Abstract
M.Com. (Business Management)
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.