Ryan McDougall chasing opportunities in South Africa

RYAN MCDOUGALL’S RETURN TO SA

After working abroad for many years, Ryan McDougall returned to South Africa in 2019 to pursue better learning opportunities for his two daughters, only to be presented with his own opportunity to help rebuild KPMG South Africa as its new CFO. By Caylynne Fourie

Ryan McDougall firmly believes that education is a good foundation for any career. It is this belief that brought him back to South Africa after five years in Namibia, where he served as the CFO of JSE-listed Trustco. His two daughters, aged seven and nine, were both in the early years of formal schooling, and Ryan decided to move back to South Africa to take advantage of the solid education systems in the country. “It was sad to leave Namibia, but I’m happy to be back in South Africa,” says Ryan, who was nominated for the 2016 CFO Awards. “I think we’ve got access to a variety of top-notch schools, with a better balance of extracurricular activities.” With the small population in Namibia, he explains that it was difficult for the schools there to offer this balance.

Returning to South Africa also presented a lot of opportunities to Ryan. “South Africa has always been the anchor of industry into the rest of Africa so there are a number of opportunities in the country for anyone who is willing to grasp them.” That is exactly what Ryan did.

A KPMG blue blood

After moving around between a few opportunities in South Africa, yet to find what he really wanted to do and what he really loved, Ryan was approached to take on the role as CFO of KPMG South Africa in early 2019. At the time, KPMG South Africa was facing enormous challenges to its reputation on work linked to state capture and VBS Bank. “A lot of people were quite reticent about my decision to take on the new role because KPMG South Africa was in the news for all the wrong reasons,” Ryan says. Even so, Ryan considers himself a bit of a “blue blood”, having done his articles at KPMG after receiving a bursary from the firm, which put him through most of his university studies. “When I had the opportunity to come back to KPMG, I felt that it was a good chance to make an impact and do something meaningful,” he says. “I had the opportunity to work in a finance department that required leadership and had to be rebuilt from the ground up.” Ryan had finally found the challenge he had been looking for in South Africa.

Rebuilding KPMG South Africa

KPMG South Africa has worked on earning back the trust of the markets by building on its values and cementing those values into the organisation. The firm brought in a number of international partners to provide guidance and steer the organisation in the right direction. In doing so, the firm was adamant about getting the right talent with the required skills into the necessary roles and functions. Ryan’s appointment was one of these moves. “Coming in, I was told I had a blank sheet and an opportunity to reinvent the finance department – how we go about managing our finance and budgets – as well as our fiscal responsibilities,” Ryan says. “That was a fantastic opportunity for me.” Taking on this opportunity, he first had to understand what already existed in the finance function at the time and then build on that by putting people in the right places and putting the right structures in place.

“South Africa has always been the anchor of industry into the rest of Africa so there are a number of opportunities in the country for anyone who is willing to grasp them.”

After the foundation had been solidified, he then went about improving the finance function by bringing in digital experience, using a more agile approach to reporting financial data and building up employees to ensure that they understand their jobs are not just pushing paper around, but adding value. “It’s really a three-phased approach of understanding, building and then starting to adopt change,” Ryan explains. “In doing so, the team has come together quite nicely. It’s been a great experience to see people feel that they are part of driving the change.” Ryan had a 100-day plan to rebuild the finance department, with a three-tiered approach: analyse, design and then implement. He explains that this involved restructuring roles and duties for staff, appointing new team leaders and managers, and ensuring each employee had a role fit for their purpose and skill set. It also meant implementing various policies and procedures to manage procurement, expense spend and internal billions. “Overall the changes led the organisation closer to understanding the value of accurate and timely financial data that could be used to plot a determinable path to success,” he adds.

Ryan says that working closely with some of the senior partners in getting the firm in the right shape and also building on a trust narrative has been hugely successful. KPMG South Africa has already won back some of its key audits, including Absa, and are taking

“When I had the opportunity to come back to KPMG South Africa, I felt that it was a good chance to make an impact and do something meaningful.”

on new audits, for example FirstRand and Woolworths. “I think we’ve laid a solid foundation and the market has noticed us again and is starting to understand that the firm’s trust narrative is something they can believe in, that ethics and governance is high on our agenda.” He adds that you can demonstrably see the changes being evidenced at senior forums and in the insights that the executive leadership are able to give into what’s happened; not just in finance, but in rearfacing as well as forward-looking information. “As a CFO, that’s your goal in the organisation. To make sure people understand where they’ve been and where they’re going and give them the right tools to develop insights. It’s been extremely rewarding.”

Moving towards a digital future

Just as KPMG South Africa was making headway in rebuilding its reputation, Covid-19 struck and brought with it an entirely new challenge. “The pandemic was a surprise to everyone,” Ryan says. “I don’t think anyone really expected it to be as mammoth an impact as it has been.”

As the world was forced into adapting a more digital approach, KPMG South Africa had to move their audit function, which relied a lot on in-person interactions, to a virtual one. “It was definitely difficult at the beginning,” Ryan says. “A lot of people were so used to going into an office, setting themselves up in a boardroom and going through the data and information. The move to a virtual approach was a huge mind shift.” He adds that, while moving to digital didn’t have the expected negative impact on the auditing function of the business, it did have a huge impact on the finance department. “We had invoices that had to be physically signed and documents and journals that were physically printed, and suddenly all of that was taken away, the carpet was pretty rapidly ripped from underneath us.”

KPMG South Africa then started investing in a system for the finance function and it has gone almost entirely digital when it comes to procurement, travel planning and data analytics. “We are busy implementing robotic process automations in the firm. This will take some of the pressures away from the finance team by eliminating mundane tasks,” Ryan says. “We’re motivating everyone into the digital age to ensure that we automate, digitise and evolve.”

Cultivating a thirst for continuous learning

Ryan says while we are in the fourth industrial revolution and so much of the CFO role has become digital, it’s important for aspiring finance professionals to ensure that they don’t get bogged down believing that digital is the be all and end all of the role. “The CFO role has changed pretty drastically, but it’s not just about the numbers and digital transformation, it’s also a very people-centric role,” he explains. “It’s important to pay attention to how people feel at work – if they have a good work-life balance, are feeling valued and feel like their careers are being built up.”

Ryan tries to make the team have fun at work, ranging from regular interactions, people telling a joke every week during meetings, dress up days, or trying to take a collection and help out with charities. “We try to focus on cultivating that thirst for continuous learning and never dismiss the value of an individual’s pursuit of development.”

Baking his way through lockdown

Working from home and lockdown has been quite tricky for Ryan’s family, who loves to travel together. “We used to do a lot of camping trips and travelling across the country, which we haven’t been able to do,” he says.

To relax, Ryan often breaks away for a round of golf, mountain bike ride and tries to go to the gym as often as possible. To keep themselves busy during lockdowns, his daughters have decided to take up baking at home, and while Ryan sees himself as more of a braai person, the girls have roped him into their baking escapades. “I’ve done a lot of baking, most of which involves copious amounts of sugars and sprinkles, so I’m sure I’ve put on quite a lot of weight.” l

PERFORMING IN A PANDEMIC

BONITAS ANNOUNCES HEALTHY ANNUAL RESULTS

2020 was marred by an unprecedented fiscal crisis globally because of the Covid-19 pandemic. However, most medical aid schemes ended the year buoyantly. We spoke to Luke Woodhouse, CFO of Bonitas Medical Fund, about the medical scheme’s annual results.

With what surplus was Bonitas able to end 2020 during these turbulent times?

We had a record low claims ratio of 83 percent in 2020, which meant we ended the financial year with a R1.7 billion surplus. This resulted in a solvency ratio of 32.7 percent – an increase of 7.8 percent on last year.

Bonitas reported significantly bolstered reserves of R6.1 billion. Considering the pandemic and poor economic climate, do these reserves seem out of kilter?

There are a number of reasons for these high reserves: 1. The reduction of elective surgery, specialist visits and other consultations with medical practitioners during the pandemic. Our net claims decreased by 4.7 percent to R14.3 billion. 2. With social distancing and mask-wearing, we saw a drop in other non-Covid illnesses/conditions and trauma claims.

3. Our long-term asset allocation investment strategy helped capitalise on investment opportunities. 4. The effective implementation of our strategic pillars, proactive risk management and prudent board decisions.

Is the significant increase in solvency levels to 32 percent sustainable?

These high solvency levels are likely to reduce over the short-term as claiming behaviour returns to normal levels. We haven’t lost sight of our medium-term objective to sustain solvency levels above the statutory minimum of 25 percent and to make meaningful, strategic decisions about current reserves in the interests of our members.

How was the Bonitas investment ship guided in such uncertain waters to achieve an investment income of R316.6 million that exceeded CPI?

The Investment Committee was particularly active given the volatility in equity markets and the market crash that occurred in March 2020. The active management and continued strategic asset allocation approach contributed to a turnaround in investment returns, growing the investment portfolio (excluding cash and cash equivalents) from R5.01 billion in December 2019 to R7.14 billion in December 2020 – delivering an overall return of 4.16 percent. We are one of the few schemes with returns above CPI.

We note the Fund uses strategic purchasing and hospital negotiations to reduce hospital costs. Has this proved effective?

Following the findings by the Health Market Inquiry that collective negotiations would not contravene the Competition Act, we participated in collective negotiation processes on hospital tariffs in 2020. The common tariff negotiations resulted in a 3.1 percent saving in 2021 terms and could exceed R200 million in 2021.

Strategic purchasing yielded hospital negotiation savings of R346 million (2019: R370.4 million). This is lower than the previous year, in absolute terms, due to lower outflows because of Covid-19.

What percentage of the budget and contributions were Covid-19 costs?

Covid-19 costs represented 5.5 percent of risk contribution income and 6.5 percent of original budgeted net claims expenditure – a R974 million-rand value.

“We had to be agile in our approach to ensure our members received the healthcare benefits they desperately needed, within a safe environment.”

What has the Fund budgeted for Covid-19 costs this year and what is the vaccine allocation?

We revised our budget after Q1 following the second wave of Covid. This makes provision for a total of R1.206 billion for Covid-19 costs, of which R210 million is provided for vaccines.

What other measures were taken to save costs in 2020?

Our total managed healthcare cost savings initiatives realised savings of R221 million. The most significant of these was achieved through the Scriptpharm chronic medicine capitation model. In addition to this we also achieved R51.7 million gross recoveries from fraud, waste and abuse (2019: R41.2 million).

What observations do you have about 2020 and what lessons can be learnt?

We had to be agile in our approach to ensure our members received the healthcare benefits they desperately needed, within a safe environment, which is why we introduced virtual care. 2020 also saw an accelerated digital transformation in line with our aim to be at the forefront of digital innovation moving forward. We lifted hospital network restrictions, introduced contribution relief measures, increased our focus on home-care and arranged delivery of chronic medication.

Did claims expenditure change?

While some categories such as in-hospital admissions experienced a major decline, with a high number of elective surgeries cancelled, there was a marked increase in medicine claims and costs. Healthcare inflation generally approximates CPI+3.5 percent – however our net claims decreased by 4.7 percent to R14.3 billion (2019: increased by 8.9 percent to R15.0 billion). The net claims ratio for the year, excluding Covid-19 costs, was 76.3 percent compared to 92.3 percent in 2019.

Was it possible to retain current members and grow membership when the pandemic saw job losses, businesses closing and a general poor economic climate?

We had to be innovative and find ways in which to reduce costs for our members and assist where possible, in line with CMS regulations. This had a negligible impact on performance but aided the retention of members during the worst of the pandemic. Contrary to what was anticipated, Covid-19 also resulted in a marked increase in queries about joining a medical scheme as people realised the critical need for quality healthcare. Despite the challenges experienced in 2020, Bonitas acquired 37,814 new members.

And the road ahead?

No one can predict the future or how the remainder of 2021 will pan out. All we can do is remain nimble and do everything in our power to assist our members. We are looking forward to new and innovative ways of empowering members to manage their health. Regardless of what happens we will continue to be the medical scheme that ‘Makes plans for South Africans.’l

For more information visit www.bonitas.co.za.