PREMEIR Service Medical Investments (PSMI) incurred a loss of ZW$61,2 million in the first quarter of this year, as the biting economic crunch sinks its teeth deep into the health funder’s business operations, official documents show.
According to confidential correspondence seen by the Zimbabwe Independent this week, throughput fell to 20% from 68%.Disgruntled workers said managers — who have stunned the country by pocketing jaw-dropping salaries in the past — must share the burden of austerity by cutting down on luxuries.
In the documents, the company’s poor performance was attributed to sub-economic tariffs, exhaustion of Premier Service Medical Aid Society (Psmas) global limits, inadequate stocking and the purchase of unbudgeted protective clothing for the Covid-19 pandemic.
PSMI spokesperson Obey Nhakura confirmed the loss, saying it should be viewed in the context of the high cost of doing business in the economy and the lack of commensurate increase in incomes.
“With a target market of low-income earners, there is only so much a company like PSMI can do in terms of increasing prices before we price ourselves out of the market. So due to the affordability of our clientele, the option to adjust our pricing has not been practical for PSMI,” Nhakura said.
“Already we saw a sharp decline in throughput as less and less people were failing to afford medical services. This challenge was further compounded by medical insurers who also failed to adjust benefit limits for most services as their clients could also not afford an increase in subscriptions. Most of our clients are in fact on medical aid.”
PSMI operates clinics, hospitals, an ambulance service, laboratories and radiology departments, as well pharmaceutical departments.
Nhakura said the company had planned to effect tariff adjustments in the second quarter of the year, but the Covid-19 pandemic resulted in unbudgeted expenses.
“The focus of the country in general is therefore on managing this pandemic and to limit its impact on our country health-wise as well as economically. PSMI has therefore experienced a drastic reduction in its revenue due to the lockdown which is a critical intervention for the country at this point, but has reduced revenue generating capacity for the company by 72%. Management is therefore seized with the responsibility for protecting the perpetuity of the company and some uncomfortable but critical measures,” he said,
As a result of the loss, the PSMI informed its workers that it will not be able to adjust salaries or offer a cushioning allowance as earlier promised but would instead roll out a grocery basket to replace the special allowance.
“The grocery basket is calculated as equivalent of the cushion allowance and will differ by grade category. The grocery basket will be delivered through Gains Supermarket but were they can be able to deliver to your workstations you will collect it from there,” the update reads.
The group also cut allowances for closed units.“Closed units to provide backup service to open units so as to eliminate locums entirely. Removal of transport and fuel allowances for those whose units are closed. All contracts to be terminated this month. Leave liability reduction with all those with days above 30 going on leave immediately. Units to operate with skeleton staff which is complementary to their throughput,” the update further reads.