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AfroCentric INTEGRATED ANNUAL REPORT 2016
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Payment integrity of healthcare claims is a core objective to
secure the success of the pending National Health Insurance.
The prompt and accurate payment for healthcare services
rendered by legitimate practitioners and facilities will form
the backbone of the NHI and ensure that all citizens receive
quality healthcare quickly and at an affordable price. The
management of fraud, waste and abuse will be key to
safeguarding the financial sustainability of the NHI nationally.
AfroCentric is proud to declare that their investment for the
exclusive licencing of the Insurance Fraud Manager (“IFM”)
predictive analytics software is demonstrating material
savings for their client medical schemes. IFM is licenced
through FICO, the world’s leading software provider of
credit scoring analytics. By continuously scoring healthcare
claims and providers using advanced analytics, AfroCentric
is able to proactively monitor and detect irregular claiming
behaviours much sooner than conventional retrospective
methods. Combining ‘Big Data’ with predictive analytics
provides AfroCentric with a distinct advantage in the industry,
by creating a holistic overview of irregular billing patterns
and trends across many medical schemes, which allows for
preventative measures to be taken against errant providers
and facilities.
HEALTH MARKET INQUIRY
The Competition Commission launched a health market
inquiry into the private healthcare sector at the end of 2013.
The inquiry is intended to investigate “the state, nature and
form of competition in a market”. Medscheme submitted
a detailed response and participated in the consultative
process. The Commission intends to publish its report
and recommendations by the end of 2016. AfroCentric is
optimistic that the inquiry will result in recommendations that
will positively impact efforts to combat the causes of soaring
medical price inflation.
RESPONDING TO THE EXTERNAL
ENVIRONMENT
In addition to the macroeconomic and legislative pressures
described, the private healthcare sector is in a period of
consolidation. Smaller schemes and those experiencing
member attrition due to the economic setback may find
themselves unable to cope in the current economy. Scheme
mergers represent opportunities for Medscheme to acquire
new clients or have the current membership base of existing
schemes increase. Medscheme is the largest manager of
medical schemes with approximately 3.7 million lives under
our management and has the flexibility in its IT systems to
administer the specific range of benefits each client scheme
offers.
Medscheme is also the administrator for several government
schemes. This provides a firm foundation from which the
Group can bid for future NHI tenders and other state
contracts. AfroCentric holds the South African proprietary
sub-licence for ‘Insurance Fraud Manager’, a fraud, waste and
abuse detection application from FICO, a Canadian-based
software company that is the global leader in healthcare
fraud detection. This could provide an opportunity to assist
government with risk management.
OUTLOOK
The economic outlook remains uncertain. The private
healthcare market is experiencing a state of fluctuation with
the impending conclusion of the health market inquiry and
the next stage of NHI development only recently revealed
in the 2015 White Paper. Although much remains uncertain
about how the NHI will ultimately be implemented,
government has embarked on a process of consultation that
will include the private sector to discover the best routes
to implementation. Through its range of healthcare-related
businesses, the AfroCentric Group represents a large part of
the healthcare value chain. As a key player in the industry,
AfroCentric is well positioned to maximise the consolidation
opportunities that exist, continue to participate in the
NHI consultative process, and assist the Competition
Commission with recommendations in response to the
health market inquiry.
RISKS
The AfroCentric Group is committed to being a ‘risk-
intelligent’ organisation with an entrenched risk management
capability focusing on value creation and value preservation.
Risk management is a formal response to corporate risk. It is
a structured and systematic process interwoven into existing
management responsibilities. It enables management to
effectively manage uncertainty, and associated risk and
opportunity, enhancing our capacity to build value for
stakeholders.
The Board has the ultimate responsibility for risk
management, which is delegated to the Chief Executive
Officer and the Executive and senior management teams.
The risk responsibilities include, amongst others: approval
of the risk management policy and framework, defining the
risk appetite, monitoring the implementation of enterprise
risk management, establishing the necessary risk structures,
reviewing risk reports and ensuring comprehensive risk
assessments on a regular basis.
ENTERPRISE RISK MANAGEMENT PROCESS
The Group’s Enterprise Risk Management Framework
(“ERMF”) is aligned to the principles of King III. A structured
and systematic enterprise-wide approach was adopted to
ensure key risks within the Group are included, enabling
AfroCentric to achieve its strategic objectives.
ENTERPRISE RISK MANAGEMENT GOVERNANCE
STRUCTURES
The AfroCentric Group established various governance
structures for the management of risk. These are managed
by the appropriate level of leadership and are operating
effectively. The different risk governance structures in place,
where the various classes of risks are addressed, is illustrated
accordingly.
STRATEGY (continued)