Discovery’s sustainability performance for the past year

Customers and the products and services we offer

Our customers are one of our most important stakeholder groups, and we continuously work to develop our products and services to meet their needs. During 2008, we identified specific areas that will enable us to deliver better quality service and products to our customers.

Key to symbols

» Priority achieved
† Priority ongoing
‡ Priority on track
Ø Priority not yet achieved

Priorities for 2009	What we’ve done	Progress
Extend access to care by targeting low-income earners who earn less than R5 000 a month through KeyCare	Last year, we introduced new salary bands for members on KeyCare who earn less than R5 000 a month. The change in income bands enables the lowest-income earners to benefit from the lowest contribution rates. Sixty-five percent of new KeyCare members are now on the lower income bands. Over 75 000 new members have joined KeyCare since January 2009.	»
Provide affordable healthcare cover by offering members a discount on their contribution if they use a network hospital	For January 2009 we introduced a new plan range that gave members the opportunity to save on their contribution while maintaining the same quality cover. The Delta plan range allowed members on Saver and Core plans to save 20% on their contribution on average.	»
Maintain and enhance Vitality’s value for consumers by removing the cost barrier to living and eating healthily	The Discovery Vitality HealthyFood™ benefit was launched at the beginning of 2009 and enables members to buy healthier food options from a list of 6 000 HealthyFood™ products at Pick n Pay at a discount.	»
Conduct scientific research with independent and international partners on health matters	In October 2008, we introduced the results of the Vitality Insured Persons study – a series of three ground-breaking studies undertaken with the involvement of researchers from the UCT Sports Science Institute of South Africa and Harvard University, set out to establish the effectiveness of Discovery’s Vitality wellness programme in addressing the rise in healthcare costs.	» †

Our focus areas during the past year

Taking a leadership role in our healthcare industry

During the past year, the ruling party expressed a commitment to reform South Africa’s healthcare system with the aim of broadening access to care for South Africans. Access to care remains a global challenge with many countries facing a shortage in resources and escalating costs. In the United States of America, President Barack Obama’s administration has proposed far-reaching healthcare reform, while China is also struggling to provide adequate cover
for its 1.4 billion citizens. This illustrates that access to healthcare is a universal challenge not unique to South Africa.

At the time of writing the report, a formal policy paper has not been released for comment yet. While the debate is ongoing and there is uncertainty and concern about the impact of a National Health Insurance system in South Africa, Discovery Health remains committed to work with government and other industry stakeholders to broaden access to care. Private healthcare in South Africa has an important role to play in South Africa’s future healthcare system and as one of the industry leaders, we will continue to take part in the consultation process.

Offering clients more value in a difficult economic environment

Discovery has developed considerable resources and unique product integration capabilities that enable clients to receive more value across the Discovery product range. During the past year, we worked at developing unique products that would give consumers more value, especially if they integrate their Discovery products. Our strategy of using Vitality as the foundation for product integration, enabled us to introduce several new products that are above all relevant in difficult economic times.

• The Discovery Vitality HealthyFood™ benefit helps consumers eat healthier and gives them savings of up to 25% at Pick n Pay on a list of 6 000 HealthyFood™ products
• The Discovery Health Delta range gives consumers an average contribution saving of 20%
• We introduced lower income bands for KeyCare – providing savings of up to 30% for families on the lowest income band
• The Discovery Life Cover Integrator enables policyholders to buy extra life cover at a saving of nearly 50%
• The Discovery Invest Upfront Investment Integrator gives a boost of up to 26% on investors’ lump sum contribution to their endowment policy

Building on the positive impact Vitality has on our clients and our business

Vitality continues to play an important strategic role in our business and for our clients. For our clients, it adds value and ultimately helps them to lead healthier lives. For our business, it not only serves as a key product differentiator and value creator, but is also key to drive better selection and improved mortality and morbidity experience for the Health and Life businesses.

During the past year, we focused on understanding the impact of Vitality on containing healthcare costs from an academic viewpoint. We conducted research with the UCT Sports Science Institute of South Africa and Harvard University that proves Vitality’s effectiveness in reducing healthcare costs. The first Vitality Insured Persons (VIP) study showed that members who are highly engaged with the Vitality programme experience lower costs per patient,
shorter stays in hospital and fewer admissions. The cost per member for example, was 7.2% lower for cardiovascular disease, 15.1% lower for cancers and 21.4% lower for metabolic diseases for hospital claims.

A better understanding of the impact of Vitality will enable us to use Vitality in more ways to help members engage in their health.

Responsible marketing and advertising

We strive to communicate and market our products in a responsible manner that is clear, consistent and transparent and fair to our clients. In terms of our advertising and brand communications, we comply with various acts such as the Competition Act, the Consumer Protection Act and Intellectual Property laws, as well as specific regulations relating to the financial services products we offer. The financial services products we offer are regulated by various bodies and this affects how we communicate these products to our clients. The Discovery Health Medical Scheme, for example, is accountable to the Council for Medical Schemes and must communicate benefits to members in a transparent and clear way. The National Credit Act also prescribes certain ways of marketing products such as credit cards, to consumers.

We comply with the advertising codes and standards as set out by the Advertising Standards Authority of South Africa – an independent regulatory body set up and paid for by the marketing and communications industry. Our suppliers who work with us on advertising and communication, also belong to representative bodies and subscribe to specific codes, for example, our advertising agency belong to the Association for Communication and Advertising, the official representative body for the Communications and Advertising Profession in South Africa.

Discovery Health customer base	Active principal members at 30 June 2009
Discovery Health Medical Scheme	750 436
Government business	27 870
Discovery individual business	116 459
IBM South Africa Medical Scheme	2 249
Southern Sun	2 888
Anglovaal Medical Scheme	4 270
Retail Medical Scheme	6 514
Edcon Medical Scheme	3 699
Quantam Medical Scheme	6 948
LA Health Medical Scheme	23 441
Lonmin Medical Scheme	13 499
Umed Medical Scheme	8 071
M-Med Medical Scheme	2 167
University of Kwazulu Natal Medical Scheme	3 240
AfriSam Medical Scheme	1 216
Total	972 967

Our priorities for 2010

• Continue to engage with important role-players in the industry on healthcare issues
• Closing the gaps in cover for Discovery Health members
• Helping consumers to navigate the health environment
• Maintain long-term affordability in healthcare
• Continue to offer consumers more value through product integration across the different businesses
• Continue to use Vitality to drive better behaviour and improve morbidity and mortality levels
• Offer clients the most efficient, relevant and personalised levels of protection and benefits