BOARD OF HEALTHCARE FUNDERS
ANNUAL
REPORT
2020
SERVING MEDICAL SCHEME MEMBERS
BOARD OF HEALTHCARE FUNDERS
OUR VISION To create a member-centric healthcare system that is affordable and accessible to the ‘health citizen’.
2020 ANNUAL REPORT
1 ANNUAL REPORT 2020
CONTENTS 2
ORGANISATIONAL ORGANOGRAM
3
MANAGEMENT & LEADERSHIP INCUBATOR INITIATIVE
5
MEMBERS & CLIENTS
7
CHAIRPERSON'S INTRODUCTION
8
MANAGING DIRECTOR’S REVIEW
23
ANNUAL FINANCIAL STATEMENTS
25
FINANCE AND AUDIT COMMITTEE REPORT
27
DIRECTORS’ RESPONSIBILITIES AND APPROVAL
28
REPORT OF THE INDEPENDENT AUDITORS
31
DIRECTORS’ REPORT
33
STATEMENT OF COMPREHENSIVE INCOME
34
STATEMENT OF FINANCIAL POSITION
35
STATEMENT OF CHANGES IN FUNDS AND RESERVES
36
STATEMENT OF CASH FLOWS
37
ACCOUNTING POLICIES
43
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
53
SUPPLEMENTARY INFORMATION
58
CORPORATE GOVERNANCE REPORT
BOARD OF HEALTHCARE FUNDERS NPC
2 ANNUAL REPORT 2020
ORGANISATIONAL ORGANOGRAM Neo Khauoe Chairperson
Hleli Nhlapo Deputy Chairperson
HEALTHCARE FUNDERS
Katlego Mothudi Managing Director
SADC
ADMINISTRATORS
Open medical schemes
Restricted medical schemes
Mzamo Dlamini
Mark Bayley
Lee Callakoppen
Sabier Martinus
Teboho Makoetlane
Ali Mia Hamdulay
Antea Fourie-van Zyl
Thabi Mlotshwa
Moraki Mokgosana
Lungi Nyathi
Josua Joubert
Stan Moloabi
Shylet Sanyanga
Vusi Mbonani
Costa Raftopoulos
Callie Schäfer
Howard Stephens Mike Wilson BOARD OF HEALTHCARE FUNDERS NPC
3 ANNUAL REPORT 2020
MANAGEMENT TEAM
DR KATLEGO MOTHUDI Managing Director
MS ZOLA MTSHIYA Head of Stakeholder Relations and Business Development
DR RAJESH PATEL Head of Health Systems Strengthening
MR CHARLTON MUROVE Head of Research
MR ERIC RANTSHO Head of Shared Services and PCNS
BOARD OF HEALTHCARE FUNDERS NPC
4 ANNUAL REPORT 2020
BHF LEADERSHIP INCUBATOR INITIATIVE The Leadership Incubator is a Board of Healthcare Funders NPC (BHF) initiative that seeks to develop and support managers and middle managers in the healthcare industry. It aims to hone strategic thinking around industry issues by providing a platform to network with peers and learn from some of the sector's top minds. We are proud that the BHF team forms part of this programme and participated in various industry initiatives in 2020.
ALICIA ELIJAH Manager: PCNS Admin and Customer Services
ELSABÉ GUROVICH BHF Admin Manager: Finance
EUNICA GUVAKUVA Section Head: PCNS Finance
FLORENCE CEBEKULU Section Head: PCNS Client Services
MARY MANAMELA Section Head: Key Accounts, Stakeholder Relations and Business Development
MOGALE LUCAS MOTHOAGAE Acting Section Head: PCNS Admin Department
BOARD OF HEALTHCARE FUNDERS NPC
5 ANNUAL REPORT 2020
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
MEMBERS & CLIENTS
Compensation Fund Federated Employers Mutual Assurance Company (FEM)
6.5 Million lives
700 000 Beneficiaries
Zambia NHI Fund
'Health Citizen' 8 Countries
Employed Population
Healthcare Professionals/ Facilities/Pharmacies Practice Code Numbering Systems
70 000
Medical Schemes
Administrators & Managed Care Organisations
Namibian Regulators NAMAF & NAMFISA
BOARD OF HEALTHCARE FUNDERS NPC
6 ANNUAL REPORT 2020
BHF MEMBERS as at December 2020 HEALTH FUNDERS (SA)
ADMINISTRATORS (SA)
Barloworld Medical Scheme
Medscheme Holdings (Pty) Ltd
BIMAF EC
Metropolitan Health Group
BIMAF WC
3Sixty Health
Bonitas Medical Scheme
Thebe Ya Bophelo Healthcare Administrators
BP Medical Aid Society
Universal Healthcare Administrators (Pty) Ltd
Building & Construction Industry Medical Aid Fund Cape Medical Plan CompCare Wellness Medical Scheme Compensation Fund Engen Medical Benefit Fund Fishing Industry Medical Scheme Government Employees Medical Scheme (GEMS) Grintek Electronics Medical Aid Scheme Horizon Medical Scheme Hosmed Medical Aid Scheme Imperial and Motus Medical Aid Libcare Medical Scheme Makoti Medical Aid Medimed Medical Scheme Medipos Medical Scheme Medshield Medical Scheme Nedgroup Medical Aid Scheme Old Mutual Staff Medical Aid Fund Opmed PG Group Medical Scheme Rand Water Medical Scheme Rhodes University Medical Scheme SABC Medical Aid Scheme SAMWUMED SEDMED
MANAGED CARE ORGANISATION (SA) Dental Information Systems (DENIS)
HEALTH FUNDERS (BOTSWANA) Botsogo Health Plan Botswana Public Officers Medical Aid Scheme (BPOMAS) PULA Medical Aid Botswana Medical Aid Society
ADMINISTRATOR (BOTSWANA) Associated Fund Administrators
HEALTH FUNDERS (NAMIBIA) Namdeb Medical Scheme Napotel Medical Aid Fund Renaissance Health Medical Aid Fund Nammed Medical Aid Fund Heritage Health Medical Aid Fund
HEALTH FUNDER (LESOTHO) Mamoth Employee Benefits
HEALTH FUNDER (MALAWI) Medhealth
Sizwe Medical Fund POLMED - South African Police Service Medical Scheme
HEALTH FUNDER (ESWATINI)
Sisonke Health Medical Scheme
Swaziland Medical Aid Fund
Suremed Health TFG Medical Aid Scheme
HEALTH FUNDERS (ZIMBABWE)
The Federated Employers
Bonvie Medical Aid Scheme
Mutual Assurance Company (FEM)
Cimas Medical Aid
Thebemed
Municipality of Masvingo Medical Aid Society
Tiger Brands Medical Scheme
Generation Health
Wooltru Healthcare Fund
BOARD OF HEALTHCARE FUNDERS NPC
7 ANNUAL REPORT 2020
CHAIRPERSON'S INTRODUCTION The year 2020 was tumultuous as we grappled with various issues critical both to South African healthcare and that of the entire SADC region.
T
he unprecedented COVID-19 pandemic, which dominated the year in review, remains ongoing at the time of writing. Despite this being the BHF’s primary area of focus over the past 12 months, other areas of industry concern were not neglected. Fraud, waste and abuse (FWA) continues to challenge the industry – maybe more than ever during the pandemic. In recognition of International Fraud Awareness Week, the HFMU hosted its fourth and so far best attended annual healthcare FWA Indaba, held virtually in November 2020.
schemes. The national and provincial dashboards track the number of in-patient admissions, as well as the reasons for admission, i.e. whether for emergencies or elective procedures. COVID-19 meant that the BHF’s annual conference had to be cancelled. Nonetheless, we still published the second edition of the peer-reviewed Southern African Health Journal, and the seventh edition of our popular magazine, BHF360° into Healthcare. The latter was complemented by a standalone online supplement exclusively devoted to issues surrounding the pandemic.
Highlights included a review of the impact of the Protection of Personal Information Act (POPIA) on the sharing of information and data, as well as its impact from a doctor and patients’ perspective. The Private and Public Sector Partnership on Remunerative Work Outside the Public Service (RWOPS) between the BHF and provincial health departments was also highlighted.
These and other initiatives reflect the BHF’s ongoing commitment to its members and the health citizens of southern Africa. I would like to thank the entire team for going the extra mile during this challenging year.
The BHF launched its in-patient admissions dashboard, derived from data received monthly from member
MS NEO KHAUOE Chairperson
BOARD OF HEALTHCARE FUNDERS NPC
8 ANNUAL REPORT MANAGING DIRECTOR’S REVIEW 2020 for the year ended 31 December 2020
MANAGING DIRECTOR'S REVIEW 2020
HIGHLIGHTS
South Africa records first COVID-19 case on 6 March By 31 December South Africa had a cumulative total of 1 057 161 COVID-19 cases COVID-19 is designated as PMB in terms of Medical Schemes Act Launches the BHF Inpatient Admissions Dashboard Hosts six-part virtual BHF Dialogue 2020 series Publishes the first BHF annual report on medical aid funds in Botswana Launches the BHF 'WE.R.EQUAL’ initiative to advance gender equality
Dr. Katlego Mothudi, Managing Director of the BHF, reflects on the year in review, which was an unprecedented one – not only for the BHF, but the world as a whole.
C
OVID-19 understandably took
of our members to assist various
centre stage in 2020 and the
governments, healthcare workers and
BHF played a key role in guiding its members, principal officers, boards of trustees, and CEOs. The healthcare sector as a whole had to adjust to a new normal whilst putting the needs of the health citizen first.
patients to combat the pandemic. The BHF partnered with 702 in a corporate social investment (CSI) initiative to mobilise resources in cash and kind for doctors in private practice across various locations
Addressing COVID-19 effectively
including townships, informal
requires legal changes in respect
settlements and remote and rural
of reimbursement and, in a special
areas. In addition, resources were
online publication devoted to
channelled to some non-profit
the pandemic, the BHF’s legal
organisations supporting the
department offered some insights
government in the fight against
on this subject, further to the Council
COVID-19. The initiative aimed to
for Medical Schemes (CMS) making
mitigate the risks faced by volunteers
COVID-19 a prescribed minimum
and other healthcare workers over
benefit (PMB) condition. As the
the shortage of personal protective
BHF we were also heartened by
equipment (PPE), hand sanitisers and
the measures taken by so many
disinfectants.
BOARD OF HEALTHCARE FUNDERS NPC
9 ANNUAL REPORT 2020
FAR-REACHING IMPACT OF COVID-19 SOCIAL DIMENSIONS Restricted movement Social distancing policies Homeless individuals relocated
to temporary shelters
Ban of alcohol sales Closure of schools and
universities
Closure of international borders Increased incidence of
gender-based violence
64 790
DEATHS
Increased social unrest and
demonstrations
Sudden change in lifestyle and
reduced physical activity levels
2 280 488
ECONOMIC IMPLICATIONS
RECOVERIES
Production reduction Reduced demand for
household goods
Uncertainty with regard to
investments
2 728 602
Reduced economic activity
CASES
Reduced interest rates World Health Organisation (WHO) COVID-19 data for Africa end-2020
Retrenchments
HEALTH We are excited to have launched the 'WE.R.EQUAL’ initiative that seeks to advance gender equality within the BHF universe (board level, internally and industry-wide).
1. 2020 KEY HIGHLIGHTS 1.1. Impact of COVID-19 It is easy to get disheartened as we reflect on the past year.
The initiative strives to align the
Unprecedented strain was placed
BHF's strategic imperatives to the
on the global healthcare system,
UN's Sustainable Development Goal (SDG) Number 5 – achieve equality and empower all women and girls
Strained healthcare systems Essential health services not
prioritised
Access gaps widening Health workforce overwhelmed Loss of healthcare workers due
to COVID-19
Supply chain challenges,
resulting in medicine shortages
with greater concern for the African
Lack of PPE
continent, due to its relatively weak
Increased mortality rates
health structures.
Mental health problems
by 2030. We believe the healthcare
On 31 December 2019 a cluster of
industry can powerfully advance
pneumonia cases was identified in
the rights, dignity and diversity of
Wuhan City, Hubei Province, China.
everyone.
Chinese authorities reported a novel
These and other highlights of a year
WHO declared the outbreak a public
unlike any other are detailed herein.
health emergency of international
coronavirus on 7 January 2020. The
Substance abuse Resurgence of
Non-Communicable Diseases (NCDs)
Decline in health service
utilisation
Reduction in income for doctors
and hospitals
Buy-downs in respect of medical
scheme options
BOARD OF HEALTHCARE FUNDERS NPC
10 ANNUAL REPORT 2020
significance on 31 January 2020. As
and supply chain challenges, while
and costs of hospitalisation,
for South Africa, the first COVID-19
the latter include social distancing
including for all complications and
case was recorded on 6 March 2020;
and restricted movement, and
rehabilitation. In accordance with
with the government subsequently
reduced economic activity and
the Medical Schemes Act 1998, the
placing the country under lockdown
retrenchments.
use of designated service providers,
on 27 March 2020. According to National Institute of
Emerging healthcare technologies were accelerated by the COVID-19
clinical protocols and formularies should apply. This will be the case for as long as the pandemic persists.
Communicable Diseases (NICD)
pandemic. These include
statistics, by 31 December 2020
telemedicine, DATCOV sentinel
The BHF assisted in finalising the
South Africa had a cumulative total of
surveillance system that collects
benefit guide published by the
1 057 161 COVID-19 cases; 6 609 208
data from 2000 hospitals, artificial
CMS and was influential in creating
tests had been done cumulatively
intelligence (AI) in diagnostics/AI
and there was a total of 28 469
chat bots, business intelligence and
deaths. Recoveries currently stand
analytics platforms, 3D printing,
at 879 671; which represents a 93%
predictive analytics, precision
recovery rate.
medicine, block chain, digital contact
COVID-19 stripped away our illusions of certainty, as the industry faced many unknowns. Principal officers, boards of trustees, CEOs and the healthcare sector at large had to adapt immediately in order to navigate and survive the new normal.
tracing and interoperability.
1.2. COVID-19 as a PMB The CMS published Circular No 25 in which COVID-19 was declared a PMB condition. It stated that all cases of COVID-19 should be funded in full
The COVID-19 pandemic has had
in line with the current published
several diverse implications that
NICD guidelines, clinical protocols
impact South Africa and the rest of
and benefit guidelines. This should
the continent, not only in respect
cover: all consultations; all clinically
of health but also social and
appropriate diagnostic tests including
economic dimensions. The former
viral polymerase chain reaction (PCR);
include loss of healthcare workers
all clinically appropriate medication;
U S EFU L L INKS The COVID-19 regulations issued on 29 April 2020
https://www.gov.za/sites/default/files/gcis_document/202004 /43258rg11098gon480.pdf COVID 19 regulations made on 28 May for alert level 3
https://www.gov.za/sites/default/files/gcis_ document/202005/43364gon608s.pdf The NICD guidelines
https://www.nicd.ac.za/wp-content/uploads/2020/04/ COVID-19-Quick-reference-v12-09.04.2020_final-1.pdf
BOARD OF HEALTHCARE FUNDERS NPC
awareness around the meaning of this for members.
1.3. Industry stands together in the fight against COVID-19 A lot has happened in our world over the past year and our lives have shifted dramatically. We have been forced to relook at how we live, work and interact with one another. Some have lost their jobs; others have lost their loved ones. We are, however, encouraged that many have extended a helping hand to support families and communities affected by COVID-19. Individuals and businesses alike are working collaboratively and moving swiftly in this regard. The true meaning of leadership lies not in directing but in serving people, and such leadership has indeed emerged. The majority of BHF members implemented diverse and innovative strategies to support their beneficiaries during this time. These included charitable donations to support vulnerable communities, PPE donations to healthcare workers on the frontline, additional benefits and co-payment waivers, as well as cutting-edge apps providing virtual
11 ANNUAL MANAGING DIRECTOR’S REPORT REVIEW for the year ended 31 December2020 2020
NATIONAL DASHBOARD
PROVINCIAL DASHBOARD
INPATIENT ADMISSIONS
INPATIENT ADMISSIONS
04 December 2020
Eastern Cape
04 December 2020
National Inpatient Admissions
Inpatient Admissions
30000
3000
25000 20000
2500
15000
2000
10000
1500
5000
1000
Apr
May
Jul
2019
2020
Aug
Sep
Oct
Nov
500
365
357 361
353
345 349
337 341
333
325 329
321
313 317
309
301 305
293 297
289
281 285
277
269 273
265
257 261
249 253
245
237 241
233
225 229
221
213 217
205 209
201
193 197
189
181 185
177
169 173
Jun 2018
Type of admissions
161 165
157
149 153
145
137 141
133
125 129
93 97
89
117 121
113
105 109
81 85
Mar
101
73 77
69
61 65
57
49 53
Feb
Dec
0
Adjusted Capacity
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 136 141 146 151 156 161 166 171 176 181 186 191 196 201 206 211 216 221 226 231 236 241 246 251 256 261 266 271 276 281 286 291 296 301 306 311 316 321 326 331 336 341 346 351 356 361
Jan
45
37 41
29 33
5 9
1
25
17 21
13
0
Jan
2020
Feb
Mar
Apr
May
2018
30000
Covid‐19 Inpatient admissions in 2020 8000
20000
Jul
6000
Aug
2020
Sep
Oct
Nov
Dec
Adjusted Capacity
Covid‐19 Inpatient admissions in 2020 1200
2500
7000
15000
Jun
2019
Inpatient Types 2020
3000
9000
25000
1000
2000
Covid‐19
800
5000 10000
4000 3000
5000
2000 1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115 121 127 133 139 145 151 157 163 169 175 181 187 193 199 205 211 217 223 229 235 241 247 253 259 265 271 277 283 289 295 301 307 313 319 325 331 337 343 349 355 361
0 Elective
Covid‐19
1000
Adjusted Capacity
600
1000
400
500
200
0
0
0
Proportion of gender
Emergency
7,444,353
6,849,442
9.22%
Year‐on‐year (2019/2018) change in total number of female inpatient admissions
7.82%
Year‐on‐year (2019/2018) change in total number of male inpatient admissions
Adjusted Capacity
3,501,525
2,120,205
Female
Male
2019 Filled Full
F
2020 62% M 62% 100%
2020
12.37%
Year‐on‐year (2019/2018) change in total number of female inpatient Admissions
12.42%
Year‐on‐year (2019/2018) change in total number of male inpatient Admissions
M; 233,438
F; 383,304
M; 262,422
2018
2019 Filled Full
M, 38%
30% 47.7
53%
46.6
45.1 44.4
2019
2020 #REF! 63% 100%
63%
37%
#REF! 37% 100%
F, 62%
2020
Emergency
Average age
Type of admissions
48.0 47.2
192,868 MALE
2020
M, 38%
F, 62%
Type of admissions
523,147
2019
2018
F 62%
Average age
INPATIENT
ADMISSIONS TO DATE 330,279 FEMALE
38%
38% 100%
2020
F; 430,706
M 38%
M 38% F 62%
2018
2019, 693,128
2018, 616,742
5,621,730
2019
2018
Covid‐19
2020
INPATIENT ADMISSIONS TO DATE
M, 2,815,859
2018
Elective
Proportion of gender
F, 4,628,494
F, 4,237,770 M, 2,611,672
Medically necessary
1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 145 154 163 172 181 190 199 208 217 226 235 244 253 262 271 280 289 298 307 316 325 334 343 352 361
1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121 129 137 145 153 161 169 177 185 193 201 209 217 225 233 241 249 257 265 273 281 289 297 305 313 321 329 337 345 353 361
Medically necessary
1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 145 154 163 172 181 190 199 208 217 226 235 244 253 262 271 280 289 298 307 316 325 334 343 352 361
Emergency
1500
M; 48.7
Medically necessary
6%
Elective
11%
Covid‐19
F; 47.4
M; 46.9
F; 46.9
F; 48.2
M; 45.9
2018
2020
2019
2020
2020
24%
Emergency
54%
Medically necessary
7%
Elective
15%
Covid‐19
Chronic
Chronic
6,849,596
Total Inpatient Admissions 2018
54%
with Chronic Illness 2018
7,444,425
Total Inpatient Admissions 2019
54%
with Chronic Illness 2019
5,621,730
Total Inpatient Admissions 2020
616,742
Total Inpatient Admissions
54%
with Chronic Illness 2020
2018 55%
with Chronic Illness
2018
693,128
Total Inpatient Admissions
2019 54%
with Chronic Illness
2019
523,147
Total Inpatient Admissions
2020 54%
with Chronic Illness
2020
consultations and facilitating the
allows the Minister of Co-Operative
not need to obtain a Companies
submission of COVID-19-related claims.
Governance and Traditional Affairs
and Intellectual Property
(COGTA) to make regulations, issue
Commission (CIPC) certificate in
directions or authorise the issue of
order to conduct any business
directions concerning matters listed
during the state of disaster. The
therein only to the extent that it is
court held unequivocally that no
necessary for the purpose of:
law enforcement officers should
1.4. Industry hospital admissions dashboard The BHF launched the in-patient admissions dashboard, which is
request a CIPC certificate from
based on data received from member
(a) assisting and protecting the public;
schemes submitted monthly to the
(b) providing relief to the public;
of the Minister of Small Business
BHF. The national and provincial
(c) protecting property;
Development in this regard. The
‘dashboards’ have been created
(d) preventing or combatting
regulations stipulate that an
by the BHF to track the number of in-patient admissions, as well as the reasons for admission, i.e. whether for
disruption; or
anyone and set aside the directives
employer must provide every
(e) dealing with the destructive and
employee who may come into
other effects of the disaster.
direct contact with members of the public as part of their duties with a
emergencies or elective procedures.
cloth face mask to cover their nose
1.5. Legal updates
Legal changes aimed at addressing COVID-19
Section 27(2) of the Disaster
A decision of the Pretoria High
the nose and mouth when in a
Management Act, 2002 (DMA)
Court had held that businesses do
public place.
and mouth, or a homemade or other appropriate item that covers
BOARD OF HEALTHCARE FUNDERS NPC
12 ANNUAL REPORT 2020
No-one is allowed to be in a public
dispensing or transportation of liquor
schemes are therefore legally obliged
place or enter a public building or
and the operation of the economic
to pay for testing and screening
premises if not wearing a cloth face
and public sector.
for COVID-19, as well as treatment
attendance at funerals, prohibitions
COVID-19 is now a PMB in terms of
are insisting on COVID-19 tests for
on evictions, places and premises
the Medical Schemes Act, for the
patients being admitted for elective
closed to the public, the sale,
period of the pandemic. Medical
surgeries, even when there is no
mask. The regulations also cover
and rehabilitation. Private hospitals
clinical evidence of infection.
HFMU PARTICIPANTS NAME OF ENTITY - PHASE 1 Agility Global Health Solution Bestmed Bonitas Chartered Accountants’ Medical Aid Fund (CAMAF) Compensation Fund The Federated Employers Mutual Assurance Company Dental Information System (DENIS) Government Employees’ Medical Scheme (Gems) Hosmed Iso Leso KeyHealth Liberty Medihelp Medscheme Holdings Metropolitan Health Group Momentum Health Momentum Thebe Ya Bopelo Opmed Private Health Administrators Polmed Preferred Provider Negotiators (PPN) Pps Profmed Providence Qhubeka Forensic Services Rand Water Medical Scheme Samwumed Health360 (Sechaba) Universal Healthcare Veripath/Verirad
1.6. CSI initiatives NAME OF ENTITY - PHASE 2 Bestmed Chartered Accountants’ Medical Aid Fund (CAMAF) CompCare Compensation Fund Discovery Health Fishmed Government Employees’ Medical Scheme (Gems) Hosmed Keyhealth Mamoth Health (Lesotho) Medihelp Medipos Medishield Momentum Medical Scheme Moto Health PG Industries Rand Water Medical Scheme Rand Water Medical Scheme Remedi Samwumed Samwumed Selfmed Sisonke Sizwe Suremed Thebemed Transmed
The BHF has undertaken to mobilise resources in cash and kind for doctors in private practice across various locations including townships, informal settlements and remote and rural areas. In addition, resources will also be channelled to some non-profit organisations currently supporting the government in the fight against COVID-19. The aim is to mitigate the risks faced by volunteers and other healthcare workers over the shortage of PPE, hand sanitisers and disinfectants. The rationale is that a lot of doctors in private practice, townships, informal settlements and remote and rural areas, as well as several non-profit organisations, are doing a lot of work in supporting government efforts to minimise the burden of COVID-19 on the public healthcare system. However, they face many risks given the shortage of N-95 protective masks, three-tier lower-cost masks for selected patients, scrub suits, hand sanitisers, disinfectant, sterile gloves, sterile disposable gowns, goggles, shoe covers, visors and related equipment.
BOARD OF HEALTHCARE FUNDERS NPC
13 ANNUAL MANAGING DIRECTOR’S REPORT REVIEW for the year ended 31 December2020 2020
HFMU key stakeholders
Medical Schemes Employer Groups
Road Accident Fund
Administrators / Managed Care Organisations
H EALTHCARE F ORENSIC M ANAGEMENT U NIT
HFMU KEY STAKEHOLDERS
Special Investigations Unit
Compensation Funds Health Departments
The annual FWA indaba
The Private and Public Sector
In recognition of International Fraud
Outside the Public Service (RWOPS)
Awareness Week, the HFMU hosted
between the BHF and provincial
its fourth annual healthcare FWA
health departments was shared. A
Indaba in November 2020, virtually.
diverse panel of experts discussed
The Healthcare Forensics
With unprecedented attendance, the
high-impact collaboration to combat
Management Unit (HFMU) online
event brought together the industry’s
FWA in the healthcare industry.
portal has over 100 participants
leaders and stakeholders to share
Another panel of experts from across
representing various organisations.
information on key issues.
the region focused on strategies to
2. PROMOTING INDUSTRY STANDARDS 2.1. Fraud, waste and abuse
The HFMU online portal
Members have shared over 400 cases of investigations conducted
Partnership on Remunerative Work
prevent FWA in the wake of the global
The indaba featured various
COVID-19 pandemic.
in respect of FWA in the portal since
speakers, including representatives
its relaunch in 2018. The HFMU has
from the regulator, healthcare
expanded beyond South Africa and
forensic investigators, legal experts,
includes participants from Lesotho,
data scientists and actuaries.
Following the successful launch of
Namibia and Zimbabwe. The portal
Highlights included the review of the
the BHF HFMU FWA Dashboard
has been further developed for
impact of the POPIA on the sharing
Report in 2019, the industry has
members to share and analyse their
of information and data, as well as its
continued to collaborate and share
own data, in efforts to mitigate risk
impact from a doctor and patients’
data with the BHF. The participating
exposure.
perspective.
schemes and administrators share
The FWA dashboard
BOARD OF HEALTHCARE FUNDERS NPC
14 ANNUAL REPORT 2020
the data on a quarterly basis
CMS to address the challenges
through an automated process.
faced and establish remedial
In return, the BHF produces and
interventions where such
shares scheme-specific reports with
interventions are required.
participating members.
2.2. CMS S59 Panel Interim Report
2.3. Titanium Awards The 2020 Titanium Awards showcased the work of individuals and
CMS S59 investigation
organisations in the public and private
In 2019 The CMS established the
affordable, accessible and sustainable
Section 59 Investigation (S59), which
healthcare. The awards have evolved
was led by a panel of legal experts.
since their inception in 2014.
The purpose of the investigation was to probe allegations of racial profiling and unfair treatment of healthcare practitioners by medical schemes and administrators. An interim report was released by the panel in January 2020, and a media conference was held to announce the findings. In the report, the panel stated
sectors, driving change by creating
presented in the following categories: Titanium Award for Excellence in Creating Access to Healthcare: This award honours individuals, academics and organisations driving and supporting programmes, initiatives and campaigns in the fight against COVID-19, to create access to healthcare for communities. The award is open to all individuals and organisations in the healthcare sector, including medical schemes, administrators, pharmaceutical companies, public and private
Last year, the awards cast a spotlight
facilities, managed care companies,
upon organisations and individuals
small and medium entities (SMMEs),
dedicated to providing programmes
healthcare professionals, and
and initiatives that create access to
non-profit and government agencies,
healthcare services.
including CSI programmes.
The sixth virtual ceremony was
Bestmed scooped the prize for
sponsored by Insight Actuaries
the winning organisation and
and Consultants. Twelve entries
Dr Margaret Venter won in the
were received and the awards were
individual category.
that forensic investigations have revealed unfair racial discrimination by the medical schemes industry. However, it noted that there was no evidence of explicit racial bias in the algorithms and methods that administrators and medical schemes use to identify FWA. Stakeholders who wished to respond to the interim report were provided with an opportunity to do so within a specified period of time. The BHF, together with impacted members, have reviewed the full report and submitted responses to the panel. The BHF is committed to constructively engaging with the
Dr Margaret Venter is the current Secretary and co-founder of The Association of Palliative Care Practitioners of South Africa.
BOARD OF HEALTHCARE FUNDERS NPC
15 ANNUAL REPORT 2020
Titanium Award for Service
health citizen’ as the common thread.
Overall, the region handled the
to Membership: Open, Closed
Topics covered included:
pandemic better than anticipated,
and Self-Administered Medical
Comprehensive primary eye care
Schemes, Administrators and
compared to the experience of the USA and Europe, and there are
Managed Care Organisations:
Improving distribution of the health workforce
This award recognises and rewards
Out-of-pocket expenditure
other, not least that COVID-19 will
medical schemes administrators
Zimbabwe: role of non-state actors
still be with us for a while. As gender
and managed care organisations
Collaboration and reimbursement
equality advances, it is encouraging
providing the best service to their
to see that more and more
members. It celebrates industry
Primary care outcomes-based contract
excellence and unprecedented
Impact of underwriting
officers (POs). Demonstrating our
contributions to members.
Impact of Regulation 30
commitment to advancing this
Medscheme scooped the prize.
Afro-inclusive pharmacogenomics
agenda, the magazine profiled female
lessons we can learn from each
schemes now have female principal
Titanium Award for Best Paper:
CLICK HERE to access the BHF Southern
Nominees were judged on relevance,
African Health Journal online.
clarity, soundness and completeness. Barry Childs, Mudanalo Shavhani,
value to the industry. The magazine also examined
2.5. BHF360° into Healthcare
The winners in this category were
POs who are adding tremendous
alternative reimbursement mechanisms and looked at barriers
and Rachael van Zyl from Insight
The BHF published the seventh
to implementing capitation in South
Actuaries and Consultants.
edition of BHF360°, which recaps
Africa. It explored some constructive
key developments and events in
and progressive steps medical
2.4. The Southern African Health Journal
the healthcare sector over the past
schemes can take to improve the
12 months. As usual, this edition
current healthcare environment and
contained updates from several
Last year the BHF published the
of our neighbours in the Southern
pave the way for broadening access
second edition of the Southern Africa
African Development Community
Health Journal. The breadth of topics
(SADC) region, with the focus on how
CLICK HERE to access the BHF360° into
was considerable, with ‘health system
funders put the needs of the health
Healthcare magazine online.
strengthening for the benefit of the
citizen first during the pandemic.
BHF360°
SP
EC
IAL
to affordable care.
BHF360° DECEMBER 2020
CO
in to h e a lthca re
VID
-19
ED
ITI
ON
into healthcare
SOUTHERN AFRICAN
June 2020
04
What we have learnt in the context of medical schemes?
12
Telemedicine Enabling access for all
An ecosystem that meets the needs of the 'health citizen'
Health systems strengthening has become everybody's business
HEALTH
JOURNAL
/ 2020
Pushing Beyond. Solutions for Change.
Exploring the expected, unexpected and everything in between
COVER: In conversation with Neo Khauoe, BHF Chairperson p. 10
BOARD OF HEALTHCARE FUNDERS NPC
16 ANNUAL REPORT 2020
2.6. BHF360° into Healthcare: COVID-19 special edition In 2020 the BHF published a special edition of its annual magazine that looked at the unprecedented COVID-19 crisis from a healthcare industry perspective. Topics under the spotlight included: the different trajectories South Africa is potentially facing as the pandemic unfolds, and the need for models that can test for the variables, even while so much about the virus remains unknown. Addressing COVID-19 effectively will require legal changes in respect of
It can ensure that healthcare
this time of crisis in relation to
professionals reach more patients,
treatment of patients, testing and
while minimising direct contact.
the healthcare funding industry’s
CLICK HERE to access the BHF360° COVID-19 Special Edition online.
2.7. BHF Dialogue Series With the onset of COVID-19, the BHF saw an opportunity to align the healthcare industry on issues of common interest; virtual roundtable discussions sought to connect healthcare professionals and enable engagement and collaboration. Themes for the six-part series were: Reorganising our healthcare
perspective. Speakers shared insights on how countries have managed COVID-19 and strategies put in place to prepare for future crises.
2.8. Botswana Report The BHF presented a report on medical aid funds in Botswana. This is the first report prepared by the BHF for medical aid schemes in the SADC region. It is a useful tool for measuring the performance of these funds and evaluating their
reimbursement, and the BHF’s legal
ecosystem – putting the health
contributions to the population's
department offered some detailed
citizen first
health status, identifying gaps and
thoughts on this subject. A review of
Using technology to enhance our ecosystem
measures taken by a number of BHF
establishing areas of improvement to enhance member experiences of medical aid funds.
members provides an encouraging
Inspiring women leading change
picture of the industry’s participation
Embracing a digitally-enabled
The report will be useful for future
ecosystem – joining the dots
planning and the establishment of
in assisting various governments to combat the pandemic.
A roadmap towards strengthening Africa’s healthcare systems –
An overview of what we have learned
universal health coverage (UHC)
so far in the healthcare environment calls, inter alia, for better co-operation and co-ordination between funders
ready and resilient Sustaining the ecosystem, with the health citizen at the core.
and providers. Two contributions focus on the critical role technology can play
The sessions sought to create
and the need to harness it effectively,
engagement as well as a call to
especially telemedicine, a modality
action; exploring some of the trends
proven to enable access to healthcare.
that we have seen unfold during
BOARD OF HEALTHCARE FUNDERS NPC
industry-wide responses to some of the challenges identified. CLICK HERE to access the Botswana Medical Aid Funds Report online. The Botswana Medical Aid Funds
ANNUAL 2019 REPORT
17 ANNUAL REPORT 2020
1. REPRESENT MEMBER INTERESTS Lobby and advocate policy position on behalf of our members
n o
1
ti
Assist members with regulatory compliance Provide legal advice to membership on industry issues
Identify and monitor trends impacting our members
2
Promote unity and collaboration by creating platforms that enable our members to engage with the BHF and participate in industry issues Create networking opportunities Engage and develop relationships with key stakeholders
3. DEVELOP INDUSTRY STANDARDS
3
a l
2. CREATE PLATFORMS FOR MEMBER ENGAGEMENT
Promote best practice in the healthcare funding industry Promote healthcare quality Identify and recognise key role players in the industry
4. FACILITATE EDUCATION AND TRAINING
4
V
Protect the image of the industry
e u
Proposi
Assist in containing healthcare costs
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 5. TRANSFORMATION THROUGH DEVELOPMENT Identify opportunities to drive transformation in the industry Graduate programme development
PROVIDE AND IDENTIFY OPPORTUNITIES
6
Profile our members and our industry
BOARD OF HEALTHCARE FUNDERS NPC
18 ANNUAL REPORT 2020
2.9. The Practice Code Numbering System (PCNS)
Facility 9%
The PCNS is a list of unique practice billing codes for providers of healthcare
Suppliers 0%
services in South Africa, Zimbabwe Namibia, Lesotho and Botswana. It
Group 2%
forms an integral part of the health systems in these countries and seeks to promote a uniform, national and legally constituted identifier for billing purposes. It furthermore assists in combating fraud, waste and abuse within the healthcare industry. The information below and alongside
Facility
Solus 89%
Group Solus
provides an overview of the key data
Suppliers
elements critical in identifying the number of practices registered and terminated in the past year, as well as remunerative work carried out by various providers outside the public sector.
500+
6
PRACTICES REGISTERED IN 2020
3 201
SOLUS PRACTICES
174
PRACTICES REGISTERED BY DISCIPLINE
SUPPLIERS
3 580
Practice Types Created in 2020 | Source: PCNS Data
508
57
GENERAL MEDICAL PRACTICES
GROUP PRACTICES
316 FACILITIES
488
TERMINATIONS
275
*RWOPS: Remunerative Work Outside of the Public Sector
BOARD OF HEALTHCARE FUNDERS NPC
OCCUPATIONAL THERAPISTS
RWOPS* JANUARY TO DECEMBER 2020
219
TOP 5
PSYCHOLOGISTS
419
REGISTERED NURSES
TYPES OF SOLUS PRACTICES REGISTERED
259
PHYSIOTHERAPISTS
19 ANNUAL MANAGING DIRECTOR’S REPORT REVIEW for the year ended 31 December2020 2020
3. REPRESENTING MEMBER INTERESTS 3.1. Low-cost benefit option (LCBO) appeal
healthcare funders and managed
the country, everyone had to adjust
care organisations. The Act gives
their ways of engaging by using
organisations and companies
different platforms.
12 months to make sure that they
The BHF participated in more than
are compliant. The deadline for
100 industry engagements over
compliance is 1 July 2021.
the course of 2020, using online
The BHF's appeal against a decision by the CMS taken on 18 January 2019,
The POPIA requires a complete
granting Discovery Life Limited an
re-examination of the manner in
exemption in terms of section 8(h)
which information is collected,
of the Medical Schemes Act from
processed, retained, retrieved and
the provisions of section 20 of the
destroyed in the healthcare funder’s
Medical Schemes Act, has been
business environment. Documents
upheld by the CMS Appeals Board.
such as standardised application
The decision orders includes: the setting aside of the decision of the CMS taken in January 2019, which granted the Discovery Life exemption; the suspension of the execution of the order setting aside the decision to exempt Discovery Life until 31 May 2021 or until
dialogues as a key tool. As part
forms, consent forms, medical report forms, member communications, standardised reports and any documents that constitute a contract between the funder on one hand providers on the other must all be possible to ensure compliance with
tation of the LCBO framework,
may have to be created in order to
whichever occurs first;
inform healthcare providers and
Allied Health Professions Council of South Africa Botswana Association of Medical Aid Funds Competition Commission Council for Medical Schemes
Health Professions Council of South Africa
reviewed and amended wherever the POPIA. New documentation
African Union
Emergency Medical Services
and beneficiaries or healthcare
the development and implemen-
STAKEHOLDERS ENGAGED
Hospital Association of South Africa Innovative Pharmaceutical Association of South Africa
suppliers of information they must
enrolment of new members on
be provided with in terms of the
Managed Care Organisations
the Discovery Comprehensive
POPIA. Wherever possible consent
Minister of Health
Primary Care or Discovery
should be obtained from a data
Essential Primary Care until the
subject for the processing of his/her/
the prohibition of the further
earlier of 31 May 2021 or the implementation of the LCBO framework.
its personal information – even in circumstances where the POPIA does
National Department of Health Namibian Financial Institutions Supervisory Authority
not necessarily require such consent.
3.2. Protection of Personal Information Act No 4 of 2013 (POPIA)
Namibian Association of Medical Aid Funds
3.3. Health systems strengthening engagements
National Treasury
Since the focus of the POPIA is
Continuous engagement with the
information gathering, processing,
healthcare industry is a cornerstone
storage and destruction, it greatly
of the BHF's vision and mission, with
affects entities that deal with large
a total of 172 engagements realised
amounts of personal data every
during the year under review. Of
day such as healthcare providers,
course, with COVID-19 looming over
Pathologists South African Medical Association The Association of Health Funders of Malawi WITS Health Consortium World Economic Forum World Health Organization
BOARD OF HEALTHCARE FUNDERS NPC
20 ANNUAL REPORT 2020
3.4. Public Relations (PR)
use video or phone calls to treat
a number of policy initiatives by
Communication played an important
access to healthcare and, within the
participating in various partnership
role in 2020 in allaying fears around
context of COVID-19, to minimise the
engagements, thought leadership
the role that medical schemes
risk of infection. The BHF was at the
presentations and industry forums.
would play within the context of the
forefront of driving communications
The BHF hosted a total of seven
pandemic, and their ability to pay for
around this milestone achieved by
facilitators and 62 speakers to
treatment relating to COVID-19.
medical schemes.
The BHF was instrumental in
3.4.2. Responding to key issues
of its continuous development, the BHF sought to contribute to
participate in assorted online policy engagements and discussions with the industry as noted below.
KEY DISCUSSION POINTS
this regard; providing clarity in messaging and consolidating the private funding voice and role of private healthcare funders within the context of the pandemic.
COVID-19 Issues/ Implications
3.4.1. Key topics covered
Demarcation Medical aids/Insurance Products
The following important topics
Conduct of Financial institutions Bill
communications efforts in the
Fraud, waste and abuse Governance Industry collaboration/ Areas of collaboration Insurance Products Introduction of National Health Insurance
were covered by the BHF in its year under review and provide an overview of the role that the BHF played in communicating on behalf of the private healthcare funders:
Covid-19 as a PMB
patients. This was critical in enabling
The BHF responded on key issues that impacted the health of members and the public. Trending topics included the need to defer elective surgery given concerns at the time that risk of in-hospital patient exposure to COVID-19 was high. The BHF also provided insights to members of medical schemes on key issues of concern, as well as shared perspectives on topics of discussion in the media.
3.4.3. Value of PR and Communications Efforts
The CMS revised various regulations
The total Advertising Value
including the PMB guidelines, which
Equivalent (AVE) generated during
saw the addition of the COVID-19
this period was R2 270 554.45.
treatment added as a PMB. The
This means that the BHF generated
BHF was influential in creating
publicity worth just over R2.2
Promulgation of Medical Schemes Act and Regulations
awareness around the meaning of
million without spending as much
this for scheme members, thereby
on communications efforts.
Recommendations on Low Cost Benefit Options
schemes would support members
Universal Health Coverage Lack of unique identifier for providers
Recommendations on PMB Regulatory Framework Submission on NHI Industry Sustainability Student VISA Framework
ensuring an understanding of how in the treatment of COVID-19.
Lifting ban on telemedicine The industry mobilised and came together to lobby the Health
This publicity was generated through public relations efforts alone, and no advertising expenses were incurred. Media coverage was generated with online, print and broadcast media.
Professions Council of SA (HPCSA) to
A total of 81 media clippings,
lift the telemedicine ban to broadly
including print and online articles,
permit doctors and therapists to
and broadcast interviews were
BOARD OF HEALTHCARE FUNDERS NPC
21 ANNUAL MANAGING DIRECTOR’S REPORT REVIEW for the year ended 31 December2020 2020
BHF PERSPECTIVES & INSIGHTS SHARED IN THE MEDIA DURING 2020 The BHF welcomes lift on the HPCSA ban on telemedicine. Medical schemes to address medical scheme member concerns. Addressing the medical scheme payment holiday issue, COVID-19 costs. Leveraging the private healthcare sector to work collaboratively with government in the fight against COVID-19. Patients urged to defer elective surgery unless it is a medical emergency. Preventative measures to be taken during the winter season. The BHF releases first report on Botswana’s medical schemes landscape. The BHF responds to the CMS circular on medical scheme member support and exemption guidelines. Effective health coverage for at-risk populations Towards the journey to achieving UHC in a time of crisis. The BHF’s women leaders give their perspective on healthcare challenges and recommendations to build a better healthcare system press release. COVID-19 lessons and its future impact on healthcare systems. Low-cost benefits with medical schemes remain a challenge.
published, providing commentary and perspectives from the BHF in the media during 2020.
4. TRAINING & EDUCATION 4.1. Trustee training The BHF undertook extensive virtual trustee training in 2020 as part of the BHF and Wits Business School Trustee Development Programme. Sessions were well-attended with 21 attendees overall; representing seven member schemes and eight non-member organisations.
TD P
T RUSTEE D EVELOPMENT P ROGRAMME
the spotlight included the law
make recommendations for the
relating to schemes, trustees’
Registrar’s consideration.
responsibilities and ethical leadership. The BHF also conducted
Dr Rajesh Patel, head of the BHF’s
two governance workshops in 2020.
health systems strengthening department, has been re-appointed
5. APPOINTMENTS
to serve on the CMS’ PMB
BHF Managing Director, Dr Katlego Mothudi, has been appointed to
Review Advisory Committee. The committee's main objective
Four countries were represented:
serve on the CMS’ FWA Advisory
is to make recommendations in
Malawi, Namibia, eSwatini and
Committee. The purpose of
respect of a comprehensive set
South Africa. A pass rate of 90%
the committee is to advise
of out-of-hospital and in-hospital
was recorded and issues under
the industry on this issue and
essential healthcare benefits.
BOARD OF HEALTHCARE FUNDERS NPC
22 ANNUAL REPORT 2020
Highlights of Member Engagements during 2020 B H F M e m b e r S t a ke h o ld er En g a g e m e nt s for 2020
364
54
84%
61% 60% 48% 34% 35%
40%
39%
35%
21% 13%
13% 0%
Networking Platforms/Sessions created for BHF Members as of
17 November 2020 2% 2% 2% 9% 19% 6% 2% 85% 2% 33% 4% 37% 6% 6% 11% 11% 4% 9% 4% 9% 11% 4% 7% 9% 4% 4% 4% 2%
Total CONNECTIONS with Members Across Africa as of
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Membership Base Engagement Ratio by Month
17 November 2020
17 November 2020
AGM Annual Report Beneficiaries Management BHF Industry Feedback BHF Update & Projects BHF Value Proposition Claims Management ENGAGEMENT FOCUS COVID19 Update, Response, Tests, Members, etc Key Issues Members Effective Coverage Are Engaged On Fraud, Waste and Abuse (FWA) Governance Healthcare Insights, Innovation, Tech, Trends, Workers HFMU Knowledge Management (KM) Legal/Regulatory/Law/Statutory Low Cost Benefit Options (LCBO) Managed Care Medical Schemes, Benefits & Changes CONTACTS WITH NHI PCNS Prescribed Minimum Benefits (PMB) 11 10 2 Public Private Partnerships Research, Academia, R&D Botswana eSwatini Lesotho Student Visas Telemedicine Trustee Development Universal Health Coverage (UHC) Women in Healthcare
Overall Membership Base Level of Engagement
Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
as of
PLUS, we've also extended our marketing
17 November 2020
ACROSS AFRICA Engagements by Country in 2020
reach beyond
Africa
302
MEMBERS
By Country
BHF MEMBERS Botswana
Malawi
eSwatini
20
18
12
Namibia
South Africa
Lesotho Malawi
Zimbabwe
Namibia South Africa Zimbabwe
TYPE OF ENGAGEMENT LEVEL OF ENGAGEMENT
Q1
Q2
Q3
47%
61%
76%
11
19
17
Q4
40%
With Members
STAKEHOLDER SESSIONS
Q1
Q2
Q3
7
Q4
6. MEMBER ENGAGEMENT
the Malawi Regional Meeting. The
of Medhealth Limited and Mr Sidney
Engaging with our members and
regional meeting was aimed at
Chikoti, the CEO of Medical Aid
building relationships with them
reflecting on matters pertaining
Society of Malawi.
ensures that we meet their needs.
to healthcare in the region and
We are pleased to share our member
served as a platform for the region
engagement dashboard for 2020 with our members; it details in tabular and dashboard form the many and varied BHF activities designed to generate outcomes that attain our strategic goals and sustain the organisation.
to delineate practical solutions for taking the sector forward. Over 40 delegates from various medical schemes including Medhealth were present and the Association of Health
6.1. New members In 2020, the Federated Employers Mutual (FEM) Assurance Company and Botsogo Health Plan were welcomed onboard as new members.
Funders in Malawi was also launched at the event. The speakers included
In March 2020, the BHF also
Ms. Elsie Munthali – Interim President
partnered with the Association of
of Association of Health Funders in
KATLEGO MOTHUDI
Health Funders in Malawi to host
Malawi, Mr. Bright Kamanga the CEO
Managing Director
BOARD OF HEALTHCARE FUNDERS NPC
23 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020 BOARD OF HEALTHCARE FUNDERS NPC
23
24 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
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
N J Khauoe A K Mia Hamdulay
Restricted Schemes - SA Administrators - SA
Chairperson-Elected 28 July 2020 Chairperson until 28 July 2020
J K Mothudi M R Bayley L R Callakoppen M E Dlamini A Fourie-van Zyl J H Joubert T B Makoetlane S Martinus J V M Mbonani T Mlotshwa C M Mokgosana B O S Moloabi H L Nhlapo N Nyathi C Raftopolous S N Sanyanga H C Schäfer H Stephens M C Wilson
Executive Administrators - SA Open Schemes - SA SADC - eSwatini Open Schemes - SA Open Schemes - SA SADC - Lesotho Restricted Schemes - SA Open Schemes - SA Restricted Schemes - SA SADC - Botswana Restricted Schemes - SA Administrators - SA Administrators - SA Restricted Schemes - SA SADC - Zimbabwe SADC - Namibia Restricted Schemes - SA Restricted Schemes - SA
MD
SECRETARY
Michelle Beneke - Beneke Gantley Inc
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
Resigned 29 November 2020 Resigned 16 November 2020 Resigned 8 September 2020 Appointed 19 November 2020
25 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
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 2020, the membership of the Finance and Audit Committee comprised: H Stephens Director (Executive)
Chairperson from 29 November 2020 and Financial Consultant for the 2020 Financial Year
A Fourie-van Zyl
Director (Non-Executive)
Chairperson until 29 November 2020
L R Callakoppen
Director (Non-Executive)
Member since 28 July 2020
J K Mothudi
Managing Director (Executive)
By invitation
J V M Mbonani
Director (Non-Executive)
Member until 8 September 2020
S D H Odendaal
Independent
Member
M C Wilson
Director (Non-Executive)
Member
The Chairman, or in his 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 57. 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
26 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
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 2020 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 continued to provide internal audit services.
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.
_______________________________________________ H STEPHENS Johannesburg 27 May 2021
BOARD OF HEALTHCARE FUNDERS NPC
27 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
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 2021 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 28 to 30. The annual financial statements set out on pages 33 to 52 which have been prepared on the going concern basis, were approved by the Board on 27 May 2021 and were signed on its behalf by:
_______________________________________________ N J KHAUOE Johannesburg 27 May 2021
_____________________________________________
DR J K MOTHUDI
BOARD OF HEALTHCARE FUNDERS NPC
28 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
REPORT OF THE INDEPENDENT AUDITORS to the members of the Board of Healthcare Funders NPC Opinion We have audited the Separate Annual Financial Statements of the Board of Healthcare Funders NPC set out on pages 33 to 52, which comprise the statement of financial position as at 31 December 2020, 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 2020, 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 Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards). 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) Separate Annual Financial Statements for the year ended 31 December 2020”, which includes the Directors’ Report as required by the Companies Act of South Africa and the supplementary information on pages 51 to 55. 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
29 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
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. A further description of our responsibilities for the audit of the financial statements is included in the Appendix to this auditor’s report. This description, which is located on page 30, forms part of our auditor’s report.
_______________________________________________ PATIENCE BHEBHE SizweNtsalubaGobodo Grant Thornton Inc. Director Registered Auditor 2 June 2021 20 Morris Street East Woodmead
BOARD OF HEALTHCARE FUNDERS NPC
30 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
REPORT OF THE INDEPENDENT AUDITORS (CONTINUED) Auditor’s responsibilities for the audit of the financial statements As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism 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. • 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.
BOARD OF HEALTHCARE FUNDERS NPC
31 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
DIRECTORS’ REPORT for the year ended 31 December 2020
The Directors present their report for the year ended 31 December 2020.
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 statements. Expenditure on the upgrade to the PCNS system continued at high levels but this was offset by curtailed expenditure in other areas.
DIRECTORS NAME
DATE OF APPOINTMENT
DATE OF RESIGNATION
M R Bayley
17 August 2017
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
J H Joubert
19 June 2018
South Africa
N J Khauoe
17 May 2018
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 K Mia Hamdulay
19 August 2015
South Africa
C M 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
H Stephens
08 February 2016
South Africa
M C Wilson
13 September 2018
South Africa
29 November 2020
16 November 2020 8 September 2020
COUNTRY
ACCOUNTING FRAMEWORK The financial statements have been prepared in accordance with the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities.
BOARD OF HEALTHCARE FUNDERS NPC
32 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
DIRECTORS’ REPORT (CONTINUED) for the year ended 31 December 2020 TAXATION Prior to the incorporation as a Section 21 company, the Board of Healthcare Funders NPC (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 have 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 2020 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 financial impact of COVID-19 on BHF was not as great as had been expected. The revenue from members was maintained and was even increased due to the adding of new members. Unfortunately, the annual conference was cancelled with a loss of revenue and the continuation of set up costs. As business travel was restricted during the pandemic the company used virtual platforms to successfully communicate with members. These sessions were well received by our members and brought considerable recognition to BHF efforts. The company implemented new work from home practices in terms of its Business Continuity Plan. A new cloud-based switchboard facility was implemented and staff were able to connect remotely to all BHF systems. All additional COVID-19 related costs were offset by reductions in other expense categories.
SUBSEQUENT EVENTS There have been no facts or circumstances of a material nature that have occurred between the accounting date and the date of this report.
AUDITORS SizweNtsalubaGobodo Grant Thornton Inc were appointed as external auditors for a three-year term which ended in 2020. The Board has recommended the renewal of the contract with SNG for 3 more years which has been submitted to the members for ratification at the next AGM.
BOARD OF HEALTHCARE FUNDERS NPC
33 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2020
NOTES
2020 R
2019 R
Revenue
3
47 497 998
43 872 000
Other Income
4
1 195 407
12 195 674
Operating Expenses
25
(48 109 902)
(56 987 660)
OPERATING (DEFICIT)/SURPLUS
5
583 503
(919 986)
Investment Revenue
6
2 421 637
3 272 356
TOTAL SURPLUS/(DEFICIT) FOR THE YEAR
3 005 140
2 352 370
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
3 005 140
2 352 370
BOARD OF HEALTHCARE FUNDERS NPC
34 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
STATEMENT OF FINANCIAL POSITION for the year ended 31 December 2020
NOTES
Non-Current Assets
2020 R
2019 R
2 735 035
3 212 725
Investment in Subsidiary
10
100
-
Property, Plant and Equipment
8
2 728 638
3 203 463
Intangible Assets
9
6 297
9 262
40 956 478
36 809 810
Current Assets Trade and Other Receivables
11
574 099
759 451
Cash and Cash Equivalents
12
40 382 379
36 050 359
TOTAL ASSETS
43 691 513
40 022 535
Reserves
36 073 019
33 067 879
Accumulated Funds
13
25 110 622
22 177 586
PCNS Reserve
16
10 962 397
10 890 293
7 618 494
6 954 656
100
-
Current Liabilities
Intercompany Loan account
20.2
Trade and Other Payables
14
6 933 267
6 198 716
Provision for Leave Pay
15
685 127
755 940
43 691 513
40 022 535
TOTAL FUNDS RESERVES AND LIABILITIES
BOARD OF HEALTHCARE FUNDERS NPC
35 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
STATEMENT OF CHANGES IN FUNDS AND RESERVES for the year ended 31 December 2020
Accumulated funds R
PCNS Reserve R
Total R
20 974 889
9 740 620
30 715 509
2 352 370
-
2 352 370
Transfer from PCNS reserve
(1 149 673)
1 149 673
-
BALANCE AT 31 DECEMBER 2019
22 177 586
10 890 293
33 067 879
3 005 140
-
3 005 140
(72 104)
72 104
-
25 110 622
10 962 397
36 073 019
BALANCE AT 31 DECEMBER 2018 Surplus for the year
Surplus for the Year Transfer to PCNS Reserve BALANCE AT 31 DECEMBER 2020
BOARD OF HEALTHCARE FUNDERS NPC
36 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
STATEMENT OF CASH FLOWS for the year ended 31 December 2020
Notes
CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from Customers / Members Cash paid to Suppliers and Employees
2020 R
2019 R
4 729 781
4 892 595
48 912 276
56 179 963
(46 604 132)
(54 559 724)
Cash generated / (utilised) by operating activities
19
2 308 144
1 620 239
Interest received
6
2 421 637
3 272 356
CASH FLOWS FROM INVESTING ACTIVITIES
(397 761)
(146 465)
Replacement of property, plant and equipment
(411 761)
(155 884)
14 000
9 419
4 332 020
4 746 130
36 050 359
31 304 229
40 382 379
36 050 359
Proceeds on disposal of property, plant and equipment Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
BOARD OF HEALTHCARE FUNDERS NPC
12
37 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
ACCOUNTING POLICIES for the year ended 31 December 2020 1
CORPORATE INFORMATION
The financial statements of Board of Healthcare Funders NPC (Non-Profit Company in terms of Section 10 of the Companies Act, 2008) (the “company”) for the year ended 31 December 2020 were authorised for issue in accordance with a resolution of the Directors on 27 May 2021. 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 33 to 52 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 of South Africa, (2008). 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 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. Depreciation rates for the assets are as follows: Furniture and fittings: Office equipment: Computer equipment: Leasehold improvements:
5% to 20% 16.67% 20% 12.5%
BOARD OF HEALTHCARE FUNDERS NPC
38 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2020 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 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. 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.
BOARD OF HEALTHCARE FUNDERS NPC
39 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2020 2.3 Impairment of assets (continued) 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. The management team reviews outstanding amounts regularly and then contacts members to determine the likelihood of payment prior to any potential suspension of membership, thereafter bad debts are written off at the discretion of management.
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
40 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2020 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
41 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2020 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
42 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
ACCOUNTING POLICIES (CONTINUED) for the year ended 31 December 2020 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 Revenue, 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
Investments in subsidiaries
Investments in subsidiaries are carried at cost less any accumulated impairment in the company financial statements. The cost of the investment in the subsidiary is directly attributable to the purchase of the subsidiary.
2.12
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 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).
BOARD OF HEALTHCARE FUNDERS NPC
43 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
2020 2019 R R
3. REVENUE Levy Income
19 111 773
15 734 988
Practice Code Numbering System Income
28 386 225
28 137 012
47 497 998
43 872 000
-
10 955 713
Trustee Training Income
221 304
212 174
Sundry Income
974 103
1 027 787
1 195 407
12 195 674
4. OTHER INCOME Conference Income and Sponsorship
5. OPERATING SURPLUS Operating surplus is stated after:
Loss on Disposals
238 957
45 949
Depreciation and Amortisation
636 592
627 051
Operating Leases - Equipment
63 047
60 752
Operating Leases - Premises Salaries and Wages Internal Audit Services
2 385 967
2 388 361
23 148 928
23 800 092
710 566
201 824
27 184 057
27 124 029
6. INVESTMENT REVENUE Interest Received on Cash and Short-Term Deposits
2 421 637 2 421 637
3 272 356 3 272 356
7. AUDITORS REMUNERATION External Audit Fees
362 837
337 201
362 837
337 201
BOARD OF HEALTHCARE FUNDERS NPC
44 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 8. PROPERTY, PLANT AND EQUIPMENT Furniture Office Computer Leasehold and fittings equipment equipment improvements
Total
R R R R R COST: At 1 Jan 2019
1 724 541
1 028 529
1 527 482
1 784 866
6 065 417
Additions
-
-
155 884
-
155 884
Disposals
(68 739)
-
(43 698)
-
(112 436)
At 31 Dec 2019
1 655 802
1 028 529
1 639 668
1 784 866
6 108 865
Additions
600
-
411 161
-
411 761
Disposals
-
(465 309)
(159 496)
-
(624 805)
1 656 402
563 220
1 891 333
1 784 866
5 895 821
ACCUMULATED Furniture Office Computer Leasehold DEPRECIATION: and fittings equipment equipment improvements
Total
At 31 Dec 2020
R R R
R R
At 1 Jan 2019
582 755
411 967
620 552
723 110
2 338 384
Depreciation charge for the year
105 432
83 245
196 051
239 358
624 086
Disposals
(41 062)
-
(16 007)
-
(57 069)
At 31 Dec 2019
647 125
495 212
800 596
962 468
2 905 401
Depreciation charge for the year
102 147
83 245
208 878
239 358
633 628
-
(247 872)
(123 974)
-
(371 846)
749 272
330 585
885 500
1 201 826
3 167 183
Disposals At 31 Dec 2020
NET BOOK VALUE: At 31 Dec 2020 At 31 Dec 2019
907 130
232 635
1 005 833
583 040
2 728 638
1 008 677
533 317
839 072
822 398
3 203 463
BOARD OF HEALTHCARE FUNDERS NPC
45 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
2020 2019 R R
9. INTANGIBLE ASSETS Computer Software Cost At 1 January 2020
69 726
69 726
At 31 December 2020
69 726
69 726
60 465
57 501
2 965
2 964
63 430
60 465
6 296
9 261
2 850 000
2 850 000
(2 849 999)
(2 849 999)
1
1
6 297
9 262
Accumulated Amortisation At 1 January 2020 Amortisation Charge for the Year At 31 December 2020
Net Book Value PCNS Copyright The carrying value is determined as follows: Cost Accumulated Impairment Carrying value at end of year TOTAL INTANGIBLE ASSETS
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.
2020 2019 R R
10. INVESTMENTS IN SUBSIDIARIES Investment in Africa Health Connect (Pty) Limited
100
-
BOARD OF HEALTHCARE FUNDERS NPC
46 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 2020 2019 R R
11. TRADE AND OTHER RECEIVABLES Trade receivables
604 143
823 014
(434 426)
(429 306)
169 717
393 708
9 181
3 500
South African Revenue Services - VAT
395 200
362 243
574 098
759 451
Balance at the Beginning of the Year
429 306
550 305
Arising During the Year
405 271
360 322
(400 150)
(481 321)
434 427
429 306
Provision for credit allowances Prepayments
Provision for impairment
Unused Amounts Reversed Balance at End of Year
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
135 268
953
33 495
-
169 716
As at 31 December 2020
135 268
953
33 495
-
169 716
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 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
47 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 2020 2019 R R
12. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise: Bank Balances
583 796
344 585
Short Term Deposits
39 798 583
35 705 774
Total Cash
40 382 379
36 050 359
13. 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.
14. TRADE AND OTHER PAYABLES 2020 2019 R R
Trade Payables
1 755 771
545 556
Accruals
1 347 558
2 187 668
Other Payables
3 102 996
2 816 561
710 440
642 802
16 502
6 129
6 933 267
6 198 716
PCNS Over Payments Employee related payables
Other Payables comprised the following items:
Accrual for Audit Fees
357 648
342 240
Debtors with Credit Balances
2 745 348
2 474 321
3 102 996
2 816 561
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
48 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
15. PROVISION FOR LEAVE PAY Provision at the Beginning of the Year Provision raised during the year Provision utilised during the year
2020 2019 R R 755 940
821 847
1 611 039
1 127 532
(1 681 852)
(1 193 439)
685 127
755 940
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.
16. PCNS Reserve During the 2020 Financial Year R72 104 was transferred from Accumulated Funds to PCNS Reserve (2019 R1 149 673). As no profit may be derived from PCNS (Note 9), excess PCNS income over expenditure is transferred to a specific reserve for the maintenance of PCNS.
17. BHF CONFERENCE Conference income and Sponsorship (included in other income – note 4)
2020 2019 R R -
10 955 713
Conference expenses (included in operating expenses)
(300 569)
(10 027 895)
Conference (Deficit)/Surplus
(300 569)
927 817
The conference for 2020 was postponed due to COVID19 restrictions, but some set up costs were incurred.
18. 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: Up to one year
2020 2019 R R 2 929 184 2 734 381
After one year but not more than five years
1 692 941
4 462 321
4 622 125
7 196 702
BOARD OF HEALTHCARE FUNDERS NPC
49 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 2020 2019 R R
19. NOTES TO THE STATEMENT OF CASH FLOWS Reconciliation of net surplus before taxation to cash generated by operations
Net Surplus
3 005 140
2 352 370
Adjustments: Depreciation
633 628
624 087
Amortisation
2 964
2 964
238 957
45 949
(2 421 637)
(3 272 356)
1 459 052
(246 986)
Loss on disposal of property and equipment Interest received
Changes in working capital
849 092
1 867 225)
Trade and other receivables
185 354
1 226 511
Provisions
(70 813)
(65 907)
Trade and other payables
734 551
706 621
2 308 144
1 620 239
Cash generated by operating activities
20. RELATED PARTIES 20.1. Transactions with related parties Directors and key management emoluments
2020 2019 R R Short term employee Short term employee benefits-emoluments Cash benefits-emoluments Cash received incentive received incentive
Katlego Mothudi - Managing Director Howard Stephens*
3 336 875
433 486
3 199 423
383 949
728 098
-
1 162 231
-
4 064 973
433 486
4 361 654
383 949
Management team
6 441 436
780 508
7 165 309
724 965
10 506 409
1 213 994
11 526 963
1 108 914
BOARD OF HEALTHCARE FUNDERS NPC
50 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
2020 2019 R R
20.2 Balances with related parties Amounts owing to subsidiaries Africa Health Connect (Pty) Limited
100
-
Amounts payable to Africa Health Connect (Pty) Limited are payable on demand. The managing director is an executive director, no other directors’ emoluments are paid. The benefits-emoluments represent the total cost to Company and no further pension or medical aid contributions were made on behalf of all. 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 employment contracts 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
51 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 21. 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 of 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 Ba2 (BB+ equivalent to other credit rating agencies) in November 2020 (i.e. below investment grade status or so-called “junk” level) The short-term outlook was left on negative, signalling 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. The investment policy was updated in 2020 to allow flexibility in choosing banks for investments.
BOARD OF HEALTHCARE FUNDERS NPC
52 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) 22. COVID-19 The financial impact of COVID-19 on BHF was not as great as had been expected. The revenue from members was maintained and was even increased due to the addition of new members. Unfortunately, the annual conference was cancelled with a loss of revenue and the continuation of set up costs. As business travel was restricted during the pandemic, the company used virtual platforms to successfully communicate with members. These sessions were well received by our members and brought considerable recognition to BHF efforts. The company implemented new work from home practices in terms of its Business Continuity Plan. A new cloud-based switchboard facility was implemented and staff were able to connect remotely to all BHF systems. All additional COVID-19-related costs were offset by reductions in other expense categories.
23. EVENTS AFTER THE REPORTING PERIOD There have been no facts or circumstances of a material nature that have occurred between the accounting date and the date of this report.
24. GOING CONCERN The directors have reviewed the company’s budget for the year to 31 December 2021 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.
BOARD OF HEALTHCARE FUNDERS NPC
53 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
SUPPLEMENTARY INFORMATION Supplementary Schedule not forming part of Annual Financial Statements
DETAILED EXPENDITURE - NOTE 25
OPERATING EXPENSES
2020 2019 R R
Advertising
525 122
176 336
Agency Fees
97 538
219 343
Auditor's remuneration
362 837
337 201
Bank charges
234 337
330 494
Cleaning
122 178
191 159
Computer expenses
930 897
594 216
Conference
300 569
10 027 895
Consumables
52 439
111 385
Depreciation
636 592
627 051
Electricity, water and rates
753 878
924 704
Entertainment
7 412
31 866
Inspection fees
317 900
351 253
Insurance
228 898
226 829
Internal auditor's remuneration
710 566
201 824
1 196 645
780 950
238 957
45 949
Legal expenses Loss on disposal of property and equipment Maintenance
151 182
259 911
Meetings
214 672
967 988
Motor vehicle expenses
29 735
82 974
Operating lease expenses - equipment
63 047
60 752
2 385 967
2 388 361
684
4 326
Operating lease expenses - premises Postage and courier Printing and stationery Professional services Provision for doubtful debts Staff remuneration Statutory levies Subscriptions
50 708
58 405
12 342 689
11 506 474
5 121
(120 998)
23 148 928
23 800 092
148 196
207 670
1 483 411
929 284
Sundry expenses
115 748
22 394
Telephone
859 271
416 865
Training and welfare costs
233 945
224 053
Travel and accommodation
159 833
1 000 655
Total 48 109 902 56 987 660
BOARD OF HEALTHCARE FUNDERS NPC
54 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
SUPPLEMENTARY INFORMATION (CONTINUED) Supplementary Schedule not forming part of Annual Financial Statements
DETAILED INCOME STATEMENT REVENUE
2020 2019 R R 47 497 998
43 872 000
Levy Income
19 111 773
15 734 988
Practice Code Numbering System Income
28 386 225
28 137 012
OTHER INCOME
3 617 044
15 468 030
-
10 955 713
2 421 637
3 272 356
Sundry income
974 103
1 027 787
Trustee Training Income
221 304
212 174
BHF Conference and Sponsorship Interest Received
Total Income
51 115 042
59 340 030
OPERATING EXPENSES
(48 109 902)
(56 987 660)
SURPLUS AFTER TAXATION
BOARD OF HEALTHCARE FUNDERS NPC
3 005 140
2 352 370
55 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
SUPPLEMENTARY INFORMATION (CONTINUED) Supplementary Schedule not forming part of Annual Financial Statements
DETAILED PCNS INCOME STATEMENT INCOME BHF Levy Contribution PCNS Service Provider Income PCNS User Agreement Income Inspection Fees Interest Received Sundry Income
2020 2019 R R 30 173 022 3 199 547 19 563 753 5 622 925 307 486 1 110 772 368 539
30 304 510 2 386 866 19 508 230 6 241 916 339 961 1 505 940 321 597
EXPENSES 30 100 918 29 154 836 Bank Charges 202 980 296 027 Cleaning 69 833 110 683 Computer Expenses 121 491 87 979 Consumables 18 735 41 827 Depreciation 207 481 206 994 Electricity, Water And Rates 293 385 348 498 Inspection Fees 317 900 351 253 Internal Audit 366 744 Legal Expenses 150 245 751 652 Maintenance 4 853 19 720 Meetings 2 681 37 226 Motor Vehicle Expenses 15 351 3 003 Operating Leases - Equipment 22 441 21 222 Operating Leases - Premises 1 051 803 1 045 212 Postage and Courier 684 495 Printing and Stationery 7 616 32 924 Professional Services 7 324 250 6 755 056 Provision for Doubtful Debts (242 395) 223 308 Recoveries 12 510 586 10 355 638 Staff Remuneration 6 958 264 8 023 825 Statutory Levies 35 863 54 977 Subscriptions 101 453 85 845 Sundry Expenses - 5 250 Telephones 525 338 181 678 Training and Welfare Costs 26 504 48 141 Travel and Accommodation 6 832 66 404 PCNS Surplus
72 104
1 149 673
BOARD OF HEALTHCARE FUNDERS NPC
56 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
GENERAL INFORMATION Supplementary Schedule not forming part of Annual Financial Statements MANAGEMENT TEAM • Katlego 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 The following schedule reflects the attendance of members of scheduled board meetings during the 2020 financial year: Attendee
13-Feb-20 28-May-20 28-Jul-20 27-Aug-20 19-Nov-20
Board meeting type
Ordinary
A.K. Mia Hamdulay (chairperson until AGM)
N. J. Khauoe (deputy chair until AGM, chair after AGM)
Ordinary
Special
√
√
Ordinary Ordinary √
√
√
H.L. Nhlapo (deputy chairperson after AGM)
√
√
√
J.K. Mothudi (managing director)
√
√
√
√
M.R. Bayley
√
√
√
L.R. Callakoppen
√
√
√
√ √ √
M.E. Dlamini
√
√
√
√
A. Fourie-van Zyl (resigned 29 Nov 2020)
√
√
√
√
J.H. Joubert
√
√
√
√
√
T.B. Makoetlane (resigned 16 Nov 2020)
√
√
√
√
N/A
√
√
√
S. Martinus
J.V.M. Mbonani (resigned 8 Sep 2020)
T. Mlotshwa (appointed 19 Nov 2020)
N/A
N/A
N/A
N/A
√
C.M. Mokgosana
√
√
√
B.O.S. Moloabi
√
N. Nyathi
√
√
√
√
√
N/A
C. Raftopoulos
√
√
√
√
S.N. Sanyanga
√
√
√
√
√
H.C. Schäfer
√
√
√
√
√
H. Stephens
√
√
√
√
√
M.C. Wilson
√
√
√
√
√
√
– In attendance – Apologies N/A – Not a member of the board Special Board meetings were held during the year to discuss matters relating specifically to COVID-19 and CMS matters
BOARD OF HEALTHCARE FUNDERS NPC
57 ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020
GENERAL INFORMATION (CONTINUED) Supplementary Schedule not forming part of Annual Financial Statements FINANCE AND AUDIT COMMITTEE • Finance and Audit Committee Meetings:
ATTENDANCE AT FINANCE AND AUDIT COMMITTEE MEETINGS The Finance and Audit Committee met as follows during the 2020 financial year: Attendee
Notes
12-Feb-20 26-May-20 26-Aug-20 10-Nov-20
Antea Fourie-van Zyl Chairperson (Resigned 29 November 2020)
√
√
√
√
N/A
N/A
√
√
(Resigned 8 September 2020)
(Independent Member)
L.R. Callakoppen J.V.M. Mbonani S.D.H. Odendaal
N/A
√
√
√
H. Stephens
√
√
√
√
M.C. Wilson
√
√
√
√
√ N/A
– In Attendance – Apologies – Not a member of the Committee at the date of the meeting
BOARD OF HEALTHCARE FUNDERS NPC
58 ANNUAL REPORT 2020
CORPORATE GOVERNANCE REPORT for the year ended 3 1 D ecember 2020
OBJECTIVES OF THE BHF 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.
CREATING PLATFORMS FOR MEMBER ENGAGEMENT
DEVELOPING INDUSTRY STANDARDS
DRIVING TRANSFORMATION AND DEVELOPMENT
FACILITATING EDUCATION & TRAINING
REPRESENTING MEMBER INTERESTS
BOARD OF HEALTHCARE FUNDERS NPC
59 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
REPRESENTATION Membership is available to participants in the healthcare industry in the private and public sector in Africa including:
HEALTHCARE FUNDERS
Medical schemes Funders which provide compensation on disability, illness or death (excl. insurers)
HEALTHCARE FUNDING INDUSTRY SERVICE PROVIDERS Actuaries Health system consultants Health policy consultants
BHF MEMBERSHIP
ADMINISTRATORS
MANAGED HEALTHCARE ORGANISATIONS
The Memorandum of Incorporation (MOI) makes a distinction between full members (who are entitled to nominate and appoint directors to the board) and associate members (who are not entitled to nominate and appoint directors to the board). The full members are:
Administrators
Open medical schemes
Restricted medical schemes
Healthcare funders
Managed care organisations
Other healthcare funders
BOARD OF HEALTHCARE FUNDERS NPC
60 ANNUAL REPORT 2020
GOVERNING BODY The governing body of the BHF is the board of directors. The governance structure during the 2020 financial year was as outlined below:
BOARD
Managing Director
Finance & Audit Committee
Governance Committee
Universal Healthcare Committee
SADC Committee
Human Capital Committee
The primary governance documents of the BHF are the MOI, which is the constitutional document of the BHF, the Authority Framework, the Board Charter, the Committee Terms of Reference and the policies and procedures adopted by the board from time to time. The governing body is ultimately accountable to the members of the BHF. An annual general meeting (AGM) is held each year and usually coincides with the scheduled time of the annual BHF conference. During the 2020 financial year, the BHF conference could not be held, due to the impact of COVID-19. The AGM was, however, held on a virtual basis utilising an online meeting platform.
BOARD OF HEALTHCARE FUNDERS NPC
61 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
BOARD OF DIRECTORS Composition Directors of the BHF are appointed on a constituency basis i.e. for each of the various constituencies, the MOI enables the appointment of directors to the board. The BHF's MOI is reviewed on an annual basis and any updates are submitted to the members for approval by special resolution. At the AGM in 2020, updates were approved in respect of the ability of constituencies to nominate and appoint directors to the board, with the aim of improving representation through the collapse of divisions between open medical schemes and closed medical schemes, and the introduction instead of a ‘healthcare funders’ constituency that includes open medical schemes and closed medical schemes, but also allows for new kinds of healthcare funders to participate at board level:
Director representation per constituency
≤6
14
≥2
Open medical schemes
≥2
Restricted medical schemes
Administrators
Healthcare funders
Managed care organisations
≥1
Other healthcare funders
BOARD OF HEALTHCARE FUNDERS NPC
62 ANNUAL REPORT 2020
The representation of the various member constituencies on the board during the 2020 financial year is as follows:
Neo Khauoe Polmed
Katlego Mothudi
Hleli Nhlapo EOH
HEALTHCARE FUNDERS
SADC
ADMINISTRATORS
Open medical schemes
Restricted medical schemes
Mzamo Dlamini Eswatini
Mark Bayley Universal Healthcare
Lee Callakoppen Bonitas
Sabier Martinus Old Mutual
Teboho Makoetlane Lesotho
Ali Mia Hamdulay Metropolitan
Antea Fourie-van Zyl Medshield
Thabi Mlotshwa Medipos
Moraki Mokgosana Botswana
Lungi Nyathi Medscheme
Josua Joubert Compcare
Stan Moloabi GEMS
Shylet Sanyanga Zimbabwe
Vusi Mbonani Sizwe
Costa Raftopoulos Rand Water
Callie Schäfer Namibia
Howard Stephens Nedgroup Mike Wilson TFG
Given that directors are appointed on a constituency basis, when they attend board meetings they represent the views of that constituency rather than of the particular member that they represent. Aside from Katlego Mothudi (who is the only executive director of the board in his capacity as Managing Director), all other directors are independent non-executive directors of the board.
BOARD OF HEALTHCARE FUNDERS NPC
63 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Demographics Neo Khauoe
54 Katlego Mothudi
51
Hleli Nhlapo
59 HEALTHCARE FUNDERS
SADC
Open medical schemes
Restricted medical schemes
Mzamo Dlamini
Lee Callakoppen
Sabier Martinus
Teboho Makoetlane
44
45
Antea Fourie-van Zyl
Thabi Mlotshwa
54
54
Josua Joubert
Stan Moloabi
50
Vusi Mbonani
60
55
Costa Raftopoulos
57
55
37
Moraki Mokgosana
50
ADMINISTRATORS
Mark Bayley
57
Ali Mia Hamdulay
47
Lungi Nyathi
37
Shylet Sanyanga
53 Callie Schäfer
66
Howard Stephens
68
Mike Wilson
57
BOARD OF HEALTHCARE FUNDERS NPC
64 ANNUAL REPORT 2020
Knowledge & Skills Neo Khauoe
Katlego Mothudi
Hleli Nhlapo
HEALTHCARE FUNDERS
SADC
ADMINISTRATORS
Open medical schemes
Restricted medical schemes
Mzamo Dlamini
Mark Bayley
Lee Callakoppen
Sabier Martinus
Teboho Makoetlane
Ali Mia Hamdulay
Antea Fourie-van Zyl
Thabi Mlotshwa
Moraki Mokgosana
Lungi Nyathi
$
Josua Joubert
Stan Moloabi
Vusi Mbonani
Costa Raftopoulos
$
$
Shylet Sanyanga
Callie Schäfer
Howard Stephens
$
Mike Wilson
The BHF is satisfied that its composition reflects the appropriate mix of knowledge, skills, experience and independence. From a diversity perspective, the BHF has identified the need to increase representation of women on its board. This is an ongoing process and is being monitored by the Governance Committee as part of its transformation agenda.
BOARD OF HEALTHCARE FUNDERS NPC
65 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Tenure The MOI provides that a director's maximum tenure is two consecutive three-year terms of office. A former director who has completed the maximum tenure is entitled to be re-appointed to the board only after a three-year hiatus. The following table represents the original date of appointment of each director to the board, the date of termination of this term of service as well as whether the director is eligible for re-election: DIRECTOR
START DATE
END DATE
REMAINING TENURE
FURTHER TERM
Neo Khauoe
17 May 2018
20 July 2021
0
Y
Hleli Nhlapo
28 July 2015
20 July 2021
0
N
Mark Bayley
17 August 2017
AGM 2023
3
N
Lee Callakoppen
21 November 2019
AGM 2022
2
Y
Mzamo Dlamini
13 September 2018
20 July 2021
0
Y
Antea Fourie-van Zyl
8 February 2016
29 November 2020
0
N
Josua Joubert
19 June 2018
20 July 2021
0
Y
Teboho Makoetlane
22 November 2018
16 November 2020
0
N
Sabier Martinus
22 November 2018
20 July 2021
0
Y
Vusi Mbonani
23 July 2019
8 September 2020
0
N
Ali Mia Hamdulay
19 August 2015
20 July 2021
0
N
Thabi Mlotshwa
19 November 2020
AGM 2023
3
Y
Moraki Mokgosana
1 April 2019
AGM 2022
2
Y
Stan Moloabi
23 July 2019
AGM 2022
2
Y
Lungi Nyathi
30 November 2016
AGM 2022
2
N
Costa Raftopoulos
26 August 2014
20 July 2021
0
N
Shylet Sanyanga
19 August 2015
20 July 2021
0
N
Callie Schäfer
28 September 2016
AGM 2022
2
N
Howard Stephens
8 February 2016
20 July 2021
0
N
Mike Wilson
13 September 2018
20 July 2021
0
Y
During the 2020 financial year, only one director's three-year term of service expired, i.e. Mark Bayley. Mr Bayley was re-appointed by the members at the 2020 AGM. The following directors resigned from the BHF during the 2020 financial year; all as a result of the termination of their relationships with their nominating members, i.e. Antea Fourie-van Zyl, Teboho Makoetlane and Vusi Mbonani.
BOARD OF HEALTHCARE FUNDERS NPC
66 ANNUAL REPORT 2020
Chairperson and deputy chairperson Each year, a special board meeting is convened immediately following the AGM to appoint the new board chairperson and deputy chairperson as well as to constitute the various committees of the board. The chairperson and deputy chairperson of the board accordingly change following the AGM. The chairpersons and deputy chairpersons of the board during the 2020 financial year were:
OUTGOING
Ali Mia Hamdulay (chair) Neo Khauoe (deputy chair)
INCOMING
Neo Khauoe (chair) Hleli Nhlapo (deputy chair)
The chairperson and deputy chairperson of the board are appointed annually. A chairperson or deputy chairperson may only continue to serve as such for a three-year consecutive period. The chairperson or deputy chairperson is only eligible to serve as such again if an unbroken period of three years has lapsed since the date of expiry of his or her term as a chairperson or deputy chairperson and the candidate is a director of the board. As independent non-executive directors of the board, the chairpersons (i.e. Dr Ali Mia Hamdulay and Ms Neo Khauoe) were accordingly independent chairpersons of the board. Given that the BHF is a non-profit company and an industry representative body with a board comprised overwhelmingly of independent non-executive directors, there is no need to appoint a lead independent non-executive member of the board and the board has not done so.
BOARD OF HEALTHCARE FUNDERS NPC
67 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
SCHEDULED BOARD MEETINGS 2020 The following schedule reflects the attendance of members of scheduled board meetings during the 2020 financial year:
Attendee
13-Feb-20 28-May-20 28-Jul-20 27-Aug-20 19-Nov-20
Board meeting type
Ordinary
A.K. Mia Hamdulay (chairperson until AGM)
N. J. Khauoe (deputy chair until AGM, chair after AGM)
H.L. Nhlapo (deputy chairperson after AGM)
√
J.K. Mothudi (managing director)
√
Ordinary
Special
√
√
Ordinary Ordinary √
√
√
√
√
√
√
√
M.R. Bayley
√
√
√
L.R. Callakoppen
√
√
√
√ √ √
M.E. Dlamini
√
√
√
√
A. Fourie-van Zyl (resigned 29 Nov 2020)
√
√
√
√
J.H. Joubert
√
√
√
√
√
T.B. Makoetlane (resigned 16 Nov 2020)
√
√
√
√
N/A
√
√
√
S. Martinus
J.V.M. Mbonani (resigned 8 Sep 2020)
T. Mlotshwa (appointed 19 Nov 2020)
N/A
N/A
N/A
N/A
√
C.M. Mokgosana
√
√
√
B.O.S. Moloabi
√
N. Nyathi
√
√
√
√
√
N/A
C. Raftopoulos
√
√
√
√
S.N. Sanyanga
√
√
√
√
√
H.C. Schäfer
√
√
√
√
√
H. Stephens
√
√
√
√
√
M.C. Wilson
√
√
√
√
√
√
– In attendance – Apologies N/A – Not a member of the board
BOARD OF HEALTHCARE FUNDERS NPC
68 ANNUAL REPORT 2020
UNSCHEDULED BOARD MEETINGS 2020 The following schedule reflects the attendance of members at unscheduled board meetings convened specifically in response to the COVID-19 pandemic; these were held in addition to the scheduled board meetings during the 2020 financial year: 22-Apr-20
13-May-20
10-Jun-20
√
√
√
√
N. J. Khauoe (deputy chairperson until AGM, chairperson after AGM)
√
√
√
√
√
√
√
√
√
H.L. Nhlapo (deputy chairperson after AGM) J.K. Mothudi (managing director)
√
√
√
√
√
√
√
M.R. Bayley
√
√
√
√
√
√
√
L.R. Callakoppen
√
√
√
√
√
M.E. Dlamini
√
√
A. Fourie-van Zyl (resigned 29 Nov 2020)
√
J.H. Joubert
√
√
T.B. Makoetlane (resigned 16 Nov 2020)
√
√
S. Martinus
√
√
√
√
√
√
√ √
05-Aug-20
08-Apr-20
√
22-Jul-20
01-Apr-20
√
08-Jul-20
25-Mar-20
√
24-Jun-20
19-Mar-20 A.K. Mia Hamdulay (chairperson until AGM)
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√ √
√
√
√
√
√
√
√
√
√
√ √
√
√
√
√ √
√ √
√
N/A
N/A
√
J.V.M. Mbonani (resigned 8 Sep 2020) T. Mlotshwa (appointed 19 Nov 2020)
N/A
N/A
C.M. Mokgosana
√
√
B.O.S. Moloabi
√
N. Nyathi
√
N/A
N/A
N/A
√
√
√
√
√
√
√
√
√ √
√
√
√
√
√
√
√
√
√
√
H. Stephens
√
√
√
√
√
M.C. Wilson
√
√
√
√
H.C. Schäfer
√
N/A
√ √
C. Raftopoulos S.N. Sanyanga
N/A
N/A
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
- In attendance - Apologies N/A - Not a member of the board at the time of the meeting Aside from the first scheduled meeting held in February 2020, all remaining meetings of the board were held electronically, which is permitted in terms of the Companies Act and the MOI.
BOARD OF HEALTHCARE FUNDERS NPC
N/A
69 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Committees of the Board FINANCE AND AUDIT COMMITTEE Overall role and associated responsibilities and functions Independent oversight of assurance functions Independent oversight of integrity of annual financial statements and other external reports Nominate internal auditors Nominate external auditors Determine fees paid to external auditors and external auditors’ terms of engagement Ensure that appointment of external auditors complies with applicable law Determine nature and extent of non-audit services rendered by external auditors Pre-approval of any agreement to be concluded with external auditors for provision of non-audit services Prepare report of the committee for inclusion in the annual financial statements Deal with concerns and/or complaints regarding: accounting practices and internal audit content or auditing of annual financial statements internal financial controls any related matter Make submissions to the board regarding accounting policies, financial control, records and reporting Review budget and recommend approval to the board Review annual financial statements and make recommendations to the board for approval Approve internal audit charter and internal audit plan Oversight in respect of risk governance in conjunction with Governance Committee Set direction for technology and information governance Approve disclosures required by the King Report on Corporate Governance for South Africa 2016 (King IV) in respect of its role in terms of financial oversight, risk governance and technology and information governance Perform other oversight functions as determined by the board. The Committee is satisfied that it fulfilled its responsibilities in accordance with its terms of reference during the 2020 financial year.
BOARD OF HEALTHCARE FUNDERS NPC
70 ANNUAL REPORT 2020
Composition MEMBER
QUALIFICATIONS
EXPERIENCE
Antea Fourie-van Zyl (chairperson)
B Comm Accounting (UJ)
Trustee: Medshield
B Compt Hon (UNISA)
Financial and accounting
CA(SA) SAICA Trustee skills programme (CMS) Certified director (IoDSA) Lee Callakoppen
MPhil (UJ)
Principal Officer: Bonitas
BA Hons (Information science and Industrial Sociology)
Operational management, human capital, facilities management, innovation and transformation, international healthcare administration operations
Dip Business Management GEDP (GIBS) Vusi Mbonani
B Comm Accounting (University of Limpopo)
CFO: Sizwe Medical Fund
Art of General Management (WBS)
Finance and accounting, financial management, human capital management, risk management
Corporate Governance (WBS) BEE (GSB) Board leadership (GIBS) Being a director (IoDSA) Social and Ethics Committees AltX Director Programme Audit Committees Effectiveness Herman Odendaal Howard Stephens
B Comm Accounting (Hons) (UJ)
Chairperson: Compcare
CA(SA) (PAAB)
Audit, accounting and tax
B Comm Accounting (Wits)
Chairperson: Nedgroup
Associated General Accountant (SA)
Banking, finance, budgeting, procurement and systems
Advanced Executive Programme at SBL (UNISA) Certified Associate of Institute of Bankers SA Mike Wilson
Programme in retailing (UNISA)
Chairperson: TFG
Certificate in business risk management (UCT)
Retail store and field operations, project management, merchandise planning, human resources, industrial relations, wage negotiations, finance management, procurement, sustainability and enterprise risk management
BOARD OF HEALTHCARE FUNDERS NPC
71 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
External advisers or invitees who regularly attend committee meetings Dr Katlego Mothudi, Managing Director Internal audit team Maryka Oosthuizen Victoria Mabwe Joshua Asa
Key focus areas during reporting period Practice Code Numbering System (PCNS) project Information technology governance
Meetings and attendance The Finance and Audit Committee met as follows during the 2020 financial year: Attendee
Notes
12-Feb-20 26-May-20 26-Aug-20 10-Nov-20
Antea Fourie-van Zyl Chairperson (Resigned 29 November 2020)
√
√
√
√
N/A
N/A
√
√
(Resigned 8 September 2020)
(Independent Member)
L.R. Callakoppen J.V.M. Mbonani S.D.H. Odendaal
N/A
√
√
√
H. Stephens
√
√
√
√
M.C. Wilson
√
√
√
√
√ N/A
– In Attendance – Apologies – Not a member of the Committee at the date of the meeting
BOARD OF HEALTHCARE FUNDERS NPC
72 ANNUAL REPORT 2020
GOVERNANCE COMMITTEE Overall role and associated responsibilities and functions Oversight in respect of the development, implementation and maintenance of good corporate governance Support BHF members in setting governance standards Oversight of non-financial risks Oversight of compliance programme Oversight and approval of non-financial content of integrated report Approve disclosures in terms of King IV in the integrated report Consider, advise and support BHF members in relation to transformation in their businesses and/or operations to ensure alignment with the values and principles outlined in applicable legislation, King IV and any policy changes. The Committee is satisfied that it fulfilled its responsibilities in accordance with its terms of reference during the 2020 financial year.
BOARD OF HEALTHCARE FUNDERS NPC
73 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Composition MEMBER
QUALIFICATIONS
EXPERIENCE
Howard Stephens
B Comm Accounting (Wits)
Chairperson: Nedgroup
(Chairperson until AGM)
Associated General Accountant (SA)
Banking, finance, budgeting, procurement and systems
Advanced Executive Programme at SBL (UNISA) Certified Associate of Institute of Bankers SA
Mike Wilson
Programme in retailing (UNISA)
Chairperson: TFG
(Chairperson after AGM)
Certificate in business risk management (UCT)
Retail store and field operations, project management, merchandise planning, human resources, industrial relations, wage negotiations, finance management, procurement, sustainability and enterprise risk management
Katlego Mothudi
BSc (UKZN)
Managing Director: BHF
MB ChB (Medunsa)
Medical practitioner practising in public and private sectors, management roles in medical schemes industry
Health Technology Assessment (USB) Executive Development Course (AfroCentric Health) Neo Khauoe (until AGM)
Stan Moloabi
HRM
Principal Officer: Polmed
MBA B Th
24+ years' experience in medical schemes industry
MB ChB (Medunsa)
Principal Officer: GEMS
Dip Business Management (Damelin Management School)
Medical practitioner, medical scheme administration and managed healthcare
Global Health Delivery Programme (Online Harvard) Leading in Health Systems: Integrating Effort, Improving Outcomes (Harvard TH Chan School of Public Health) Callie Schäfer
Various senior management programmes (USB)
Principal Officer: Namdeb
Certificate in Marketing (Online Harvard)
Medical aid administration, relationship building and stakeholder relations, government sub-committee experience in healthcare and sports
BOARD OF HEALTHCARE FUNDERS NPC
74 ANNUAL REPORT 2020
External advisers or invitees who regularly attend committee meetings None
Key focus areas during reporting period Low-cost benefit option CMS Section 59 Investigation Virtual AGM Director nomination process BHF locus standi in member interest litigation Transformation Director nomination process
Meetings and attendance The Govenance Committee met as follows during the 2020 financial year: Attendee
12-Feb-20 27-May-20 01-Jul-20 26-Aug-20 16-Sep-20 18-Nov-20
Ordinary Ordinary Special Ordinary Special Ordinary
H. Stephens (Chairperson until AGM)
√
√
√
√
M.C. Wilson (Chairperson after AGM)
N/A
√
√
√
√
√
√
√
√
√
√
√
N/A
N/A
N/A
√
J.K. Mothudi (Managing Director) N. J. Khauoe B.O.S. Moloabi H.C. Schäfer √ N/A
√
N/A
N/A
N/A
√
√
√
√
√
– In Attendance – Apologies – Not a member of the Committee at the date of the meeting
BOARD OF HEALTHCARE FUNDERS NPC
√
√
√
75 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
HUMAN CAPITAL COMMITTEE Overall role and associated responsibilities and functions Ensure organisation remunerates fairly, responsibly and transparently to promote achievement of strategic objectives and positive outcomes Assist board to set direction for how remuneration should be approached and addressed on an organisation-wide basis Recommend remuneration policy to board for approval to: attract, motivate, reward and retain human capital promote achievement of strategic objectives within the BHF's risk appetite promote positive outcomes promote ethical culture and responsible corporate citizenship Oversee implementation and execution of remuneration policy Oversight of disclosure in respect of remuneration in company's integrated report Make recommendations to the board as to the measurement of the performance of employees Oversight of human capital risk management Approve disclosures required by King IV in integrated report.
The Committee is satisfied that it fulfilled its responsibilities in accordance with its terms of reference during the 2020 financial year.
Composition MEMBER
QUALIFICATIONS
EXPERIENCE
Mark Bayley (Chairperson)
B Soc Sc (UKZN)
Managing Director: Universal Healthcare Administrators
PDM (HR) (WBS) Programme in Financial Management (UNISA)
Management and implementation of target operating models for administration of medical schemes; develop strategy, manage people, processes and systems and operational infrastructure
Ali Mia Hamdulay
MB ChB (UCT)
(Until AGM)
M Fam Med (cum laude) (Stell)
Managing Director: Metropolitan Health Group
Postgraduate Certificate in Health Technology (Stell) Postgraduate Certificate in Negotiations Senior leadership programme (UCT Graduate School of Business)
Medical practitioner, clinical advisory services, disease risk management, provider management and clinical risk management
Value Measurement for Healthcare (Harvard)
BOARD OF HEALTHCARE FUNDERS NPC
76 ANNUAL REPORT 2020
Composition (continued) MEMBER
QUALIFICATIONS
EXPERIENCE
Neo Khauoe
HRM
Principal Officer: Polmed
MBA
24+ years' experience in medical schemes industry
B Th Hleli Nhlapo
B ChD (Wits)
(From AGM)
Postgraduate Diploma in Forensics MSc in Forensic Odontostomatology
Antea Fourie-van Zyl
Former executive member: South African Dental Association, private dental practice, dental advisor to country's top administrators, local area manager for managed health systems, executive member of South African Medical and Dental Practitioners and secretary and executive member of the Dental Professionals' Association
B Comm Accounting (UJ)
Trustee: Medshield
B Compt Hon (UNISA)
Financial and accounting
CA(SA) SAICA Trustee skills programme (CMS) Certified director (IoDSA) Josua Joubert (From AGM)
Self-education and enrichment (Roodepoort College; Technical College of South Africa; UNISA) Diploma in Management Development Programme (UNISA) Postgraduate Certificate of Business Administration (Heriot-Wyatt University) Postgraduate Diploma of Business Administration (Heriot-Wyatt University)
CEO and Principal Officer: Compcare Business development, operations management, human resources management, financial management, brand management, sales and marketing management, public and stakeholder communications
MBA (Heriot-Wyatt University) Costa Raftopoulos
Various labour law and advanced labour law courses
Trustee: Rand Water
Trustee training and development – pension fund and medical scheme environment Howard Stephens
B Comm Accounting (Wits)
Chairperson: Nedgroup
Associated General Accountant (SA)
Banking, finance, budgeting, procurement and systems
Advanced Executive Programme at SBL (UNISA) Certified Associate of Institute of Bankers SA
BOARD OF HEALTHCARE FUNDERS NPC
77 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
External advisers or invitees who regularly attend committee meetings Katlego Mothudi (Managing Director) Gail Forsman (LTF Consulting)
Key focus areas during reporting period COVID-19 response Performance-linked remuneration policy
Meetings and attendance The Human Capital Committee met as follows during the 2020 financial year: Attendee
26-May-20
25-Aug-20 10-Nov-20
M.R. Bayley (Chairperson)
√
√
A.K. Mia Hamdulay
√
N/A
N. J. Khauoe
√
√
H.L. Nhlapo
N/A
A. Fourie-van Zyl J.H. Joubert
√
√ N/A √
√
N/A
√
√
C. Raftopoulos
√
√
√
H. Stephens
√
√
√
√ N/A
– In Attendance – Apologies – Not a member of the Committee at the date of the meeting
BOARD OF HEALTHCARE FUNDERS NPC
78 ANNUAL REPORT 2020
SADC COMMITTEE Overall role and associated responsibilities and functions Oversight of the implementation of the strategy of the BHF in the SADC region Support the development and growth of the healthcare funding industry in the SADC region Promote regional collaboration among SADC members of the BHF in all areas of common interest as identified by the committee from time to time Lobby the SADC Health Desk for regional healthcare reforms identified by the committee from time to time in accordance with the BHF's strategy Approve the disclosures required by King IV.
The Committee is satisfied that it fulfilled its responsibilities in accordance with its terms of reference during the 2020 financial year.
BOARD OF HEALTHCARE FUNDERS NPC
79 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Composition MEMBER
QUALIFICATIONS
EXPERIENCE
Callie Schäfer (Chairperson)
Various senior management programmes (USB)
Principal Officer: Namdeb
Certificate in Marketing (Online Harvard)
Medical aid administration, relationship building and stakeholder relations, government sub-committee experience in healthcare and sports
Katlego Mothudi
BSc (UKZN)
Managing Director: BHF
MB ChB (Medunsa)
Medical practitioner practising in public and private sectors, management roles in medical schemes industry
Health Technology Assessment (USB) Executive Development Course (AfroCentric Health) Mzamo Dlamini
Insurance Management – MITC, Malta Visionary Business Leadership Programs (MDP) (GIBS)
Managing Director: Eswatini Insurance Brokers (Pty) Ltd (formerly Aon Swaziland (Pty) Ltd
Certificate of Proficiency in Insurance (IISA) Insurance Diploma (ACII) (UNISA) Various management development programmes Attachment Aon London/ Lloyds Syndicates Teboho Makoetlane
BA Economics (NUL) B Comm (Hons) Financial Economics and Investment Management (UFS) Advanced Programme: Retirement Funds Management (UNISA)
Principal Officer: Mamoth Health Benefits Retirement planning, governance, personal finance
MBL (UNISA) Moraki Mokgosana
B Comm Accounting (University of Botswana)
CEO: Botswana Medical Aid Society
Master of Business Leadership (UNISA) Shylet Sanyanga
Certificate in Community Development, Conflict Resolution, Project Planning and Management (CCOSA)
CEO: Association of Healthcare Funders of Zimbabwe
Diploma in General Management (Zimbabwe Institute of Management) MBA (Africa University, Zimbabwe) Macfenton Shariff
BSc (University of Malawi)
COO: Medhealth Ltd
MBBS (University of Malawi) Certificate in Financial Management (Malawi College of Accountancy)
BOARD OF HEALTHCARE FUNDERS NPC
80 ANNUAL REPORT 2020
External advisers or invitees who regularly attend committee meetings None
Key focus areas during reporting period Fraud, waste and abuse (FWA) Regional single exit price Regional COVID-19 response Botswana annual report
Committee Meetings The SADC Committee met as follows during the 2020 financial year: H.C. Schäfer (Chairperson)
12-Feb-20 27-May-20 26-Aug-20 18-Nov-20 √ √ √ √
J.K. Mothudi (Managing Director)
√
M.E. Dlamini
√
T.B. Makoetlane (resigned 16 Nov 2020)
√
√
C.M. Mokgosana
R. Palermo S.N. Sanyanga M.B. Shariff √ N/A
√
√
N/A
√
√
√
√
√
√
– In Attendance – Apologies – Not a member of the Committee at the date of the meeting
BOARD OF HEALTHCARE FUNDERS NPC
√
√
√
√ √
81 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
UNIVERSAL HEALTHCARE COMMITTEE Overall role and associated responsibilities and functions Consider implications of universal healthcare on the interests of the BHF's members Review legislative amendments to: advise the BHF's membership of the implications gather input from members and formulate a collective response Formulate the BHF’s position in respect of legislation and other regulatory reforms introduced by government from time to time, taking into account the wider interests of the need for universal healthcare in South Africa balanced against the interests of BHF members Partner with government, including the Department of Health (DOH) and Council for Medical Schemes (CMS) in developing a solution that addresses the country's need for universal healthcare, which is practically implementable and includes the BHF's members as key partners for the delivery of universal healthcare in South Africa Consider ramifications of the implementation of universal healthcare in other SADC countries Any other issue related to policy or the implementation of universal healthcare in South Africa that the committee may deem or the board may direct falls within the scope of the committee. The Committee is satisfied that it fulfilled its responsibilities in accordance with its terms of reference during the 2020 financial year.
BOARD OF HEALTHCARE FUNDERS NPC
82 ANNUAL REPORT 2020
Composition MEMBER
QUALIFICATIONS
EXPERIENCE
Lungi Nyathi (Chairperson)
MB ChB (UCT)
Executive Director: Health Management: Medscheme
Various health economics and public health courses (UCT)
Director in several AfroCentric Health companies Principal Medical Officer: Khayelitsha CHC
Katlego Mothudi
BSc (UKZN)
Managing Director: BHF
MB ChB (Medunsa)
Medical practitioner practising in public and private sectors, management roles in medical schemes industry
Health Technology Assessment (USB) Executive Development Course (AfroCentric Health) Neo Khauoe
HRM
Principal Officer: Polmed
MBA
24+ years' experience in medical schemes industry
B Th Sabier Martinus
B Pharm (cum laude) (UWC) PGD: Marketing Management (UNISA) Dip: Project Management (Varsity College)
Chief Executive Officer /Principal Officer: Old Mutual Staff Medical Aid Fund
Management Development Programme (Stell) PGD: Financial Planning (Stell) Ali Mia Hamdulay
MB ChB (UCT) M Fam Med (cum laude) (Stell) Postgraduate Certificate in Health Technology (Stell) Postgraduate Certificate in Negotiations Senior leadership programme (UCT Graduate School of Business)
Managing Director: Metropolitan Health Group Medical practitioner, clinical advisory services, disease risk management, provider management and clinical risk management
Value Measurement for Healthcare (Harvard) Stan Moloabi
MB ChB (Medunsa)
Principal Officer: GEMS
Dip Business Management (Damelin Management School)
Medical practitioner, medical scheme administration and managed healthcare
Global Health Delivery Programme (Online Harvard) Leading in Health Systems: Integrating Effort, Improving Outcomes (Harvard TH Chan School of Public Health)
BOARD OF HEALTHCARE FUNDERS NPC
83 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
External advisers or invitees who regularly attend committee meetings Directors who are not members of the committee including Mark Bayley, Lee Callakoppen, Mzamo Dlamini, Hleli Nhlapo and Costa Raftopoulos
Key focus areas during reporting period Low-cost benefit option Health Market Inquiry (HMI) recommendations Prescribed Minimum Benefits costing
Meetings and attendance The Universal Healthcare Committee met as follows during the 2020 financial year: Attendee
06-Oct-20 03-Nov-20
N. Nyathi (Chairperson)
√
√
J.K. Mothudi (Managing Director)
√
√
√
S. Martinus
√
√
A.K. Mia Hamdulay
√
B.O.S. Moloabi
√
N. J. Khauoe
√ N/A
√
– In Attendance – Apologies – Not a member of the Committee at the date of the meeting
BOARD OF HEALTHCARE FUNDERS NPC
84 ANNUAL REPORT 2020
Evaluations of the performance of the board Given COVID-19, no performance evaluations of the Board or any of its committees were conducted during the 2020 financial year. Performance evaluations were, however, conducted during the 2021 financial year in respect of the performance of the Board and its committees during the 2020 financial year. Anonymous assessments were conducted on a formal basis. Formal feedback will be provided to the Board and its committees on the findings of those performance assessments, together with recommendations and a proposed implementation timetable.
Appointment and delegation to management DELEGATION During the 2020 financial year, a Management Authority Limits and an Authority Framework were in place which governed the delegation of authority from the Board to its committees and to management. During the 2020 financial year, the Governance Committee, the Finance and Audit Committee and the Human Capital Committee recommended that the Management Authority Limits and the Authority Framework be collapsed into a single document, the Authority Framework. This was approved by the Board in February 2021. The Board is satisfied that the Authority Framework contributes to role clarity and the effective exercise of authority and responsibilities.
PROFESSIONAL GOVERNANCE SERVICES TO THE BOARD The MOI of the BHF does not require the BHF to comply with the Enhanced Accountability and Transparency Requirements set out in Chapter 3 of the Companies Act. For this reason, although the Finance and Audit Committee largely performs the role of an audit committee, it is not an audit committee per se as defined in the Companies Act. The King IV requirements associated with an audit committee have, however, been incorporated into the terms of reference of the Finance and Audit Committee. Additionally, despite the BHF not subscribing to Chapter 3 of the Companies Act, it has, however, appointed auditors who conduct an annual audit of its financial statements. Furthermore, the BHF has secured professional corporate governance services from Beneke Gantley Inc and specifically Michelle Beneke BA LLB (Wits), an admitted attorney of the High Court of South Africa. The Board believes these corporate governance arrangements to be effective.
BOARD OF HEALTHCARE FUNDERS NPC
85 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Ethical leadership The Board has adopted a charter which outlines the behaviour required of its members and the Board is satisfied that it has fulfilled its responsibilities in terms of its Charter for the reporting period. The Charter reflects the obligations of the Board as outlined in the MOI. The evaluation of the performance of the Board during the 2020 financial year was conducted during Quarter 1 of the 2021 financial year. In addition to an annual declaration of interests, Board members are required to declare their interests in respect of any item on the agenda of a meeting to the meeting in question and, given the predominantly electronic means of convening Board meetings during the 2020 financial year, members were requested to notify the Company Secretary if any conflicts of interest arose, so that these could be specifically minuted.
Organisational ethics The BHF has adopted an Ethics Policy that applies to Board members as well as on a general basis throughout the organisation. In the 2020 financial year, Board members were required to sign individual copies of the Ethics Policy confirming their awareness of its contents and to return the signed document to the Company Secretary for safe-keeping. All new directors are required to sign a copy of the Ethics Policy.
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Responsible corporate citizenship During the 2020 financial year, the following initiatives were implemented:
WORKPLACE The Human Capital Committee continued to focus on all elements associated with human capital, including the implementation of relevant policies within the BHF, consideration of the impact of COVID-19 on the workforce, performance management and an ongoing focus on ensuring that remuneration of BHF staff members is market-related. The BHF also launched the We.R.Equal campaign to promote gender diversity within the workplace.
ECONOMY A core focus area of the BHF is the combating of FWA in the healthcare funding industry. The formation of the Healthcare Forensic Management Unit (HFMU) as a standing steering committee within the BHF structure is a platform of collaboration both within the industry as well as among other participants and with various law enforcement agencies including the Special Investigations Unit (SIU). The reach of the HFMU has extended beyond the borders of South Africa to other SADC countries where a FWA framework was launched to ensure that cross-border industry collaborated to eliminate the scourge of FWA in the region. During the 2020 financial year, the CMS, in its capacity as regulator of the healthcare funding industry, initiated an investigation by an independent panel into allegations of racial discrimination levelled against various industry players in relation to their anti-FWA practices. At the time of writing, the Panel had issued a contentious Interim Report which has been responded to individually by members of the BHF. In addition, the BHF made submissions in response to the Interim Report on behalf of its members generally.
SOCIETY As an industry-representative body, the BHF continues to advocate for its members and the ‘health citizen’. During the 2020 financial year, the BHF was involved in a number of initiatives to facilitate the response to COVID-19 including a framework that was co-developed with the Health Funders' Association (HFA) in response to the block exemption granted by the Minister of Trade, Industry and Competition to the Competition Act 89 of 1998 (Competition Act) to support procurement with the aim of decreasing the impact of healthcare costs associated with, amongst others, the treatment and prevention of COVID-19. The BHF continues its ongoing engagements with the DOH and the CMS in furtherance of its mandate to protect the health citizen and represent the interests of its members as participants in the healthcare funding industry across the SADC region.
BOARD OF HEALTHCARE FUNDERS NPC
87 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
ENVIRONMENT Annually, the BHF holds a conference that is well-attended on a regional basis. Due to COVID-19 and associated travel restrictions, the BHF was unable to convene its conference on a live basis and instead held various online engagements with its members that dealt with topical relevant issues. In addition, the BHF has been working remotely since the beginning of March 2020 and continues to do so at the time of the writing of this report. This has also resulted in less travel than is typically required of an organisation involved in member advocacy and engagement. Given the success of virtual engagements, going forward, the BHF anticipates a situation arising where, for instance, certain meetings can be attended either in person or electronically; thus enabling increased availability of Board and committee members to attend meetings electronically if travel is a challenge from a diary perspective.
Strategy and performance A Board strategy session took place in the 2020 financial year. This strategy was approved in August 2020, thus enabling management to prepare operational plans and a budget in time for the 2021 financial year. The budget was approved in November 2020.
Risk governance The risk appetite of the BHF is being an activist corporate citizen who challenges the status quo and partners with all stakeholders to achieve universal healthcare for all. The risk tolerance of the BHF is being a good, reputable, corporate citizen that is representative of its members. The BHF has implemented a risk management policy, which was approved by the board and is reviewed on an annual basis by the Finance and Audit Committee (as custodian of the policy); and if amendments are proposed, they are referred to the Board for approval. Following the annual strategic session with the Board, management considers all strategic, operational and tactical risks and reassesses these in light of any changes to its strategy. Business units within the BHF conduct risk assessments and escalate identified risks to senior management for inclusion in the BHF's overall high-level risk assessment. Similarly, any strategic risks identified are communicated within the BHF to ensure that management is able to respond operationally and tactically. The Finance and Audit Committee reviews the risk register on a quarterly basis and the top 10 risks are communicated to the Board at each of its ordinary scheduled meetings. Risk management is integral to the business of the BHF. For example, during the 2020 financial year, the Board was notified, as part of a standing item on industry updates, of any key strategic issues that affected the future of the industry. As an industry representative organisation, the sustainability of the BHF depends on the sustainability of its members. Another example is the additional special Board meetings that were initially convened weekly and subsequently fortnightly and less frequently, to respond to the COVID-19 pandemic.
BOARD OF HEALTHCARE FUNDERS NPC
88 ANNUAL REPORT 2020
Technology and information governance The pandemic and the requirement of office workers from around the world to work from home highlighted the importance of access to technology and information governance. During the 2018 financial year, the BHF introduced a centralised SharePoint intranet and Board Portal. From a Board perspective, the need for paper documentation was eliminated and all Board and committee agenda packs are made available via SharePoint. This proved to be an absolute requirement for collaboration and engagement during the pandemic. The need to ensure information governance was heightened during the pandemic with penetration tests and other forms of information risk management initiatives being implemented during the 2020 financial year. The BHF also continued its investment in improving technology not only within the BHF itself but also in the PCNS unit to facilitate the issue of practice numbers to healthcare providers. The PCNS project was overseen by the Finance and Audit Committee as a key focus area during the 2020 financial year. An IT Steering Committee was formed during the 2020 financial year and various best-in-breed IT policies were developed and approved by the Board during the 2020 financial year. The focus on technology and information governance as well as the PCNS project will continue during the 2021 financial year.
Compliance governance A compliance policy was adopted by the Board and a compliance universe has been developed to identify legislation material to the BHF. During the 2020 financial year, significant work was done in reviewing legislation and developing obligation matrices which will be used during the 2021 financial year as part of a gap analysis assessment. The gap analysis will identify areas requiring intervention by management and the implementation of those interventions will be monitored by the Governance Committee. Compliance is an ongoing issue and gap analyses will need to continue indefinitely on a rotational basis to ensure ongoing compliance with applicable laws.
Remuneration governance The BHF is a non-profit company. Only employees of the BHF (including the Managing Director) are remunerated. None of the non-executive directors are remunerated. Accordingly, remuneration is managed by the Human Capital Committee; recommendations being made to the Finance and Audit Committee to assess affordability and sustainability of the organisation and these are included in the annual budget, which is submitted to the Board for approval.
BOARD OF HEALTHCARE FUNDERS NPC
89 ANNUAL CORPORATE GOVERNANCE REPORT REPORT for the year ended 31 December2020 2020
Stakeholder relationships The BHF has adopted a stakeholder engagement policy that is reviewed by the Governance Committee on an annual basis. Stakeholder mapping has also been conducted and is updated by the Stakeholder Engagement Department on an ongoing basis. Given the nature of the BHF as an organisation that lobbies and advocates on behalf of its members, stakeholder engagement is central to its day-to-day functioning. Management reports on a quarterly basis to the Board regarding its initiatives in respect of stakeholder engagement. The formation of the SADC Committee, the Human Capital Committee and the Universal Healthcare Committee underpins the importance of stakeholder engagement to the Board. These committees provide feedback to the Board on a quarterly basis with regard to work conducted since the date of the last Board meeting.
Reporting This corporate governance report forms part of the BHF's annual report which includes various other reports issued by management and the chairpersons of various committees (including, in particular, the Finance and Audit Committee) as well as the annual financial statements. This report constitutes the disclosures required in terms of King IV.
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NOTES
BOARD OF HEALTHCARE FUNDERS NPC
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BOARD OF HEALTHCARE FUNDERS
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BOARD OF HEALTHCARE FUNDERS NPC
ANNUAL REPORT
2020
BOARD OF HEALTHCARE FUNDERS
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