South African medical scheme administrator Medscheme has signed two deals with Siemens Business Services (SBS), worth a total of R1.038 billion.
The contracts include a seven-year support services deal worth R1 billion, and a five-year e-business agreement worth R38 million.
Medscheme IT director Hankie Vogel says the support services deal will involve SBS taking over all support functions of Medscheme desktops countrywide, network operational support including asset management and procurement, as well as managing the IT help desk infrastructure.
Vogel says this will enable Medscheme to focus on its core competencies. He believes the deal is probably one of the biggest ever in the healthcare industry, in terms of money value and period of time.
He adds that the seven-year period was decided on to allow for solid systems building blocks to be put in place.
"We chose to do business with SBS because we already have a good relationship with Siemens, we can leverage off hardware and licensing volumes within a large global company, and we have confidence in their commitment to delivering efficient service," says Vogel.
SBS South Africa CEO Robert Goegele says the deal builds on Siemens' 20-year relationship with Medscheme, during which the company has developed a good understanding of Medscheme's business and critical success factors.
"This new agreement is moving the relationship to a level where we are incentivised to assist Medscheme in achieving its objectives, rather than just providing enabling technologies and making them work. Over the next years, Medscheme will enjoy significant operational cost reductions and continuous improvement in service."
Goegele says the contract also allows SBS to further leverage its economies of scale in the IT service and communication environment. "It will also further strengthen our e-business units that are working with Medscheme to leverage Microsoft .Net and IBM WEBSphere to improve Medscheme's e-business capability," he says.
Vogel says that in terms of the second deal, SBS will provide hardware, infrastructures, specific applications and functions for the Medscheme e-business environment. The deal, which was given final approval last week, is expected to result in an e-business infrastructure that provides cost savings and business growth opportunities.
Vogel says the infrastructure for Medscheme's new e-business environment should be in place within the next two months, with functional benefits expected in the third quarter.
Medscheme, which administers over 40 schemes with a total of around 3.7 million members and beneficiaries, expects to be able to streamline claims processing and information management for members, as well as making payments to healthcare providers more efficient and cost-effective through the e-business environment.
Vogel points out that a single call to the call centre could cost Medscheme more than R10. "We can see substantial savings when a member is able to query medical aid claims electronically," he says.
While Vogel is not prepared to elaborate on Medscheme's complete e-business strategy at this stage, he says it will also involve improved service to doctors, members and other healthcare providers, and will be linked to the existing services - Healthbridge for doctors and Interpharm for pharmacists.
"We can't yet predict the total cost benefits that Medscheme will see as a result of the e-business strategy," says Vogel. "This will depend on how individual business units within the company identify and exploit opportunities presented by the new systems. However, I hope to see at least 10 or 12 business cases emerging from this new environment, which should result in cost savings of millions of rand, with more efficient service for everyone concerned."
Goegele says: "Ultimately, Medscheme's business requires a steady reduction in transaction costs, quick payment cycles, reliable IT infrastructure and a strong online capability to interface with its customers and service providers. The new contract is aligned with these objectives and is therefore the ideal basis for the coming years."
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