Board of H e a lt h c a r e Funders
2019
ANNUAL REPORT
2019
ANNUAL REPORT
OUR VALUES Commitment Leadership Innovation Inclusivity Excellence Communication Integrity
OUR VISION A member-centric healthcare system that is affordable and accessible to the ‘healthcare citizen’. Our aim is to remain relevant, understanding the context we work in and improving our value proposition.
ANNUAL REPORT 2019
CONTENTS
2
BOARD OF DIRECTORS AND MANAGEMENT TEAM
4
CHAIRMAN’S REPORT
6
MANAGING DIRECTOR’S REVIEW
21
ANNUAL FINANCIAL STATEMENTS
23
FINANCE AND AUDIT COMMITTEE REPORT
25
DIRECTORS’ RESPONSIBILITIES AND APPROVAL
26
REPORT OF THE INDEPENDENT AUDITORS
29
DIRECTORS’ REPORT
31
STATEMENT OF COMPREHENSIVE INCOME
32
STATEMENT OF FINANCIAL POSITION
33
STATEMENT OF CHANGES IN FUNDS AND RESERVES
34
STATEMENT OF CASH FLOWS
35
ACCOUNTING POLICIES
41
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
49
SUPPLEMENTARY INFORMATION
54
CORPORATE GOVERNANCE REPORT
78
IN MEMORIAM – DR MINI
79
THE BHF VALUE PROPOSITION
1
T H E B O A R D O F H E A LT H C A R E F U N D E R S N P C
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ANNUAL REPORT 2019
BOARD OF DIRECTORS Ali Hamdulay Chairperson Non-executive Director Constituency: Administrators Katlego Mothudi Managing Director Executive Director
Antea Fourie-van Zyl Deputy Chairperson (Before AGM) Non-executive Director Constituency: Open Schemes
Neo Khauoe Deputy Chairperson (After AGM) Non-executive Director Constituency: Closed Schemes
Mark Bayley Non-executive Director Constituency: Administrators
Mzamo Dlamini Non-executive Director Constituency: SADC – eSwatini
Teboho Makoetlane Non-executive Director Constituency: SADC – Lesotho
Josua Joubert Non-executive Director Constituency: Open Schemes
Sabier Martinus Non-executive Director Constituency: Closed Schemes
Stan Moloabi Non-executive Director Constituency: Closed Schemes
Moraki Mokgosana Non-executive Director Constituency: SADC – Botswana
Hleli Nhlapo Non-executive Director Constituency: Administrators
Lungi Nyathi Non-executive Director Constituency: Administrators
Costa Raftopoulos Non-executive Director Constituency: Closed Schemes
Callie Schäfer Non-executive Director Constituency: SADC – Namibia
Howard Stephens Non-executive Director Constituency: Closed Schemes
Mike Wilson Non-executive Director Constituency: Closed Schemes
Shylet Sanyanga Non-executive Director Constituency: SADC – Zimbabwe
Vusi Mbonani Non-executive Director Constituency: Open Schemes
Lee Callakoppen Non-executive Director Constituency: Open Schemes
Vusi Memela Non-executive Director Constituency: Open Schemes
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ANNUAL REPORT 2019
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MANAGEMENT TEAM
DR KATLEGO MOTHUDI Managing Director
ZOLA MTSHIYA Head of Stakeholder Relations and Business Development
DR RAJESH PATEL Head of Benefit and Risk
CHARLTON MUROVE Head of Research
ERIC RANTSHO Head of Shared Services and PCNS
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ANNUAL REPORT 2019
CHAIRMAN’S REPORT 2019 was another year of extensive involvement in addressing numerous critical challenges for our membership in the region. Dr Ali Hamdulay, chairman of the Board of Healthcare Funders (BHF), reflects on some of the highlights.
M
arred by dull economic growth, weak consumer trust, financially strained households and high unemployment rates, strategies for maintaining the healthcare sector were top of the BHF's agenda. We worked with a wide range of stakeholders to identify approaches that will continuously push us toward a health system that serves the best interests of all in Southern Africa. As most countries in the Southern African Development Community (SADC) region are aligned with the global agenda of universal healthcare coverage, BHF focussed its effort on ensuring membership plays a meaningful role towards the achievements of Universal Health Coverage (UHC). As an organisation we made great strides, representing eight countries, and we are well positioned to participate meaningfully in transforming our industry and, in fact, the greater SADC region in alignment with policy reform in the interest of the ‘health citizen’. The advisory and mediatory role of the BHF is becoming increasingly important in the divided healthcare landscape and the deepening challenges in the region. In 2019, we focused on building solid, valuable relationships in the interests of our members, not only locally with the likes of the Council for Medical Schemes (CMS) and the National Department of Health (NDoH), but with international entities like the International Finance Corporation (IFC),
BOARD OF HEALTHCARE FUNDERS NPC
INDUSTRY TRENDS AT GLANCE Launch of section 59 CMS racial profiling
investigations Lancet Commission Report on quality of
our healthcare Release of the COFI Bill which splits the
authorities that govern medical schemes Health Sector Anti-corruption Forum established Release of the HMI Findings NHI Bill published
the World Bank, the World Health Organisation (WHO), the BMJ and the Lancet Commission. We also expanded our regional efforts, paying more attention than ever before to the interests of the SADC as a whole. The BHF has a 'zero tolerance' policy in respect of racial profiling and takes allegations of racial discrimination on the part of certain Black private medical practitioners seriously. We welcomed the decision of the CMS to set up a specialised commission to investigate these allegations.
ANNUAL REPORT 2019 CHAIRMAN’S REPORT
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for the year ended 31 December 2019
BHF STRATEGIC GOALS UNIVERSAL HEALTH COVERAGE
Be the trusted driver of health system reform that incorporates all stakeholders
VALUE CHAIN ALIGNMENT
Maintain a fully aligned ecosystem where member needs are driven by all stakeholders
FINANCIAL STABILITY
Generate more revenue while fundamentally serving our members
THOUGHT LEADERSHIP AND BRAND
Proactively drive content and position the BHF as an industry thought leader
The BHF compiled a collaborative response to the CMS circular on low-income products in which we reiterated our stance that schemes should be granted the same exemption dispensation offered to short-term insurers in respect of low-cost options while the low-cost benefit option (LCBO) framework is being developed. The Health Market Inquiry (HMI) highlighted industry inefficiencies and the role these play in making medical schemes unaffordable. The HMI Report notes that the industry needs to adopt significant reforms to better serve the ‘health citizen’. The BHF agrees that this is both possible and desirable, given the industry’s strong financial position. The BHF paid close attention to two very important pieces of impending legislation, the National Health Insurance (NHI) Bill and the Conduct of Financial Institutions (COFI) Bill. We made a detailed submission to government in respect of the former. While the BHF wholeheartedly supports NHI as a mechanism to move South Africa closer to the goal of universal healthcare, there are many concerns with regard to the NHI Bill in its current form, which we highlighted in our submission: constitutional
anomalies, issues relating to corporate governance of the NHI fund, flow of funding, the role of provincial and local government, and the purchaser/provider split, to name just a few. I would like to thank the outgoing Director-General of Health, Ms Malebo Precious Matsoso, for her sterling service to the industry. The BHF wishes her well in her future endeavours. All these initiatives reflect the BHF’s ongoing commitment to its members and to the health of the nation. In conclusion, as always, I’d like to express my deepest thanks and appreciation to my fellow directors for their time, expertise and unfailing support. Likewise, to the dedicated staff and management team of the BHF who take our strategies and make them happen on the ground.
DR ALI HAMDULAY CHAIRMAN
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ANNUAL REPORT 2019
MANAGING DIRECTOR’S REVIEW 2019
HIGHLIGHTS
HFMU expands beyond South Africa’s borders Fraud, waste and abuse ‘dashboard' report Member guidelines to apply for exemption for LCBOs Medical scheme dashboard analysis
Dr. Katlego Mothudi, Managing Director of the Board of Healthcare Funders (BHF), reflects on the year in review, during which the organisation widely engaged with its members and stakeholders on a wide range of issues affecting not only the funding industry, but the broader healthcare environment.
W
e engaged our members and
of Financial Institutions (COFI) Bill,
stakeholders on a range of
two proposed pieces of legislation
complex topics and issues during 2019.
with a potentially huge impact on
Pivotal discussion points included
the industry. As part of our value
fraud, waste and abuse (FWA), a
proposition, we also undertook a
major concern within the funding
strategic ‘scenario planning’ exercise
Policy and regulatory engagements with different stakeholders
environment and low-cost benefit
to evaluate South Africa’s future
options (LCBOs). Schemes are currently
healthcare landscape. Furthermore,
not permitted to offer LCBOs, and the
in consultation with the CMS and
Strategic partnerships
BHF is lobbying the Council for Medical
SA healthcare sector scenario planning into 2030
Effective coverage implementation manual for medical schemes
Schemes (CMS) to change this.
the Department of Home Affairs, we developed a ‘recognition framework’ aimed at resolving the requirement
We are engaging with government
that foreign students, despite being in
with regard to the National Health
possession of a valid visa, be covered
Insurance (NHI) Bill and the Conduct
by a registered medical aid scheme.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL REPORT 2019 MANAGING DIRECTOR’S REVIEW
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for the year ended 31 December 2019
GP OUTLIERS BY WEEKDAY Dashboard representation of Fraud Waste and Abuse Industry Report
The following are key highlights for
third Annual Healthcare FWA Indaba.
report was based on data collected
the year under review.
With an unprecedented attendance
from medical schemes. There are
record, this two-day event brought
numerous possible strategies for
together the industry’s leaders and
fighting FWA and, as highlighted in
stakeholders to share information on
this report, collaboration is key to
key issues related to FWA.
unlocking their benefits. We encourage
1. FRAUD, WASTE AND ABUSE The online portal of the Healthcare Forensic Management Unit (HFMU) has over 100 participants representing various organisations. Members have shared over 390 cases of investigations conducted on FWA in the portal since its relaunch in 2018. The HFMU has expanded beyond South Africa’s borders and includes participants from Lesotho, Namibia
funders to share more information
Highlights from the programme
on the HFMU portal as it helps focus
included case studies such as details of the sick note syndicate; admissibility of evidence in a court of law presented by the National Prosecuting Authority (NPA); the evolving role of the regulator in the context of FWA, delivered by the
efforts on FWA initiatives. Greater participation by other funders with regard to data-sharing will improve the identification of outliers and bring about efficiencies.
Health Professions Council of South
Data-sharing and leveraging insights
Africa (HPCSA); and the role of the
across funders have also enabled
Health Sector Anti-Corruption Forum
funders and investigators to better
and Zimbabwe. We look forward to
in curbing FWA as detailed by the
focus investigative efforts, when
welcoming participants from other
Special Investigations Unit (SIU).
addressing the challenges of FWA.
FWA industry report
CMS S59 investigation
The BHF compiled a detailed FWA
In 2019 the CMS launched the Section
‘dashboard’ report comprising
59 Investigation (S59), which was
In recognition of International Fraud
highlights from 70% of industry data
led by a panel of legal experts. The
Awareness Week, the HFMU hosted its
in respect of trends. This inaugural
purpose was to probe allegations of
countries, including Botswana, Malawi and eSwatini, in 2020.
FWA indaba
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ANNUAL REPORT 2019
Medical Schemes Employer Groups
H EALTHCARE F ORENSIC M ANAGEMENT U NIT
Road Accident Fund
HFMU KEY STAKEHOLDERS
Administrators / Managed Care Organisations
Special Investigations Unit
Compensation Funds Health Departments
racial profiling and unfair treatment of
options. Instead, insurers were granted
permitted to provide cover to the same
healthcare practitioners by medical
broad exemptions from the Medical
population while the LCBO framework
schemes and administrators.
Schemes Act and permitted to provide
is being developed. Medical schemes
demarcation products for a further
offer more protection to the population
two years, while the CMS and the
covered as they operate based on
National Department of Health (NDoH)
strong social solidarity principles. This
develop a framework for LCBOs.
will result in schemes providing more
In its submission, the BHF highlighted the prevalence of healthcare fraud globally as well as in our industry. It recognised and acknowledged efforts made by medical schemes and administrators to tackle FWA. However, it was reiterated that these individual efforts must be consolidated to address the scourge of FWA effectively. The HFMU was established for this purpose and has been advocating for industry-wide collaboration.
2. LOW-COST BENEFIT OPTIONS
The BHF guidelines
standardised benefits that are in line with national health policy, as opposed
To support members, the BHF
to the fragmented provision of health
developed guidelines to encourage
services by insurers.
and help members apply for exemption for LCBOs. The guidelines were based on essential healthcare benefits, which are aligned with the revised prescribed minimum benefits (PMBs) currently under development.
Appeal lodged by the BHF Towards the end of the 2019 financial year, the BHF lodged an official appeal with the CMS with regard to the Discovery Life exemption, granted in
For the successful implementation of
January 2019. After numerous attempts
NHI, it is important to strengthen the
to obtain information, the CMS, in
The CMS’ Circular 54 of 2015 provided
provision of primary care benefits.
terms of the Promotion of Access
guidelines for medical schemes to
The BHF is of the view that the same
to Information Act (PAIA) and the
apply for exemptions in respect of
exemption dispensation offered
Promotion of Administrative Justice Act
LCBOs. The exemption framework
to insurers in respect of low-cost
(PAJA), declined our requests to provide
was withdrawn, however, leaving
options should also be given to
us with details regarding the basis upon
schemes unable to provide such
medical schemes. Schemes should be
which that exemption was granted.
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for the year ended 31 December 2019
The BHF response to CMS Circular 80 of 2019
3. NHI SUBMISSION
Hoexter: Administrative Law in South Africa points out that whether one applies the Promotion of Justice Act or
The stated purpose of Circular 80 of
The NHI Bill was released on
the constitutional principle of legality,
2019, issued by the CMS, is to inform
8 August 2019. The BHF’s submission
administrators are required to remain
medical schemes, insurers and other
was submitted to the Parliamentary
within the bounds of their powers and
Portfolio Committee on Health by
interested parties that no LCBOs will
not to misconstrue those powers.
29 November 2019.
segments going forward. The circular
The sustainability of the medical
further states that no products based
schemes industry in the long term is
on the Demarcation Exemption
currently under threat and has been for
The submission was in three parts: the first was an executive summary. The BHF supports the concept of
Framework and/or the Medical
some time, due partly to the high costs
UHC as defined by the WHO, namely:
Schemes Act will be allowed beyond
of the current PMB package. There is no
‘Universal health coverage means that
2021. This circular is legally problematic
guarantee that the new PMB package,
all people and communities can use
for a number of reasons. It is ultra vires
if it is brought into law, will resolve
the promotive, preventive, curative,
the powers of both the Registrar of
the problems around accessibility of
rehabilitative and palliative health
Medical Schemes and the CMS, and it
medical schemes to lower-income
services they need, of sufficient quality
constitutes an unlawful fettering of the
groups. While a PMB package based
to be effective while also ensuring that
Council’s powers to grant exemptions
on primary healthcare is undoubtedly
the use of these services does not
in terms of section 8(h) of the Medical
a step in the right direction, it has
expose the user to financial hardship.’
Schemes Act.
not yet been tested and there may
For South Africa, NHI is the vehicle to
well be opposition to such a package
deliver UHC.
be allowed for low-income market
The duty of the Council, in section 7 of the Medical Schemes Act, is to control and co-ordinate the functioning of
from various societal groups when
It is necessary to emphasise, however,
the Minister of Health attempts to promulgate the necessary regulations.
that NHI is not UHC. It is just one of
is complementary (as opposed to
While the need for LCBOs may well
objectives of UHC. Even if UHC is an
consistent) to national health policy,
fall away if the new PMB package is
ideal that can never be fully attained,
and does not extend to the taking
implemented, it is up to the Council
pursuing it gives direction to a health
of blanket decisions not to grant
to decide, in terms of section 8(h),
system for improving access to
exemptions to medical schemes in
whether there are still exceptional
healthcare services for those who
terms of section 8(h) on the subject
cases that warrant exemption. This can
need them, so it is a valuable concept.
of LCBOs.
only be done on a case-by-case basis.
There is a constitutional right to
The ability of medical schemes to
administrative action that is lawful,
adapt to their changing environment,
reasonable and procedurally fair,
like any other business, is critical
and that cannot be overturned by a
for their survival. In light of this,
circular from the CMS. The fact that the
unlawful constraints on exemptions
CMS signalled its intention to apply a
from the Medical Schemes Act and
blanket rule regarding medical scheme
its regulations, such as those set
exemptions for LCBOs is therefore
out in Circular 80 of 2019, cannot be
deeply concerning. Hoexter (vi): C.
entertained.
medical schemes in a manner that
the mechanisms for achieving the
The second part of the submission was a full commentary and analysis. This section consisted of the BHF’s comments and analysis of the NHI Bill, taking into consideration the language used, constitutional anomalies, corporate governance of the NHI fund, flow of funding, the role of provincial and local government, and purchaser/ provider split, amongst others.
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ANNUAL REPORT 2019
These included concerns relating to amendments to the Medical Schemes Act, the single exit price and the application of the Competition Act. The third part of the submission detailed proposed amendments to the NHI Bill. The BHF prepared this section in order to assist the Parliamentary Portfolio Committee to better understand the nature of the amendments to the NHI Bill proposed in its written submission. Some of the changes relate to the wording but others were proposed in order to ensure that the systems, to be created by the bill, are effective and efficient and that the Constitution is upheld. The BHF members have pledged to recognise the critical role of the government in providing for the health needs of the South African population and have committed to work together with officials of the national and provincial Departments of Health and other government agencies in a spirit of fairness, co-operation and constructive engagement within the confines of the law.
4. THE BHF MEDICAL SCHEME DASHBOARD ANALYSIS SNAPSHOT The quality of care provided by open schemes and restricted schemes is comparable. HIV has the highest coverage ratios, while asthma has the lowest coverage ratios. The coverage ratios for hypertension are sub-optimal, yet it is the most prevalent chronic condition. The non-healthcare CMS Annual Report 2018/2019
expenditure of open schemes is higher compared to non-healthcare
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for the year ended 31 December 2019
expenditure in restricted schemes. This is largely attributed to brokerage and marketing expenses.
5. SCENARIO PLANNING
Defining the game
All in all, four scenarios were crafted: These were Clean Bill of Health,
The process used a set of questions and followed the methodology below: 1. Context – how has healthcare
the BHF head office on 23 May 2019 to evaluate the South African health sector, which is currently not ‘healthy’. The objective of this process was to develop a set of scenarios for the South African healthcare sector until 2030, and to identify opportunities for the BHF in the development of an improved healthcare sector that would be beneficial to its members.
Intensive Care Unit (ICU). CLEAN BILL OF HEALTH is a
changed over the last five years? A strategic conversation took place at
Non-Adherence, Waiting Room and
best-case scenario where there
2. Scope – what is the BHF’s playing
is healthcare sector cohesion
field, or the scope of its game? 3. Players – who are the major players in the healthcare sector?
plus positive leadership by senior government officials. The doctor is on the ball; the treatment is solid; the
4. Rules of the game – what are the
patient follows the doctor’s guidance;
certainties that apply to all players
a clean bill of health emerges. Positive
in the sector?
leadership on the part of government
5. Key uncertainties – what uncertainties will impact on the sector? 6. Scenarios – what are possible futures for the healthcare sector?
has laid down the structural framework and the collaborative environment for key players within the healthcare sector.
DEFINING THE GAME – SCENARIO MATRIX HEALTHCARE SECTOR PLAYER COHESION
Waiting Room
Clean Bill of Health
SENIOR GOVERNMENT LEADERSHIP NEGATIVE
SENIOR GOVERNMENT LEADERSHIP POSITIVE
ICU
Non-Adherence
HEALTHCARE SECTOR PLAYER DISCORDANCE BOARD OF HEALTHCARE FUNDERS NPC
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ANNUAL REPORT 2019
6. TITANIUM AWARDS
NON-ADHERENCE envisages
they can; now they’re waiting for the
discordance among key healthcare
necessary authorities to help. In this
sector players, despite positive
scenario, key players in the healthcare
The 5th edition of the Titanium Awards
leadership by government. The
sector need buy-in from senior
saw the inclusion of a new category
doctor provides appropriate advice
government structures to provide
known as the Best Paper Award. The
the momentum and pathways for the
award seeks to promote a balance of
healthcare system to succeed. That
scientific rigour and relevance to the
leadership is not forthcoming.
industry so that science is accessible
on what needs to be done, but the patient either ignores it or search for alternative therapies online. The result: non-adherence.
to member trustees.
A protectionist mindset throws down
The worst-case ICU SCENARIO
stumbling blocks in the path of clear
sees discordance among key
developmental initiatives provided by
healthcare sector players exacerbated
the government.
by the lack of postitive leadership
Titanium Award for Young
THE WAITING ROOM SCENARIO is
from government. Without clear
Achiever: Anele Siswana was the
characterised by healthcare sector
guidance through regulation, and the
winner. The award celebrates young
cohesion despite negative leadership
energy and resources of government,
professionals who have made a
by government. Patients have an idea
the healthcare sector has little hope
notable impact in the healthcare
of what is wrong and have done all
of growth.
industry and also seeks to promote
Anele Siswana, winner of the Titanium Award for Young Achiever
BOARD OF HEALTHCARE FUNDERS NPC
The winners in each category are as follows:
ANNUAL REPORT 2019
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effective succession within the sector to sustain the future of the medical profession. Anele walked away with R50 000 in prize money. Titanium Award for Outstanding Achievement: This category celebrates any individual who has made outstanding and exceptional contributions to the healthcare industry to promote, grow, improve and advance the sector. Dr Brian Ruff was named the winner. Titanium Award for Excellence in Creating Access to Healthcare: The Government Employees Medical Scheme (GEMS) scooped the prize. The award recognised its initiatives to facilitate access to healthcare. Titanium Award for Service to Membership – Open, Closed and Self-Administered Medical Schemes, Administrators and Managed Care Organisations:
Dr Brian Ruff, winner of the Titanium Award for Outstanding Achievement
This award was conferred on Hosmed in recognition of what it has achieved
Rispel were the winners. This award
Ferhson was honoured with the award.
in providing the best service to its
recognises health journalists for the
His daughter, Renita Fehrsen-du
members. The award recognises
contribution they make towards raising
Toit, accepted the award on his
industry excellence and unprecedented
awareness of healthcare issues.
behalf. Speaking about her father’s
Titanium Award for Best Paper:
contributions to healthcare outcomes
contributions to members by providing value for money.
This category recognises the best
in South Africa, she said: “He always
Titanium Award for Health
paper, which provides information that
had a passion to care for people and
Facilities (private and public
is relevant and adds value. Nominees
after he retired from academia, he
sectors): This award acknowledges
were judged on relevance, clarity,
started a medical aid that enabled
individual healthcare facilities whose
soundness and completeness. Shivani
even lower-income people to afford
innovations and systems result in
Ranchod was named the winner.
private healthcare services. If I learned
efficiency in the delivery of quality healthcare. Alliance Care was the winner.
Dr Humphrey Zokufa Lifetime Achievement Award: This award
one thing from my father, it is always to be ethical.” The family announced
recognises an individual who has
that it would donate the prize money
Titanium Award for Best
made a significant contribution to
of R50 000 to the Ian Murray Fund, an
Healthcare Media Content: Primedia
the healthcare industry over a long
organisation that facilitates medical
Cape Talk’s Pippa Hudson and Amy Rae
period of time. The late Professor Sam
students’ trips to rural areas.
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ANNUAL REPORT 2019
7. STAKEHOLDER ENGAGEMENT
The BHF membership engagement
2019. Initiatives with key stakeholders included the following:
Engaging and building relationships with all our key stakeholders ensures that the BHF meets the needs of its members, driving activities to achieve strategic goals and sustain the business. Various stakeholder
Policy and regulatory engagements
with 19 different stakeholders,
issues and challenges emerged as the
12 thought leadership sessions,
primary concerns of our members.
Exhibitions held with five key
The table below lists those key
partners,
concerns and challenges, based on our
Engagements with three non-
engagements with our members.The
members, and
funding industry operates in a highly
Successful signing of two Memo-
randums of Understanding (MoUs).
engagements were held for the period
BHF MEMBER ENGAGEMENTS
In the course of 2019, a number of
regulated environment and the BHF
STAKEHOLDER REVIEW 2019
COUNTRY
TYPE
CHANNEL
KEY ISSUES
South Africa
Regional meeting Cape Town and Johannesburg
23 medical schemes
HFMU collaboration
5 administrators
Low-cost options
Board of trustee presentations
4 medical schemes
Address member concerns, areas to focus on
BHF and WITS
25 registered attendees
Trustee Development Programme
13 members schemes
2 countries represented
The law relating to medical schemes, role of responsibility of trustees, ethical leadership, history of medical aids, health governance, fraud waste and abuse in healthcare, health finance, principles and practices of governance: King IV practices
5 administrators
Scenario planning feedback
1 managed care entity
COFI Bill – Legal opinion; Low-cost options
Update on activities undertaken by the BHF on behalf of members
1 administrator 2 non-members
Regional meeting Cape Town and Johannesburg
Value-based contracting The BHF Conference 2019
NHI regional workshop Johannesburg
15 medical schemes
NHI Bill
Board of trustee presentations
12 medical schemes
Update on activities undertaken by the BHF on behalf of members; Address member concerns and identify key areas to focus on
Regional Meeting Johannesburg and Cape Town
21 medical schemes
The BHF NHI Submission; Alignment of Healthcare Reform in the context of Health Market Inquiry
4 administrators 1 managed care organisation 1 government agency
Post HMI – What’s next for medical schemes Low cost option- exemption application Section 59; Effective coverage implementation COFI Bill; PMB Review; Risk Based Solvency CMS Annual Report Analysis SIU Health Sector Anti-Corruption Forum
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for the year ended 31 December 2019
routinely engaged extensively with
TOP 10 MEMBER CONCERNS IN 2019
policy-makers and regulators, both proactively and reactively, on various key issues affecting membership in
1.
Medical scheme consolidation
Botswana, Namibia, South Africa,
2.
Role of the funding industry under the NHI
3.
Relationship between the CMS and medical schemes
4.
Lack of growth
5.
Escalating healthcare costs
6.
Racial profiling allegations
7.
Lack of cohesion in the industry
Zimbabwe, Lesotho, Malawi and Swaziland. A stakeholder engagement was implemented further thereto. A stakeholder engagement plan, which can be accessed on the company website, shows in tabular form details
8. The need for governance training
of the many and varied initiatives in
9.
which the BHF has participated and the key outputs. Key elements are
Quality of healthcare
10. LCBOs
provided alongside and below.
BHF MEMBER ENGAGEMENTS
STAKEHOLDER REVIEW 2019
COUNTRY
TYPE
CHANNEL
KEY ISSUES
Botswana
Botswana regional
3 medical schemes
The BHF's proposition to Botswana members
meeting
1 administrator
Healthcare fraud, waste and abuse Update on the student visa issue
Cape Town ICC
Updates on regional activities of the BHF Data collection; Effective coverage Unique identifier for healthcare professionals in Botswana Regional meeting
Lesotho
Strategic workshop
3 schemes
Fraud framework; Student visa updates; HMFU
1 administrator 1 non-member
The implementation of NHI: Industry role, lessons learnt and Implications for the industry
1 medical scheme
Benefit design
Research matters Strategic direction
Malawi
Malawi regional meeting
1 medical scheme
The BHF's proposition to Malawian members Healthcare fraud, waste and abuse
Cape Town ICC
Update on the student visa issue Updates on regional activities of the BHF Data collection; Effective coverage Unique identifier for healthcare professionals in Malawi
Namibia
Regional meeting
4 medical schemes
Fraud waste and abuse collaboration regionally Data collection The BHF's value to the industry Overview of the SA funding system
Strategic workshop
1 medical scheme
Benefit design
Workshop
1 medical scheme
Effective coverage
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ANNUAL REPORT 2019
New members It gave us great pleasure to welcome Bonitas Medical Fund and the Compensation Fund to the BHF family in 2019. Bonitas is the second-largest open medical scheme in South Africa,
have both on board and looks forward
There were 438 and 745 deletions,
to a long and mutually rewarding
respectively, over the same period.
relationship.
These stats are representative of the open and closed practices across the
8. PRACTICE CODE NUMBERING SYSTEM
SADC region for the period 2018/2019.
9. TRUSTEE TRAINING
with 730 000 beneficiaries. It has
There were many new registrations on
financial stability, strong key indicators
the Practice Code Numbering System
The BHF undertook extensive trustee
of fiscal health and reserves of over
(PCNS) during 2018/2019. These
training in the course of 2019 as part
R3 billion. The Compensation Fund’s
included both medical professionals
of the BHF and Wits Business School
mission is to regulate the South
and allied health workers
Trustee Development Programme.
African labour market to ensure a
throughout the SADC region. The
Sessions were well-attended with 44
sustainable economy through various
new registrations totalled 4745 and
attendees overall, representing 20
measures. The BHF is delighted to
4784, respectively, for the two years.
schemes and one administrator.
BHF MEMBER ENGAGEMENTS
STAKEHOLDER REVIEW 2019
COUNTRY
TYPE
CHANNEL
KEY ISSUES
SADC
Regulator’s round
6 countries
Recognition of foreign insurance products in
table discussion
keeping with the requirements of the Immigration Act 13 of 2002
Regional meeting
7 medical schemes
Fraud waste and abuse, research, data spec,
Board of Trustees
2 medical schemes
Address member concerns, key areas to focus on
One on one
4 medical schemes
Address member concerns, key areas to focus on
One on one
1 administrator
Address member concerns, key areas to focus on
Effective Coverage
4 medical schemes
Member implementation experiences with regards
Implementation
3 stakeholders
to effective coverage as well as the overview of
upcoming events and student visa updates Presentations
Forum South Africa
effective coverage
BHF & WITS
25 registered attendees
The law relating to medical schemes, the role of
Zimbabwe
Trustee
12 member schemes
and responsibility of trustees, ethical leadership,
Lesotho
Development
4 non-member
history of medical aids, health governance, fraud
organisations
waste and abuse in healthcare, health finance,
2 partners
principles and practices of governance:
3 countries
King IV practices
One on one
2 medical schemes
Fraud waste and abuse collaboration regionally;
One on one
2 medical schemes
Zimbabwe
Programme
Data collection; BHF value to the industry Guest lecturers; Howard Stephens: Health finance case studies; Joe Seoloane: Case studies on companies that have undergone curatorship Update on BHF activities on behalf of members Address member concerns, areas to focus on
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL REPORT 2019
17
A pass rate of 85% was recorded and
context, further to which a proposed
upon request from the BHF Benefit
issues under the spotlight included
framework was developed. The
and Risk Department.
the law relating to schemes, trustees’
background to the development
responsibilities and ethical leadership.
and structure of the framework
10. EFFECTIVE COVERAGE An implementation manual on effective coverage was launched in December
is discussed in detail in the BHF document entitled 'Effective Coverage in South Africa – an Implementation Manual for Medical Schemes'.
11. THE 20TH ANNUAL BHF CONFERENCE The 20 th BHF Annual Conference was held between 21 and 24 July 2019 at the International Convention Centre in
2019. The BHF commissioned
The purpose of this document is to
Cape Town. Over 1000 delegates from
3ONE Consulting Actuaries to assist
provide practical input regarding the
more than 20 countries attended,
in assessing effective coverage
implementation of this framework in a
including healthcare executives,
within the South African healthcare
medical scheme context. It is available
professionals, principal officers of
BOARD OF HEALTHCARE FUNDERS NPC
18
ANNUAL REPORT 2019
1000+
Delegates
20 Countries
89
120
18
Industry thought leaders and experts presented at the conference
Organisations from across the healthcare, financial, medical and other sectors were represented
Media were represented at the conference
medical schemes, policy-makers,
schemes, pharmaceutical companies,
regulators, government officials and
administrators, investment houses,
representatives of international
government departments, managed
organisations.
care organisations and international
The conference featured 89 guest speakers from across the SADC region,
bodies such as the World Health
A peer-reviewed health journal, the
Organisation (WHO) and SADC.
Southern Africa Health Journal, was
the USA, Kenya, Ireland, India and
Themed Convergence 2030: Healthcare
Germany, amongst others.
Re-imagined, the conference focused
Dignitaries included the Namibian Deputy Minister of Health and Social Services, Juliet Kavetuna, the Namibian Deputy Minister of Finance,
12. LAUNCH OF THE SOUTHERN AFRICA HEALTH JOURNAL
on the role of convergence in defining
launched in July 2019 in conjunction with the at the 20 th BHF Annual Conference.
what the healthcare system will look
Fragmentation is a common theme
like in 2030.
in the South African system and is not unique to us; it exists in many
A major part of the conference was
countries. It comes at a cost and
dedicated to understanding the
hence the inaugural journal had
role of multi-sectoral convergence
‘convergence’ as its theme within
in delivering quality health services
the overarching context of UHC and
and why it is important to scale up.
the need for increased access to
Key topics included, amongst other,
quality affordable care. It included
defining and understanding our
an update on Malawi’s journey as it
An estimated 120 organisations
healthcare ecosystem, as well as the
moves towards UHC. Topics covered
were represented, including medical
need for health system reform.
included:
Paulos Ithete, Namibian Member of Parliament, Heather Sibungo, the Director General: NDoH of South Africa, Malebona Precious Matsoso, and Gauteng MEC for Health, Dr Bandile Masuku.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL REPORT 2019
20% Healthcare-related expenditure amounted to R157 billion in 2019
19
Paid to professional providers in hospital Directly paid to hospitals
37%
PMB conditions and tertiary care
50%
Allocated to in-hospital care
67%
SOURCE: CMS Annual Report
South African effective coverage
framework Measuring medical scheme risk
profiles Essential modules for medical aid
administration Value proposition for efficiency
discounted options offered by South African medical schemes in 2018 Patient experience – a formative
and summative evaluation of the self-reported perspective of medical scheme beneficiaries with diabetes.
13. CMS ANNUAL REPORT ANALYSIS The 2018/19 CMS Annual Report highlighted very low growth in the industry, as well as a risk pool that is weakening. In the absence of interventions such as LCBOs and a PMB review, the state of the industry is likely to decline further. It is therefore important that we ensure that the barriers to care associated with the
Industry trends
be retained by schemes to cater for the risks medical schemes face?
Trends noted in the previous years
In fact, risk-based solvency is a
have continued. The number of schemes has been reduced marginally and there are now 78 registered schemes; the total number of benefit options offered by these schemes is 264. Fragmentation at
much-needed intervention to ensure optimal solvency levels and the BHF is committed to continued engagement on these and many other issues affecting healthcare in the region.
the benefit option level persists,
Of the R157 billion paid in claims,
especially as there are an additional
more than 50% related to PMB
65 efficiency-discounted options
conditions – a very high proportion
that 8.92 million beneficiaries may
of that spent on tertiary care. Of
now choose from. Open schemes
the total healthcare expenditure,
experienced a 0.91% increase in
37% was directly paid to hospitals,
growth, closed schemes 0.51%.
and approximately 20% of total expenditure was paid to professional
On the financial side, the industry
providers in hospital. This implies that
received R174 billion in 2018,
more than 67% of total healthcare
up from R163 billion in 2017.
expenditure was for in-hospital care.
Healthcare-related expenditure amounted to R157 billion in the 2018 financial year. The industry made a surplus of R5 billion, contributing to reserves which totalled R66 billion as at 31 December 2018.
This confirms the HMI’s observation that most care takes place in hospital, making medical schemes unaffordable. If the industry is to reverse this unsustainable trajectory, there is a need to relook the provision
current PMB package are addressed
One must then ask the question:
of more primary and preventative
immediately. LCBOs will be a start.
how much of these reserves should
care.
BOARD OF HEALTHCARE FUNDERS NPC
20
ANNUAL REPORT 2019
What are members experiencing?
required is that the right choices and
proof of medical cover from a South
actions are taken.
African-registered medical scheme, as
As noted above, beneficiaries have
14. THE COFI BILL
the choice of belonging to one of 329 alternative options (264 benefit options and 65 efficiency-discounted options) offered by 78 schemes. That is a large number to choose from and the complexity of benefit design makes the choice even more difficult. This explains why the HMI
per the South African Immigration Act. This requirement is imposed at two stages:
The Conduct of Financial Institutions (COFI) Bill is a complex piece of legislation and must be read in conjunction with other pieces of legislation, notably the Financial Services Regulatory Act. It repeals
1. Application stage: Some South African embassies/consulates require proof of cover before the visa is applied for. This requirement, however, is not applied consistently.
Average contributions increased by
Demarcation Regulations. Medical
8.2%, which is 3.5% above inflation.
schemes will have to compete with
This places significant financial strain
insurers offering healthcare products
2. University registration stage: Some universities (selectively) reject foreign students’ local medical scheme cover; instructing them to obtain South African medical scheme cover; from one of their vendors despite the foreign student having a valid visa.
on members. Out-of-pocket payments
as before.
In light of this, a ‘recognition
Report recommends standardised benefit options with simpler designs; something the CMS is also looking at.
are an additional cost. Beneficiaries’ total out-of-pocket expenditure was at least R32.9 billion in 2018, up from R31.8 billion. This amounts to 19% of total healthcare expenditure, which means that the industry is failing to cover almost 20% of beneficiaries’ needs.
several other Acts and its potential impact on the medical funding industry is huge. If implemented in its current form, it will do away with the
The number of institutions regulated by the Financial Services Conduct Authority (FSCA) is much wider than the entities the CMS regulates. In the COFI Bill, there is provision to regulate all outsourced services by schemes and administrators. This means that all outsourced services of both schemes
This once again highlights the need
and administrators may be under
to review benefit design to provide
scrutiny and may require licences from
more primary care. While there was
the FCSA.
a decrease in new complaints by beneficiaries to the CMS, there was an increase in unresolved cases, almost double relative to the previous year. While more cases were resolved in comparison to 2017, it is of concern that more than 47% of complaints had taken more than 120 days to resolve.
The extent of the interventions is wide. The COFI Bill calls for oversight on remuneration of all service providers to ensure that it is fair, commensurate and there is no duplication of payment. The FCSA will be empowered to determine the fairness of contracts with any service provider.
framework’ has been developed by the CMS in consultation with the Department of Home Affairs, SADC member states, the International Education Association of South Africa and the BHF. The framework seeks to provide a mechanism for the CMS to assess whether medical schemes not registered in South Africa fulfil the regulatory requirements. The framework, in terms of section 8 (c) of the Medical Schemes Act, provides that: “The Council shall, in the exercise of its powers, be entitled to enter into an agreement with any person, including the State or any other institution, for the performance of any specific act or function or the rendering of any service.”
The report notes that industry needs to adopt significant reforms to better
15. STUDENT VISA UPDATE
serve the ‘health citizen’. This is indeed possible, given the strong financial
Foreign students who wish to study
position of the industry. All that is
in South Africa are required to obtain
BOARD OF HEALTHCARE FUNDERS NPC
DR KATLEGO MOTHUDI MANAGING DIRECTOR
BOARD OF H E A LT H C A R E FUNDERS NPC (Non-Profit Company in terms of Section 10 of the Companies Act 2008)
ANNUAL FINANCIAL STATEMENTS f o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 19
22
ANNUAL REPORT 2019
ANNUAL FINANCIAL STATEMENTS for the year ended 3 1 D ecember 2019
COUNTRY OF INCORPORATION AND DOMICILE
South Africa
NATURE OF BUSINESS
“To promote the interest of members as medical schemes and administrators with a view to efficient access of their subscribing members to healthcare benefits.”
DIRECTORS A K Mia Hamdulay Administrators - SA J K Mothudi Executive M R Bayley Administrators - SA L R Callakoppen Open Schemes - SA M E Dlamini SADC - eSwatini A Fourie-van Zyl Open Schemes - SA G Goolab Restricted Schemes - SA J H Joubert Open Schemes - SA N J Khauoe Restricted Schemes - SA M Mahlaba Administrators - SA T B Makoetlane SADC - Lesotho S Martinus Restricted Schemes - SA J V M Mbonani Open Schemes - SA A V Memela Open Schemes - SA M C Mokgosana SADC - Botswana B O S Moloabi Restricted Schemes - SA H L Nhlapo Administrators - SA N Nyathi Administrators - SA C Raftopolous Restricted Schemes - SA S N Sanyanga SADC - Zimbabwe H C Schäfer SADC - Namibia C G Schmidt Restricted Schemes - SA H Stephens Restricted Schemes - SA M C Wilson Restricted Schemes - SA SECRETARY
Michelle Beneke - Volvere (Pty) Ltd
COMPANY REGISTRATION
2001/003387/08
REGISTERED OFFICE
Lower Ground Floor South Tower 1Sixty Jan Smuts Jan Smuts Avenue cnr Tyrwhitt Avenue Rosebank 2196
POSTAL ADDRESS
PO Box 2863 Saxonwold 2132
ATTORNEYS
Adams and Adams Attorneys
BANKERS
Nedbank Limited
AUDITORS
SizweNtsalubaGobodo Grant Thornton Inc
BOARD OF HEALTHCARE FUNDERS NPC
Chairperson Re-elected 23 July 2019 MD Appointed 21 November 2019
Resigned 23 July 2019
Resigned 23 July 2019
Appointed 23 July 2019 Resigned 2 December 2019 Appointed 1 April 2019 Appointed 23 July 2019
Resigned 3 April 2019
ANNUAL FINANCIAL STATEMENTS 23 for the year ended 31 December 2019
ANNUAL FINANCIAL STATEMENTS for the year ended 3 1 D ecember 2019
FINANCE AND AUDIT COMMITTEE REPORT Composition of the Finance and Audit Committee Owing to the size of the company, the Board of Directors resolved to appoint a Finance and Audit Committee that will undertake additional functions. The Finance and Audit Committee is also responsible for providing oversight in respect of risk management. A risk register is reviewed on a regular basis. These risks are monitored by this Committee. At 31 December 2019, the membership of the Finance and Audit Committee comprised: A Fourie-van Zyl
Non-Executive Director
Chairperson
J K Mothudi
Managing Director (Executive)
Not a member – by invitation only
J V M Mbonani
Director (Non-Executive)
Member from 4 November 2019
S D H Odendaal
Independent
Member
H Stephens
Director (Executive)
Member and Financial Consultant for the 2019 Financial Year
M C Wilson
Director (Non-Executive)
Member from 22 May 2019
The Chairperson or, in her absence, at least one member of the Finance and Audit Committee attends the Annual General Meeting.
Functions of the Finance and Audit Committee The public interest score of the company is less than 350. In addition, the company has not, in terms of its Memorandum of Incorporation, agreed to adopt the Enhanced Accountability Requirements as set out in Chapter 3 of the Companies Act 71 of 2008 (Companies Act). However, in the spirit of good corporate governance and in alignment with the provisions of the King Report on Corporate Governance for South Africa, 2016 (King IV), the Board of Directors has formed the Finance and Audit Committee, which holds meetings with the key role players on a regular basis and by the unrestricted access granted to external auditors. In the current year, four meetings were held by the Finance and Audit Committee. The details of membership and attendance are set out on page 53. The Terms of Reference of the Finance and Audit Committee are reviewed on a regular basis to ensure that they remain relevant. In these Terms of Reference, the main responsibilities are: • Considering the appointment of the external auditors, assessing their independence and making appropriate recommendations, through the Board, to members for consideration at the Annual General Meeting; • Discussing, with the external auditors, the auditor’s engagement letter; • Recommending to the Board the external audit fee and pre-approving any non-audit services; • Ensuring that the provision of non-audit services does not impair the external auditor’s independence or objectivity; • Reviewing the annual financial statements prior to Board submissions; • Reviewing policies and processes; • Enquiring of the external auditors about significant financial risks or exposure; • Reviewing, with the internal auditors, the internal audit process; • Reviewing and monitoring corporate governance practices; and • Reviewing the company’s risk management assessment. BOARD OF HEALTHCARE FUNDERS NPC
24
ANNUAL REPORT 2019
FINANCE AND AUDIT COMMITTEE REPORT (CONTINUED) Statement of Internal Control Based on the assessment by the Finance and Audit Committee of the results of the internal audit of the company’s system of internal controls and risk management, including the design, implementation and effectiveness of the internal financial controls and considering information and explanations given by management and discussions with both the internal and external auditors on the results of their audits, nothing has come to the attention of the Finance and Audit Committee that caused it to believe that the company’s system of internal controls and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements. The opinion of the Finance and Audit Committee has been recommended to the Board for approval.
Annual Financial Statements The Finance and Audit Committee has evaluated the annual financial statements for the year ended 2019 and concluded that they comply, in all material aspects, with the requirements of the Companies Act and the International Financial Reporting Standard for Small and Medium-sized Entities. The Finance and Audit Committee, therefore, recommended the approval of the annual financial statements to the Board. The financial statements for the current year have been prepared in accordance with the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities.
Internal Audit Outsourced Risk and Compliance Assessment (Pty) Ltd were re-appointed as internal auditor during 2019.
External Auditor The auditors are engaged to provide members with an independent opinion as to whether or not the annual financial statements fairly present, in all material aspects, the financial position of the company and its financial performance and cash flows in accordance with the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities and the requirements of the Companies Act 71 of 2008. The Finance and Audit Committee has been provided with a management letter by the external auditors. Management indicated that all representations made to the independent auditors were accurate and appropriate.
_______________________________________________ A FOURIE-VAN ZYL Johannesburg 25 June 2020
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 25 for the year ended 31 December 2019
ANNUAL FINANCIAL STATEMENTS for the year ended 3 1 D ecember 2019
DIRECTORS’ RESPONSIBILITIES AND APPROVAL The Directors are required by the Companies Act of South Africa, 2008, to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the International Financial Reporting Standard for Small and Medium-sized Entities. The external auditors are engaged to express an independent opinion on the annual financial statements. The annual financial statements are prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. The Directors acknowledge that they are ultimately responsible for the system of internal financial control established and place considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The Directors have reviewed the company’s cash flow forecast for the year to 31 December 2020 as part of the going concern assessment and, in the light of this review and the current financial position, they are satisfied that the company has or will have access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for reporting whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework. The annual financial statements have been examined by the company’s external auditors and their report is presented on pages 26 to 28. The annual financial statements set out on pages 29 to 48 which have been prepared on the going concern basis, were approved by the Board on 28 May 2020 and were signed on its behalf by:
_______________________________________________
_____________________________________________
DR A K MIA HAMDULAY DR J K MOTHUDI Johannesburg 25 June 2020 BOARD OF HEALTHCARE FUNDERS NPC
26
ANNUAL REPORT 2019
REPORT OF THE INDEPENDENT AUDITORS to the members of the Board of Healthcare Funders NPC Opinion We have audited the financial statements of the Board of Healthcare Funders NPC (the company) set out on pages 31 to 48, which comprise the statement of financial position as at 31 December 2019, and the statement of profit or loss and other comprehensive income, statement of changes in funds and reserves and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Board of Healthcare Funders NPC as at 31 December 2019, and its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa.
Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the sections 290 and 291 of the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised January 2018), parts 1 and 3 of the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised November 2018) (together the IRBA Codes) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities, as applicable, in accordance with the IRBA Codes and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Codes are consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) respectively. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information The directors are responsible for the other information. The other information comprises the information included in the document titled “Board Of Healthcare Funders NPC (Non-Profit Company in terms of Section 10 of the Companies Act, 2008) Annual Financial Statements for the year ended 31 December 2019”, which includes the Directors’ Report as required by the Companies Act of South Africa. The other information does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 27 for the year ended 31 December 2019
REPORT OF THE INDEPENDENT AUDITORS (CONTINUED) Responsibilities of the directors for the financial statements The directors are responsible for the preparation and fair presentation of the financial statements in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
BOARD OF HEALTHCARE FUNDERS NPC
28
ANNUAL REPORT 2019
REPORT OF THE INDEPENDENT AUDITORS (CONTINUED) • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
_______________________________________________ Pravesh Hiralall SizweNtsalubaGobodo Grant Thornton Inc. Director Registered Auditor 25 June 2020 20 Morris Street East Woodmead
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 29 for the year ended 31 December 2019
DIRECTORS’ REPORT for the year ended 31 December 2019
The Directors present their report for the year ended 31 December 2019.
MAIN BUSINESS AND OPERATIONS The Company promotes the interest of members as medical schemes and administrators with a view to efficient access of their subscribing members to health care benefits. The operating results of the Company are set out in the attached financial statement. Significant expenditure was incurred on the upgrade to the PCNS system but this was offset by curtailed expenditure in other areas. A for profit entity was established in 2019 with the MD being the sole director. No financial transactions were processed through this entity in 2019. In our opinion the results do not require any further comment.
DIRECTORS NAME
DATE OF APPOINTMENT
M R Bayley
17 August 2017
DATE OF RESIGNATION
South Africa
L R Callakoppen
21 November 2019
South Africa
M E Dlamini
13 September 2018
eSwatini
A Fourie-van Zyl
08 February 2016
South Africa
G Goolab
07 June 2016
South Africa
J H Joubert
19 June 2018
South Africa
N J Khauoe
17 May 2018
South Africa
M Mahlaba
30 November 2016
South Africa
T B Makoetlane
22 November 2018
Lesotho
S Marthinus
22 November 2018
South Africa
J V M Mbonani
23 July 2019
South Africa
A V Memela
08 February 2016
South Africa
A K Mia Hamdulay
19 August 2015
South Africa
M C Mokgosana
01 April 2019
Botswana
B O S Moloabi
23 July 2019
South Africa
J K Mothudi
01 September 2017
South Africa
H L Nhlapo
28 July 2015
South Africa
N Nyathi
30 November 2016
South Africa
C Raftopolous
26 August 2014
South Africa
S N Sanyanga
19 August 2015
Zimbabwe
H C Schäfer
28 September 2016
Namibia
C G Schmidt
19 June 2018
South Africa
H Stephens
08 February 2016
South Africa
M C Wilson
13 September 2018
South Africa
23 July 2019
23 July 2019
2 December 2019
3 April 2019
COUNTRY
BOARD OF HEALTHCARE FUNDERS NPC
30
ANNUAL REPORT 2019
DIRECTORS’ REPORT (CONTINUED) for the year ended 31 December 2019 ACCOUNTING FRAMEWORK The financial statements have been prepared in accordance with the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities.
TAXATION Prior to the incorporation as a Section 21 company, the Board of Healthcare Funders (BHF) was an unincorporated association, exempt from income tax. After incorporation under Section 21 of the previous Companies Act, BHF had to reapply for a tax exemption certificate. The exemption certificate was approved on 22 March 2012 without an effective date. However, all amounts owed to the BHF have been refunded. For the current year, no taxation has been provided as a result of the tax exempt status granted by the South African Revenue Service.
PRACTICE CODE NUMBERING SYSTEM On 18 March 2014 Council for Medical Schemes wrote to the Company advising that the tender for the administration of PCNS had not been awarded to the Company. The Company then launched legal proceedings contesting the legality of the tender award. An arrangement was also reached with the Council for Medical Schemes that the Company would continue to administer PCNS pending the outcome of the legal proceedings. There has been no further legal proceedings in the current year and no legal costs have been incurred in respect of this matter. The only known exposure is any future potential legal costs to be incurred to close out on this matter. Further engagement occurred during 2019 and progress is being made.
GOING CONCERN The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and the realisation of assets and settlement of liabilities, contingent obligations and commitments that will occur in the ordinary course of business.
COVID-19 The company implemented its Business Continuity Plan during March 2020. The majority of staff has been able to work from home and system enhancements are in place to decentralise the operations of the call centre. All investments are with the local banks and have only been affected by the reduction in the Repo rate.
AUDITORS SizweNtsalubaGobodo Grant Thornton Inc was appointed as external auditors for a three-year term which ends in 2020.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS
31
for the year ended 31 December 2019
STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2019
NOTES
2019 R
2018 R
Revenue
3
43 872 000
39 086 536
Other Income
4
12 195 674
10 899 424
Operating Expenses
21
(56 987 660)
(55 699 784)
OPERATING (DEFICIT)/SURPLUS
5
(919 986)
(5 713 824)
Investment Revenue
6
3 272 356
3 100 285
TOTAL SURPLUS/(DEFICIT) FOR THE YEAR
2 352 370
(2 613 539)
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
2 352 370
(2 613 539)
BOARD OF HEALTHCARE FUNDERS NPC
32
ANNUAL REPORT 2019
STATEMENT OF FINANCIAL POSITION for the year ended 31 December 2019
NOTES
Non-Current Assets
2019 R
2018 R
3 212 725
3 739 259
Property, Plant and Equipment
8
3 203 463
3 727 033
Intangible Assets
9
9 262
12 226
36 809 810
33 290 191
Current Assets Trade and Other Receivables
10
759 451
1 985 962
Cash and Cash Equivalents
11
36 050 359
31 304 229
TOTAL ASSETS
40 022 535
37 029 450
Reserves
33 067 879
30 715 509
Accumulated Funds
12
22 177 586
20 974 889
PCNS Reserve
15
10 890 293
9 740 620
Current Liabilities
6 954 656
6 313 941
Trade and Other Payables
13
6 198 716
5 492 094
Provision for Leave Pay
14
755 940
821 847
40 022 535
37 029 450
TOTAL FUNDS RESERVES AND LIABILITIES
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 33 for the year ended 31 December 2019
STATEMENT OF CHANGES IN FUNDS AND RESERVES for the year ended 31 December 2019
Accumulated funds R
PCNS Reserve R
Total R
BALANCE AT 31 DECEMBER 2017
23 409 151
9 919 896
33 329 047
Deficit for the year
(2 613 539)
-
(2 613 539)
179 277
(179 277)
-
20 974 889
9 740 620
30 715 509
2 352 370
-
2 352 370
Transfer to PCNS Reserve
(1 149 673)
1 149 673
-
BALANCE AT 31 DECEMBER 2019
22 177 586
10 890 293
33 067 879
Transfer from PCNS reserve BALANCE AT 31 DECEMBER 2018 Surplus for the Year
BOARD OF HEALTHCARE FUNDERS NPC
34
ANNUAL REPORT 2019
STATEMENT OF CASH FLOWS for the year ended 31 December 2019
Notes
CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from Customers / Members Cash paid to Suppliers and Employees
2019 R
2018 R
4 892 595
(4 111 710)
56 179 963
49 805 591
(54 559 724)
(57 017 586)
Cash generated / (utilised) by operating activities
18
1 620 239
(7 211 995)
Interest received
6
3 272 356
3 100 285
CASH FLOWS FROM INVESTING ACTIVITIES
(146 465)
(1 005 973)
Replacement of property, plant and equipment
(155 884)
(1 310 321)
9 419
304 348
4 746 130
(5 117 683)
Proceeds on disposal of property, plant and equipment Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year
11
31 304 229
36 421 912
Cash and cash equivalents at the end of the year
11
36 050 359
31 304 229
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 35 for the year ended 31 December 2019
ACCOUNTING POLICIES for the year ended 3 1 D ecember 2019 1
CORPORATE INFORMATION
The financial statements of Board of Healthcare Funders (Non-Profit Company in terms of Section 10 of the Companies Act, 2008) (the “company”) for the year ended 31 December 2019 were authorised for issue in accordance with a resolution of the Directors on 28 May 2020. The company is a non-profit company in terms of Section 10 of the Companies Act, 2008 incorporated and domiciled in South Africa with its membership comprising administrators, medical schemes and societies in South Africa, Botswana, Lesotho, Mozambique, Namibia, eSwatini, Malawi and Zimbabwe.
2
PRESENTATION OF ANNUAL FINANCIAL STATEMENTS
The financial statements set out on pages 31 to 48 have been prepared in accordance with the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities and in accordance with the Companies Act. These financial statements are presented in Rands which also represents the functional currency of the company. All financial information is presented in Rands and has been rounded to the nearest Rand except where otherwise stated.
2.1
Property, plant and equipment
Property, plant and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and any accumulated impairment in value. Such cost includes the cost of replacing part of such property, plant and equipment when the cost is incurred if the recognition criteria are met. The amortisation method was changed from reducing balance to straight line for the 2019 financial year. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in surplus or deficit in the year the asset is derecognised. The assets’ residual values, after straight line depreciation is applied, are reviewed on an annual basis and adjusted to an end value of R1, if there is any indication of additional usage.
BOARD OF HEALTHCARE FUNDERS NPC
36
ANNUAL REPORT 2019
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2019 2.1
Property, plant and equipment (continued)
Depreciation rates for the assets are as follows: Furniture and fittings: 5% to 20% Office equipment: 16.67% Computer equipment: 20% Leasehold improvements: 12.5%
2.2
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised, and expenditure is charged against surplus or deficit in the year in which the expenditure is incurred where these costs do not meet the recognition criteria. The amortisation method was changed from reducing balance to straight line for the 2019 financial year. The useful life of the PCNS intangible asset is assessed to be finite and has been impaired to R1 in prior periods (Refer to Note 9). The useful life of the assets is estimated as follows: Computer software 3 to 15 years PCNS software 3 to 15 years Research costs Research costs are expensed as incurred.
2.3
Impairment of assets
The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the company makes an estimate of the asset’s recoverable amount. An asset’s or cash generating unit’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use and is determined for an individual asset, unless that asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The difference between the carrying value and recoverable amount is recorded in surplus or deficit. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. The best evidence of the fair value less costs to sell of an asset is a price in a binding sale agreement in an arm’s length transaction or a market price in an active market. If there is no binding sale agreement or active market for an asset, fair value less costs to sell is based on the best information available to reflect the amount that an entity could obtain, at the reporting date, from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. In determining this amount, an entity considers the outcome of recent transactions for similar assets within the same industry.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 37 for the year ended 31 December 2019
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2019 2.3 Impairment of assets (continued) An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in surplus or deficit. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over the remaining useful life.
2.4
Financial instruments
Initial recognition and measurement All financial instruments are recognised at the trade date. Trade date is the date at which the company committed to purchase the asset. Financial instruments are initially recognised when the company becomes party to the contractual terms of the instruments and are measured at the transaction price. Financial liabilities and equity instruments are classified according to the substance of the contractual agreement on initial recognition. Transaction costs are included in the initial measurement of the financial instrument. Subsequent to initial recognition these instruments are measured as set out below.
Financial assets Accounts receivable At the end of each reporting period, the trade receivables are reviewed to determine whether there is any objective evidence of impairment. If so, an impairment loss is recognised. Trade receivables are recognised and carried at the undiscounted amount less an allowance for any impairment. Provision is made when there is objective evidence that the company will not be able to collect the debts. Bad debts are written off when identified. Trade receivables are non-interest bearing and are generally settled within 30 – 90 days.
Cash and cash equivalents The accounting policy for cash and cash equivalents is set out in 2.5.
Financial liabilities The company’s principal financial liabilities are trade and other payables. These are categorised under “other liabilities”.
Trade and other payables Trade and other payables are carried at the undiscounted amount. Trade payables are non-interest bearing and are normally settled on 30-day terms.
BOARD OF HEALTHCARE FUNDERS NPC
38
ANNUAL REPORT 2019
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2019 2.4
Financial instruments (continued)
Derecognition Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: •
the rights to receive cash flows from the asset have expired;
•
the company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass through” arrangement; or
•
the company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
Derecognition Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in surplus or deficit.
Fair value methods and assumptions The carrying amount of financial assets and liabilities with a maturity of less than one year is assumed to approximate their fair value.
2.5
Cash and cash equivalents
Cash equivalents are short-term, highly liquid investments held to meet short-term cash commitments rather than for investment or other purposes. Therefore, an investment normally qualifies as a cash equivalent only when it has a maturity of, say, three months or less from the date of acquisition. For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held on call and investments in money market instruments all of which are available for use by the company unless otherwise stated. Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 39 for the year ended 31 December 2019
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2019 2.6 Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of that amount of the obligation. Where the company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in surplus or deficit net of any reimbursement.
2.7
Employee Benefits
The cost of short-term employee benefits (those payable within 12 months after service is rendered) such as paid vacation, leave pay, sick leave and bonuses are recognised in the period in which the service is rendered and is not discounted. The expected cost of short-term accumulating compensated absences is recognised as an expense as the employees render service that increases their entitlement or, in the case of non-accumulating absences, when the absences occur. The expected cost of bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance. Provisions for leave pay and bonuses are recognised as a liability in the financial statements. Defined Contribution Fund Contributions in respect of defined contribution plans are recognised as an expense in the year to which the related service is rendered.
2.8
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. Company as a Lessee Operating Lease Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
2.9
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is recognised at the fair value of the consideration received or receivable excluding discount rebates and other SARS taxes and duty. The following specific recognition criteria must also be met before revenue is recognised: PCNS provider income PCNS income from providers is accounted for on the cash basis when payment is received. The fee is recognised as revenue when no significant uncertainty about its collectability exists.
BOARD OF HEALTHCARE FUNDERS NPC
40
ANNUAL REPORT 2019
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2019 2.9
Revenue recognition (continued)
Levy income Levy income from members and user income from the Practice Code Numbering System is accounted for on the accrual basis where there is reasonable assurance that the levy will be received. Interest income Interest is recognised using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument, or a shorter period, where appropriate, on a time proportion basis that takes into account the effective yield on the asset. All other income is accounted for on the accrual basis.
2.10
Taxes
Value added tax Revenues, expenses and assets are recognised net of the amount of value added tax except where the value-added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value-added tax is recognised as part of the cost of acquisition of the asset, or as part of the expense item, as applicable. The net amount of VAT recoverable / payable is included as part of receivables or payables in the statement of financial position.
2.11
Significant accounting judgements and estimates
Estimation of uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year are discussed below: Property, plant and equipment Estimation is used in approximating the useful lives and residual values of property, plant and equipment. These assessments are made on an annual basis and use historical evidence and current economic factors to estimate the values (see note 8). Trade receivables Estimation is used in approximating the recoverability of debtors. These assessments are made on an annual basis and uses management’s best estimate based on current economic factors and historical experience with debtors (see note 10).
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS
41
for the year ended 31 December 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
2019 2018 R R
3. REVENUE Levy Income
15 734 988
14 746 523
Practice Code Numbering System Income
28 137 012
24 340 013
43 872 000
39 086 536
10 955 713
9 678 694
212 174
282 411
1 027 787
938 319
12 195 674
10 899 424
4. OTHER INCOME Conference Income and Sponsorship Trustee Training Income Sundry Income
5. OPERATING SURPLUS Operating surplus is stated after: Loss on Disposals
45 949
25 720
Depreciation and Amortisation
627 051
732 694
Operating Leases - Equipment
60 752
55 444
Operating Leases - Premises (see Note 17)
2 388 361
2 381 236
23 800 092
22 123 345
201 824
170 522
27 124 029
25 488 961
Interest Received on Cash and Short-Term Deposits
3 272 356
3 100 285
3 272 356
3 100 285
Salaries and Wages Internal Audit Services
6. INVESTMENT REVENUE
7. AUDITORS REMUNERATION External Audit Fees
337 201
349 984
337 201
349 984
BOARD OF HEALTHCARE FUNDERS NPC
42
ANNUAL REPORT 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 8. PROPERTY, PLANT AND EQUIPMENT Capital Furniture Office Computer Leasehold Work in and fittings equipment equipment improvements Progress
Total
R R R R R R COST: At 1 Jan 2018
1 711 677
1 205 665
931 943
1 345 308
277 046 5 471 639
Additions
145 053
70 639
655 070
439 558
- 1 310 320
Disposals
(132 189)
(247 775)
(59 531)
1 724 541
1 028 529
1 527 482
At 31 Dec 2018 Additions Disposals At 31 Dec 2019
- (68 739) 1 655 802
- (277 046)
1 784 866
-
6 065 417
-
155 884
-
-
-
(43 698)
-
- (112 436)
1 028 529
1 639 668
1 784 866
R
R
155 884
- 6 108 865
ACCUMULATED Furniture Office Computer Leasehold DEPRECIATION: and fittings equipment equipment improvements
(716 541)
R
Total
R R
At 1 Jan 2018
586 393
563 587
467 960
397 253 2 015 193
Depreciation charge for the year
110 956
96 145
195 422
325 857
Disposals
(114 593)
(247 765)
(42 829)
- (405 187)
At 31 Dec 2018
582 755
411 967
620 552
723 110 2 338 384
Depreciation charge for the year
105 432
83 245
196 051
239 358
Disposals
(41 062)
At 31 Dec 2019
647 125
- 495 212
(16 007) 800 596
-
728 380
624 086 (57 069)
962 468 2 905 401
NET BOOK VALUE: At 31 Dec 2019
1 008 677
533 317
839 072
At 31 Dec 2018
1 141 786
616 562
906 930
BOARD OF HEALTHCARE FUNDERS NPC
822 398 3 203 463 1 061 756
3 727 033
ANNUAL FINANCIAL STATEMENTS 43 for the year ended 31 December 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
2019 2018 R R
9. INTANGIBLE ASSETS Computer Software Cost At 1 January 2019 Disposal At 31 December 2019
69 726
107 153
-
(37 427)
69 726
69 726
57 501
71 900
2 964
4 314
-
(18 713)
60 465
57 501
9 261
12 225
Accumulated Amortisation At 1 January 2019 Amortisation Charge for the Year Disposal At 31 December 2019
Net Book Value
PCNS Copyright The carrying value is determined as follows: Cost Accumulated Impairment Carrying value at end of year TOTAL INTANGIBLE ASSETS
2 850 000
2 850 000
(2 849 999)
(2 849 999)
1
1
9 262
12 226
The PCNS copyright was purchased from Bestmed Medical Scheme, in terms of an out-of-court settlement. The Council for Medical Schemes, which accredits BHF with the administration of PCNS stipulated that no profit may be derived from PCNS. The excess PCNS income over the actual expenditure is placed in a specific reserve for the maintenance of PCNS. The impairment was assessed on the date of acquisition of the copyright and represents the recoverable amount. The recoverable amount was determined at the PCNS cash unit level and was based on the value in use of zero, as no profit may be derived from the PCNS administration.
BOARD OF HEALTHCARE FUNDERS NPC
44
ANNUAL REPORT 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 2019 2018 R R
10.
TRADE AND OTHER RECEIVABLES
Trade Receivables
823 014
935 303
(429 306)
(550 305)
393 708
384 998
3 500
148 087
South African Revenue Services - VAT
362 243
1 452 876
759 451
1 985 962
Balance at the Beginning of the Year
550 305
596 649
Arising During the Year
360 322
259 102
(481 321)
(305 446)
Provision for Credit Allowances Prepayments
Provision for impairment
Unused Amounts Reversed Balance at End of Year
429 306
550 305
Age analysis of financial assets that are past due but not impaired
0–30 Days 31–60 Days 61–90 Days 91+ Days Total R R R R R
Trade Receivables
12 940
19 942
171 275
189 551
393 708
As at 31 December 2019
12 940
19 942
171 275
189 551
393 708
Trade Receivables
24 959
6 385
88 038
265 617
384 998
As at 31 December 2018
24 959
6 385
88 038
265 617
384 998
Trade and other receivables are non-interest bearing and are generally on 30-day terms. Trade and other receivables that are not past due nor impaired are considered to be fully recoverable. Due to the short-term nature of the instruments their fair value approximates the carrying amounts. The maximum exposure to credit risk at the reporting date is the carrying amount of the financial statements of each class of trade and other receivables mentioned above. The company does not hold any collateral as security.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 45 for the year ended 31 December 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 2019 2018 R R
11. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise: Cash on Hand
-
Bank Balances
84
344 585
519 718
Short Term Deposits
35 705 774
30 784 427
Total Cash
36 050 359
31 304 229
12. ACCUMULATED FUNDS In terms of the Companies Act, these funds are not distributable to constituent members in the normal course of business but can be used to create a specific reserve. In the Board’s view there is no need to establish a specific reserve.
13. TRADE AND OTHER PAYABLES 2019 2018 R R
Trade Payables
545 556
858 084
Accruals
2 187 668
1 768 477
Other Payables
2 816 561
2 316 217
642 802
544 411
6 129
4 905
PCNS Over Payments Employee related payables
6 198 716
5 492 094
Other Payables comprised the following items:
Accrual for Audit Fees
342 240
388 795
Debtors with Credit Balances
2 474 321
1 927 422
2 816 561
2 316 217
Terms and conditions of the above financial liabilities. • Trade payables are non-interest bearing and are normally settled on 30-day terms. • Accruals and other payables are non-interest bearing and have on average a term of six months. Included in accruals and other payables are the lease commitments straight line adjustment. • PCNS overpayments occur as a result of practitioners paying excess amounts over and above current year subscription fees. • Debtors with credit balances represents overpayments by members to be used for future conference or membership fees. • Due to the short-term nature of the instruments their carrying amounts approximate their fair value.
BOARD OF HEALTHCARE FUNDERS NPC
46
ANNUAL REPORT 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
2019 2018 R R
14. PROVISION FOR LEAVE PAY Provision at the Beginning of the Year Provision raised during the year Provision utilised during the year
821 847
553 460
1 127 532
1 126 475
(1 193 439)
(858 088)
755 940
821 847
Leave pay A provision is recognised for the estimated value of outstanding leave entitlement for staff not yet taken at the reporting date. The outflow of benefits will occur as the leave is taken. There are no cash flow implications unless employment is terminated.
15. PCNS Reserve During the 2019 Financial Year R1 149 673 was transferred from Accumulated Funds to PCNS Reserve. During the 2018 Financial Year R179 277 was transferred from PCNS Reserve to Accumulated Funds.
16. BHF CONFERENCE Conference income and Sponsorship (included in other income - note 4) Conference expenses (included in operating expenses) Conference Surplus
2019 2018 R R 10 955 713
9 678 694
(10 027 895)
(8 945 602)
927 818
733 092
17. COMMITMENTS AND CONTINGENCIES Operating lease commitments The company has entered into leases on property and an office machine. The property leases have an average life of eight years and five years respectively. There are no restrictions placed upon the lessee by entering into the lease. The leases provide for an escalation of 9% per annum. Future minimum rentals payable under non-cancellable operating lease agreements at year-end are as follows:
2019 2018 R R
Up to one year
2 734 381
2 525 817
After one year but not more than five years
4 462 321
7 196 702
-
-
7 196 702
9 722 519
More than five years
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 47 for the year ended 31 December 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 2019 2018 R R
18. NOTES TO THE STATEMENT OF CASH FLOWS Reconciliation of net surplus before taxation to cash generated by operations
Net Surplus/Deficit
2 352 370
(2 613 538)
Adjustments: Depreciation
624 087
728 380
Amortisation
2 964
4 314
45 949
25 720
(3 272 356)
(3 100 285)
(246 986)
(4 955 409)
Loss on disposal of property and equipment Interest received
Changes in working capital
1 867 225
(2 256 586)
Trade and other receivables
1 226 511
(1 352 773)
Provisions
(65 907)
268 387
Trade and other payables
706 621
(1 172 200)
1 620 239
(7 211 995)
Cash generated by operating activities
19. DIRECTORS AND KEY MANAGEMENT EMOLUMENTS 2019 2018 R R
Executive
Short term employee benefits-emoluments received by director
3 583 372
3 382 046
Short term employee benefits-emoluments received by management team
7 890 274
6 930 555
Non-board related activities
1 162 231
1 139 742
12 635 877
11 452 343
The managing director is an executive director, no other directors’ emoluments are paid. The managing director’s service contract is a permanent contract, with no timelines applicable, other than notice periods. Non-board related activities refer to the contract for the Finance Consultant. A detailed breakdown of the emoluments paid to key staff members is available on request from the Company Secretary.
BOARD OF HEALTHCARE FUNDERS NPC
48
ANNUAL REPORT 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 20. FINANCIAL INSTRUMENTS Financial risk management objectives and policies The company’s principal financial instruments comprise cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the company’s operations. The company has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
Credit risk Receivables balances are monitored on an on-going basis. The maximum exposure is the carrying amount as disclosed in note 10. There is the possibility for a concentration of credit risk within the provision for impairment of trade receivables, the majority of which is for resigned member’s levies. With respect to credit risk arising from the other financial assets of the company, which comprise cash and cash equivalents, the company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The company only deposits cash surpluses with financial institutions with a credit rating of not less than the equivalent of Aa1*. * Moody’s downgraded South Africa’s long-term foreign and local currency credit rating to Ba1 (BB+ equivalent to other credit rating agencies) on 27th March 2020 (i.e. below investment grade status or so-called “junk” level) The short-term outlook was left on negative, signaling the low likelihood of the credit rating improving in the short term. The company trades only with recognised, creditworthy third parties. In addition, receivable balances are monitored on an on-going basis with the result that the company’s exposure to bad debts is not significant. The maximum credit risk exposure arises from trade and other receivables and cash and bank balances. There are no significant concentrations of credit risk.
Liquidity risk The company monitors its risk to a shortage of funds using a recurring liquidity planning model. This model considers the maturity of both its financial liabilities and financial assets (e.g. accounts receivable) and projected cash flows from operations. The company has not entered into any loan arrangements and does not have any overdraft facilities.
Capital management The primary objective of the company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business. No changes were made in the objectives, policies or processes during the years ended 31 December 2019 and 31 December 2018.
21. EVENTS AFTER THE REPORTING PERIOD COVID-19 The company implemented its Business Continuity Plan during March 2020. The majority of staff have been able to work from home and system enhancements are in place to decentralise the operations of the call centre. All investments are with the local banks and have only been affected by the reduction in the Repo rate.
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL FINANCIAL STATEMENTS 49 for the year ended 31 December 2019
SUPPLEMENTARY INFORMATION Supplementary Schedule not forming part of the Annual Financial Statements
DETAILED EXPENDITURE - NOTE 21
2019 2018 R R
OPERATING EXPENSES Advertising
176 336
116 651
Agency Fees
219 343
120 233
Audio-Visual Costs
-
23 909
Auditors Remuneration
337 201
Bank Charges
330 494
265 911
Cleaning
191 159
187 422
Computer Expenses Conference
349 984
594 216
548 593
10 027 895
8 945 602
Consumables
111 385
108 490
Depreciation
627 051
732 694
Electricity, Water and Rates
924 704
815 488
31 866
21 251
Entertainment Inspection Fees
351 253
520 213
Insurance
226 829
220 152
Internal Auditor’s Remuneration
201 824
170 522
Legal Expenses
780 950
559 607
Loss on Disposal of Property and Equipment
45 949
25 720
Maintenance
259 911
328 024
Meetings
967 988
1 306 827
82 974
48 864
Motor Vehicle Expenses Operating Lease Expenses - Equipment Operating Lease Expenses - Premises Postage and Courier Printing and Stationery Professional Services Provision for Doubtful Debts Recruitment Costs Staff Remuneration
60 752
55 444
2 388 361
2 381 236
4 326
144 852
58 405
167 347
11 506 474
11 102 704
(120 998)
(46 344)
-
446 702
23 800 092
22 123 345
Statutory Levies
207 670
201 053
Subscriptions
929 284
1 019 707
Sundry Expenses
22 394
18 170
416 865
385 966
Training and Welfare Costs
224 053
1 372 725
Travel and Accommodation
1 000 655
910 721
Telephone
Total 56 987 660 55 699 784
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ANNUAL REPORT 2019
SUPPLEMENTARY INFORMATION (CONTINUED) Supplementary Schedule not forming part of the Annual Financial Statements
DETAILED INCOME STATEMENT
2019 2018 R R
REVENUE
43 872 000
39 086 536
Levy Income
15 734 988
14 746 523
Practice Code Numbering System Income
28 137 012
24 340 013
OTHER INCOME
15 468 030
13 999 709
BHF Conference and Sponsorship
10 955 713
9 678 694
Interest Received
3 272 356
3 100 285
Sundry income
1 027 787
938 319
212 174
282 411
Trustee Training Income
Total Income
59 340 030
53 086 245
OPERATING EXPENSES
(56 987 660)
(55 699 784)
SURPLUS/(DEFICIT) AFTER TAXATION
BOARD OF HEALTHCARE FUNDERS NPC
2 352 370
(2 613 539)
ANNUAL FINANCIAL STATEMENTS
51
for the year ended 31 December 2019
SUPPLEMENTARY INFORMATION (CONTINUED) Supplementary Schedule not forming part of the Annual Financial Statements
DETAILED PCNS INCOME STATEMENT
2019 2018 R R
INCOME 30 304 510 26 450 523 BHF Levy Contribution 2 386 866 2 270 204 PCNS Service Provider Income 19 508 230 16 538 804 PCNS User Agreement Income 6 241 916 5 531 005 Inspection Fees 339 961 452 933 Interest Received 1 505 940 1 267 429 Sundry Income 321 597 390 148 EXPENSES 29 154 837 26 629 800 Bank Charges 296 027 232 314 Cleaning 110 683 107 873 Computer Expenses 87 979 106 613 Consumables 41 827 51 423 Depreciation 206 994 300 789 Electricity, Water And Rates 348 498 347 728 Inspection Fees 351 253 520 213 Legal Expenses 751 652 559 607 Maintenance 19 720 44 094 Meetings 37 226 94 706 Motor Vehicle Expenses 3 003 2 370 Operating Leases - Equipment 21 222 16 828 Operating Leases - Premises 1 045 212 1 109 168 Postage and Courier 495 128 181 Printing and Stationery 32 924 110 614 Professional Services 6 755 056 5 105 747 Provision for Doubtful Debts 223 308 (72 401) Recoveries 10 355 638 9 929 110 Recruitment Costs - 124 522 Staff Remuneration 8 023 825 7 253 853 Statutory Levies 54 977 64 883 Subscriptions 85 845 136 893 Sundry Expenses 5 250 11 158 Telephones 181 678 185 734 Training and Welfare Costs 48 141 42 797 Travel and Accommodation 66 404 114 983 PCNS Surplus / Deficit
1 149 673
(179 277)
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ANNUAL REPORT 2019
GENERAL INFORMATION Supplementary Schedule not forming part of the Annual Financial Statements MANAGEMENT TEAM • Kathlego Mothudi - Managing Director • Rajesh Patel - Head: Benefit & Risk • Zola Mtshiya - Head: Marketing and Communications • Eric Rantsho - Head of Shared Services and PCNS • Charlton Murove - Head of Research
ATTENDANCE AT BOARD OF DIRECTORS MEETINGS Director M R Bayley L R Callakoppen M E Dlamini A Fourie-van Zyl (Deputy Chairperson until AGM) G Goolab J H Joubert N J Khauoe (Deputy chairperson after AGM) M Mahlaba T B Makoetlane S Martinus J V M Mbonani A V Memela A K Mia Hamdulay (Chairperson) M C Mokgosana B O S Moloabi J K Mothudi H L Nhlapo N Nyathi C Raftopolous S N Sanyanga H C Schäfer C G Schmidt H Stephens M C Wilson √ n/a
21 February √ n/a √
23 May √ n/a √
23 July √ n/a √
19 September √ n/a √
21 November √ √ √
√
√
√
√
√
√ √
√ √
n/a √
n/a √
n/a √
√
√
√
√
– Attended meeting – Apologies given – Not a member of the board
BOARD OF HEALTHCARE FUNDERS NPC
√ √ n/a √ n/a n/a √ √ √ √ √ √
n/a n/a √ √ √ √ n/a √ √ √ √ √ √ √ √ √ √ √ n/a √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ n/a n/a n/a √ √ √ √ √
n/a √ √ √ √ √ √ √ √ √ √ √ √ n/a √ √
ANNUAL FINANCIAL STATEMENTS 53 for the year ended 31 December 2019
GENERAL INFORMATION (CONTINUED) Supplementary Schedule not forming part of the Annual Financial Statements FINANCE AND AUDIT COMMITTEE • The role of the Audit Committee is fulfilled by the Finance and Audit Committee, despite the fact that the company is not required to have an audit committee. • Finance and Audit Committee Meetings:
ATTENDANCE AT FINANCE AND AUDIT COMMITTEE MEETINGS Committee members A Fourie-van Zyl (Chairperson) J K Mothudi (Managing Director – by invitation) J V M Mbonani S D H Odendaal H Stephens M C Wilson √ n/a
20 February √ √ n/a √ √ n/a
22 May √ n/a √ √
18 September √ √ n/a √ √ √
4 November √ √ √ √ √
– Attended meeting – Apologies given – Not a member of the committee at that time
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ANNUAL REPORT 2019
CORPORATE GOVERNANCE REPORT for the year ended 3 1 D ecember 2019
OBJECTIVES OF THE BHF As a representative non-profit organisation, the BHF: Member interest representation Lobbying and advocacy Member compliance Member legal advice Trends monitoring Protect public perceptions of industry Member engagement Member collaboration Network opportunities Stakeholder relationships Industry standards Best practice Promote quality healthcare Recognising key industry stakeholders Education and training Thought leadership Enhancing skills and knowledge Member guidance Track industry issues Promote stakeholder awareness Transformation through development Transformation in healthcare industry Graduate development programme Opportunity identification Profiling members and industry
The BHF is committed to transformation of the healthcare industry and eradication of all forms of discrimination including on the grounds of health status, race, gender, sex, pregnancy, marital status, ethnic or social origin, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.
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for the year ended 31 December 2019
INCLUSIVE APPROACH TO MEMBERSHIP To qualify for membership of the BHF, a member must participate in the healthcare industry. This includes public and private sector participants, including actuaries and other consultants. External representative organisations are Pan-African medical schemes, administrators and managed healthcare organisations. While full members are entitled to nominate directors from their constituency (medical scheme, administrator, managed healthcare organisation or external representative organisation) to the board of directors of the BHF (Board), associate members are not. An annual general meeting is convened once per annum to present the audited financial statements and annual report of the BHF. This normally coincides with the Annual BHF Conference; in 2019 the AGM was held on 23 July 2019.
Medical Scheme
Administrator FULL MEMBERS Managed Healthcare Organisation External Representative Organisation MEMBERS Administrator
Managed Healthcare Organisation ASSOCIATE MEMBERS
External Representative Organisation Any other entity in the Healthcare Industry
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ANNUAL REPORT 2019
STAKEHOLDER ENGAGEMENT As an industry body, the BHF is keenly aware that it operates not in a vacuum, but in a broader context.
Natural Environment Society Economy External Stakeholders Internal Stakeholders
BHF
Although eligible members are identified in its MOI, the BHF recognises its broader stakeholder set:
MEMBERS MEDICAL SCHEME BENEFICIARIES
CMS
GOVERNMENT
EMPLOYEES
HEALTHCARE PROVIDERS
MEDIA SUPPLIERS BOARD OF HEALTHCARE FUNDERS NPC
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for the year ended 31 December 2019
Economy The BHF is a level 3 contributor to broad-based black economic empowerment as described by the Codes of Good Practice issued by the Minister of Trade and Industry in terms of the Broad-Based Black Economic Empowerment Act 53 of 2003. Fraud, waste and abuse (FWA) in the healthcare funding environment is rife and the BHF has created a portal for the management of FWA through its Healthcare Forensic Management Unit (HFMU). The HFMU portal provides all stakeholders from the healthcare funding industry, including third parties who are not members of the BHF, with the ability to collaborate on the eradication of FWA. HFMU operates as a platform for this collaboration with multiple stakeholders, including law enforcement agencies and regulatory bodies. The BHF is a non-profit organisation that relies on membership subscriptions and fees for the attendance of its annual conference and other training programmes, including its trustee training programmes, to generate revenue. A for-profit entity, called Africa Health Connect (Pty) Ltd, was established in 2019 with the MD being the sole director. No financial transactions were processed through this entity in 2019. The intention is to reduce reliance on membership levy income for the sustainability of the organisation. The BHF is registered as a public benefit organisation with the South African Revenue Service.
Society One of the objectives of the BHF is to promote consumer awareness. Through its HFMU endeavours, it has further committed to fighting the scourge of FWA in the medical scheme industry, which has a direct impact on rising medical scheme contributions; it thereby seeks to ensure the ongoing affordability of private healthcare funding for consumers in the SADC region.
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ANNUAL REPORT 2019
Interventions Interventions include the following and are broadly framed within a stakeholder engagement policy:
Members The BHF annual conference Regional meetings e-Forums Member communiques Annual report AGM • Titanium Awards Trustee training
Media
Council for Medical Schemes (Regulator) Multi-lateral relationships in various disciplines between the BHF's employees and their counterparts at the CMS Engagement with the CMS (including the Registrar and Council) on a number of issues affecting the healthcare funding industry Engagement with regulators in other Southern African Development Community (SADC) countries in conjunction with local member representatives Stakeholder engagement policy
Suppliers
Educating the public on how medical schemes operate, including radio and TV appearances
Fair procurement policies
Press releases to provide information to media
Partnering with suppliers
Titanium Awards
Commitment to transformation
Corporate communication and media policies
Healthcare Providers Engagement at industry level with industry bodies for healthcare service providers including the Health Professions Council of South Africa (HPCSA), the South African Medical Association (SAMA) and the Hospital Association of South Africa (HASA) Financial investment to improve access to the Practice Code Numbering System (PCNS) Transformation – standing Governance Committee agenda item
Employees Expansion of Remuneration Committee to Human Capital Committee Performance-linked remuneration ExCite platform Knowledge management Transformation – standing Governance Committee agenda item Stakeholder engagement policy
Stakeholder engagement policy
Government
Medical Scheme Beneficiaries
Engagement with various spheres of government including the Department of Health and National Treasury on policy issues
Beneficiary awareness through media presentations
Submissions provided to draft legislation
Media releases and communiques which assist member schemes and ultimately medical scheme beneficiaries
Engagement with the relevant Ministers of Health in terms of industry regulation and concerns Stakeholder engagement policy
BOARD OF HEALTHCARE FUNDERS NPC
Lobbying for issues to the benefit of medical scheme beneficiaries
CORPORATEANNUAL GOVERNANCE REPORT REPORT 2019
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for the year ended 31 December 2019
GOVERNANCE STRUCTURE
BOARD
Managing Director
Finance & Audit Committee
Universal Healthcare Committee
Governance Committee
SADC Committee
Human Capital Committee
HFMU Steering Committee
HFMU Operational Committee
Members
Non-Members
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ANNUAL REPORT 2019
BOARD OF DIRECTORS The Board is the governing body of the BHF and is ultimately accountable to the members. As a non-profit company, the BHF is required to have a minimum of three directors, but directors are appointed on a constituency basis as follows:
OPEN MEDICAL SCHEMES
RESTRICTED MEDICAL SCHEMES
Maximum 7 directors Open medical schemes registered with the CMS in South Africa
Maximum 6 directors Restricted medical schemes registered with the CMS in South Africa
ADMINISTRATORS & MANAGED CARE ORGANISATIONS
EXTERNAL REPRESENTATIVE ORGANISATIONS
Maximum 6 directors Administrators and Managed Care Organisations registered with the CMS in South Africa
1 director per country
BOARD REPRESENTATION The Chairperson and Deputy Chairpersons of the Board are as follows:
Ali Hamdulay Chairperson
Katlego Mothudi Managing Director
Antea Fourie-vanZyl Deputy Chairperson (Before AGM)
Neo Khauoe Deputy Chairperson (After AGM)
The Chairperson and Deputy Chairperson of the Board are appointed by the other Board members following the annual general meeting (AGM) at a special Board meeting exclusively convened to appoint the Chairperson and Deputy Chairperson and form the committees. Before the AGM, the Deputy Chairperson was also the chairperson of the Finance and Audit Committee and a member of the Human Capital Committee, but not its chair. The Deputy Chairperson after the AGM is a member of the Human Capital Committee, but not its chair. The Chairperson was a member of the Human Capital Committee but was not its chair. The Managing Director is an invitee to meetings of the Human Capital Committee and the Finance and Audit Committee.
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for the year ended 31 December 2019
Composition Open schemes are represented on the Board as follows: Antea Fourie-van Zyl, Medshield Josua Joubert, Compcare Lee Callakoppen, Bonitas Vusi Mbonani, Sizwe Vusi Memela, Hosmed (Resigned 2 December 2019)
The restricted scheme constituency has appointed the following directors: Costa Raftopoulos, Rand Water Croydon Schmidt, BCIMA (Resigned 3 April 2019) Guni Goolab, GEMS (Resigned 23 July 2019) Howard Stephens, Nedgroup Mike Wilson, TFG Neo Khauoe, Polmed Sabier Martinus, Old Mutual Stan Moloabi, GEMS
Administrators and managed care organisations are represented by the following directors: Ali Mia Hamdulay, Metropolitan Health Hleli Nhlapo, EOH Lungi Nyathi, Medscheme Mangaliso Mahlaba, Thebemed (Resigned 23 July 2019) Mark Bayley, Universal Healthcare
While the External Representative Organisations are represented as follows: Callie Schäfer, Namibia Moraki Mokgosana, Botswana Mzamo Dlamini, eSwatini Shylet Sanyanga, Zimbabwe Teboho Makoetlane, Lesotho
Apart from the Managing Director, all of the other directors are non-executive directors who are appointed to represent their constituencies, rather than their individual organisations.  
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ANNUAL REPORT 2019
Skill Set
Legal
Medical
The mix of knowledge and skills of the Board includes:
Procurement
Business
Human Resources
Accounting Risk Management
The Board is committed to transformation of the healthcare industry as a whole and this is encapsulated as one of the objectives of the BHF outlined in both the MOI as well as in the terms of reference of the Governance Committee, where transformation is a standing agenda item. Transformation is key to maintaining effective stakeholder engagement.
Term of Office Directors are appointed either by members through a voting process at the AGM or between AGMs by nomination from the relevant constituency at Board meetings. These interim appointments are confirmed by the members at the AGM immediately subsequent thereto. Save for the Managing Director (who is an executive director and also an employee of the BHF), directors serve for a term of office of three years; provided that each director whose tenure has ended may stand for re-election at the AGM only. No director who has served his tenure may be re-appointed by the Board.
Independence and Conflicts Directors and all committee members are encouraged to declare their personal financial interests in respect of any item which appears on the agenda or is discussed during any meeting. This is a standing agenda item on all Board and committee agendas. In addition, annual declarations of interest have been implemented and partially rolled out during the 2019 financial year and will be fully rolled out in the 2020 financial year. The Board has adopted an Ethics Policy which includes ethical obligations on directors as well as employees and other third parties. To assist directors in understanding their ethical responsibilities and duties (including their statutory duties), presentations have been made to the Board as part of ongoing director training; an Independent Legal Advice Policy has been adopted by the Board to assist directors who require independent legal advice, at the cost of the BHF, to clarify their legal position in respect of any matter arising from their directorship should the need arise. A Board Charter has also been adopted; it outlines the obligations of directors and clarifies expected conduct both in terms of the Companies Act and the MOI as well as dealing with other issues pertinent to the conduct of the affairs of the Board.
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for the year ended 31 December 2019
Performance Evaluation An online self-assessment performance evaluation was conducted in the 2019 financial year, with the results being presented to the Board and discussed during a meeting. Although not all Board members participated, the response to the outcome of this first performance evaluation was heartening.
Meetings and Attendance Attendee Ali Mia Hamdulay
Capacity
21-Feb-19 23-May-19 23-Jul-19 19-Sep-19 21-Nov-19
Chairperson
√
√
√
√
√
Mark Bayley
Director
√
√
√
√
√
Lee Callakoppen
Director
n/a
n/a
n/a
n/a
√
Mzamo Dlamini
Director
√
√
√
√
√
Director / Deputy chairperson
√
√
√
√
√
Guni Goolab
Director
√
√
n/a
n/a
n/a
Joshua Joubert
Director
√
√
√
√
√
Director / Deputy chairperson
√
Antea Fourie-van Zyl
Neo Khauoe
√
√
√
n/a
n/a
n/a
Director
Teboho Makoetlane
Director
√
√
√
√
Sabier Martinus
Director
√
√
√
√
Vusi Mbonani
Director
n/a
n/a
√
√
Vusi Memela
Director
√
√
√
√
Moraki Mokgosana
Director
n/a
√
√
√
√
Managing Director
√
√
√
√
√
Katlego Mothudi
Mangaliso Mahlaba
Hleli Nhlapo
Director
√
√
√
√
Lungi Nyathi
Director
√
√
√
Costa Raftopoulos
Director
√
√
√
√
Shylet Sanyanga
Director
√
√
√
√
√
Callie Schäfer
Director
√
√
√
√
√
Croydon Schmidt
Director
Howard Stephens
Director
√
√
√
√
√
Mike Wilson
Director
√
√
√
√
n/a n/a n/a n/a
√
– In attendance – Apologies n/a – Not necessary for this person to attend
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STRATEGY, PERFORMANCE AND REPORTING Strategy and performance The BHF’s strategy was revised by the Board in conjunction with management in September 2019. The strategy and implementation plans were approved by the Board in November 2019. The performance of management against the strategy will be monitored by the Board during the 2020 financial year and for the duration of the strategic timeline. The BHF revisits its strategy and the performance against that strategy on an annual basis for the duration of its strategic timeline to ensure that the strategy and the implementation plans remain relevant, given changing internal and external environmental factors.
Reporting The preparation of the annual financial statements and the annual report are overseen by the Finance and Audit Committee and the Governance Committee and are recommended to the Board for approval prior to being distributed by management to the members of the BHF.
BOARD COMMITTEES A calculation of the BHF’s public interest score is conducted on an annual basis following approval by the members of the audited financial statements. The calculations were not reviewed by external auditors for the 2019 financial year. The public interest score for the BHF for the 2018 financial year was less than 350 and accordingly, the BHF is not required to have a Social and Ethics Committee; neither is it obliged to have an Audit Committee. In addition, the MOI of the BHF does not provide for the voluntary adoption of the Enhanced Accountability and Transparency requirements set out in Chapter 3 of the Companies Act.
Committee structures There are two committee structures:
GOVERNANCE
STAKEHOLDER
Finance & Audit Committee Governance Committee
SADC Committee
Human Capital Committee
Universal Healthcare Committee
The governance committees focus on ensuring proper corporate governance in respect of the various areas of their responsibility while the stakeholder committees focus on dealing with issues that arise from time to time that are of importance to the specific stakeholder grouping. The Human Capital Committee creates an overlap between governance and stakeholder interests, but the BHF views stakeholder committees as those requiring advocacy, particularly given the objectives of the BHF. Governance committees accordingly tend to be predicated on clear work plans and predetermined outcomes, while stakeholder committees tend to operate on a looser basis, often either anticipating developments in relation to stakeholders or reacting to such developments. Accordingly, they may have work plans, but do not strictly adhere to them.
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for the year ended 31 December 2019
FINANCE AND AUDIT COMMITTEE Mandate Although the public interest score of the BHF does not merit the formation of an audit committee, the BHF has nonetheless created a Finance and Audit Committee. A new independent member, Herman Odendaal, joined the Committee in the 2019 financial year and his term of office ends in the 2022 financial year.
COMBINED ASSURANCE Oversight Approve internal audit charter Approve internal audit plan Annual committee report Deal with concerns and complaints
ANNUAL FINANCIAL STATEMENTS Oversight Nominate external auditor Determine external audit fees Determine non-audit services and agreement for non-audit services Review AFS and recommend to Board for approval
ACCOUNTING POLICIES & FINANCIAL CONTROLS Board submissions on accounting policies, ďŹ nancial controls, records and reporting Review and recommend budget to Board
RISK GOVERNANCE Oversight Determining risk strategy Approve risk management policy Evaluate nature and extent of risks based on risk appetite and risk tolerance Oversight of risk management
TECHNOLOGY & INFORMATION GOVERNANCE Oversight Set direction for technology and information governance Approve policies
The committee has formal terms of reference which were reviewed by the committee and submitted to the Board for approval during the 2019 financial year.
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Committee work during the 2019 financial year The work of the Finance and Audit Committee during the 2019 financial year included: Combined Assurance
Internal audit plan
Internal audit charter Internal audit industry code of ethics confirmation AFS
Approve AFS
Approve external audit report Solvency and liquidity test Accounting policies and financial controls
Policy review
Terms of reference review
For-profit subsidiary business case
Pricing model review
Authority framework
Budget review
Risk governance Risk management policy review
Business continuity plan PCNS project
Technology and information governance Penetration testing
Adverse social media scan
The Finance and Audit Committee is satisfied that ORCA Services, which provides the internal audit services, is sufficiently independent of management. The internal audit plan is risk-based and amended, subject to the approval of the committee, to cater for organisational risk profile changes. The committee met with the internal auditors independently of management during the 2019 financial year. A risk register had been prepared by management which identified certain strategic, tactical and operational risks facing the BHF. These were monitored by the committee during the 2019 financial year. A risk management policy, which includes a statement by the Board in relation to the BHF’s risk appetite and risk tolerance, has been approved and amendments to the policy were proposed by the committee and approved by the Board in the 2019 financial year. Technology and information governance received significant attention during the 2019 financial year, particularly in relation to the PCNS project which involved the mapping of processes and an assessment of system gaps to automate where possible. The committee's work during the 2019 financial year was monitored relative to a work plan adopted by the committee. The members of the committee conducted self-evaluations on a questionnaire-basis and feedback was provided to the committee for discussion. This was reported to the Board.
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for the year ended 31 December 2019
Meetings and attendance The Finance and Audit Committee met as follows during the 2019 financial year: Attendee Antea Fourie-van Zyl Herman Odendaal
Capacity
20-Feb-19 22-May-19 18-Sep-19 04-Nov-19
Chairperson
√
√
√
Independent Member
√
√
√
Howard Stephens
Member
√
√
√
√
Mike Wilson
Member
n/a
√
√
√
√
√
√
√
Katlego Mothudi
√ n/a
Managing Director (by invitation)
√
– In Attendance – Apologies – Individual not a member of the Committee or employed by the BHF at the time
The members of the Finance and Audit Committee have the requisite financial literacy, skills and experience to execute their duties effectively; and save for Herman Odendaal, who is an independent member, all other members are non-executive directors of the Board. Board members are entitled to attend Finance and Audit Committee meetings as observers and are entitled to speak, but not vote.
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GOVERNANCE COMMITTEE Mandate
GOOD CORPORATE GOVERNANCE Oversight
SETTING STANDARDS Governance
RISK MANAGEMENT Monitoring non-financial risk
COMPLIANCE GOVERNANCE
INTEGRATED REPORT
Applicable legislation King IV
Approve nonfinancial content King IV disclosures
The committee reviewed its terms of reference during the 2019 financial year. The terms of reference were approved by the Board.
Committee work during the 2019 financial year The work of the Governance Committee during the 2019 financial year included: Document Review Policies
Memorandum of Incorporation
AGM documentation
Board Charter
Member commitment
Compliance Compliance policy
Compliance framework
Governance King IV gap analysis
Corporate governance report
AGM documentation
The members of the committee conducted self-evaluations on a questionnaire-basis and feedback was provided to the committee for discussion. This was reported to the Board. The BHF subscribes to the tenets of King IV, complies with material applicable laws and has initiated a compliance project. Regularly, legal advice is sought to ensure that its operations comply with applicable laws.
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for the year ended 31 December 2019
Meetings and attendance The Governance Committee met as follows during the 2019 financial year: Attendee Vusi Memela Katlego Mothudi
Capacity
20-Feb-19 22-May-19 18-Sep-19 20-Nov-19
Chairperson
√
√
√
Managing Director
√
√
√
√
Neo Khauoe
Member
√
√
√
Callie Schäfer
Member
√
√
√
√
Howard Stephens
Member
√
√
√
√
√ n/a
– In Attendance – Apologies – Individual not a member of the Committee or employed by the BHF at the time
Some of the members of the Finance and Audit Committee are members of the Governance Committee and this cross-membership translates into collaboration between the committees, where required, and the avoidance of duplication or fragmentation of the functioning of the committees as far as possible. The members of the Governance Committee have the requisite knowledge, skills, experience and capacity to enable the committee to execute its duties effectively. Board members are entitled to attend committee meetings as observers and to address the committee, but not to vote at such meetings.
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HUMAN CAPITAL COMMITTEE Mandate Initially, the mandate of this committee was limited to operating as a Remuneration Committee, but this was broadened to incorporate other human capital governance issues. The mandate of the Human Capital Committee includes:
REMUNERATION Ensuring fairness and transparency in line with the BHF's strategic objectives Setting direction Remuneration policy Oversight Performance management recommendations
HUMAN CAPITAL RISK MANAGEMENT Oversight
GOVERNANCE Approving disclosures in the annual report
The committee has formal terms of reference which were reviewed by the committee and approved by the Board during the 2019 financial year.
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for the year ended 31 December 2019
Committee work during the 2019 financial year The work of the Human Capital Committee during the 2019 financial year included: Remuneration Balanced scorecard
Remuneration adjustments and bonus payments
Human capital risk management Succession plan
Retention plan
Industrial relations plan
Departmental risk register feedback
Governance Terms of reference review
King IV compliance review
Proposed committee work plan
Performance and remuneration policy
Stakeholder engagement policy
Disciplinary policy
Whistle blowing policy
The Human Capital Committee has ensured that the approach to remuneration within the BHF addresses organisation-wide remuneration and that all elements of remuneration offered by the BHF are included in this approach. It has also ensured the implementation of this approach within the BHF environment. The BHF is office-based with its management and staff travelling to meetings with members and other stakeholders. Health and safety procedures are in place within the BHF’s offices in Rosebank and its staff comply with the health and safety procedures of stakeholder premises. From an employment perspective, the BHF has an employment equity plan in place as required by the Employment Equity Act. Fair remuneration for the organisation is considered by the Human Capital Committee and recommendations in this regard are made to the Finance and Audit Committee for inclusion in the annual budget, which was approved by the Board in November 2019. Performance management and development plans are in place in respect of employees throughout the organisation.
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ANNUAL REPORT 2019
Meetings and attendance The Human Capital Committee met as follows during the 2019 financial year: Attendee Costa Raftopoulos Mark Bayley Antea Fourie-van Zyl Neo Khauoe
Capacity
21-Feb-19
17-May-19
Chairperson (May-Sept 2019)
n/a
√
18-Sep-19
04-Nov-19 √
Chairperson (From Nov 2019)
n/a
n/a
n/a
√
Deputy Board Chairperson (Before AGM)
√
√
√
√
Deputy Board Chairperson (After AGM)
n/a
n/a
n/a
√
√
Ali Mia Hamdulay
Board Chairperson
Katlego Mothudi
Managing Director (by invitation)
√
√
√
√
Finance & Audit Committee representative
√
√
√
Howard Stephens √
– In attendance – Apologies n/a – Not necessary for this person to attend
Some of the members of the Human Capital Committee are members of the Finance and Audit Committee and the Governance Committee, and cross-collaboration ensures that the work of the committee complements that of the other committees, rather than overlapping with the role of the Human Capital Committee. The committee members have the necessary knowledge, skill, experience and capacity to enable the committee to perform its duties. Members of the Board are invited to attend committee meetings on an observer basis, but are not entitled to vote at such meetings.
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for the year ended 31 December 2019
SADC COMMITTEE Mandate
SADC STRATEGY Oversight of implementation
SADC INDUSTRY Support growth and development
REGIONAL COLLABORATION All areas of common interest
SADC HELP DESK LOBBYING
ANNUAL REPORT DISCLOSURE
Regional healthcare reforms
Approve disclosures required by King IV
The committee's terms of reference were reviewed by the committee and approved by the Board during the 2019 financial year.
Committee work during the 2019 financial year The work of the SADC Committee during the 2019 financial year included: SADC Strategy Stakeholder engagement mapping
Assisting members with in-country issues
SADC Industry WHO SADC health costs study Regional Collaboration Student visas
Fraud, waste and abuse
Common coding systems
In-country associations
Regional pharmaceutical procurement
SADC Health Desk Lobbying Student visas
The committee conducted a self-assessment during a meeting and its work plan was updated based on this self-assessment.
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ANNUAL REPORT 2019
Meetings and attendance The SADC Committee met as follows during the 2019 financial year: Attendee
Capacity
Country 20-Feb-19 22-May-19 18-Sep-19 20-Nov-19
Bright Kamanga
Chairperson (until 3 Jun 2019)
Malawi
√
√
n/a
n/a
Mzamo Dlamini
Member
eSwatini
√
√
√
√
Teboho Makoetlane
Member
Lesotho
√
√
√
Moraki Mokgosana
Member
Botswana
n/a
√
√
√
Katlego Mothudi
Managing Director
South Africa
√
√
√
√
Ricardo Palermo
Member
Mozambique
Shylet Sanyanga
Member
Zimbabwe
√
√
√
√
Member/Chairperson (after 3 Jun 2019)
Namibia
√
√
√
√
Member
Malawi
n/a
n/a
√
√
Callie Schäfer Macfenton Shariff √
– In attendance – Apologies n/a – Not necessary for this person to attend
The members of the committee represent the various SADC members and have been nominated by members in those countries. Accordingly, they have the necessary knowledge, skill, experience and capacity to enable the committee to exercise its duties effectively.
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for the year ended 31 December 2019
UNIVERSAL HEALTHCARE COMMITTEEE Mandate
UNIVERSAL HEALTHCARE IMPLICATIONS Consider member impact
PARTNER WITH DOH AND CMS Co-develop solution for universal healthcare in South Africa Practically implementable Members included as key partners for delivery of universal healthcare in South Africa
LEGISLATIVE REVIEW Advise members of implications Formulate collective response
UNIVERSAL HEALTHCARE SADC IMPLICATIONS Consider ramifications
FORMULATE BHF POSITION Balance need for universal healthcare against member interests
OTHER UNIVERSAL HEALTHCARE POLICY ISSUES Any issue identified by Board
The committee has formal terms of reference which were reviewed by the committee and approved by the Board in the 2019 financial year.
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Committee work during the 2019 financial year The work of the Universal Healthcare Committee during the 2019 financial year included: Universal Healthcare Implications Effective coverage Legislative Review COFI Bill
Demarcation regulations
LCBO
NHI Bill
Medical Schemes Amendment Bill
Formulate BHF position Member commitment
Demarcation regulations
LCBO
HMI Report
UHC Action Plan
Other policy issues Draft consolidation framework
HMI Report
Demarcation regulations
LCBOs
CMS Section 59 investigation
Meetings and attendance The Universal Healthcare Committee met as follows during the 2019 financial year: Attendee Lungi Nyathi
Capacity
15-Feb-19 14-Jun-19 16-Oct-19 20-Nov-19
Chairperson
√
√
√
Managing Director (Member)
√
√
√
√
Guni Goolab
Member
√
Joshua Joubert
Member
√
Costa Raftopoulos
Member
√
Mark Bayley
Member
n/a
n/a
√
Stan Moloabi
Member
n/a
n/a
√
Hleli Nhlapo
Member
n/a
n/a
√
Neo Khauoe
Member
n/a
n/a
Katlego Mothudi
√
– In attendance – Apologies n/a – Not necessary for this person to attend
BOARD OF HEALTHCARE FUNDERS NPC
n/a n/a √
n/a
n/a
n/a n/a
√
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for the year ended 31 December 2019
APPOINTMENT AND DELEGATION TO MANAGEMENT Managing Director role The Managing Director is responsible for leading the implementation and execution of the approved strategy, policy and operational planning. He is the chief link between management and the Board, and is accountable and reports to the Board. An organisation-wide succession plan (including in relation to the Managing Director) was reviewed and approved by the Human Capital Committee (formerly the Remuneration Committee) during the 2020 financial year.
Delegation An Authority Framework and Management Limits of Authority have been reviewed by the committees and were approved by the Board in November 2019.
Professional corporate governance services to the Board Even though the public interest score of the BHF is less than 350 and the MOI of the BHF does not voluntarily adopt the Enhanced Accountability and Transparency Requirements outlined in Chapter 3 of the Companies Act, the BHF has access to professional and independent guidance on corporate governance and its legal duties, as well as the requisite support to co-ordinate the functioning of the Board and its committees partially through the utilisation of internal non-dedicated resources and the appointment, on a part-time basis, of Volvere (Pty) Ltd. This appointment has been approved by the Board. The Board has ensured that the company secretarial function is empowered and carries the necessary authority and has the necessary competence, gravitas and objectivity to provide independent guidance and support to the Board and its committees. The company secretary is not a member of the Board. She reports to the Board via the chairperson in respect of statutory duties and functions performed in connection with the Board and to the chairpersons of the committees in connection with those committees. In respect of other duties and administrative issues, the company secretary reports to the Head: Shared Services. The performance of the company secretary during the 2019 financial year will be included in the evaluations of the Board and its committees conducted in the 2020 financial year.
KING IV Disclosure This report includes the disclosures required by the King IV Report on Corporate Governance in South Africa, 2016 (King IV).
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ANNUAL REPORT 2019
6 NOVEMBER 1951 - 11 MAY 2020
REMEMBERING Dr. Clarence Mini
T
he Board of Healthcare Funders is deeply
He volunteered his time to support efforts to develop the
saddened by the recent passing of Dr Clarence
public health sector, sharing best practices and providing
Mini from COVID-19. An industry legend,
honest insights into its realities. He was not afraid to
Dr Mini played a significant role at the foundation level
go into hospitals in townships and remote areas to gain
of the BHF. After the departure of the late and former
an understanding of the realities faced by healthcare
MD, Dr Humphrey Zokufa, Dr Mini supported and led the
professionals and community members. He was pivotal
team while the BHF was looking for a replacement.
in the development of many young professionals in the
He was deeply rooted in the organisation at a time
sector, to whom he served as a mentor.
when the BHF required leadership internally, when the
He was passionate about providing support to enable
organisation was going through a period of political
people to develop, organisations to grow, and institutions
turmoil and was at risk of disintegrating.
to become efficient. He did not tolerate inefficiency, always
He provided the leadership that was needed and put the interests of the organisation first. His views on UHC were far ahead of their time, and he saw its value long before many understood the concept. We are here today because of his resilience and the efforts he made to keep the organisation standing. He was a strong and decisive
spoke the truth and challenged the status quo. As part of the Value Input Accreditation Committee, where he served as a volunteer reporting to the MEC of Health on areas that need improvement in public healthcare facilities and quality assurance standards, he was genuinely concerned about the welfare of others.
yet compassionate and humble leader, who made a
We are grateful to his family for sharing him with the
difference to the institutions and people with whom he
industry, for understanding his passion and allowing him
made contact. He challenged leaders and policy-makers
to follow his purpose. We have lost a leader and a legend,
to look closely at the realities of the people and the
a friend and a compassionate patriot. Farewell Dr Mini,
communities who benefit from the healthcare sector.
you will be deeply missed by all of us at the BHF.
BOARD OF HEALTHCARE FUNDERS NPC
Lobby and advocate policy position on behalf of our members Assist members with regulatory compliance Provide legal advice to membership on industry issues Assist in containing healthcare costs Protect the image of the industry Identify and monitor trends impacting our members
2. CREATE PLATFORMS FOR MEMBER ENGAGEMENT
2
Promote unity and collaboration by creating platforms that enable our members to engage with the BHF and p articipate in industry issues Create networking opportunities Engage and develop relationships with key stakeholders
3
3. DEVELOP INDUSTRY STANDARDS
i s
1
n o ti
P e r op u l a o V
1. REPRESENT MEMBER INTERESTS
Promote best practice in the healthcare funding industry Promote healthcare quality Identify and recognise key role players in the industry
4
4. FACILITATE EDUCATION AND TRAINING Provide guidance Provide stewardship and facilitate thought leadership exchange on industry issues Enhance skills and knowledge within our membership Progress tracking reports on industry issues Promote stakeholder, consumer awareness and medical scheme member education
5 6 5. TRANSFORMATION THROUGH DEVELOPMENT Identify opportunities to drive transformation in the industry Graduate programme development
PROVIDE AND IDENTIFY OPPORTUNITIES Profile our members and our industry
BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL REPORT
2019
Serving Medical Scheme Members
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