Afrocentric Health CFO explains how the company achieved a Level 1 BEE rating
Afrocentric Health CFO Hannes Boonzaaier is simple about his approach to helping the company to achieve a Level 1 rating: "You just look at what's got to be done and you do it."
“How do you eat an elephant?” the old question goes. The answer? “Bit by bit.” This is how Hannes Boonzaaier, Afrocentric Health CFO and recent winner of the Transformation Award at the CFO Awards, outlines his company’s contribution to the ideal of universal healthcare.
“We see opportunities where we can provide solutions on a smaller scale,” he says. “We’re already providing a chronic medication solution to 750,000 state patients in four provinces. We deliver their medication to them at their workplaces so they don’t have to go into the clinics. We started this with the Department of Health in 2014, and it’s already grown to significant volumes, making it worthwhile even though the margins are low.”
He says that Afrocentric, which owns one of the biggest medical scheme administrators, Medscheme and various other pharmaceutical companies, is all about providing medical solutions to its clients and patients (rather than rolling out bricks-and-mortar institutions). “Widely, what we want to achieve as a group, is that we feel that we can drive healthcare costs lower by assisting our funder schemes to make better informed decisions on their procurement strategies. The DNA of what we do every day is ask how we make our clients’ access to healthcare easier, whether it’s processing a claim quicker, buying more cost-effective services and products or giving them the ability to transact with us via apps.”
He explains their approach. “What we try to do is pass the benefit. There’s a lot of fat in the healthcare chain in South Africa due to fragmented care and suppliers. We want to make our schemes more successful, so if our schemes, Bonitas, GEMS, Polmed and Fedhealth can come with lower rates and lower increases on the market, our membership will grow and that’s where we’ll make our money. For sustainability, we want to drive healthcare costs down, so we only buy a business if it will mean that we can do it cheaper than the market is doing it currently.”
As a part of this strategy, Afrocentric has been purchasing businesses in the medical value chain that will allow them to leverage relationships and harness efficiencies in delivering healthcare solutions to their clients.
“The group has diversified and our traditional medical scheme administration business is probably only 60 percent of our group at this stage, split between Joburg and Cape Town. We’ve diversified into a pharmaceutical business, based in Pretoria, and various other disciplines from hospital consumables to back and neck rehabilitation services.”
He says that the positive outcomes of good ideas – especially those in Afrocentric’s acquisition and expansion space – excite and inspire him.
“As we expanded our pharma business with new warehousing facilities, it added so many synergies for the business. We now have our disaster recovery site there, and many of our administration business units are also being located closer to this new environment to co-create synergies and new products. It’s optimised so much more than just the warehouse for the pharmaceutical business. It excites me to come up with new ideas every day about how to optimise things. It makes the day worthwhile. And then reporting them in the end, you know what a lot of work you did to get to that entry.”
Eating the B-BBEE elephant
Another significant aspect of Hannes’s work that he’s applied the “eating the elephant” approach to is the company’s B-BBEE scorecard, for which his efforts earned him the Transformation Award. “We’re at Level 1. I’ve been very involved since the new codes came in, and ran the accreditation project in 2015. There was a risk that we’d go from Level 2 to 4, but three years ago, we went to Level 2 and are now at Level 1.”
He says that when you’re refining the scorecard and you want to go from 95 points to 103 points, “Decimals start counting. You just look at what’s got to be done and you do it.”
Who better to chase the decimals than a CFO? “I was quite involved for three of four years heading it up, and I am now head of the procurement pillar. In this space, we are trying to grow new businesses and support smaller businesses. We take in interns, some of whom are disabled people – not for the points but because we are fortunate enough to have an organisation that’s growing, so we can absorb disadvantaged people into the group.”
When Hannes started with Afrocentric in 2010, the finance team was 80 percent white and 20 percent black. He’s proud to say that today, those ratios have switched through specific capacity-building efforts.
“To be progressive, you have to build the capability yourself. People always want to go out in the market and buy talent, but I’ve seen it so many times that you will lose those people in a couple of years. So we’ve taken eight years to get guys that were credit controllers to be financial managers. We’ve developed them quite a lot, and they remember that. They are committed to the group based on what our inputs to their development have been and that’s why they mostly want to aspire further in other disciplines in our diverse group. For me it’s been a great journey.”
Afrocentric is also registered on the Saica accreditation programme, to take people internally from their B.Com studies all the way into CA. The first three CAs will be graduating in October this year, and a new all-black intake is coming on board.
Afrocentric also has an internship programme, taking in more than 100 graduates a year. “Graduates need a lot of IT skills, so we take people with a basic IT background and we put them on further development. The costs of buying IT skills when young professionals are 26 to 30 years old are very expensive compared to developing them from 20,” Hannes says.
Another aspect of the company’s B-BBEE success is that it has embraced supplier development in industries related to theirs. “Big IT companies were doing a lot of our desktop support, but now we’ve created and empowerment company to provide this service, headed up by a black IT professional that previously worked for us.”
Similarly, in their Pharmacy Direct business, there’s lots of courier work to be done, and they have set up supplier development programmes through which new and smaller courier companies are created and given the work which was first all done internally. Hannes is always on the lookout for further opportunities.
“I’ve been personally involved in a new travel solution. A female entrepreneur came to us saying she was developing a new travel platform that makes travel booking in South Africa a lot cheaper, and can we support her with the benefit of being on a new platform for free. I am quite involved in a lot of these initiatives to help guys out. That’s been the spirit behind getting to Level 1.”
About winning the Transformation Award, Hannes had the following to say: “Winning the award for developing my finance team over a period of eight years is really gratifying and they were the first colleagues I share the award with the following morning. The satisfaction of having seen many young professionals join the finance team and develop into seasoned commercial businessmen that have advanced further in the group is what gives me the ultimate kick.”
He says that the award has also motivated him to share many of his experiences as a finance executive with other young finance professionals outside of the group, and that he looks forward to doing the same at the Finance Indaba in October as well.
Getting to know the business and the CFO
Hannes is a strong believer in the value of broad exposure within the organisation, which reflects his own career path to CFO, and he encourages others on the finance team to garner as much business experience as possible.
“I always say, ‘get practical’. Get involved in the core business. You need to know what the ticks are behind a number, behind a product or behind a client. Because in that way you can add value.”
Hannes himself spent five years in the operations, in the claims assessing environment, the commission environment and in scheme finances.
“I got to know the business. When people are talking about IT systems, I know how the transactions work and what the solution could be, and I can give the finance view on that. I am promoting this with my finance guys. I tell them not to sit behind their desks, but to get out of the finance department and go and have coffee with the other colleagues. It takes extra time, but it ultimately buys respect, and opens up all types of discussions when it comes to the budgeting and cost-cutting phases.”
He says the role of the CFO is to contribute to the profits of the organisation through cost and revenue decisions. “It’s not enough to say you know what we need to do to reduce costs or increase revenue. Once you start climbing into and understanding the environment of your colleagues, you get respected for trying to understand the problems they are facing and can suggest solutions.”
He believes that emotional intelligence and respect for what makes others “tick” gets a CFO further than facts alone. “I have so often seen a decision made, not on information, but based on the upfront trust that the board or decision-makers have in a person, and their track record. Of course, this is supported by the information being presented.”
He says that nothing beats the basics of prudent accounting, cashflow management, clean reconciliations, and accurate reporting and forecasting.
Asked about his future ambitions, he says that one always aspires to greater things, but that for now, he’s happy where he is, and his goals are around the business. “I want to double or triple the market capitalisation of the group through various acquisitions and growth initiatives.”
In terms of his home life and leisure time, Hannes has a teenage son and daughter. His view is that the work-life balance needs to be flipped around so that your personal friends, sport and hobbies give you energy and innovation in the workplace. For this reason he is an avid daily supporter of his bootcamp class in gym and on weekends plays “fairly” competitive tennis. He says that marriage and kids’ activities keep him quite busy, and he enjoys adventure sports on holiday.