greater efficiency

'The entire process (of restructuring) has been documented and can be easily replicated, not only in other organisations within our industry, but also in other business sectors,' says Dr Herc Hoffman, chief executive manager of Multimed.

Medical scheme administrator Multimed has shown that positive restructuring and open transformation can lead to better performance. Not being one of the so-called big players in the industry, it also proved that bigger is not always better when it comes to delivering the goods, and can now rightfully claim to be one of the most efficient and effective medical scheme administrators in the country.

'Getting back to basics' is how chief executive manager, Dr Herc Hoffman, explains the transformation of the formerly hierarchically structured and overly bureaucratic organisation into the young and vibrant modern-day Multimed, that seems to be well on its way to becoming 'the first choice medical scheme administrator in southern Africa', its stated vision.

Others, however, seem to believe there are more than just basics involved. Multimed became the first-ever medical scheme administrator to be crowned with gold by the National Productivity Institute (NPI) in 2003. Prior to receiving this prestigious award, two industry-wide due-diligence processes rated it in the top three.

Top-class recognition of this kind in one of the toughest industries within only three years of embarking on a major restructuring - with some very 'interesting' provisos added - must surely prove that somewhere someone must be doing something right. Hoffman, a former specialist paediatrician turned businessman, unassumingly puts it down to 'absolute commitment from each and every staff member'.

Multimed was established in 2000 after separating itself as administrator from Munimed, a medical scheme formerly exclusively for employees of local government. Immediately, it was faced with a tough challenge: the total transformation and restructuring of Multimed.

Coming from a non-competitive closed medical scheme, operating in a protected local government environment, Multimed had to be transformed into a world-class innovative private-sector company operating in the open market. All this in an industry currently undergoing radical change, with added pressure from the legislator as well as market, healthcare, socio-economic and humanitarian needs.

In 2001, Mr James Sullivan was appointed executive director: operations and organisational development. He became Hoffman's right-hand man when the latter was appointed in 2002 as chief executive officer. Together, they embarked on an extensive project to redesign every aspect of the business. But they did not have a free hand.

As if the task at hand was not tough enough, Multimed had to honour an agreement reached with the trade unions that the existing staff of Munimed would be transferred to the new company as a going concern in terms of the Labour Relations Act. Furthermore, no retrenchments should result from any further restructuring.

'A daunting task for sure,' agrees Sullivan. 'We saw the solution in the development of the personal and business skills of our employees an, in order to do this, some non-negotiable principles were agreed on and applied. it included the active participation of every single employee in all phases of the project, and managing change while improving service.'

The process was given further impetus with the appointment of Khanya Consulting. Based on the Whole Systems Design approach, the organisational structure was revised, resulting amongst others in management levels being reduced from eight to two and the previous hierarchical departments being transformed into work groups.

Following this, a team consisting of representatives of management and the board of directors negotiated a process aimed at restructuring the remuneration system and the conditions of service in order to address existing inequities; lack of choice; and an outdated method of net salary determination.

Throughout this process there was continuous engagement with all members of staff in order to foster the stated principles of transparency and partnership.

This process resulted in an agreement being reached wherein all parties had made certain concessions in order to ensure the sustainability of the company. The salary gap between the highest and lowest paid employee was reduced from 1:36 to 1:16. (The aim is to reduce this even further and a target was set for 1:12).

Because of the change to a total package payment system, all employees were offered a choice to tailor their salary package in order to increase their 'take home' pay. This may now be reviewed annually.

In fact, Multimed's labour relations policies and practices have been completely revised and now reflect the new spirit of co-operation and trust between all the parties.

Hoffman added to this by also introducing weekly sessions with staff members during which they are updated on the status of the transformation process and, thanks to anew corporate culture that embraces transparency, there was agreement from all on the next steps to be taken.

'One of the main focal points is to promote real empowerment of all the people in the organisation,' Hoffman says. 'We continuously evaluate and monitor the results and progress of the improvements. We find that the time spent on fostering the principles of continuous improvement in the employees ensures the sustainability of the process in the company, irrespective of where the individual employees are deployed. It further ensures that new employees may be easily assimilated into the company, without disrupting or adversely affecting the productivity and culture within.'

This is what Hoffman calls 'getting back to basics'. it is about involving employees and trade unions in the design and execution of the restructuring process, and building confidence in employee involvement.

And he has these productivity and quality improvements to show for it:

Members under administration grew by 103.36 percent
Staff numbers grew by only 12.5 percent
Administration costs increased by only 2.6 percent from 2000 to 2004
The claims assessing error rate was reduced to 0.09 percent
The response time to written enquiries was reduced to 48 hours
Electronic claims are assessed on the same day
Paper claims are assessed within two days of receipt
One hundred percent of undisputed claims are now paid within 14 days of receipt
'Because the entire process has been documented and is based on proven scientific tools and methodologies,' says Hoffman, 'it can be easily replicated, not only in other organisations in our industry, but also in other business sectors.'

Hoffman says that Multimed's strategic objectives (and the commitment of its staff) are now focused fully on taking the next bold step: 'We are looking for more funds to administer. We have the technology. We have the capacity. We are ready for it.'