Netcare suppliers stumble on BEE - 11 February 2008

Slindile Khanyile: Business Report,

NETCARE suppliers attracting as much as 80 percent of the preferential procurement budget at the country's largest private hospital group did not comply with black economic empowerment (BEE) policies, according to Corrine Kennedy, Netcare's group procurement manager. Kennedy refused to divulge the exact figures involved or the identities of the service providers, saying the company had now committed itself to short-and medium-term plans for BEE transformation. Last year the company, which has adopted the department of trade and industry's codes of good practice, wrote to its top 100 suppliers to establish whether they were BEE compliant. Netcare said it felt that preferential procurement was one of the areas where it was still lacking in transformation, as it scored one of out 20 possible points in that regard. Kennedy said the group's assessment of the suppliers was still in process. Netcare had approached its service providers representing the top 80 percent of its procurement spend last year and had received an "encouraging" response. The total number of Netcare's suppliers was more than 5 000. Kennedy said that all key suppliers indicated their willingness to comply with the transformation requirements, and therefore Netcare would work jointly with them and hoped to have the top 80 percent of suppliers accredited within a reasonable period of time. Netcare spent R220 million on preferential procurement in 2006; last year it raised that amount to R886 million. This year its target is R2 billion. The company had found that some of its suppliers had the right empowerment policies in place and were lacking only accreditation. These companies would continue to supply Netcare but their BEE scores would not be taken into consideration when the hospital group did its own scoring, unless they were accredited. All new suppliers were now screened before they could be listed as approved Netcare suppliers, said the group. Though the current focus was on the top 80 percent of budget, suppliers that fell outside of that spectrum had also been contacted about their compliance status. Meanwhile, Netcare had outlined its future billing policy for anaesthetic agents to medical schemes and healthcare administrators. Mark Bishop, the head of funders and contracting, said that the change was as a result of discussion with the Department of Health, who engaged hospital groups across the board in order to devise an alternate methodology to the one currently being used. Bishop said the group was still waiting for further guidance from the Department of Health but the new billing system would be effective from this Friday. Further discussions would take place between the hospital group, medical aid schemes and administrators. Last year hospitals were heavily criticised for charging medical schemes inflated prices for medical materials and devices, as well as for overcharging for anaesthetic gases. Rajesh Patel, the head of the benefit and risk department at the Board of Healthcare Funders, said these practices had left medical schemes with a R2 billion bill in 2007. Netcare admitted that it received discounts on surgical items but said it passed these on to its patients.

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