1. PRESENTED BY THE DIRECTOR-GENERAL : NPT NHLEKO 1

2. A distressed organisation Audit findings Interventions The need for a Turnaround Strategy Progress Conclusion 2

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4. Disjointed Silo focussed Non-delivery Public Protector complaints Ministerial complaints Refusal of service to COIDA patients Fraud Audit Qualifications Discontent staff System challenges Process problems 4

5. People Service Leadership Systems Finances Process MANUAL NOT FULLY FUNCTIONAL GOOD POSITION POOR – MANY COMPLAINTS AG : “TONE NOT SET AT THE TOP” DISSATISFIED DYSFUNCTIONAL 5

6. Source : CF Employee Satisfaction Survey 2012 ** ALMOST HALF THE EMPLOYEES AT CF ARE DISSATISFIED – THIS DOES NOT MAKE FOR AN EFFECTIVE OR PRODUCTIVE WORKFORCE 6

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8. Revenue Management and Debtors Claims Bank Reconciliations Year 2008 / 9 2009 / 10 2010 / 11 2011 / 12 DISCLAIMER QUALIFICATION DISCLAIMER QUALIFICATION DISCLAIMER CLEARED 8

9. 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 2012/13 9

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11. Leadership capacitation New Organisational structure SAP systems implementation Employee culture survey Process mapping Consultants for different areas STILL DYSFUNCTIONAL New branding All these interventions focussed on one area only – silo approach 11

12. 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 O 12

13. RMA Systems 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 13

14. 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 14

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16. 16 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

17. 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 17

18. CF TURNAROUND Organisational Strategy Organisational structure People, values and culture Business Processes and Policies Business Operating Model Performance management and Framework Fraud and risk Management Skills assessment and planning Revenue and Debt management IT Strategy Leadership Change Management 18

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20. 20 PROJECT TEAM Project 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

21. MEDICAL BACKLOG PROJECT -To address medical invoice processing backlog -Timeframe : January – June 2013 21 Claim Invoices Processed 528 193 Claim Lines Processed 1 441 175 Invoices Approved for payments 410 757 Benefits paid R538 million Value of invoices rejected R124,2 million

22. 22 CLAIMS REJECTED - REASONS

23. 23 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

24. 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 24

25. 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 25

26. 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 26

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28. 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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