Factors influencing medical scheme administrators’ utilization of optimal cost management techniques

M.Com. (Business Management)Abstract: Within today’s competitive and cost-driven business environment, Medical Scheme Administrators (MSAs) are under tremendous pressure from various stakeholders to ensure their operations are at the pinnacle of financial performance, through stable but profitable business structures, whilst achieving maximum return for member’s contributions. However, there is often a public misunderstanding between not-for-profit medical schemes and the high-profile multimillion rand companies that act as administrators. Both of these organisations are faced with drastic economic challenges which include, the global financial crisis, credit crunch, globalisation and increased competitive forces. As market share shrinks, organisations strive to find new customers and increase their bottom line by adequately managing costs The purpose and research question of the study was to identify the factors that influenced optimal cost management practices to ensure that organisations have a true understanding of costs, so that they can continuously make the right decisions with regards to product mix, price and market. This research uses a qualitative methodology to uncover how the South African Medical Scheme Administrators currently use costing principles. This is achieved through semi-structured long interviews with individuals, who are directly responsible for this function within their respective organisation. The study concluded that benefits of a conceptual cost management framework, which is made up of a number of key models to assist an organisation mature in their cost management practices. It is evident from this research that the medical schemes in South Africa are relatively immature; therefore, they require a focus on efficient and effective cost management practises