PRESENTED BY THE DIRECTOR-GENERAL : NPT NHLEKO

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• A distressed organisation

• Audit findings

• Interventions

• The need for a Turnaround Strategy

• Progress

• Conclusion

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People

Service

Leadership

Systems

Finances

Process

MANUAL

NOT FULLY FUNCTIONAL GOOD

POSITIONPOOR – MANY COMPLAINTS

AG : “TONE NOT SET AT THE TOP”

DISSATISFIED

DYSFUNCTIONAL

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Source : CF Employee Satisfaction Survey 2012

** ALMOST HALF THE EMPLOYEES AT CF ARE DISSATISFIED – THIS DOES NOT MAKE FOR AN EFFECTIVE OR PRODUCTIVE WORKFORCE

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Revenue Management and Debtors

ClaimsBank

ReconciliationsYear

2008 / 9

2009 / 10

2010 / 11

2011 / 12

DISCLAIMER

DISCLAIMER

QUALIFICATION

QUALIFICATION

DISCLAIMER

DISCLAIMER

QUALIFICATION

QUALIFICATION

DISCLAIMER

DISCLAIMER

CLEARED

CLEARED

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Material misstatements in the financial statements were identified

Management did not provide effective leadership …to ensure that staff properly understands the code of conduct implemented and adheres to it

The Fund lacks finance leadership with adequate management, financial and accounting skills and competencies.

Management did not implement controls including clearing of a number of suspense accounts for the Funds business processes.

Management has not implemented a process to monitor compliance with rules and regulations resulting in numerous non compliance matters reported

The Fund risk management assessments were not adequate to ensure that risks…were adequately identified and a risk strategy monitored

LIKELIHOOD OF A DISCLAIMER FOR THE FUND FOR 2012/13LIKELIHOOD OF A DISCLAIMER FOR THE FUND FOR 2012/13 9

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Leadershipcapacitation

NewOrganisational

structure

SAP systemsimplementation

Employeeculturesurvey

Processmapping

Consultantsfor different

areasSTILL DYSFUNCTIONAL

Newbranding

All these interventions focussed on one area only –

silo approach 11

• numerous negative media exposure both on radio shows (eg. Talk Radio 702) and television (eg. Fokus on SABC1)

• increasing complaints to the Public Protector

• demands from different associations and groups to discuss and complain about services from the Fund (eg. SACCI, SASOM)

• various litigations and demands as a result of poor service delivery

• non payment of claims and increasing backlog of unprocessed claims

• backlogs in the issuing of Letters of Good Standing

N ON O

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RMASystems

Pilot

- This is a systems approach to addressing

organisational challenges

- A requirement for this approach is that the organisation

must be mature and stable eg. SARS

- If successful, it will address the claims systems problems

- However, it will not address the people issues, process challenges,

organisational problems, change management etc.

- This is again a silo approach to addressing organisational problems

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Lessons learnt from previous systems implementation :

- Reliance that system will fix all problems

- Over reliance on service provider

- No internal technical skills

- No proficient project management component

- Super users provided training to all users

- Change management was lacking

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Scenario 1 – “Limping along”

Continue in the current manner oblivious of the outcry

for improvement and efficient services. Doing what you

can do under the circumstances.

 

Scenario 2 – “Is this the best?”

Some efficiencies and optimisation is visible, but there

is much more to do. Addressing issues in a silo

manner that might improve one area, but will not

address others. Also not being aware that the

improvement in one area could compromise other

areas eg. implementing a system, but the people to

use it are so dissatisfied with the organisation, they

jeopardise progress.

Scenario 3 – “You can’t do it, let

someone else try”

No improvements have been noted, several failed

attempts. Allow someone else with different ideas and

views to try and turn this around and optimise the way

things are done.

Scenario 4 – “Catch the Gautrain”

A total organisational turnaround has occurred.

Services have improved and are accessible through

various channels for all citizens, at their convenience.

All key business elements are functioning well together

ie. people, processes, systems, finances etc.

ON TRACK, ON TIME, FAST AND EFFICIENT

THE NEED FOR AN ORGANISATIONAL TURNAROUND STRATEGY- Drop the silo based approach to addressing the CF problems

- Adopt a holistic approach to the dysfunctional organisation

- Understand that certain elements impact on each other eg. people and processes. Addressing one element will not automatically fix the others.

- Address the fundamental problems

- Understand the underlying problems (forensic) and address these and not the symptoms

- Requires both internal and external skills and expertise

- Will ensure that all resources are utilised optimally going forward

- Is a long term process, but also ensures long term sustainability and efficiency

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CFTURNAROUND

Organisational Strategy

Organisational structure

People, values and culture

Business Processes and Policies

Business Operating Model

Performance management and

FrameworkFraud and risk Management

Skills assessment and planning

Revenue and Debt management

IT Strategy

Leadership

Change Management

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PROJECT TEAMProject team setup and involved in :

-drafting a remedial plan

-developing strategies and interventions to improve operations

-drafting and review of specifications of the forensic audit and turnaround strategy

- drafting a governance document for setup, functioning and management of

a programme office

NEXT STEPS

- Implement programme office – July 2013

MEDICAL BACKLOG PROJECT

-To address medical invoice processing backlog

-Timeframe : January – June 2013

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Claim Invoices

Processed

528 193

Claim LinesProcessed

1 441 175

Invoices Approved for

payments

410 757

Benefits paid

R538 million

Value of invoices rejected

R124,2million

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CLAIMS REJECTED - REASONS

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CLAIMS REGISTRATION BACKLOG PROJECT

-To address backlog of claims to be registered

-Additional resources used in the project team

-Focussed attention by project manager and supervisor and regular reporting

-Current claims system utilised to address the backlog

January 2013

Starting balance of

claims unregistered

240 092

May 2013

Registration Backlog

addressed

*** While the registration backlog has been addressed, the backlog shifts

to the next link in the process chain – which highlights the need for a

holistic approach to addressing the Fund’s problems

IT SYSTEMS

- Electronic portal has been developed for employers and medical service

providers to register and submit claims.

NEXT STEPS

- Review, configuration and alignment of system – June 2013

- Testing of system – June 2013

- Sign-off and implementation – July 2013

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FORENSIC AUDIT AND TURNAROUND STRATEGY TENDERS

-Tenders published in Government Gazette and media

-Briefing sessions held with bidders

-Questions and Answers on tenders responded

-Evaluation of bids completed by independent evaluators for transparency and

integrity purposes

NEXT STEPS

- Appoint service provider – June 2013

- Formalise programme office – June 2013

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STAKEHOLDER ENGAGEMENTS

Briefing sessions with external stakeholders held including medical service

providers and business associations

Engagements with oversight structures held including Public Protector and

Auditor-General

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Service

People

Process

Systems

Finances

Leadership

Turnaround will ensure that all key business elements are addressed and come together towards a transformed Compensation Fund 28

Where all the pieces fit together.

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