A study of the business models adopted by medical aid societies in order to survive in a turbulent operating environment (2005-2013)

Abstract

The purpose of this study was to investigate the business models being used by medical aid societies in order to survive in a turbulent economic environment experienced by Zimbabwe between 2005 and 2013. The turbulent economic environment caused operational difficulties for most medical aid societies like failure to meet claims costs, diversification into questionable non core activities and skyrocketing costs of doing business. These challenges threatened the long term survival of societies, therefore the study delved deep to understand what can be done to guarantee long term survival of the societies. The research followed a positivist or quantitative research philosophy. A deductive approach was used. The study used a survey research strategy and the time horizon was cross-sectional as opposed to longitudinal. The study had a population of about 36 650 people and a sample of 200 people received questionnaires. The respondents were split across medical aid subscribers, employees, shareholders and managers of various medical aid societies. The sample was arrived at using the stratified random and convenience sampling techniques. The study relied on primary sources of data. Collected data was analyzed by the SPSS software. Medical aid societies are following efficiency based business models which lack robust value chains. They are not providing services that meet customer expectations as shown by 40% of respondents. The current regulatory framework is enough for the operations of medical aid societies as expressed by 73% of respondents. There was no pattern or mutually agreed strategies used for survival by medical aid societies. However, most societies followed the strategy of lessening costs to survive. All forms of innovation are low across all societies.

In conclusion, the study established that the business models being used are not robust and need to be improved especially their value chain components. The challenges faced by medical aid societies could be lessened should this component get addressed otherwise challenges like skyrocketing claims costs will continue making medical aid societies less viable.