Presentation Transcript

1. Black Economic Empowerment in the Healthcare Industry

   Dr Thuthula Balfour-Kaipa Health Adviser Chamber of Mines Pan African Health Conference Gallagher Convention Centre, Midrand, Johannesburg 15 - 16 September 2010
2. Outline Aim, purpose and views on BEE The Health Charter The study KPMG BEE Study Conclusion
3. Aim and purpose of BEE Aimed at addressing the imbalances of the past by seeking to substantially and equitably transfer and confer ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens.” BEE Commission, 2001 “significant decreases in income inequalities” “increasing proportion of economic activities vested in community and broad-based enterprises (such as trade unions, employee trusts, and other collective enterprises) and co-operatives.” DTI Strategy for BBBEE, 2003
4. Economic sense of BEE KPMG, 2007
5. Views on BEE Black economic empowerment (BEE) "strikes a fatal blow against the emergence of black entrepreneurship by creating a small class of unproductive but wealthy black crony capitalists made up of ANC politicians, some retired and others not". Moeletsi Mbeki, "Architects of Poverty - Why Africa's Capitalism Needs Changing"
6. Views on BEE BEE has not lived up to its promises. The codes of good practice have created a compliance culture, rather than a transformative culture that promotes entrepreneurship and sustainable growth for the economy. Moreover, the focus on political patronage, rather than empowerment of poor communities, has denied many rural people significant benefits from the mining industry that operates on their ancestral lands. MamphelaRamphele, Discovery Leadership Summit, 11 September 2010
7. Two faces of BEE Fat cats Desired outcome Current reality
8. Health Charter, 2005 Principles of Broad Based Black Economic Empowerment are applicable to firms and/or individuals that conduct business or economic activity in the health sector whether for profit or otherwise. Ownership - This is to be achieved by a process of comprehensive transfer of ownership to, or acquisition of ownership by, black people throughout the value chain in the sector.
9. Health charter Implementation in following areas: Direct (BEE shareholding) and indirect ownership (employee or trust/community shareholding schemes); Management & control (by Black people); Procurement; Enterprise development; Investment in joint ventures with BEE companies; Department of Health or other accredited BEE programmes involving for instance, PPIs insofar as such programmes are proven to lead to, or contribute to broad-based BEE within the national health system); Employment equity and skills development; Corporate social investment.
10. Health charter proposals 26% owned and/or controlled by or black people. 2005 35% owned and/or controlled by black people. 2010 51% Equity ownership by black people. 2014. 60% procurement from black owned firms/persons. 2010. 80% procurement from black owned firms/persons. 2014 Fixed proportion of annual income on social responsibility projects which include new and existing Funding and resources for new and existing community development projects. Development finance from three sources, partially from DFIs, with the majority sourced from mainstream financial institutions and vendors themselves. For Small black owned businesses PPis
11. Comparisons in score cards
12. The Implementation of BEE in Gauteng-based private hospital groups
13. Rationale 2005- Health Charter viewed private sector as untransformed (pausity of senior black managers and little skills development). Charter not adopted. Private hospital industry accounts for significant share of private health sector (25.6%) and can contribute significantly to aims of BBBEE. Besides Netcare and Medi-Clinic, no information on how private hospitals are implementing BBBEE.
14. Aim and objectives Aim: To assess the implementation of BBBEE and its importance to corporate strategy in Gauteng-based private hospitals. Objectives To ascertain meeting the targets set in the DTI BBBEE scorecard. To determine which targets they find hard to meet and why this is the case. To establish what strategies they have employed in meeting the BBBEE targets. To establish which strategies have been successful. To determine if BBBEE is important for the private hospital groups’ corporate strategy
15. Methodology Qualitative research through personal in-depth interviews, using a semi-structured questionnaire. Sample All private hospitals in Gauteng Large, JSE-listed (Netcare) Large, non-listed (Life Healthcare) Small Black-owned (Clinix and Lenmed) Six officials, at various levels, to be interviewed. Analysis – content analysis
16. Results 17 respondents interviewed. 70.6% male 47.1% white 41.2% at strategic level
17. Meeting of DTI BBBEE targets Overall, felt they did well (71.4%) or very well (28.6%). Most satisfied with socio-economic development (70.6%) and employment equity (64.7%). Most dissatisfied with meeting targets on enterprise development. 47% said the hospital group was not doing well. EE was easy to meet due to nature of industry “Overall we end up beating the system because there is lots of nurses at the bottom that are most of them black”
18. Difficulty in meeting DTI targets Four came up as most difficult to meet: Preferential procurement (35.3%) Lack of accreditation, health standards and multinationals Ownership (29.4%) Structuring of companies, lack of funding Management control (29.4%) Lack of skills/experience, high turnover/low turnover Employment equity (23.4%) Disability, lack of experience
19. Strategies adopted Corporate strategy level Governance structures (transformation committees), policy and target setting, monitoring and metrics. Business strategic level Training and internal promotion, headhunting, promote accreditation
20. Success of strategies 81.2% felt strategies adopted had been successful. On procurement, skills and ownership Cohesive leadership
21. Strategic importance 41.2% felt it makes business sense (competitiveness) If you look at international markets, if you look at national markets, and what our competitors are doing, and in terms of politics, it is critical, its no question, it’s a no-brainer” All felt there was a moral imperative for BBBEE.
22. Other findings Understanding of BBBEE in black-owned hospitals was poor. No concerted effort on implementation of BBBEE in black-owned hospitals.
23. Conclusions Gauteng-based hospitals are making good progress on implementation of BBBEE (Level 5 and 4). Mixed response on the meeting of specific targets. Difficulty in meeting PP, ownership, management and EE targets. Corporate and business strategies employed by previously white-owned hospitals, but no strategic approach by black-owned. Strategies generally successful and leadership emerging as a factor in success. BBBEE seen as of strategic importance esp. for competitiveness. Implementation of BBBEE well integrated into corporate structures in previously white hospitals.
24. KPMG 2009 BEE survey KPMG, 2009
25. Conclusion BEE implementation continues in health, despite absence of Health Charter. Challenges for implementation in health are similar to other sectors. Need for a structured review and monitoring of BEE implementation in Health. There is a place for a Health Charter. The hope is that BEE in health will lead to equity by substantially transferring ownership, management and control of entities in the health sector.

26. THANK YOU