Cape Town — The Council for Medical Schemes expects to lift the curatorship on Pro Sano medical scheme within the next two months, opening the way for the once-troubled scheme to run its own affairs again.

While the development is important for people who belong to Pro Sano, it has broader resonance as it highlights the council's effectiveness as a watchdog for medical scheme members.

The scheme was placed under curatorship in April 2007 after the council discovered Pro Sano's conflict-ridden board of trustees was virtually dysfunctional. Trustees were paying themselves above market rates for attending meetings, had spent large amounts on legal fees, and had entered into unlawful contracts with brokers.

Although Pro Sano was in sound financial health, the council foresaw a dangerous decline if remedial action was not taken: its solvency ratio (a measure of cash reserves to contribution income) had fallen from 48% in 2005 to 35,5% in 2006 and was projected to fall below the statutory minimum of 25% if the council did not step in.

The Cape High Court appointed former Board of Healthcare Funders chairman Joe Seoloane as curator. He had almost completed his job of setting the scheme to rights, he said on Friday.

All the scheme's contracts had been reviewed and its governance rules had been changed to improve its governance, including stricter control over how people were to be selected to its board of trustees, he said.

The new governance rules had drawn on "an extensive list of authorities", including the National Prosecuting Authority's definitions of what can and cannot be done by an officer, and the King 2 and King 3 reports on corporate governance, Seoloane said.

The "last hurdle" was unwinding the shareholders agreement for Pro Sano's administrator, Sigma Health Fund Managers, he said. Pro Sano holds 57 % of the shares in Sigma, in contravention of the Medical Schemes Act, which forbids schemes from owning their administrators. The plan was to make Pro Sano self- administered, he said, and staff employed by Sigma would become Pro Sano employees.

Pro Sano has also been rebranded, and is being marketed to companies around the country.

This represents a marked shift from its traditional focus on government and parastatal employees in the Western Cape.

The scheme had recruited 10 000 new members, compensating for the attrition it experienced when it was first placed under curatorship, said Pro Sano marketing executive Michelle Camps.

"We have seen most of our growth coming from Gauteng and KwaZulu-Natal," she said.

The scheme's membership stands at about 32000 principal members, according to Seoloane. It had about 35700 principal members when he took over.

Pro Sano's solvency ratio was about 30% at the end of last year, he said.

None of the trustees accused of mismanaging Pro Sano's affairs has been sanctioned, beyond losing their positions as trustees.

Seoloane said it would cost more to institute civil or criminal proceedings against the trustees than the scheme was likely to recover from them, so he considered it not to be in Pro Sano members' best interests to try and recover funds.