COUNCIL FOR MEDICAL SCHEMES BUDGET PRESENTATION

COUNCIL FOR MEDICAL SCHEMESBUDGET PRESENTATION Daniel Lehutjo Chief Financial Officer

The Council for Medical Schemes is a Schedule 3 public entity under the Public Finance Management Act (PFMA) Act 1 of 1999. This budget is prepared in terms of section 53 of the Act. The Act stipulates that the Accounting Authority of a public entity listed in Schedule 3 which is not a government business enterprise must submit to executive authority responsible for that public entity, at least six months before the start of the financial year or another period agreed to between the Executive Authority and the public entity, a budget of estimated revenue and expenditure for that financial year, for approval by the Executive Authority.

The budget must be submitted to the executive authority through the Accounting Officer for the entity designated by the Executive Authority, who may make recommendations to the Executive Authority with regard to the approval or amendment of the budget. The accounting authority for such a public entity is responsible for ensuring that the expenditure of that public entity is in accordance with the approved budget.

EXPLANATORY NOTES TO THE BUDGET FOR THE FINANCIAL YEAR 2009/2010 This Budget was constructed on the basis of the operational plans for 2009/10, taking into account the broader strategic objectives of Council. The expenditure pattern of last year and the prevalent economic conditions have been taken into account in the development of this budget. As far as it is feasible the expenditure has been aligned with the timing of the operational plans.

BELOW FOLLOWS EXPLANATORY NOTES TO THE BUDGET ITEMS: • Appeal Board • The figure is based on last year’s budget . External expertise are used on the appeals matters. • Audit Fees: External • This relates to the statutory audit to be undertaken by the Auditor General. The figure is based on the actual expenditure of last year. • Audit Fees: Internal • The internal audit work relates to the work performed by our internal auditors. The figure is based on the coverage plan the internal auditors have submitted.

Bank Charges • The budget figure is based on last years actual expenditure. • Cleaning and Gardening • The cleaning service is outsourced and the budget was arrived at on the basis of the signed contract. The budget has taken into account the growth of the organization. • Consumer Education • The consumer and education unit is engaged in a variety of consumer awareness programs which include radio slots, exhibition and shows (Rand Easter Show), publication in consumer magazines.

Computer Expenses • This line item entails acquisition computer accessories like backup tapes, toner cartridge, mouse devices, memory sticks, modules for upgrades etc. • Consultancy Fees • The communication unit will require consulting work on the editing of documents. IT unit requires consulting on the call centre system, deployment of new financial returns, sense spot security and telephone system configuration. The internal finance unit uses consultants on accounting packages from time to time.

Courier and Postage • Postage and courier services are required to send accreditation certificates to brokers in the main. We also use postage and courier services for administration purposes; e.g. sending documents for meetings and correspondences in general. The figure was adjusted for inflation in relation • Council Committees • This covers the travel and accommodation of Council members and sub-committee members attending Council meetings. It is expected that expenditure will be in line with the activities of Council.

Council Members' Fees • The budget has been prepared to match the activities of Council and its Committee during the year under consideration. • Depreciation • The Depreciation is based on the value of existing assets and the possible acquisitions during the year. • Employee Wellness Programme • This line item covers for the well being of staff of Council in the form of providing subsidy to health activities as well as counseling sessions.

External Storage • Council has a contract with Metro file to store documents off site. Old documents are always taken off site to facilitate proper filling. • Employee Benefits • This is cover for employees in respect of accidental death and disability. It is based on the actual earnings from one year to the other and has been negotiated to coincide with our financial year.

HRD /Organisational Strategy • The project on talent management and succession planning will be undertaken this year. • Insurance • This is the insurance for office contents and is budgeted on the basis of the value of assets in existence in Council. • Internet Expenses • Internet services are provided by internet Solutions and we have a Service Level Agreement with them.

Investigations • This relates to investigations commissioned by Council to enforce compliance. The estimates is based on past experiences. The unit also has a full staff compliment to meet the requirements of the investigations. • Legal Fees • The legal matters are unpredictable. The estimate is based on pas experiences and in a budget review process attention in normally paid to this line item.

Media and Promotion • The budget covers for the printing of the annual report as well as the publication of the quarterly journal (CMS news). The unit has also planned the road shows for the annual report. • Operational Planning • This relates to a planning session by all staff members in preparation for the year ahead. The sessions are organized differently every year to allow for flexibility in travel and accommodation.

Printing • The budget has been adjusted to take care of printing reports from research projects from the research unit as well as the printing or the operational plans for the organization by the IT unit. • Recruitment and Reallocation • Recruitment budget is made available in the event of a vacancy arises. Advertising costs have gone up. In some instances we recruit some positions through agencies and their charges are based on the total cost to company for the year. Where senior positions are involved the costs are a bit steep.

Registration & Accreditation Costs • The work on the accreditation of administrators has been internalized. The budget is intended to accommodate on site consultation with administrators. • Rent • The rent is budgeted on the basis of the lease agreement. The rent escalates at 7% p.a. in May of each year.

Rental Copiers • This is budgeted for on the basis of a service level agreement. • Rental Other Assets • This is in terms of the signed contract for the provision of cold refreshing water. • Repairs and Maintenance • This covers general repairs for the building and maintenance in respect of the air conditioners, UPS, generators, call centre system etc.

Research Costs • The Research unit will be engaged in the following research projects: • An assessment of coverage of non-PMB conditions • PMB costing • Annual Statutory Returns • Improving Data quality • Improvement of Complaints Database • Monitoring of ICD 10 implementation

Knowledge Management • The information centre manages the Access to Information Act and maintains the library of Council. The information centre uses three systems (EBSCO, Sabinet and Butterworths database) to maintain electronic journals. • Salaries • Salaries are budgeted for on a total cost to company approach. Salaries have increased on average by 9%.

Security Computers and building • Security in respect of computers relates to the firewalls and encryption systems to prevent hacking. The access to the building is also protected through a security system. The budget is based on the contract with respective service providers. • Staff Training • This line item covers for staff development and training. It also caters for attendance of conferences and workshops. A training plan was developed by the HR unit which was used to cost this line item.

Stationery • The budget is based on last years' expenditure patterns and is adjusted for inflation. We have also increased the budget in line with the growth of the organisation. • Strategic Planning • This is the planning session of Council every year in November. • Subscriptions • This relates to subscription to professional bodies by staff.

Telephone and Fax • This is based on last years' figure and adjusted for inflation. Efficiency measures have been put in place to monitor the use of telephone and faxes and have proven to be effective. • Travel • Travel is mainly associated with the operational activities the various units engage in. The accreditation unit staff members are expected to travel frequently to visit administrators to evaluate the work started on the accreditation of administrators which is now performed in house.

Trustee training • The budget has been increased by inflation on last year's actual expenditure. • Water and Electricity • This expenditure projection is based on last year’s pattern and has been adjusted for inflation. The usage level in the organization drives this expenditure pattern. • Website Design and Development • It is envisaged that the website will be redesigned during this financial year.

THANK YOU

COUNCIL FOR MEDICAL SCHEMES BUDGET PRESENTATION