ANNUAL REPORTYOUR PARTNER FOR HEALTHY LIVING

The Ministry of Health (MOH) is committed to strengthening the provision and delivery of quality health care to the people of Jamaica, as we continue on the road to Sustainable Development Goal 3: “Ensure Healthy Lives and Promote Well-being for All, At All Ages”.

The work of the National Health Fund (NHF) is integral to our success in making that journey. The use of the Fund’s resources continues to facilitate infrastructural projects, the expansion of pharmaceutical services and the promotion of healthy lifestyles for all Jamaicans.

The MOH and its affiliated institutions commanded the largest share of the NHF’s projects budget for the 2017-18 financial year. Thirty-six projects were approved at a value of $1.70 B. Twelve projects were approved for the MOH valuing $1.0 B, eight for South East Region Health Authority (SERHA) valuing $241 M, three for Southern Regional Health Authority (SRHA) valuing $125 M, ten for the North East Region Health Authority (NERHA) valuing $116 M, two for the Western Regional Health Authority (WRHA) valuing $71 M.

Additionally, among their main focus was the completion of two cancer centres for the Ministry of Health/Regional Health Authorities. As of March 31, 2018, both Centres were completed and arrangements made for the transfer of management of facilities.

The NHF has also transformed its pharmacy services for the 2017-18 financial year. The Fund now operates pharmacy

services in a total of 105 locations consisting of hospitals, full week and schedule health centre services.

To their credit, they have confirmed an additional 35 contracts as part of the Public Private Sector Pharmacy Partnership Programme, bringing the number of pharmacies to 52. This innovative approach to partnerships solidifies the NHF’s commitment to efficiency in its operations and reliability for customers.

Both individual benefits programmes experienced growth over the 2017-18 financial year. There was a 4.1% increase in enrolment over the previous year. Enrolment increased by 2.6% for the NHF Card while the enrolment for the Jamaica Drugs for the Elderly Programme grew by 7.9% over the previous year.

More than 500 drug presentations benefited from increased subsidies, which led to a rise in the average subsidy rate from 44% to 46%. This was complemented by an ongoing expansion of the NHF Card Drug List during the year, with the addition of 10 new active pharmaceutical ingredients to the programme, as well as 52 new presentations associated with existing active pharmaceutical ingredients.

The NHF also maintained its support for the ‘Jamaica Moves’ national campaign, as we seek to reduce the island’s risk of non-communicable diseases (NCD’s), and, in turn, create a healthier, happier Jamaica. This was only one of the many health promotion activities backed by the organisation.

The NHF also bolstered their work in the school and workplace wellness programmes, while maintaining their annual health calendar. As though this were not enough, they have done exceptional work in corporate social responsibility, mobilising staff members to be an example for all of Jamaica to see.

Despite the many health needs of the population and limited resources, the NHF enjoyed another successful financial year, courtesy of sound strategy, including a data-driven approach to risk reduction, and overall efficiency.

I thank the Board of Directors, Management and Staff of the Fund for their stellar effort as well as our partners and stakeholders who provide the feedback that is so essential to helping us to deliver on our mandate. Working together is essential to our continued success.

Minister’s Message 01

Hon. Dr. Christopher Tufton, MP Minister of Health

1

The National Health Fund (NHF) is an agency of the Ministry of Health and was established in 2003 by the National Health Fund Act. The NHF provides financial support to our national health care system in order to improve its effectiveness and the affordability of health care for the Jamaican population.

Our Vision StatementNo financial barriers to health care.

Our Mission StatementTo provide funding for specified health care benefits, health promotion, health projects and pharmacy services in a sustainable, efficient and customer centric environment.

Our Statement of ValuesAt the National Health Fund, we are committed to the highest standards of honesty, integrity and quality. We will at all times be professional in discharging our responsibilities and be guided by noble moral and ethical standards.

The Quality Policy It is the policy of the National Health Fund to: • Provide services of the highest possible standards that meet our customer requirements and enhance customer satisfaction through continual improvement of our processes.

• Achieve our quality objectives by establishing, implementing and maintaining an effective Quality Management System which complies with applicable requirements including ISO 9001:2015.

About the NHF 02

2

• Help Jamaican residents to access medication in both the public and private health sectors through the provision of the NHF Card and the Jamaica Drug for the Elderly Programme (JADEP) Card and the administration of the Government of Jamaica Health Card.

• Delivery of in-patient and outpatient pharmacy services for the public health sector. This includes the management of the medical warehouse and of over 1O5 pharmacy locations in the public health system, providing full time and scheduled services.

• Provide grants to institutions to improve health care delivery including infrastructure development, training, disaster preparedness, medical equipment and transportation. Project management is an important part of our work which extends to not only internal projects but major projects for our parent Ministry.

• Support multiple health promotion programmes to aid in the prevention, reduction and management of non-communicable and communicable diseases.

The NHF is ISO 9001:2015 certified and is therefore focused on continuous improvement of our processes to ensure customer satisfaction for both internal and external customers. Good corporate governance and the management of risk are also hallmarks of our operations.

How We Are Funded?The NHF’s revenue sources for the provision of benefits for the NHF and JADEP cards and for grants to institutions are:

• 20% of Special Consumption Tax charged on Tobacco Products with effect from April 14, 2008.

• 5% of Special Consumption Tax collected.

• 5% of annual earnings up to $500K paid by employee and employer, collected by the NIS. Funds from the GOJ Budget are provided for the procurement, warehousing distribution of pharmaceuticals and medical sundries and for dispensing of medications to patients.

Our DivisionsThe Fund currently has an island-wide staff complement of approximately 500 members across seven divisions:

1. Executive2. Finance Investment & Projects3. Information & Communication Technology

4. Human Resource and Administration5. Individual Benefits/Operations6. Pharmaceutical Division7. Drug Serv

What we do? 03

3

$7.99 Billion

3 Benefit Cards

773,621

$4.59 Billion

14

463

256

17

$4.75 Billion

1,507,766

108

$1.79 Billion

111,820

526

Revenue from taxation

NHF Card for all Jamaican Residents - 16 Conditions covered Jamaica Drug for the Elderly (JADEP) Card -10 conditions Government of Jamaica (GOJ) Health Card for VEN List Items

Beneficiaries Since Inception 471,722 NHF Card Programme Beneficiaries301,899 JADEP Card Beneficiaries

Subsidies for NHF and JADEP Card Programme

Same Day Card Locations to enrol

NHF Card Pharmacy Providers

JADEP Pharmacy Providers

Public Sector Pharmacy Partners

Spent to procure pharmaceuticals and sundries for the public health sector

Prescriptions processed at 32 Drug Serv pharmacies

Drug Serv Locations being operated consisting of hospitals, full week and scheduled health centre services

NHF Grants approved for 44 projects

Screening tests done

Employees island-wide

National Health Fund at a Glance 2017-2018

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Chairman and Chief Executive Officer’s ReportHow we have delivered against our corporate priorities for 2017-2018Summary of Financial PerformancePerformance of NHF Cards & Cardholders’ Profile Review of NHF Grants & Projects Transforming Pharmacy Services Drug Serv Pharmacy Services Pharmaceutical Warehouse

Influencing Health Behaviour Management of Strategic Resources Information Communication Technology Human Resources Ten Year Comparison Report

Board of Management GovernanceOverview Corporate Governance StructureBoard Composition and Role of Chairman and Members Conflict of Interest Related Party TransactionBoard Committees Composition and Membership Board Members Competency Profile Board’s Role in Risk OversightBoard’s Oversight of Strategic Planning Board Performance EvaluationBoard & Committee Meetings Attendance Report Board Committee Reports Regulatory Compliance Risk Management Report Quality Management System Report

Stakeholder Outreach

Corporate Social Responsibility The NHF Team • Executive Management • Senior Managers • Head Office Middle Managers • Pharmaceutical Division Middle Manager • Drug Serv Managers

Auditor’s ReportIndependent Auditors Report to the Board of Management Financial StatementsEmolument Package

01

02

Message from the Minister of Health

About NHF

06

2731

36

42

545657

121520

PERFORMANCE

37 ACCOUNTABILITY

61 FINANCIAL STATEMENTS

Vision, Mission Statement, NHF Core Values | Overview of NHF’s Operations

PERFORMANCE

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At the National Health Fund (NHF), we take pride in being one of the most effective public sector organisations, having maintained our trajectory of performance year after year. During the 2017-2018 financial year, the Board, Management

and staff, worked diligently to deliver quality health care services to more Jamaicans than ever before. Consequently, there was a deliberate focus on efficiency and access to pharmaceuticals for public patients, strategic improvements in the operation of the pharmaceutical supply chain, further investments in health care infrastructure and healthy lifestyle promotion, as well as a customer service focus, which resulted in increases throughout our enrolment and benefit programmes.

The take-over by the NHF of the remaining pharmacy locations in the public sector, was completed in January, 2018, bringing the total number of pharmacies being operated by the agency to 108. These pharmacies will be rebranded as Drug Serv Pharmacies. Our commitment to public patients is to provide an experience of greater access to medication and shorter waiting times to receive prescription services. This was evident in the total number of prescriptions filled reaching 1,507,766, processed at 32 Drug Serv pharmacies where the Pharmacy Information Management System (PIMS) was in operation. This represented an increase of 21 percent when compared to the last financial year.

As a testament to our innovative approach to service, we took the bold initiative to develop Quick Prescript, an electronic prescription submission application for our public patients. In addition, another 35 private pharmacies were selected under the Public Sector Pharmacy Partner Programme, which should bring to 52, the number of provider pharmacies serving public patients across the island. These steps, and others outlined in the Five-Year Strategic Plan for pharmacy services will revitalise and transform our service to public patients.

Significant improvements in the management of the supply chain for pharmaceuticals, was achieved this past financial year through the use of technology and efficiencies gained with the implementation of the new Warehouse Management System.

Strategic investments continue to reap success for the NHF. The new Greater Portmore Drug Serv Pharmacy officially opened on June 14, 2017. This $29M investment is a part of the ongoing Pharmacy Expansion programme which also included the renovation of 19 pharmacies island-wide at a cost of $88M. There was also the expansion of the Same Day Card Service to seven Drug Serv locations across the island, which facilitated greater convenience and improved access for beneficiaries. The year ended with 14 locations providing Same Day Service which enables the customers to obtain beneficiary cards within 15 minutes. This service generated 54,282 cards, representing 75 percent of total cards produced. The result was an increase in the volume of customer service interactions during the year, with 19,436

Chairman & CEO’s Report

GREGORY MAIR, CHAIRMAN

EVERTON ANDERSON, CEO

7

calls handled along with 67,966 visitors served.

We continue to experience growth in the Individual Benefits Programme, welcoming 41,477 new beneficiaries, resulting in an overall total of 773,621 beneficiaries since NHF’s inception. This represents a 4.1% increase in enrolment over the previous year. As we continue to strategically resolve the health care challenges of Jamaicans, more than 500 drug presentations benefited from increased subsidies which led to a rise in the average subsidy rate from 44% to 46%. This was further supported by the ongoing expansion of the NHF Card Drug List during the year. NHF Card claims activity during the year resulted in more than 4 million claims, with 252,046 beneficiaries accessing benefits during the period, registering a 4.2% increase over the number of claimants in the previous year.

In fulfilment of the Government’s health care strategy to reduce resource gaps in health care coverage and increase access to affordable health care for all Jamaicans, the NHF team commenced the development of the policy proposal and road map for the National Health Insurance Plan (NHIP). Work was far advanced by the end of the 2017-2018 financial year and it is expected that the document will be submitted to the Honourable Minister of Health for approval in the new fiscal year.

We remain dedicated to our mission to provide funding for health projects and support for their execution. This resulted in the NHF implementing 19 Capital Projects on behalf of the Ministry of Health (MOH) and the Regional Health Authorities (RHAs) at a cost of $540M. Overall during the 2017-2018 financial year, $1.79B was approved for forty-four (44) Institutional Benefits projects for health promotion, primary and secondary health care infrastructure, equipment and research. A further $25M was invested for the facelift of 10 Health Centres in partnership with the MOH, RHAs and respective communities, as part of our social and corporate responsibility. Special congratulations are in order for the NHF staff for seeing through our main focus of completing and handing-over two Cancer Centres to the Ministry of Health (MOH)/Regional Health Authorities (RHA). As of March 31, 2018, both Centres were completed and arrangements made for the transfer of management of facilities.

The continued fight to curtail the growth in non-communicable diseases (NCDs) requires that we gain the buy-in of all Jamaicans and put health promotion at the heart of our operations, while in alignment with the MOH Programme to reduce non-communicable diseases (NCDs). The MOH Jamaica Moves initiative was supported throughout the year which helped us to achieve over 111,000 screening tests, 11,000 more when compared to the previous year. We

revitalized our focus on promoting healthy lifestyles in schools, communities and the work place with programmes such as the Work-It-Out Challenge Competition and the Memoranda of Understanding (MOU) with the Jamaica Constabulary Force (JCF) and The Jamaica Fire Brigade (JFB). This was followed up with a new MOU signed with the Press Association of Jamaica (PAJ), where we will be supporting the health education and capacity building of the PAJ to promote the initiatives of a healthy lifestyle for media workers.

Critical to our continued success is capacity building for our high-performing staff members to ensure continued delivery of quality services, personal growth and development. The transfer of public sector pharmacy staff from hospitals and health centres to the NHF resulted in the addition of 110 new staff members to our team, bringing the total number of NHF staff to 526 at the end of March, 2018. As we seek to fill skills gaps in the organisation and maintain a current succession plan, we prioritised training in areas such as risk management, customer service, procurement, quality management, occupational health and safety and information technology for the 2017-2018 financial year.

Our staff continues to work selflessly in delivering excellence too in corporate social responsibility. Our pharmacy staff has initiated Infirmary visits totaling 24 across nine parishes to dispense medication and deliver quality customer care through engaging and educating patients and caregivers around the best practices of usage, storage, safety and the documentation of medication.

Underpinning the operations of the Fund is our commitment to excellent corporate governance. We are passionate about managing a well-functioning agency that consistently delivers quality services, while prudently handling fiscal resources, upholding ethical corporate conduct and maintaining our standing as a trusted public sector entity. We are focused on rigorous risk management integrated into our day-to-day work and is an ongoing process that flows through the organization.

The leadership, hard work, insight and foresight demonstrated by the team over the last financial year not only made it a year of success, but also one of transition grounded in strategy and efficiency. As we look to the coming years we renew our pledge to remain committed to excellence, to keep abreast of innovations, while continuously adopting better management and service delivery techniques to successfully overcoming all challenges before us.

Chairman & CEO’s Report

8

Completion and submission of the 1st Draft Consultancy Report on the National Health Insurance Plan to the Minister of Health by March 31, 2018.

Launch Phase 2 of the Public Private Partnership Pharmacy Programme in at least 33 pharmacies.

Achieve a minimum of 85% Customer satisfaction across the organization.

Certification to the ISO 9001:2015 maintained for the Head Office and Pharmaceutical Division

Increase the number of teams participating in the NHF Work It Out Challenge to 200 teams as part of Jamaica Moves.

Achieve a minimum fill rate of 80% at all NHF pharmacy locations.

Maintain a minimum stock level of 85% VEN List Items.

Roll out of same day card printing of NHF & JADEP cards at 7 additional locations across the island.

New Pharmacy Services Plan developed and the Quick Prescript platform implemented by December 2017.

100,000 screening tests completed by March 2018.

Maintain administrative expenditure within the approved NHF Budget.

Complete and handover a minimum of 80% of agreed projects within the scheduled time by March 31, 2018.

Achieved - Inception, Progress and Financial Reports completed.

Achieved – Expression of Interest evaluated and list of Pharmacies agreed on.

Achieved - Survey completed and report with results finalized.

Achieved - Annual Surveillance Audit conducted by NCBJ was successfully completed.

Achieved - Over 200 teams signed up. In addition, Exercise, Nutritional Assessment and Counselling Sessions were conducted for all participants.

Achieved - Average service level 87% for FY 2017/2018

Achieved – Average Stock level of 86% achieved for VEN list items.

Achieved – The (7) additional locations were implemented making a total of thirteen (13) locations now able to provide same day service.

Achieved – Plan approved and Quick Prescript App implemented.

Achieved -103,221 screening tests completed

Achieved as March 31, 2018 :Actual $ 7,266.23M | Budget $7,716.28M

Achieved – 10 of 12 projects completed represents 83%

OBJECTIVE STATUS OF PERFORMANCE

How We Delivered Against our 2017/18 Corporate Objectives

A US$723K contract between the NHF and Sanigest Internacional was signed in December 2017 for the development of the proposal a National Health Insurance Plan (NHIP) for Jamaica. Participating in the Signing Ceremony are: Seated (L-R) Mr. Gregory Mair, Chairman of NHF, Hon. Christopher Tufton, Minister of Health, Mr. Everton Anderson, CEO, NHF, Mr. James Cercone, President, Sanigest International. Standing are (L-R): Mr. Granville Gayle, Senior VP ICT, NHF, Mrs. Sancia Bennett Templer, Permanent Secretary, MOH and Etoile Pinder, Sanigest.

The NHF team was able to maintain financial stability and achieve a creditable financial performance for the year ended March 31, 2018 despite challenges arising from our mandate to assume responsibility for the management and delivery of pharmacy services within the public health sector and being subjected to an inadequate drug budget.

Financial Position

The Statement of Financial Position as at March 31, 2018 reflects a net asset position of $13.01B, which is a weakened position, by 7.14% ($999.64M), when compared to March 2017. The chart below provides further details.

The financial position is reflecting a current ratio of 4.30:1, and an acid test ratio of 3.55:1. Whilst these ratios exceeds acceptable standards the high level of receivables remain a concern. The current and acid test ratios for the comparable period were 4.56:1 and 3.97:1, respectively.

Trade Receivables from MOH at March 31, 2018 is $911.75M which reflects a decrease of 59.66% ($1.35B) over the balance as at March 2017. This is a direct result of an additional impairment provision of $2.26B being made in the current period in relation to the debt owed by MOH. This brings the total impairment provision to 4.26B.

Other Receivables of $2.35B as at March 31, 2018 shows a decrease of 19.07% ($552.48M) when compared to prior year. The balance is substantially comprised of Taxation Revenue receivable which amounted to $1.06B at March 31, 2018 compared to $1.61B at March 2017. The Taxation Revenue Receivables balance as at March 31, 2018 is net of impairment provision of $796.86M.

Trade Accounts Payable of $1.17B represents amounts owed to suppliers of pharmaceuticals and medical sundries; this

balance increased by 51.91% ($400.65M) when compared to March 2017. The increase is primarily attributable to the increase in demand for pharmaceuticals and medical sundries owing from the increase in access due to the Pharmacy Services Takeover.

Institutional Benefits Payable of $1.62B at March 2018 reflects an increase of $43.77M when compared to the position March 2017. The increase occurred because payments during the period was less than grant approvals; approvals for the financial year amounted to $1.83B whilst payments totaled $1.46B.

The General Fund amounted to $1.86B which is a decrease of 57.44% ($2.51B) compared to March 2017. During the period $2.10B was transferred from General Fund to finance Institutional Benefits projects.

The Trust Fund Reserve stood at $9.48B at March 31, 2018 which is an increase of 8.42% ($736.19M) when compared to March 2017. The increase in this Reserve is due to interest income of $466.35M, foreign exchange loss of $130.06M and transfer from General fund of $399.90M.

Income and ExpenditureThe deficit for the year ended March 31, 2018 is $12.57M which is a weakened performance when compared to the surplus of $1.12B for the period ended March 31, 2017.

Total Revenue net of expenses for the year reflected an increase of 8.50% ($818.23M) when compared to March 2017. The increase is due to revenues from taxation sources (Tobacco Tax National Insurance and Special Consumption Tax) and other income increasing over prior year by 9.15% ($670.55M) and 457.65% ($1.86B), respectively. On the other hand, net revenue from pharmacy services reduced over prior year by 90.77% ($1.71B). The reduction in the net revenue from pharmacy services is owing to the Fund changing its billing mechanism from a mark-up regime to a cost plus 5% management fee methodology. The 5% management fee plus recoverable expenses ($1.98B) has been included in other income and is the main reason for the positive variance over prior period.

Expenses for the year amounted to $10.45B which is an increase of $1.95B when compared to prior year. The main factors contributing the increase are as follows:

1. There is an increase in the provision for impairment of receivables in the current period of $3.06B.2. Benefit Costs (NHF & JADEP Cards) of $4.80B represents 45.96% of Total Expenditure and an increase of 8.09%

Summary Of Financial Performance March 2018

10

when compared to March 2017; this is due solely to increased card utilization. 3. Health Promotion and Public Relation expense of $166.17M accounts for 1.59% of Total Expenditure. 4. Staff Costs of $1.32 B represents an increase of 10.95% ($130.56 M) over the previous year. The increase is mainly due to NHF taking over the staff costs for all public sector pharmacy staff by January 2018; a 5% salary increase was also granted by the Government to public sector workers. 5. Administrative and other expenses for the current year amounted to $1.10 B resulting in an increase of 46.09% ($347.99 M) over prior year.

The full details of the financial operations are presented on pages 61-104.

Individual Benefits

Staff Costs

Admin. & Other Expenses

Health Promotion

Prov. for Impairment

$4.80 B

$166.7M

$1.32 B

$3.06 B

$1.10 B

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Performance of NHF Cards & Cardholders’ Profile

4.1%over enrolment of the previous year

NHF CARDPROGRAMME

JADEP CARDPROGRAMME

Individiual BenefitsProgramme increased

Individual BenefitsThe 2017-2018 financial year has been a rewarding one for NHF operations, marked with increases in all our enrolment and benefit programmes. Enrolment on the Individual Benefits Programmes continued on a growth path with the addition of 41,477 beneficiaries, reaching a total of 773,621 with 371,215 active members. This represented a 4.1% increase over enrolment in the previous year.

Enrolment increased by 2.6% on the NHF Card Programme compared to that of the previous year, and there was an addition of 29,607 beneficiaries, resulting in a total of 471,722 NHF cardholders with 296,735 active members.

The Jamaica Drug for the Elderly Programme (JADEP) enrolment grew by 7.9% over the performance of the previous year. With 11,870 new beneficiaries added to the programme thereby reaching a total of 301,899. Of this number, 74,480 JADEP beneficiaries were active.

The Fund also maintains the Government of Jamaica (GOJ) database which comprises 618,747 NHF and GOJ cardholders who are able to use their cards at public sector pharmacy facilities, as well as private pharmacies enrolled on the Public Sector Pharmacy Partnership Programme (PPP) to provide dispensing services to public sector patients.

Enrolment increased by 2.6%

29,607 beneficiaries enrolled during the year

296,735 beneficiaries were active

A total of471,722 beneficiaries now enrolled

Enrolment increased by 7.9%

11,870 new beneficiaries enrolled during the year

A total of 302,089 beneficiaries now enrolled76,606

beneficiaries were active

A Total Of 773,621 Beneficiaries

41,477 New Beneficiaries

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Individual Benefits Claims Activity

NHF Card claims activity during the year resulted in more than 4 million claims, with 252,046 beneficiaries accessing benefits during the period, registering a 4.2% increase over the number of claimants in the previous year. Five conditions, namely hypertension, diabetes, high cholesterol, glaucoma and prostate cancer accounted for 77% of the total expenditure.

More than 500 drug presentations benefited from increased subsidies which led to a rise in the average subsidy rate from 44% to 46%. This was complemented by an ongoing expansion of the NHF Card Drug List during the year with the addition of 10 new active pharmaceutical ingredients to the programme, as well as 52 new presentations

Profile of Cardholders

69%

84.3%

31%

The composition of male & female enrollees for both NHFcard and JADEP programmes.

of NHFCard beneficiaries are 45 years of age and older

Enrollment By Cases

12%14%

24%

7%6%5%3%4%

10%

15%Diabetes

Arithritis High Cholesterol

Hypertension

Other IschaemicHeart

Asthma Benigh Prostatic

Glaucoma

Vascular

70.8%

70.8% of the JADEP beneficiaries are between 60-74 years of age

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associated with existing active pharmaceutical ingredients. Additionally, there were major changes to the JADEP Drug List as a result of a comprehensive review of the programme during the previous financial year.

Led by improvements made to the JADEP Drug list in 2017, claims activity experienced a commendable 23.1% growth during the year. Over 403,552 claims were approved, with 50,757 beneficiaries accessing JADEP benefits at over 260 participating providers islandwide. The actual results indicated that the number of claimants rose by 13.3% over that of the previous year and the total expenditure under the JADEP Programme increased to $167.36M.

Expansion of Same Day Service

Our customers are at the centre of our operations, which is why we implemented the initiative that led to the expansion of the Same Day Service to seven Drug Serv locations across the island. This facilitated greater convenience and improved access for beneficiaries, improving the level of quality health care received. The year ended with 14 locations providing Same Day Service which enables the customers to obtain beneficiary cards within 15 minutes. There were 54,282 cards generated through this service, representing 75 percent of total cards produced. This resulted in an increase in volume of

customer service interactions during the year with 19,436 calls handled, along with 67,966 visitors served.

Our Provider Network

Our card programmes would not be possible without the support of pharmacy providers. Expansion of the NHF’s participating provider network continued during the year with the addition of 30 new pharmacies. However, 19 pharmacies including 10 JADEP providers were terminated due to the closure of their operations. The year ended with a network of 463 NHF Card providers and 256 JADEP providers island-wide providing prescription services to beneficiaries, of which 87% are private sector pharmacies. An extensive network of providers offers the beneficiaries increased access and multiple options for filling prescriptions.

Same Day Card Service locations:

1. NHF Head Office

2. Union Square Help Desk

3. KPH Drug Serv

4. Princess Margaret Drug Serv

5. Greater Portmore Drug Serv

6. May Pen Help Desk

7. MRH Help Desk

8. Percy Junior Drug Serv

9. Santa Cruz Drug Serv

10. Black River Drug Serv

11. Savanna-la-mar Drug Serv

12. SABH Help Desk

13. Port Maria Drug Serv

14. CRH Help Desk

1

1

11

7

3

11

37

33

21

1

52

15 73

3

29

1

36

127 74

1249

7524

1212

18

17

2

14

25

5810HANOVER

ST. JAMESTRELAWNY ST. ANN ST. MARY

PORTLAND

ST. THOMASKINGSTON &ST. ANDREW

ST. CATHERINE

CLARENDON

MANCHESTERST. ELIZABETH

WESTMORELAND

Providers by Parish

NHF Card Poviders

Diagnostic Providers

JADEP Card Providers

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Review of NHF Grants & Projects

The National Health Fund (NHF) remains committed to the continued development of the Health Sector. During the year, $1.79 B was approved for 44 Institutional Benefits projects. $907 M was approved for 37 new projects, while additional funding of $882.74M was approved for 7 existing projects.

Project Approval by Grantee

The Ministry of Health (MOH) and its affiliated institutions with 36 projects approved valued at $1.70 B, commanding the largest share of the budget for 2017-2018 financial year. Twelve projects were approved for the MOH valuing $1.0 B, eight for South East Region Health Authority (SERHA) valuing $241 M, three for Southern Regional Health Authority (SRHA) valuing $125 M, ten for the North East Region Health Authority (NERHA) valuing $116 M, two for the Western Regional Health Authority (WRHA) valuing $71 M and one under NHF for $140 M.

Non-Government Organizations (NGO) combined with Other Government Agencies (OGA) not in the health sector had eight projects approved valuing $90 M.

Project Approval by Type

The category “Other” which includes miscellaneous projects, received a total of $836 M for four projects and represents the largest share of the funding approved. The Infrastructure Category which takes in new construction and renovation projects, received $526 M for 21 projects. Medical & Non-Medical Equipment Category received $285 M for seven projects, Health Promotion and Protection received $28 M for three projects while Training received $39 M for four projects, Transportation received $21 M for two projects and Research received $54 M for three projects.

Projects Managed by the NHFThe NHF implemented and managed infrastructure projects valued at approximately $2.5 B island-wide, including completing projects approved for the MOH and RHAs in the previous year.

$230 M

$125 M

$71.0M

$116M

$241 M$1.0 B

13%

7%

4%

7%

13%

56%

Ministry of Health

South East Regional Authority

North East Regional AuthorityNon-Government Organisations & Other Gov. Agencies

Western Regional Authority

Southern Regional Health Authority

Medical and Non-Medical Equipment

Training

Research

Infrastructure Transportation

Equipment & Other

Health Promtion & Protection

Approval by Grantee

Approval by Type

47%

29%

16%

3%

2%

2%1%

$28 M$21 M

$54 M

$285M

$39 m\M

$526 M $836 M

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National Cancer Centres

A major focus during the year was to complete and handover two National Cancer Treatment Centres to the MOH/ RHA. The Centre at Cornwall Regional Hospital was officially opened on Friday, November 24, 2017 and treatment of patients has been ongoing since.

All infrastructure work on The Centre at St. Joseph’s Hospital was completed and all major equipment has been installed and commissioned. An overseas clinical team commenced training of staff from KPH who will man the centre.

Arrangements were made for the transfer of management of facilities to the MOH and SERHA. Total value of this project was J$1.8 B.

Implementation of Capital Projects for MOH & RHAs

Given the level of efficiency of the NHF, the MOH requested in June, 2017 that the agency implement 19 projects for MOH and RHAs which were threatened with delays. These projects had received approval for funding valued at $540 M from the

NHF. At the end of March, 2018, 12 projects were completed. The remaining seven are scheduled to be completed in the 2018/2019 financial year.

Renovation of 19 NHF Pharmacies

During the fiscal year approximately $88 M was disbursed to renovate 19 pharmacies island-wide. Among those with major renovations were:

• St. Ann’s Bay Regional Hospital Pharmacy renovation - $2.6 M;• Glen Vincent Pharmacy with the construction of a waiting area -$3.6 M• Spanish Town Hospital Pharmacy - $19 M• Commencement of new pharmacy at the Linstead Hospital - $31 M

Facelift for 10 Health Centres

The NHF partnered with communities, RHAs and MOH as part of its social and corporate responsibility, to provide facelifts for 10 Health Centres at a cost of $25 M.

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Renovations Before & After

Community Workday Projects

The Kitson Town Health Centre before renovation Kitson Town Health Centre After

Annotto Bay Nurses Quarters before renovation Annotto Bay Nurses Quarters After

Mt. Pleasant, Portland Community work day Craig Head, Manchester Community work day

17

Photo Captions

1. The Official Opening of the National Cancer Treatment Centre at Cornwall Regional Hospital

2. The Official Opening of the Greater Portmore Drug Serv Pharmacy.

3. The Hand-Over of Ambulances to the new Emergency Medical Services Site at the Waterford Fire Station in St. Catherine

4. The Hand-Over of two Toyota Hiace buses for the Community Mental Services of the North East Regional Health Authority and the Western Regional Health Authority.

5. Ground Breaking Ceremony for the expansion of the Kitson Town Health Centre in St. Catherine

6. Ground Breaking Ceremony for renovation at the Spanish Town Infirmary Chapel in St. Catherine

7. The Official Opening of Linstead Hospital’s A&E Department

8. The Official Wheelchair Lift Commissioning at the Jamaica Association of Intellectual Disabilities’ School of Special Education and the Randolph Lopez School of Hope

1

2

3

65

2

3 4

7 8

During the year a Drug Serv Oversight Committee was established to support the Drug Serv Division in transforming the services for public patients. Top of the list of achievements was the successful transfer of the entire public sector pharmacy services to the NHF. With the transfer of service, the NHF now operates pharmacy service in a total of 105 locations consisting of hospitals, full week and scheduled health centre services.

Other notable achievements in the wider service delivery were the implementation of the Quick Prescript application, introduction of Mobile Dispensing Units for bedside care in hospitals, the expansion of the Public Sector Pharmacy Partner Programme (PPP) and retrofitting and branding of a coaster bus for dispensing medication to distant underserved communities.

The year marked another milestone in the life of the NHF with the full transfer of all public sector pharmacies to the agency. Approximately 2.2 million prescriptions are generated in the public health system annually and our mandate is to improve pharmacy services offered to public patients. NHF aims to provide the highest quality service with emphasis on improving access to quality pharmaceuticals as well as improved organizational efficiency and enhanced customer satisfaction.

Transforming Pharmacy Services

Drug Serv Mobile Pharmacy

Drug Serv Pharmacy Services

20

Number of Prescriptions Filled

A total 1,507,766 prescriptions were processed by 32 Drug Serv pharmacies where the Pharmacy Information Management System (PIMS) was in operation. This represented an increase of 21 percent when compared to the last financial year. Of this number, 255,735 (17%) was in-patient treatment, while 1,252,032 (83%) was out-patient treatment. The out-patient figure was achieved, in part, by the 193,877 prescriptions processed using the Drop off/Pick up Service (DOPUS) that is offered at all locations. This represents 15.5 percent of total out patients’ prescriptions filled.

Public Sector Pharmacy Partner Programme (PPP)

The PPP was active throughout the year, with 17 pilot pharmacies processing a total of 65,613 prescriptions. Plans to expand the partnership with private pharmacy to deliver services to public patients were well advanced at the end of the financial year and contracts were close to being signed with another 35 pharmacies to bring the number of PPP providers to 52.

Quick Prescript Application

During the year, the NHF introduced the Quick Prescript App, an innovative prescription submission mobile application. The NHF Quick Prescript App, which will be available to users via Google Play Store and the App Store, is downloadable on mobile devices (smart phones and tablets). Once downloaded, Quick Prescript allows patients to submit their public prescriptions to Drug Serv pharmacies by taking a photograph of the prescription and uploading it to the Quick Prescript App. Patients are then contacted through Live Chat when the medication is ready for pick up at their selected Drug Serv pharmacy.

Those without a smart phone or mobile data will be able to take advantage of the innovative service via the Quick Prescript kiosks, which are to be placed at selected Drug Serv Pharmacies and public health clinics across the island.

67.5%

15.5%17%

In-patient Treament

DOPUS Out-paitent Treatment

Outpaitient Treament

Drop off/Pick upService (DOPUS)

PRESCRIPTIONS FILLED @ DRUG SERV PHARMACIES WITH PIMS APRIL 2017-MARCH 2018

MandevilleMay PenBlack River HospitalPrincess MargaretUnion SquareDiabetes CentreSavanna-la-MarGlen VincentGreater PortmoreSanta CruzBustamantePort MariaPercy JunorVictoria Jubilee HospKingston Public HospCornwall Regional HospKitson Town H/CCatherine Hall H/CSt. James Type 5 H/CSt. Ann's Bay HospitalAdelphi/Maroon/GranvilleMandeville CompSpanish Town Hospital

TOTAL

120,063101,79763,40746,619

147,32874,49153,99769,38990,25241,61891,46242,75161,31466,984

169,09280,4329,977

16,00837,94937,6974,692

18,79638,711

1,507,766

21

The NHF team was supported in the development of the App by an external applications developer. The application was piloted in March, 2018 with patients owning Android smart phones, who used the Drug Serv What’s App service which would be replaced with the Quick Prescript App.

Quick Prescript is expected to be a key driver in providing better quality service to public patients and increasing the productivity of Jamaicans through reduced waiting time, improved access and improved medication compliance.

Mobile Dispensing Unit

Another innovation during the year was the development of a Mobile Dispensing Unit facility to provide ‘bed side’ medication distribution service to patients on the wards of public hospitals island wide. The Mobile Dispensing Unit is a secure trolley equipped with a computer, pharmacy software, label and receipt printer. The Unit will be piloted in certain hospital wards which were selected in collaboration with hospital Chief Executive Officers, Senior Medical Officers and Directors of Nursing Services.

Mobile Dispensing Units will allow clinical pharmacists to participate in the ward rounds by providing information on the medication prescribed; reduce waiting time as medication will be dispensed at the patient’s bedside; reduce pharmaceutical waste and provide bedside counselling for patients before they leave for home.

88%achieved for

VEN items

The Division achieved average service level for Vital Essential and Necessary (VEN) items of 88%, exceeding the target of 75%.

Freq

uen

cy o

f Pr

ob

elm

Iden

tifi

ed

3500

3000

2500

2000

1500

1000

500

0

3390 3375

1917

29

991

Service Level

Clinical Interventions

Clinical interventions continued with a total of 9,702 drug related problems being documented during the year, related to effectiveness of drug therapy; Drug Selection; Dosage form selection and Drug toxicity. The interventions made by pharmacists resulted in medication safety, changes in therapy and better patient’s outcome.

Spoilage

Spoilage for the reporting period amounted to $7.43M which was 0.15 percent of inventory.

As we seek to improve the management of waste and safe disposal of pharmaceutical items, the process for the collection of expired pharmaceuticals was revised during the year. Pharmacy managers are required to document the expired items for collection and submit this to the Warehouse Manager, following which the Warehouse team organises pickup. The items were then quarantined at the Warehouse, awaiting GOJ Board of Survey processing.

Infirmary Visits Report

As we strengthen our efforts to deliver quality health care to more Jamaicans each year, we have instituted a pharmacy services delivery programme which supports patients and residents in State care and nursing homes.

This financial year, we visited a total of 24 facilities across nine parishes. This included six Infirmaries in the parishes of Clarendon, St. Elizabeth, St. Mary, Manchester, St. Thomas and Westmoreland. Other facilities visited include children’s homes, golden age homes and the Mustard Seed Communities. We found that most institutions required a separate medication refrigerator and thermometers to monitor temperatures so that medications can be stored under the specified conditions. Generally expired items are disposed of by the nearby health centre for the infirmaries.

Among the recommendations coming out of these visits were the need for additional staff and training in dealing with, and administering, medication. Specifically, timely pick-up of medication, separate medication refrigerator, better organization of medication cupboards and the provision for clothing, toiletries and household items. The NHF will continue to work with these institutions to improve pharmacy services.

24

86%

The Pharmaceutical Supply Chain

In playing their part in breaking down the barriers to quality health care for more Jamaicans, the Pharmaceutical Warehouse and Procurement and Import teams worked assiduously to maintain adequate stocks of VEN list items according to budgetary allocation.

Improving Availability of Pharmaceuticals

This year, marked progress was made in increasing the medical supplies available to Jamaicans. A minimum stock level of 85 percent of VEN list items was defined by the NHF and an annual average stock level of 86 percent was achieved. This was done by the timely payment of supplier’s invoices which ensured there were no stock outs resulting from supplier’s hold due to non-payment of invoices, and despite many challenges in procuring supplies.

Among the challenges faced were global shortages; suppliers non-adherence to contracted lead times, discontinuation of products by manufacturers and increases in demand. New strategies are to be implemented to mitigate these challenges, as we aim for consistency of supplies, increase our supplier base and reducing prices in the Pharmaceutical Tender Cycle in the new financial year.

A total of 107 contracts to procure 1,089 pharmaceuticals and medical supplies were managed during the period. An estimated $4.75B was spent to procure pharmaceuticals and medical supplies, an increase of 3.3 percent when compared

to the previous financial year.

The Imports Department demonstrated improvements each quarter in the clearance of shipments, closing out with a 97 percent clearance of shipment of both perishable and non-perishable items in less than the timelines required from the date of arrival.

In an effort to maintain continued improvements, efficiency and effectiveness of the Imports Department, the NHF has completed and submitted the Authorized Economic Operator (AEO) application to Jamaica Customs Agency for review. We now await the validation and audit process, which is the next step in attaining this status. The AEO system is designed to reward compliant importers, allowing them to have cargo arrive and delivered on the same day, resulting in expedited clearances.

Service Level for VEN List Items

The annual average service level for VEN List items was 87 percent which represents a seven percent increase over the 2016-2017 financial year, while the service level for drugs used in the treatment of chronic illnesses was 82 percent the same as the preceding year. Likewise, we were able to achieve an 86 percent, adherence to delivery schedule for orders that were submitted on time.

Improving Warehouse Efficiency

The NHF continued its move towards a modern and efficient warehouse with the full implementation of a new Warehouse Management System (WMS). Since its implementation, there have been significant improvements in warehouse operations such as inventory receival, picking and packing, inventory management and auditing. This has in turn resulted in improved order fulfilment and delivery rates.

In Stock Medical Supplies for 2017-2018

Inventory Spoilage Rate

Inventory spoilage measures the annual value of damaged and expired items as a percentage of annual inventory value. For the 2017-2018 financial year the target was to maintain the inventory spoilage rate at ≤ 0.5 percent of annual inventory value. This target was achieved with the inventory spoilage rate being 0.07 percent of annual inventory value.

Inventory Variance

Inventory variance measures the value of inventory variance as a percentage of inventory value. For the 2017-2018 financial year the target was to maintain the inventory variance rate at ≤ 0.3 percent of inventory value. This target was achieved with the annual inventory variance rate being 0.0152 percent of annual inventory value. This is a significant improvement over the previous year, which had an inventory variance rate of 1.77 percent of inventory value.

Inventory Turnover

The inventory turnover rate was 4.34 times per year, at an average of 84 days compared to 3.82 times per year for the previous year.

Utilization

The total cost of pharmaceuticals, medical sundries, sutures and x-ray material issued to public sector pharmacies was $5.0B.

PUBLIC HEALTH FACILITIES UTILIZATION BY DRUG & NON DRUG CATEGORY

Cardiovascular SystemCentral Nervous SystemEndocrine SystemNutritional ProductsDrugs Used For InfectionDrug For Malignant DiseasesMiscelleanous PreparationsRespiratory SystemDrug Used In AnaesthesiaDermatological PreparationAlimentary SystemEye & Ear PreparationsMedical SundriesSuturesX-ray SuppliesRaw Materials

12.8 %12.2 %11.3 %11.1 %9.1 %8.4 %3.5%

2.9 %2.4 %1.7 %1.4 %0.6 %

17.9 %2.8 %1.7 %0.2 %

100 %

Hannover

Portland

Trelawny

St. Mary

St. Thomas

St. Elizabeth

Westmoreland

St. Ann

Clarendon

St. Catherine

Manchester

St. James

Kingston & St. Andrew

$0

Utilization by Parish - 2017-2018 Financial Year

Bs

$0.3 $0.6 $0.9 $1.2 $1.5 $1.8 $2.1

26

Encouraging Jamaican residents to take greater control of and improve their health is an important NHF mandate. During the year opportunities and interventions were created to reach our target population while the Agency established and strengthened partnerships across sectors to promote healthy living. A variety of technologies were employed to expand participation and share information on health as well as the services and achievements of the NHF. Alignment and collaboration with the Ministry of Health in the delivery of health promotion programmes was also a major focus.

Community Outreach & Screening Programme

NHF increased its participation in community outreach events resulting in 619 events comprising of Community Health Days, Health Fairs, School Wellness, Conferences and official launch ceremonies during the year.

The vast benefits to be gained from persons engaging in healthy living, lessens the strain on the nation’s health resources and reduces the negative impact of chronic non-communicable diseases on the economy. Regular screening tests in keeping with age, gender, family history and health risks, is a foundation for practising a healthy lifestyle.

A total of 111,820 screening tests, an increase of more than 11,000, were done island-wide at 398 events. Of this total, 70 Community Health Days, 16 school wellness events and 160 health fairs benefited from the provision of screening tests. Community Health Days accounted for 46,314, which is approximately 41 percent. Health fairs were responsible for 46,453, which is 42 percent and screening in schools 3,742, which is 17 percent. The Mobile Screening Unit was utilized at 34 events during the year.

Influencing Health Behaviour

Health Screening increased during the year by 11%.

Persons with abnormal results were referred to their private practitioners or health centres for management.

Additionally 1,380 SMS messages were sent to persons who attended NHF Community Health Days with abnormal screening results, encouraging them to seek medical care at their doctor or nearest health centre.

Exit Surveys conducted during the year at Community Health days revealed that while there was overall satisfaction with the service among clients attending these events, suggestions for improvements included the presence of a medical doctor, provision of pap smears and HIV testing. These additional services were implemented based on availability, with the support of the Parish Health Departments in the Regional Health Authorities and, in some cases, the National Family Planning Board. In the upcoming financial year the partnership for the provision of additional services at Community Health Days will be strengthened with the introduction of pharmacy services using a mobile pharmacy.

School Wellness

During the year, NHF partnered with Health Education Officers in the St. Catherine and Kingston & St. Andrew

Health Services to strengthen health promotion in three selected schools. The schools were Holy Rosary Primary, Dinthill Technical High and Greater Portmore High. Among the activities carried out during the year were the launch of the Healthy Youth Positive Energy (HYPE) Clubs at the three schools; sensitization sessions for parents and a Heart Month event at Greater Portmore High. In keeping with the Health Promoting School Protocol, baseline surveys were conducted in the three schools and the results will be used to further develop health promotion programmes, in collaboration with the Parish Health Departments.

In addition to screening in 16 schools during the year, small grants of $25,000 were approved for eight schools to support activities for their HYPE Clubs.

Workplace Wellness

The lives of hundreds of persons in the workplace were impacted through presentations, screening and participation in health fairs at numerous work places, but especially through the NHF Work-It-Out Challenge Competition and the Memoranda of Understanding with the Jamaica Constabulary Force (JCF) and The Jamaica Fire Brigade (JFB).

BMI(Mainly Overweight & Obese)

Haemoglobin

High Risk & Boderline (Cholesterol)

High Cholesterol

Pre-diabetic/Diabetic

HbA1C

Blood Sugar

ECG

10%0%

Table Results Showing Persons Screened With Abnormal Results:

30%20% 40% 50% 60% 70% 80%

Acting Vice President of Drug Services, Mrs. Katherine Dawson Shaw (3rd left) presents the team from the National Intelligence Bureau (NIB) with their prizes during the award ceremony held on February 23, 2018 at the Jamaica Police Academy, Twickenham Park, St. Catherine for the JCF/ NHF Force-It-Out Weight Loss Challenge. Under a MOU with the JCF, NHF provided sponsorship for several initiatives to promote health in the JCF

Health Promotion ProgrammesWork-it-Out Challenge

As we aim to increase health promotion and beat non-communicable diseases, the NHF Work–it-Out Challenge competition was expanded significantly from just teams from work places, to teams from all organizations, or any team of five individuals with BMI of 28 or more. Also in keeping with the Jamaica Moves thrust a fitness component was added to the competition.

At the deadline for entry on September 1, 2017, 220 teams had entered and 191 teams showed up for the weigh-ins for the start of the competition. Over the 24 weeks of the competition, participants were provided with nutrition counselling, exercise sessions and regular tips on healthy lifestyles.

Men’s Health Programme

We continued our focus on the 5 Star Health for Men programme with the launch of the new initiative Trades Man Check Up. Two interventions were conducted at Phil’s Hardware where screening tests were provided to male customers and staff. Similar checks were also offered during football matches to the players, managers and coaches attached to the Master’s League Football Competition from August to November, 2017 and to select teams attached to the Player’s Association (RSPL).

Registration of men under the programme continued and at March 31, 2018, 6,305 were enrolled and sent regular emails and SMS texts with health tips throughout the year.

Observing the Health Calendar

In keeping with the health calendar, NHF observed seven internationally health focused days in partnership with several stakeholders. The activities carried out were health screening, the promotion of physical activity and healthy eating, social media engagements, traditional media awareness through

the hosting of outside broadcasts and educational sessions promoting our services. The health days observed were Move for Health Day, World Blood Donor Day, World Blood Donor Day, World Sickle Cell Awareness Day, Caribbean Wellness Day, Cancer Awareness Month, World Diabetes Day and World Heart Month. Major partners were the Ministry of Health, National Blood Transfusion Services, Business Corporation of Jamaica, The University of the West Indies Sickle Cell Unit and the Heart Foundation of Jamaica (HFJ).

NHF Card and JADEP Card updates were placed in the print media throughout the year. In November 2017, the New NHF Corporate Advertisements with the slogan “Your Partner for Healthy Living” was launched on radio, television and print media. Additionally, the new diabetes advertisement was carried in the print media and on radio.

Face-to-Face presentations are the most effective in communicating information and a total of 32 were done Island-wide at work places, conferences and seminars on the benefits provided by NHF and new initiatives for customers.

Digital Media

A consultant was hired to manage NHF Social Media pages. Subsequently, at March 31, 2018, we had accumulated 8,800 Facebook fans, up from 3,000 at March 31, 2017. Visits to NHF website increased from 59,000 the previous financial year to 67,905 driven by the social media strategy. The NHF digital signage system was expanded to six new locations. Each month a new loop of videos and tips on NHF’s services and activities as well as health related information were shared on the system.

Sponsorships

During the 2017-2018 financial year, 274 requests tabled at the Sponsorship Evaluation Committee, 181 of which received sponsorship. The NHF continues to sponsor medical conferences hosted by UDOP, MAJ, PSJ, St. Ann’s Bay Regional Hospital, UTECH, UWI, KPH, Lupus Foundation, JTA, UHWI, Renal Foundation and JMDA.

Publicity & AdvertisingThe table below highlights the publicity and advertising activities undertaken during the 2017-2018 Financial Year.

Print AdvertisementsOther PublicationsEditorialsRadio InterviewsTelevision InterviewsWebsiteSMS Messages Sent

2105

82225

67,905233,275

Mr. Gregory Mair (right) Chairman, presents a prize to Veronique Pitter, team captain of Chancellor Insurance Agency, winners of the NHF Work-It-Out Challenge 2017-2018.

29

100.50%

100.00%

99.50%

99.00%

Apr May Jun Jul Aug Sep Oct Nov Dec | Jan Feb Mar

System Availability

2017 2018

Series1 Series2 Series3 Linear (Series2) Linear (Series3)

Management of Strategic Resources

Consistent Updates

The ICT Division continued to work through the ICT strategic plan with the focus on improved Governance, Collaboration and Knowledge Management, Business Systems, Technology and overall Service Delivery.

With disaster recovery being of critical importance to business continuity, there was a critical review and update of our Backup and Recovery Plan, to ensure all relevant business systems were taken into account, especially those that would have been introduced during the year.

Supporting Business Expansion

With the organization investing in the improvements in service delivery to our stakeholders, Pharmacy Services has benefited significantly through the introduction of systems and technology to enhance these areas. Management of the supply chain has been improved through the implementation of the Warehouse Management System. The system streamlines the logistics processes of the warehouse to increase inventory accuracy through the use of bar coding technology and computerized inventory management. With

the WMS the organization is better able to control and administer warehouse operations, from the time goods enter the warehouse until they move out.

On the dispensing end, NHF Quick Prescript was developed during the year. This is a paradigm shift in how we deliver service to persons presenting public prescriptions. Through the mobile application and kiosks located at selected facilities persons can now submit their prescriptions and eliminate the wait in the pharmacies.

Facilitating Knowledge Management

Knowledge Management is at the heart of our organization and this includes how we capture and store the relevant information, but also how we make available to all stakeholders the types of analyses and reporting required. The data capture capabilities were improved, with an expansion of the use of our Document Management System to incorporate the requisition and purchase processes. Additionally, we expanded our Business Intelligence system to extend the reporting and analysis capabilities to a wider audience. The coming year will see further expansion of these solutions to

Information Communication Technology The goal of the Information Communication Technology Division remains a commitment to lead the organization on the technological front by ensuring that all of our stakeholders are satisfied with the level of service being provided to them. This was achieved by guaranteeing that we have the least possible downtime during operation hours. To this end, system uptime during the year dipped to 99.75 percent across all systems. This means that for each day of operation (8 hours) we had less than 62 seconds of downtime across all systems.

31

enhance this area.

Constant Focus on Our Core Technologies

The core infrastructure technologies employed are constantly reviewed to ensure they adequately meet the expanding needs of the organization. We upgraded the network infrastructure to include new firewalls and routers, all managed and monitored from a single platform, which allows for the standardizing of configurations across the network and reviewing of critical issues identified on the systems. Additionally, new servers implemented over the period facilitated improvements in its virtual infrastructure and enhanced its disaster recovery solution.

ICT Help Desk

With greater adoption and use of the ICT help desk, the total number of requests stood at over 1,350 with all being closed in the agreed timelines.

Requests Closed Before Agreed Timeline

140

120

100

80

60

40

20

0

Apr MarMay Jun Jul2017Aug Sep Oct Nov Dec Jan Feb

Tick

ets

Rai

sed

2018

32

Overview

Our human resource is at the heart of our work. We remain committed to the personal and professional development of all staff members, as we believe that a satisfied staff will deliver satisfactory service to all Jamaicans. As such, it was critical we had the necessary framework in place for capacity building and development. During the 2017-2018 financial year, the Human Resource and Administration Division saw growth in staff complement which moved from 416 to 526. This growth resulted mainly from the transfer of public sector pharmacy staff from hospitals and health centres to the NHF. This process which started on the October 1, 2017 ended on the January 31, 2018. Several orientation sessions were held for the new staff during the period.

Communication

It is essential that communication lines are open for all staff members. This has been achieved through the distribution of “NHF Buzz”, a quarterly staff newsletter, updates on the Intranet, multiple divisional meetings during the months of August and September, 2017, with a general staff meeting held in February, 2018 where 287 members were in attendance.

This was further reinforced by a Human Resource Site Visit Schedule to all our locations at least twice per year. This was established with a view to having the staff interact with the HR personnel in face to face settings, where their queries and

Human Resources

Mr. Everton Anderson, CEO welcomed new pharmacy staff transferred from the Regional Health Authorities to NHF.

Staff members participating in Praise and Worship prior to start of the meeting

Members of NHF staff from across the island gathered for theGeneral Staff Meeting at The Jamaica Conference Centre.

Miss Carol Madden, HR Manager speaking with Miss Cecile Clarke, Pharmacy Services Co-ordinator during a HR pharmacy visit.

33

concerns could be addressed and where they could be updated on various HR activities.

NHF Structure

In 2017, the NHF set out to have its structure re-organized. This process continues and in January, 2018, approval was given for the Senior Management and Pharmacy structure by the Ministry of Finance and Planning. A succession plan has been crafted for the Fund across all departments to ensure optimal performance as staff members develop with the organization.

Training and Staff Development NHF continues to focus on continuously developing high-performing staff to achieve greater outcomes. As such, staff received on average 14.2 hours of training exceeding the target of 8 hours of training per annum. Training and development activities were focused on building technical capacity, leadership, administration, service excellence, quality management, safety and personal development. Specific training programmes included Occupational Health and Safety, Customer Service, Health Management, Information Technology, Risk Management and Procurement.

The Jamaica Foundation for Lifelong Learning (JFLL) Workplace Literacy Programme officially ended on April 30, 2017. During the two-year programme, which started in May 2016, there was a mixture of regularly scheduled classes, as well as internal and external assessments. A total of 19 learners participated in the programme.

Pharmacy Internship and Summer Programme

The Fund’s Pharmacist Internship and Summer Programme continue to be a success. The aim is to expose students to various areas in the health sector and to enhance their educational experience through practical assignments. For the period September 1, 2017, to February 28, 2018, a total of 21 pharmacy students were placed at seven Drug Serv Pharmacies. Additionally, two pharmacy technician students were accommodated for the internship of 520 hours each.

The Summer Employment Programme successfully placed approximately 226 students to provide work experience. The students were placed at the NHF Departments and Drug Serv Pharmacies, Regional Health Authorities (10), Princess Margaret Hospital, St. Joseph’s Hospital, Bustamante Hosp. for Children, University Hospital of the West Indies, Cornwall Regional Hospital, Kingston Public Hospital, Pharmacy Council of Jamaica, Ministry of Health, Diabetes Association of Jamaica, Heart Foundation of Jamaica, UWI (TRMI), and St. Catherine Health Department.

Staff Recognition

Fifty-two employees were recognized for outstanding Customer Service delivery as part of our quarterly Staff Recognition programme. The persons recognized included

individuals from each Pharmacy location, as well as Head Office and the Pharmaceutical Division.

Wow Recognition was also given to six members of staff who through their excellent performance in executing a project promoted the image and reputation of the NHF.

Four employees received the CEO’s Award for their outstanding contribution, during the NHF Open Day held in July 2018. They were:

Mrs. Hillary Hutchinson (Corporate Planner), Duanne Johnson (System Application Manager-ICT), Cecile Clarke (Pharmacy Services Coordinator), Christine Hodges (Pharmacy Manager)

A luncheon was hosted for all the administrative staff at the Pollyanna Restaurant on Administrative Professionals Day and staff members were presented with certificates recognizing their commitment and dedication to outstanding service.

CEO Awards

Mrs. Hillary Hutchinson (centre), Corporate Planner receiving the CEO’s Award from Mr. Gregory Mair, Chairman while Mr. Anderson CEO applauds

Mr Duanne Johnson (centre), Applications Support Manager receives the CEO Award from Hon. Christopher Tufton, Minister of Health. Mr. Anderson Looks on.

34

A GSAT Awards Ceremony was held at the Courtleigh Hotel on August 4, 2017 to recognize the success of the children of nine staff members.

Staff Volunteerism

The Human Resource & Administration Division collection drive to assist in restoring the Walkers’ Place of Safety, which was destroyed by fire on January 16, 2018, an effort aimed at restoring the home and the services it offered.

Disaster Planning

The Disaster Planning Committee has received best practices from the Meteorological Office of Jamaica (MET Office) and the Office of Disaster Preparedness (ODPEM) on Earthquake Safety and Hurricane Preparedness. This resulted in the development of brochures on how we can improve our level of preparedness in the case of an earthquake or hurricane, as well as the creation of Emergency Evacuation Videos to assist our clients in identifying what to do and where to assemble in the event of an emergency arising whilst they are visiting any of our locations. These will be placed on our digital signage system which is located in the patient waiting area of our pharmacies.

Children of NHF staff members were recognised at the GSAT Award Ceremony.

Mr. Horaine Franklyn, President of the NHF’s Staff Welfare and Charity Committee presents packages to Audrey Budhi, Director of Children and Family Programmes at the Child Development Agency, while members of NHF staff (L– R) Mrs. O’Shea Scott, Miss Carol Madden, Mrs. Hillary Hutchinson and Miss Stacey-Ann Taylor look on.

35

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0 0 0

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$2,1

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90.5

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47.7

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56.5

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68.6

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$896

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$953

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$3,2

78.4

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61.6

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,445

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50.7

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,223

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$940

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$2,6

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,198

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$2,9

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,947

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0$7

,327

.30

PART

ICU

LARS

2008

- 09

2009

- 10

2010

- 11

2011

- 12

2012

- 13

2013

- 14

2014

- 15

2015

- 16

2016

- 17

70 443 16

111,

820

$166

.1744

$1,7

89.0

6

29,6

07

471,

722

$4,4

25.0

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11,8

70

301,

899

$167

.36

$1,9

97.9

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$3,1

92.9

9

$5,1

90.9

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$1,

021.

55

$4,

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12

$2,

954.

19

$7,

997.

86

2017

- 18

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ACCOUNTABILITY

37

BOARD OF MANAGEMENT GREGORY MAIR is the Chairman of the NHF Board of Management and began his tenure in 2017. He has the responsibility of overseeing the statutory body charged with reducing the island's disease burden through greater access to health care, health promotion, and the provision of support to health services,.

Mr. Mair was born in Kingston, Jamaica, but spent his formative years in Venezuela. He holds a Bachelor of Science degree in Civil Engineering from the Universidad Catolica Andres Bello in Caracas, Venezuela, and a Master’s degree in Business Administration from the Universidad Adolfo Ibanez in Santiago, Chile. He has since served both the public and private sectors in numerous capacities throughout his 29-year local career, spanning the fields of engineering, insurance brokerage, real estate and, most notably, politics.

DR. DANA MORRIS DIXON is the Deputy Chair of the NHF Board of Management. She was appointed in 2017 and, alongside Chairman Desmond Gregory Mair, shares the responsibility of overseeing the policies and general administration of the affairs of the Fund.

Dr. Morris Dixon is a Fulbright Scholar who holds a Ph.D. in International Studies at the University of Denver, Graduate School of International Studies. Currently, she is the Chief Marketing and Business Development Officer of The Jamaica National Group Limited, where she is responsible for developing and guiding the overall marketing and advertising strategy of the Group, as well as its individual subsidiaries.

Additionally, Dr. Morris Dixon is the current Chairperson for the National Family Planning Board and serves as a board member on the International Women’s Forum.

EVERTON ANDERSON has been the Chief Executive Officer of the NHF and an Ex-Officio member of the NHF Board of Management since January 2013. He has held various positions as a health administrator including Regional Director of the Western Regional Health Authority, Chief Executive Officer of the Cornwall Regional Hospital and Parish Manager in St. James, Westmoreland and Hanover Health Services.

Mr. Anderson obtained his Bachelor of Science degree in Management Studies and his Master of Business Administration in Public Sector Management from the University of the West Indies, Mona. His wealth of health industry experience has guided the NHF to notable accomplishments, including receiving the Public Sector Corporate Governance Award for the 2016-2017 Financial Year and the top Customer Service Agency Award in 2015. He serves as the Co-Chair of the LINAC Steering Committee which is responsible for the establishment of the two new National Cancer Treatment Centres, among the largest investments in health care in Jamaica. He currently serves on the Board of Cornwall College and is a former Director for Maldon High, Herbert Morrison Technical High School and the Montego Bay Chamber of Commerce. Mr. Anderson is a Member of the American College of Health Care Executives.

CHAIRMAN

DEPUTY CHAIRMAN

CHIEF EXECUTIVE OFFICER

38

A. CECILE WATSON was appointed to the NHF Board of Management in 2016. She chairs three board committees, Audit & Risk, Corporate Governance and Human Resource.

Mrs. Watson is an entrepreneur and former banker with over 30 years’ experience in the banking and finance sectors. She has extensive experience as a manager in the private and public sectors and also serves on the board of the Development Bank of Jamaica, where she sits on three board committees.

Mrs. Watson is currently the business owner for ShredWiz, a document destruction and information security company.

PAUL HANWORTH was appointed a member of the NHF Board of Management in 2016 and chairs the Finance, Projects and Public Private Sector Pharmacy Programme Committee. He is the Chief Operating Officer of PanJam Investment Limited, a multi-faceted investment holdings company in Kingston, Jamaica.

Mr. Hanworth is both a Certified Public Accountant (USA) and a Chartered Accountant (England & Wales), and holds Master’s degrees in Management from Rensselaer Polytechnic and in Classics from Sidney Sussex College, Cambridge University. In addition to the NHF, he sits on the boards of PanJam Investment Limited, its principal associated company Sagicor Group Jamaica Limited, and a number of PanJam’s other subsidiaries and associated companies. He is a Director of the British Caribbean Insurance Company and of Rainforest Seafoods, and chairs the Listed Companies Committee of the Private Sector Organisation of Jamaica.

DUKE HOLNESS was appointed a member of the NHF Board of Management in 2017 and chairs the Medical Review and Research Committee. He is a senior executive with over 25 years of experience in successfully commercialising a wide range of consumer and pharmaceutical products for leading multi-national organisations.

Mr. Holness has had successful tenures in the pharmaceutical industry with multiple and diverse markets throughout the Caribbean and Latin American region, and in delivering revenues in excess of US$100 million. These include leadership positions such as Regional Managing Director for EXELTIS Pharmaceuticals for Central America and Caribbean; Caribbean General Manager and Regional Vice-President for Central America, Caribbean, Ecuador & Peru for GlaxoSmithkline Pharmaceuticals; and General Manager for Smithkline Beecham, Jamaica & North Caribbean. He holds a Bachelor of Science degree in Management Studies from the University of the West Indies (UWI) and a Master of Business Administration from the Nova Southeastern University in Florida, United States.

CECILE WATSON

PAUL HANWORTH

DUKE HOLNESS

39

STEVEN SYKES was appointed to the NHF Board of Management in 2016. He is the Director of Operations at the Continental Baking Company Limited, where he has responsibility for the production and distribution of all products and maintenance of the company’s facilities.

Mr. Sykes holds an Executive Master’s degree in Business Administration from the University of the West Indies, Mona. He also studied Aeronautical Engineering in Florida, United States, and worked in the airline industry for nine years, including Air Jamaica. Mr. Sykes also serves on the boards of Continental Baking Company Limited, its United Kingdom distribution company NBC Distribution Limited, as well as the board of the Jamaica Manufacturer’s Association. He is a member of the American Society of Baking.

DR. TONOYA TOYLOY was appointed a member of the NHF Board of Management in 2017. She has been part of the pharmaceutical industry in Jamaica for over 14 years, serving in roles specialising in Community, Industrial, and Academic Pharmacy.

Dr. Toyloy is the Managing Director of LiveWell Pharmacy, with operational branches in Portmore Pines, St. Catherine, and Fairview, Montego Bay. She obtained her Doctor of Pharmacy degree, graduating Magna Cum Laude, from the University of Florida in the United States. She also holds a Bachelor of Pharmacy degree from the University of Technology (UTech), Jamaica, where she graduated with First Class Honours.

Dr. DAVID LOWE was appointed to the NHF Board of Management in 2016. Dr. Lowe is the Chief Executive Officer at Caribbean Producers Jamaica Ltd. He originally joined CPJ as the Vice President of Marketing and Retail Sales before being promoted to Chief Revenue Officer.

Previously, Dr. Lowe held distinguished positions in investment banking, management consulting and government. He received his Ph.D. in Corporate Finance from the Manchester Business School, University of Manchester, UK. He also serves as Chairman of the Western Region Health Authority (WRHA) and the National Compliance Regulatory Authority (NCRA).

DR. KAMAL MARS was appointed as a member of the NHF Board of Management in 2017. She is an Urologist and a Level 4 Medical Officer at the Cornwall Regional Hospital in Montego Bay. She also consults privately at the Baywest Wellness Clinic, the Montego Bay Hospital and the Hospiten, Montego Bay.

Dr. Mars graduated from the University of the West Indies (UWI) as a Doctor of Medicine specialising in Urology. In addition to holding Bachelor’s degrees in Medicine and Surgery, having graduated with Honours in Anatomy and in Surgery, she also holds a Bachelor of Science degree in Biochemistry from the UWI.

Dr. Mars previously served as a member of the Jamaica Medical Doctors’ Association and remains active in the medical community as part of the Jamaica Urological Society, the Caribbean Urological Association and the Medical Association of Jamaica.

STEVEN SYKES

DR. TONOYA TOYLOY

Dr. DAVID LOWE

DR. KAMAL MARS

The National Health Fund also copped the trophy for Best Board Composition and Function and was First Runner-Up for both the Risk Management and Internal Controls as well as Corporate Governance Policies, Procedures and Practices awards.

Mr. Everton Anderson, CEO, NHF (right) and Mrs. Cecile Watson, (second right) Board Member, NHF accept the 2017 PSOJ Public Sector Award for Excellence in Corporate Governance from Hon. Fayval William, Minister of State in the Ministry of Finance and the Public Service. The PSOJ awards function was held on December 13, 2017 at the Knutsford Court Hotel in Kingston.

Mr. Anderson and Mrs. Watson from NHF accept the Trophy for Board Composition, Functions and Structure from Mr. Patrick Hylton, President NCB

The National Health Fund (NHF), was declared the overall winner of the 2017

PSOJ Public Sector Award for Excellence in Corporate Governance.

AwardeesPSOJ

Mr. Steven Sykes, NHF Board Member (centre) receives the Award for First Runner-up for Corporate Governance Policies, Procedures and Practices from Gail Moss-Solomon, Senior Legal Counsel, Grace Kennedy Group and Mr. Anderson, NHF CEO shares the happy moment.

Miss Audriana Sinclair, (centre) Quality Assurance Manager, NHF and Mr. Anderson accept the First Runner –up Award for Risk Management and Internal Controls from Mr. Jeffrey Hall, CEO Jamaica Producers.

41

GovernanceA Quick Outline of Corporate Governance at the NHF

The National Health Fund is committed to exercising and maintaining strong corporate governance practices. Good governance strengthens Board and Management accountability and improves our standing as a trusted organization.

NHF'S CORPORATE GOVERNANCE TENETSAs set out in the NHF's Corporate Governance documents

• Effective and functional Board governed by the Board Charter

• Board size and level of diversity in keeping with legislation

• Appropriate sub committees formed to assist the Board in the effective

perfomance of its duties as per the NHF Act

• Members should observe and foster high ethical standards as per Code of Ethics

• Conflicts of Interest must be disclosed and effectively managed as per policy

• Board should ensure a comprehensive risk management system and sound

internal control system as per Board Charter

• Board must be transparent and fair, always operating with integrity governed by its policies

Board and Committee Oversight– Corporate Strategy Formulation

– Policies and Procedures Framework

– Risk Management

– Corporate Social Responsibility activity

– Sustainability of the Fund

– Budget & Expenditure Forecasting

Board Composition– Members of the Board appointed by the Minister

are all non-executive & independent

– Chief Executive Officer (CEO) is a

Ex-officio member

– Board members have diverse skills,

experiences and age ranges

– Board comprise of 40% female members

Board Practices – Annual Board and Committees

performance reviews

– New Board Member orientation/

induction and continuing Board member

education on key topics and issues

– Board Charter

– Code of Ethics for members of the Board

– Stakeholder Engagement

Performance Monitoring– Organization (CEO, Senior Executives and

Staff) incentive program strongly links pay

and performance

– Board reviews the goal-setting

processes so that targets are rigorous, yet

attainable, thereby incentivizing performance

– Board evaluates performance against

programs to align targets and goals with our

overall business strategy and objectives

42

Overview The NHF remains committed to achieving global corporate governance, best practice standards and upholding ethical corporate conduct in executing its mandate. Its culture, policies, structures and programmes, operating through transparent processes, all ensure that the organisation is managed in a manner that meets all the legal and regulatory requirements, as well as stakeholders’ expectations.

The NHF is passionate about being a well-functioning agency that consistently delivers quality services, while prudently handling fiscal resources and maintaining its standing as a trusted public-sector entity.

The Board of Management operates in line with the NHF Act, the Corporate Governance Framework for Public Bodies, the Public Bodies Management and Accountability Act and all applicable laws and regulations. It has responsibility for the policy and administration of the affairs of the Fund.

In pursuit of excellence in governance, the NHF Board continuously reviews our corporate governance policies and procedures in keeping with evolving practices and issues raised by our stakeholders. Below are our strategic planning and corporate governance activities:

• Clearly defining the organisation’s purpose and strategy.• Implementing quality of service measures with key performance indicators.• Optimising organisational efficiencies through organisational structures, roles, responsibilities and established processes.• Enhancing human resource management to include employee engagement strategies that keep the workforce motivated, creative and responsive. • Maintaining governance oversight units through Board committees.• Establishing multiple lines of defence through internal and external audit, risk management, control and compliance, with applicable laws and regulations.

Appointment

GOJ Cabinet

Ministry of HealthPolicy Direction

Board of ManagementOversight and development of policies and strategies

for the Fund

Board Sub-CommitteeMedical Review & Research Committee

Finance, Projects & PPP CommitteeAudit & Risk Committee

Corporate Governance CommitteeHuman Resource Committee

External AuditorsValidation+Compliance

MOH/MOFReview & Oversight ofLegislative Framework

Internal AuditorsValidation+Compliance

Chief Executive OfficerResponsible for the day to day

management of the Fund

Senior ManagmentLeading the implementaion of

operational activities for the Fund

Divisions

Report

Appointment Report

Report

Direction

Appointment Report

Direction &Supervision

Report

Direction &Supervision

Report

Report

DirectionConsultation

Submission

Overview of theCorporate Governance

Structure-NHF

43

Board Composition and the Role of Chairman and Members According to the NHF Act, the Board will have between seven and nine members appointed by the Minister of Health with responsibility for the Fund. The Board meets as often as necessary for the transaction of its business, with at least six meetings being held within each financial year. The Chairman or Deputy Chairman normally presides at meetings. The current Board is comprised of nine members appointed by the Minister and met eleven times during the Financial Year 2017/2018.

The Board has established five committees to govern the operations of the NHF. They are the Finance Projects & PPP Committee; Audit, and Risk Committee; Corporate Governance Committee; Medical Review and Research Committee and the Human Resource Committee.

The Chairman is principally responsible for the effective operation and chairing of the Board and for ensuring that information that it receives is sufficient to make informed judgments. He also provides support to the Chief Executive Officer, particularly in relation to external affairs.

The Corporate Secretary is responsible for ensuring that Board processes and procedures are appropriately followed and support effective decision-making and governance. He/She is appointed, and can only be removed by the Board.

Each Board member is expected to commit sufficient time preparing for and attending meetings of the Board and its Committees. Regular attendance at Board meetings is a prerequisite. In-depth knowledge of the particulars of the NHF's business is vital for each Director in making informed

and objective decisions

Management has responsibility for operational activities and Board members have responsibility for the general oversight of the Fund. The Directors have complete access to the Chief Executive Officer, the Corporate Secretary and the Chief Internal Auditor.

Conflict of Interest

With the objective of increasing efficiency, transparency and accountability, and by virtue of the various laws and government policy, Board members are required to disclose to the Board and to the Minister of Health any conflict of interest or potential conflict of interest which arises.

In this context, conflicts of interest are an important consideration of those who occupy positions of leadership (Board and Management) at the National Health Fund.

Systems have been established whereby when conflicts of interest arise at the Board level they are documented and the Board will take a decision as to how the conflict is to be dealt with and this too is documented. During the year, there was no conflict of interest reported.

Related Party Transactions

To ensure that the NHF’s Financial Statements contain the required disclosures, the NHF has policies and procedures which require that all related party transactions (amounts above $500,000.00 to individuals, entity, or government) and outstanding balances and commitments, with all such parties are identified, monitored and disclosed.

See Notes to the NHF Financial Statements 31 March 2018 page 103.

Name

Mr. Paul Hanworth

Mr. Gregory Mair

Dr. Dana Morris Dixon

Mr. Steven Sykes

Mr. Everton Anderson

Mrs. Cecile Watson

Mr. Duke Holness

Mr. Dameon McNally

Mrs. Cecile Watson

Mr. Duke Holness

Mr. Dameon McNally

Mrs. Camille Facey

Mr. Everton Anderson

Chairman

Member

Co-opted Member

Chairman

Member

Co-opted Member

Corporate Secretary

CEO

Composition

Chairman

Board Chairman

Member

Member

CEO

Name

Mr. Duke Holness

Dr. Tonoya Toyloy

Dr. Kamal Mars

Dr. Shane Alexis

Mr. Everton Anderson

Mrs. Cecile Watson

Mr. Duke Holness

Mr. Dameon McNally

Mr. Everton Anderson

Chairman

MemberCo-opted Member

CEO

Composition

Chairman

Member

Member

* Resigned

CEO

Name Composition

Board Committees Composition & Membership 2017-2018Finance, Projects & PPP Committee Medical Review &

Research Committee Corporate Governance Committee*

Audit & Risk Committee* HR Committee

*Mr. Everton Anderson, CEO is not a member of this committee but he attends it’s meetings

*The Corporate Governance Committee was separated from the Audit & Risk Committee in February 2018.

NHF Board Members Competency ProfileThe NHF Board of Management represents a wide range of experience and views. The table below was completed based on the Competency Profile Instrument for the Boards of Public Bodies.

*Meaning to the Indicators: *Yes - refers to competencies already possessed by an individual prior to being appointed to the Board.*Acquired – refers to competencies that can be developed during the tenure of the Board.

Other Key Skills & Talents

Ethics and Integrity – Acts with integrity, honesty and transparency in relationships with others and the organisation

Communication – Presents ideas in a clear, concise, easily understood and persuasive manner and willing to engage others to enhance mutual understanding of issues and perspectives

Interpersonal Relations - Relates to others in a respectful and engaging manner and works well in a team environment.

Professionalism – Approaches the work of the Board and the responsibilities as a Board member in a business – like manner

Self Management and Motivation – Adds value to the Board by taking an active interest in its work, effectively managing own time making informed contributions through adequate preparation

Role Understanding – Understands the roles and responsibilities of the position and the roles of respective partners

Organizational Knowledge – Understands the roles and responsibilities of the position and the roles of respective partners

Corporate Governance – Conversant with the general principles and practices of ‘good’ Corporate and Organizational Governance and understands the importance of managing public resources in a transparent and effective manner

Independent and Critical Thinking – Brings an objective mindset to the examination of issues. Willing to probe and challenge conventional wisdom and advocate for change.

Government Operations – Understands the structure of Government and how its various components work.

Financial Literacy – Conversant with the basic elements of organizational financial management including and understanding of financial statements and processes such as budgeting.

Strategic Focus – Understands the need for forward thinking, conversant with the techniques and methodologies for formulating strategic plans

Results Driven – Maintains a consistent focus on actions which deliver measurable outcomes and helps the team to gain clarity in respect of the performance expected.

Accountability – Hold others and self to account for decisions and actions.

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Acquired

Yes

Yes

Acquired

Yes

Yes

Yes

Yes

Competency Descriptor (Competencies required for Public Bodies Board Members)

Gregory Mair

Dr. Dana Morris Dixon

Cecile Watson

Paul Hanworth

Duke Holness

Steven Sykes

Dr. Tonoya Toyloy

Dr. David Lowe

Dr. Kamal Mars

Medicine & Science

2

Talent Management

8

Risk Management

2

Business Leadership & Operations

10

Finance and Accounting

5

Government & Public Policy

3

Health Care & Pharma

3

Technology

1

Academia

5

45

The NHF adopted the “Three Lines of Defence Model” in risk governance. This is manifested by the direction and oversight from the Board of Management, the Audit and Governance Committee and Internal Audit Department. The framework of the NHF combines a top-down strategic view with a bottom-up operational assessment conducted by each division and department. Members of senior management discuss the top-tiered risks escalated through the bottom-up process and deliberate on any other risk issue that they consider important.

The following diagram illustrates the National Health Fund’s Risk Governanceand Management Framework:

The Board’s Oversight of Company Strategy Planning The Board of Management, through the Chairman, provided strategic direction and policy guidance to the NHF, establishing the context and major priorities for the period. Embracing a consultative approach, the Board engaged senior and middle managers and examined issues such as resource efficiency, ways to improve operations and the delivery of services at the highest standards. A major part of the process included an environmental scanning, as well as analysing customer surveys to capture stakeholders’ views to determine opportunities, with an understanding of the realities of the NHF’s current operating environment. Additionally, the vision, mission, and mandate were revisited to ensure that they were

aligned with the proposed strategic priorities and objectives while ensuring that they are in keeping with the broader social agenda of the Government.

As an outcome, the three major strategic priorities developed were:1. Optimizing funding for the health sector and improving access to affordable health care.2. Influencing the behaviour of the Jamaican population for better health outcomes.3. Operational excellence through optimal staff and systems performance to better serve NHF’s customers.

The Board of Management continues to oversee the company strategies through discussions at the various Board and Committee meetings held on a regular basis.

The Board’s Role in Risk Oversight

46

Number of board and committee meetings held for the year 2017/2018

Names

Mr. Gregory Mair, Board Chairman

Dr. Dana Morris Dixon, Board Deputy Chairman

Mr. Everton Anderson, CEO-Ex-officio

Mrs. Cecile Watson

Mr. Paul Hanworth

Mr. Duke Holness

Mr. Steven Sykes

Dr. Tonoya Toyloy

Dr. David Lowe

Dr. Shane Alexis – *resigned Sept. 2017

Dr. Kamal Mars – *appointed Jan. 2018

Mr. Dameon McNally, Co-opted Member of the Audit, Risk, Governance & HR Committees

Finance, Projects & PPP Committee Meeting

7

3

7

7

Audit, Risk & Governance Committee Meeting

4

5

5

5

Human Resource Committee

3

4

4

3

Medical Review & Research Committee

5

6

5

3

Board

8

8

11

10

8

10

11

11

6

3

2

11 7 75 4

Board Performance EvaluationIn keeping with the high standards of corporate governance, the NHF Board of Management conducts annual self-evaluation of its effectiveness using a subset of the Ministry of Finance & Public Service approved instrument.

Attendance to Board & Sub Committee Meetings for April 2017 – March 2018

The scope of the three templates utilized in this review includes evaluation questions pertaining to the Board, Committees, the Chairman and individual members.

We are happy to report that all action points were given the necessary attention and have been effectively addressed. Board members are efficient and effective in their deliberations.

Initiation

• The corporate Governance Committee initiates and oversees the process, which is conducted annually.

Evaluation

• During the evaluation, several factors are assessed: Roles and relationship; strategy & performance; ethical conduct; risk and compliance management; financial governance and Broad processes

Presentation of Evaluation Result

• The results of the Board evaluation are presented a subsequent Board meeting.

• The results of each committee’s evaluation is presented at the subsequent committee meeting

Follow-up

• Any results requiring additional consideration are addressed at future Board and Committee meetings, as appropriate.

• A Broad improvement plan is developed and implemented.

70%

30%

Board PerformanceRating

Average ExcellentGood

Facey Corporate Services was engaged as the Corporate Secretary in November 2017. The assigned officer is Mrs. Camille Facey, an attorney-at-law with over 30 years of experience,. She has attended five meetings of the Board of Management and serves as a member of the Corporate Governance Committee.

47

Medical Review and Research Committee Report

The Medical Review and Research Committee assists the Board in its oversight of the Individual Benefits Programmes and the qualitative assessment of health care research projects. The committee has specific responsibilities for the evaluation and implementation of new benefits which have met specific criteria for addition to the Individual Benefits Programme. In addition, the committee monitors claims experience and utilisation of existing benefits available through the Individual Benefits Programmes.

The committee, in discharging its duties, ensures that the requisite policies, procedures and controls exist to support a robust evaluation framework that upholds fairness and balance.

During the financial year, the committee had seven meetings, where the areas of focus revolved around the following activities: • Introduction of an Online Drug database to improve access to updated drug information, allowing greater emphasis on evidenced- based pharmacy practice and providing for increased engagement in research activities by its users.

• Continued evaluation of drug applications resulted in the approval of 14 new active pharmaceutical ingredients (new products) in addition to 25 associated presentations to the NHF programme.

• Progress was made towards conducting an Impact Study deemed necessary to measure the extent to which the NHF is impacting the quality of health care provisions across the island.

• Given the emergence of new and innovative formulations, the Individual Benefits pricing policy was revised with the objective of strengthening the existing guidelines.

The committee's deliberations at meetings led to a number of recommendations that were referred to the Board for ratification and implementation. The execution of these recommendations resulted in improved operational efficiency and enhanced customer satisfaction.

Human Resource Committee Report

The purpose of the Human Resource Committee is to ensure that all activities of the Human Resource & Administration Division are in keeping with the policies, systems and processes that are set out in the various policy documents that govern the operations of the organization. This is achieved by the formation of policies, the frequent reviews and monitoring of the activities of the staff, as well as the review and determination of disciplinary matters. It ensures that the highest professional and ethical standards are met and are in harmony with the mission and vision of the organization.

During the financial year 2017/2018, the Committee focused on matters such as the implementation of the staff engagement strategy, national pharmacy services takeover, revised organizational structure, training and development policy and amendments to the dress code policy.

We implemented additional features of the Human Resource Management System which is aimed at improving the efficiency of the Human Resource Department while supporting and assisting with requests of the staff.

The Human Resource Committee met on four occasions during the year.

Finance, Projects & Public Private Partnership Committee Report

The Finance, Projects & Public Private Partnership Committee (FP& PPP) has oversight responsibility for the financial reporting of the Fund; ensuring that financial information is presented in accordance with International Financial Reporting Standards, the NHF Act and other local regulatory requirements. The Committee also has oversight responsibility for NHF’s Operations, Public Private Partnership and Institutional Benefit Programme.

During the year, the Committee monitored the financial planning and reporting requirements as well as deadlines to ensure that the budget and annual reports were submitted on time and the monthly financial reporting and statutory requirements were met. Other achievements included full compliance with statutory deductions and payments and investment activities conducted in compliance with the NHF’s investment policy.

Corporate Governance Committee Report

The Corporate Governance Committee was separated from Audit & Risk and established as a stand alone committee in February 2018. This resulted in increased focus on ensuring the NHF’s full compliance with all relevant legal and regulatory requirements, particularly those outlined in the National Health Fund Act, the Public Bodies Management and Accountability Act and the Corporate Governance Frame work for Public Bodies. The committee promotes the governance accountability system of the organization and seeks to facilitate greater certainty, probity and transparency by the development of clear policies and procedures. Additionally, the committee monitors the Board’s effectiveness and reviews both local and global corporate governance best practices initiating modifications at the NHF where it is determined that these are necessary.

In order to fulfil its purpose, the committee was given the authority and responsibility to:

Board Committee Reports

48

• Develop the National Health Fund’s corporate governance code and/or policy for the Board’s approval and annual review.

• Oversee the development and implementation of a Board induction process for new Directors and a programme of continuing Director development as needed.

• Co-ordinate the annual Board evaluation.

• Monitor trends and best practices in corporate governance and keep the Board advised of same;

• Consider the possible conflicts of interest of the Directors and any related party transactions of Directors and make relevant proposals to the Board in accordance with the NHF’s corporate governance code and/or policy, while making other recommendations within its mandate, where required.

The Corporate Governance Committee meets quarterly.

Audit & Risk Committee Report

In keeping with the Public Bodies Management and Accountability Act (December 28, 2001), the Audit and Risk Committee met five (5) times during the financial year and continues to fulfill its role.

This role requires the Committee to complete the following key activities:

• Review the external auditor’s audited accounts submission, management letter and management’s response, to ensure that management addresses the issues raised.

• Review the system of internal controls at the NHF for effectiveness.

• Review and monitor the organization’s policies to ensure compliance with legal and regulatory requirements.

• Ensure that a reliable, effective and efficient control system is in place to monitor and reconcile Beneficiaries’ and Providers’ Pharmacies claims behaviour, to validate payments made and to ensure compliance with the NHF’s Provider Agreements (NHF & JADEP)

• Review and monitored the organization’s Risk Management Committee's risk mitigation measures, to ensure that our

risks are being adequately addressed.

• Monitor the organization’s Information Systems, Communication & Technology Risk Management measures, to ensure that these risks are being satisfactorily addressed.

The Committee also monitors the audit functions, by reviewing the major findings coming out of audit reviews and investigations, in addition to management’s response, for completeness and implementation. These audit reviews were aimed at monitoring the organization’s operating, financial and compliance activities, internal controls, in addition to NHF policies and procedures for efficiency and effectiveness.

Regulatory Compliance

The Executive Division, which includes Corporate Planning and the Internal Audit, ensures compliance with laws, regulations, policies and standards of good governance in relation to the organization. A quarterly compliance report is then provided to the Audit and Risk Committee of the Board of Management.

The Board understands the regulatory framework under which it operates and emphasizes compliance with all regulations, to ensure that the organization’s systems are sound.

Below is a select list of laws, regulations and other standards with which the NHF complies, as well as a list of the organization’s statutory reports.

These laws include, but are not limited to, The Pharmacy Act (1975); The Food and Drugs Act (1975); The Dangerous Drugs Act (1948), the Financial Administration Audit Act (1959); the Public Bodies Management and Accountability Act (2001); the Access to Information Act (2002), the Corruption Prevention Act (2001); the Protected Disclosures Act (2010); the Factories Act (1943); the Environmental Laws and Regulations of Jamaica (NEPA Guide 2003); Labour Relations & Industrial Disputes Act (LRIDA), 1975; Employment (Termination and Redundancy Payment) Act, 1974 and the Staff Orders (2004).

49

Net Credit Report (Statement C)

Flow of Funds Report (Statement A)

Monthly Financial Statements/Reports

Public Bodies Management and Accountability Act (PBMA) Report

Public Bodies Management and Accountability Act (PBMA) Report

Public Body Contract Awards Report (QCA)

Procurement Contracts (PRS1)

Annual Report

Audited Financial Statements

The Access to Information Act (2002): Quarterly Report

Employer's Annual Return: (Income Tax)

Employer's Annual Return: (National Insurance)

Employer's Annual Return: (Education Tax)

Employer's Annual Return: (National Housing Trust)

Corporate Plan & Estimate of Revenue and Expenditure

Shows the month-end balances on investment categories and bank balances.

Shows the month-end balances Income/Revenue & Expenditure.

Shows the monthly and accumulated financial position of the organisation.

Quarterly report of actual performance against targets. The financial statements and the projected budgets for the remaining quarters.

Gives the half-year financial statements and the projected budgets for the remaining quarters.

Shows the award of contracts over $500,000 during the Quarter.

Shows all procurement contracts approved by the organisation.

Annual Report gives the details on the operational and financial activities for the Financial Year.

Audited Financial Statements shows the accumulated financial position of the organisation over a twelve month period as certified by the external auditors.

Shows requests from the public for information on aspects of the operations of the organisation.

This Return shows the income tax deducted from individuals employed by the organisation during the calendar year.

This Return shows the national insurance payments deducted from the salaries of individuals employed and the organisation's portion during the calendar year.

This Return shows the education tax payments deducted from the salaries of individuals employed and the organisation's portion during the calendar year.

This Return shows the National Housing Trust payments deducted from the salaries of individuals employed and the organisation's portion during the calendar year.

The report shows the organisation Strategic Business and Operational Plan and Budget for the new Financial Year

Ministry of Finance, and Planning (MOFP)

Ministry of Finance and Planning (MOFP)

Ministry of Finance and Planning (MOFP)

Ministry of Finance and Planning (MOFP)

Ministry of Finance and Planning (MOFP)

Office of the Contractor General

Ministry of Finance and Planning (MOFP)

Ministry of Finance and Planning (MOFP)

Ministry of Finance and Planning (MOFP)

The Access to Information Unit, Office of the Prime Minister, 5-7 South Odean Avenue, Kingston 10.

The Inland Revenue Department

Ministry of Labour and Social Security (National Insurance)

The Inland Revenue Department

National Housing Trust

Ministry of Finance and Planning (MOFP)

NAME OF REPORT

List of Regulatory Compliance Reports

NATURE OF REPORT AGENCY

50

REQUEST RECEIVED

2

1

1

1

1

1

1

1

1

1

2

REQUEST ACTIONED

2

1

1

1

1

1

1

1

1

1

2

SUBJECT OF REQUEST

PHARMACY MANAGEMENT SYSTEM INCLUDING PERCENTAGE INCREASE IN ILLNESS CHANGES AND DRUG SHORTAGES

GENERIC DRUGS IMPORTED BY NHF, MONETARY BREAK DOWN FOR EACH CONDITION & PERCENTAGE MARK UP AT DRUG SERV PHARMACIES

NHF BENEFICIARY ENROLMENT BASED ON AGE, GENDER, PARISH AND ILLNESS

NHF SOURCE OF FUNDS, TIME PERIOD IN CURRENT CORPORATE OFFICE & AMOUNT PAID FOR LEASE/RENTAL OF CORPORATE OFFICE SPACE

TOP 5 DRUGS ACCESSED AT DRUG SERV PHARMACIES FOR HYPERTENSION, DIABETES, EPILEPSY, BREAST CANCER AND ASTHMA

BENIGN PROSTATIC HYPERPLASIA FOR 2012-2016 INCLUDING TOTAL NUMBER OF BENEFICIARIES, EXPENDITURE AND PARISH DISTRIBUTION

TOP DRUGS PURCHASED BY NHF AND COST ATTACHED

NHF PUBLIC PRIVATE PHARMACY PARTNERSHIP PROGRAMME

NHF CARD USUAGE FOR DILANTIN & EPILANTIN

PURCHASING DATA FOR HYDROXYUREA FOR THE LAST 5 YEARS

NHF ANNUAL REPORTS - 2015-2016 & 2016-2017

Access To Information Request Report April 2017-March 2018

Relations with Major StakeholdersThe National Health Fund identifies the needs and expectations of its stakeholders to determine their effect or potential effect on the organization’s ability to consistently provide quality service to customers and applicable statutory and regulatory requirements. The major stakeholders, their impact and expectations are listed below:

Major Internal Stakeholders• Board of Management & Subcommittees • CEO and Snr Managers• Employees

Their Impact • Accountability, governance, transparency, strategy formulation.• The organization’s ability to achieve its objectives.• Quality of products/service, work culture.

Their Requirements• Compliance with applicable requirements.• Timely submission of required reports.• Provision of necessary resources to execute job function.• Timely response to feedback• Timely and accurate information• Communication

Major External Stakeholders• Government of Jamaica , Ministries• Revenue Collection Agencies• Beneficiaries • Provider Pharmacies• Doctors• Public Health Facilities & Public Sector Customers• Media (TV, Radio, Print)

Their Impact • Ability to carry out its mandate as well as honour its administrative obligations.• Accountability, governance, quality of product/service.• Access to Individual benefits/ services.• Quality of Pharmaceuticals offered by NHF.• Quality of healthcare services provided to Jamaicans.• Informing the public.

Requirements• Compliance with Pharmacies standards.• Timely communication of policy and procedure changes.• Timely addition of new Pharmaceuticals or illness.• Timely resolution of complaints.

51

Identify & assessinternal andexternal risks

Determine appropriate

risk response

Establish policiesand procedures, controls,

systems and accountabilitiesto supposrt response

Communicate risks and

mitigate plans

Monitoreffectiveness of

mitigation efforts

MISSIONTo provide funding for

specific health care benefitshealth promotion, healthprojects and pharmacy services in a sustinable

efficient customercentric environment

1

2

3

4

5

Risk Management at NHFEffective risk management is fundamental to the achievement of NHF’s strategic objectives.

Risk Management Framework

The agency has in place an Enterprise Risk Management (ERM) framework to effectively identify, assess, mitigate and monitor key business, financial, operational, reputational and compliance risks. The framework provides a proactive and systematic approach to identifying and managing risks with a common framework across the organization to evaluate the risk severity and likelihood of occurrence.

The risk management process is integrated into NHF’s daily operations and is an ongoing sytem which flows throughout the organization. When the Agency performs its risk identification, it takes into account internal and external factors, including economic, political, social, technological, environmental, new regulations and new or updated strategies.

Each risk identified is analysed on the basis of likelihood and impact consistent with risk parameters set by the Board. The risk assessment process also includes a review of the control mechanisms for each risk and the effectiveness of each control.

The organization compiles a risk register, which is updated and monitored on an on-going basis by taking into account emerging issues. Key risks and their action plans are reviewed by the Risk Management Committee quarterly and reported to the Audit and Risk Committee and the Board.

Significant changes in key risks on a day-to-day basis are handled and reported to management and the Risk Management Committee. Fundamental to the achievement of the NHF’s business goals is how it can effectively manage existing and emerging risks in different economic, social and political environments. The Group continually works to improve its risk management framework in order to cope with the changing dynamics of the environment in which it operates.

Independent Assurance

Internal and external bodies provide assurance on the effectiveness of the risk management processes and compliance with the relevant standards and policies.

1. Internal AuditOur Internal Audit department conforms to the International Standards published by the Institute of Internal Auditors (IIA).

Internal Audit has direct and unlimited access to the organization’s operations, documents and employees. Internal Audit reports directly to the CEO and the Audit and Governance Committee. The team reports quarterly to the Chairman of the Audit and Risk Committee. Audit missions include operational, risk, ethics and fraud reviews.

2. External Certifications We maintain certification to the requirements of the ISO9001:2015 International Standard, which is necessary for the operations of our processes. The effectiveness of our Quality Management Systems is constantly challenged by external and internal audits seeking continuous improvement.

3. External Auditor The independent external auditor provides an independent opinion on the financial results of the organization: its report is available on pages 61-104. The auditor has unrestricted access to the NHF sites and documentation, and communicates with the Internal Audit Department, Audit and Risk Committee and the Finance Committee.

The Audit and Risk Committee assesses the work of the external auditor at least once a year.

Integrated Risk Management Process

52

Quality Management System ReportIn support of good corporate governance and effective risk management, the NHF’s Quality Policy applies to all operations and employees and emphasizes the need to provide service of the highest possible standard to our customers. The successful implementation of the NHF’s programmes is as a result of the constant measuring of performances and adherence to relevant statutory and regulatory requirements and industry standards. In addition to the influences of governance, risk and quality assurance on business processes, which allows for continued certification to ISO9001:2015 QMS Standard.

NHF ISO9001:2015 Certification

A total of six (6) audits were completed in 2017/2018 for the maintenance of our existing ISO9001:2015 QMS certificate. Four were internal audits and two by our certification partner, National Certification Body of Jamaica (NCBJ). Only one minor non-conformity was cited within the area of organizational

context, and this was addressed by conducting an analysis of the root cause and the necessary corrective and preventative actions were accepted by NCBJ. The implementation of these actions are in progress and will be closed during the requested time period.

During the audits by NCBJ, the following areas were identified as strengths :

• the process for monitoring and measuring key process indicators • regular monitoring of customer satisfaction levels• the process used to analyse and evaluate data and • the systematic risk management within its operation

For the 2018/2019 period, NHF will improve on its processes to continually provide quality services to customers. The aim is also to maintain existing ISO9001:2015 QMS certification and to expand the scope to include the processes within the Drug Serv Division.

53

Stakeholder Outreach Engaging with stakeholders is a fundamental part of the NHF’s commitment to good governance. The Fund has sought opportunities to reach stakeholders to share information on the activities, seeking insights into what improvements can be made to service offerings. Although stakeholder outreach is primarily a function of management, members of the Board also participate when appropriate.

Surveys

The NHF regularly conducts surveys with clients and has feedback tools which are used to obtain views on operations. These have been essential in assisting the organization to continuously improve its services.

A Pharmacy Provider Survey was conducted during the last quarter of the financial year which showed that 95 percent of providers were at least satisfied with the quality of service delivered by the Fund.

Exit surveys are consistently conducted at NHF Community Health Days held in various communities across the island in order to get client feedback on our services. During the year, 689 persons across all parishes completed the survey. Among the areas for feedback were wait time for service, comfort of waiting area, the quality of the service, the professionalism of the staff, how the tests were conducted, the amount of health information received and how the respondents can be better served.

Communication Communication with our stakeholders has been through various platforms, including our website, social media, SMS messages, print media, radio, television, media events, newsletters and meetings.

Emphasis was placed on increasing pharmacy site visits during the year, which were carried out by a multi-disciplinary team from across the organisation. This initiative has proven to be very successful and has enabled the team to play a supportive role in educating, building and maintaining good working relationships with the providers who are our valued partners in service delivery. In addition, three Provider Newsletters were issued during the year.

The Pharmaceutical Warehouse had 292 individualised customer contacts made via visits, telephone calls and meetings. This number exceeded the target of 250 customer contacts for the year by 23 percent. Additionally, four quarterly newsletters were distributed to customers during the year, serving as a medium to provide customers with general warehouse news and updates in a scheduled and consistent manner.

Presentations were made at 11 medical conferences during

the year, including the annual Medical Association of Jamaica conference, the annual Pharmaceutical Society of Jamaica conference and the Nursing conference, thereby allowing the NHF to reach its stakeholders in the medical profession.

NHF Open Day

The NHF held its first Open Day on Friday, July 28, 2017, at the Blue Mountain Suite, Knutsford Court Hotel. This activity showcased the achievements/performance of the NHF with a focus on the financial year 2016-2017, as well as shared the challenges and risks faced in operating the NHF Testimonials were offered by a varied group of stakeholders highlighting the impact of the NHF on health care in Jamaica. The half-day event closed with a panel discussion on the New NHF vision – “No Financial Barriers to Health Care in Jamaica.” Over 120 NHF stakeholders from government, non-government and the private sectors attended.

How to Communicate with Our Board of Management

You may communicate with the members of the Board by writing to Mr. Gregory Mair, Board Chairman or Mrs. Cecile Watson, Corporate Governance Chairman, both of whom are independent, non-executive directors of the NHF:

Mr. Gregory Mair, Board Chairman OR Mrs. Cecile Watson, Corporate Governance Committee Chairman c/o National Health Fund, The Towers, 6th Floor, 25 Dominica Drive, Kingston 5

Miss Latoya Peddie (R), Provider Relations Supervisor on a pharmacy visit to Adanas Pharmacy in Kingston, with Mrs. Ingrid Bachelor, Pharmacy Owner.

54

Scenes from NHF 2017 Open Day

Corporate social responsibility has become an integral part of NHF’s business operations and aligns with its passion to be an exemplary government agency and good corporate citizen. While the NHF is focused on achieving its mission, it is committed to effectively managing the economic, social and environmental impact of its operations on the NHF’s businesses, employees, communities and the environment. This is a demonstration of leadership and commitment to Jamaica.

In raising the bar for excellence in corporate governance, the NHF’s efforts remain clear:

• Equity in the distribution of benefits. • Compliance with legal requirements and ethical norms. • Efficiency in operations.

• Protection of the environment.

• Enhancing the well-being of Jamaican residents and improving the communities in which the Fund operates.

• Enhancing the well-being of the NHF staff.

Access to Medication

The NHF has responsibility for managing pharmacy services for Jamaica’s public sector, as well as providing over $4 billion in pharmaceutical benefits through the NHF and JADEP Card programmes. The agency is committed to equity in the distribution of benefits and to helping public sector patients have and maintain access to quality medication in a respectful and friendly environment.

The Fund is focused on meeting the pharmacy needs of vulnerable groups. In this regard it has instituted a pharmacy services delivery programme, which supports patients and residents in State care and nursing homes. Once per quarter, the NHF pharmacy staff visit a selected institution to dispense medications and deliver quality customer care through engaging and educating patients and caregivers around the best practices of usage, storage, safety and the documentation of medication.

Stewardship of Resources

As a government agency that utilises taxpayer funds, the NHF is committed to being good stewards of the resources entrusted to it for the health care of the people of Jamaica.

The Fund is guided by the procurement guidelines of the Government of Jamaica in planning and managing procurement of goods, works and services and is committed to building and maintaining strong relationships with suppliers, based on mutual trust, understanding and respect.

The NHF takes measures to ensure the information for all beneficiaries/customers/business associates is held in the

strictest confidence except where disclosure is lawfully required and all employees and Board members are obligated to safeguard the privacy and confidentiality of its business affairs.

Environment, Health and Safety Given the overall impact of climate change, especially on small island states such as Jamaica, the NHF is fully committed to care for and protect the environment in which the Agency operates. This commitment extends to continuously improving its environmental performance across all business activities to reduce the organization’s environmental impact and improved energy efficiency, conserve water usage and carry out proper waste disposal, particularly inorganic waste.

The agency seeks to comply with all applicable statutory and other relevant requirements associated with environmental impact and encourages customers, suppliers and other stakeholders to do the same.

In order to meet obligations to the patients in the public health sector and other patients, the NHF remains committed to ensuring a consistent supply of safe pharmaceutical drugs.

Employees Well-Being The NHF strives to promote a work environment that encourages safety, security, diversity, inclusion, as well as the overall well-being and professional development of staff members. It recognises the importance of and encourages healthy work-life balance for staff, by promoting healthy lifestyle practices among employees, with emphasis on healthy eating, fitness and stress management.

Volunteerism among staff in their communities is encouraged as a part of the organisation’s ongoing contribution to the development of communities, while supporting the development of young people by facilitating valuable work experience through the NHF Internship for pharmacists, as well as the Summer Employment Programme.

Corporate Social Responsibility

Mr. Gregory Mair, NHF Chairman and Staff at the end of their walk/run at the 2018 Heart Foundation of Jamaica, Heroes of the Heart 5K.

56

Executive Management

The NHF Team

Senior Management

Granville GayleSenior VP - Information & Communicatio Technology

Front row (L-R); Katherine Dawson Shaw (Acting VP Drug Serv) | Shermaine Robotham (Health Promotion & PR Manager)Back (L-R) : Orett Clarke (Project Manager), O’neil Foster (Chief Internal Auditor), I. Ricardo Corrie (Procurement Specialist)

Missing from photograph are: Keron Mais, (Director of Operations) | Collie Smith (Institutional Benefits Manager)

Anne Logan VP - Operations / Individual Benefits

Judith Cheese-Morris VP - Human Resource & Administration

57

Middle Management Head Office

Seated (L-R): Lois Sawyers (Training & Development Manager), Kimberly Calder (Audit Manager-Internal), Hillary Hutchinson (Corporate Planner), Latoya Peddie (Provider Relations Supervisor). Standing Front Row (L-R): Carol Madden (Human Resources Manager), Audriana Sinclair (Quality Assurance Manger), Aldith Hazzart (Customer Service Manager), Kayon Fullerton (Finance Manager),

Garcia Palmer-Payne (Funds Manager). Back Row L-R: Claudine Henry (Finance Manager), Ainsley Jones (Individual Benefits Manager), Denise Clarke (Audit Manager-External), Dwayne McKenzie (Technical Support Manager), Renee Marsh (Information Systems Manager),

Duane Johnson (Applications Support Manager) and Sacha Blake (Senior Customer Care Manager).

(L-R) Sheryl Evans (Manager), Kirk Mckain (Administration Manager), Marcia Morrison(Import Manager), Donna Thomas(Warehouse Manager), Erica McIntosh(Procurement Manager) and Norman Smith(Warehouse Operations Supervisor)

Middle Management Marcus Garvey Drive

58

Drug Serv Pharmacy Managers

Front Row (L-R): Autherine Spencer (Princess Margaret Hospital), Dr. Michelle Young Brown (Kingston Public Hospital) and Cecille Clarke (Pharmacy Services Co-ordinator). Back Row (L-R): Clive Harris (Pharmacy Services Manager), Marcia Thomas (Kingston Public Hospital), Sheldon Thawe (Victoria Jubilee Hospital), Carene Ralph Brown (Diabetes Centre) and Nathalee Prendergast (Pharmacy Services Manager).

Front Row (L-R): Neisha McLean (Pharmacy Services Co-ordinator), Camille Abrahams (Duhaney Park Health Centre), Judith Herron (National Chest Hospital). Back Row (L-R): Andrea Griffiths (Spanish Town Hospital), Dr. Joseth Royal Morrison (Bellevue Hospital), Laurie-Ann Henry (St. Ann’s Bay Health Centre), Marjorie Robinson (Comprehensive Health Centre) and Dr. Amanda Daley (Bustamante Hospital for Children).

59

Drug Serv Pharmacy Managers

L-R Jennifer Simpson (Lionel Town Hospital), Dr. Michele Douglas Shaw(Mandeville Regional Hospital), Otilia Powell (May Pen Hospital), Grace-Ann Johnson (Mandeville Regional Hospital).

Front Row (L-R): Dona Chin Loy (Port Maria Hospital), Yvonne Amair (Cornwall Regional Hospital), Carol Staple (Cornwall Regional Hospital), Dr. Jennifer Prout (Cornwall Regional Hospital). Back Row (L-R): Janique Samuels Campbell (Falmouth Hospital), Tracey Robinson Campbell (St. Ann’s Bay Hospital), Dr. Cleston Headley (Parish Pharmacist-St. James) Trudy Lawrence Haye (Falmouth Health Centre), Donovan Aljoe (Noel Holmes Hospital).

60

NATIONAL HEALTH FUNDFINANCIAL STATEMENTS31 MARCH 2018

61

NATIONAL HEALTH FUND

FINANCIAL STATEMENTS

31 MARCH 2018

I N D E X

Page Independent Auditors' Report to the Board of Management 63 - 65

FINANCIAL STATEMENTS

Statement of Financial Position 66

Statement of Surplus or Deficit and Other Comprehensive Income 67

Statement of Changes in Reserves 68

Statement of Cash Flows 69

Notes to the Financial Statements 70 - 104

62

64

65

NATIONAL HEALTH FUND

STATEMENT OF FINANCIAL POSITION

31 MARCH 2018

Note 2018 2017 $M $M ASSETS NON-CURRENT ASSETS: Property, plant and equipment 6 451.46 327.03 Intangible assets 7 4.38 10.02 Investments 8 4,557.96 4,785.32 5,013.80 5,122.37 CURRENT ASSETS: Inventories 9 1,993.62 1,507.12 Accounts receivable: Ministry of Health 10 911.75 2,260.22 Other receivables 10 2,345.23 2,897.71 Taxation recoverable 0.20 0.01 Securities purchased under resale agreement 11 5,328.39 4,406.08 Cash and cash equivalents 12 749.30 646.70

11,328.49 11,717.84 16,342.29 16,840.21 RESERVES AND LIABILITIES RESERVES: General Fund 1,859.59 4,369.19 Trust Fund 13 9,482.59 8,746.40 Institutional Benefits Fund 1,663.03 889.26 Revaluation reserve 2.70 2.70 13,007.91 14,007.55 NON-CURRENT LIABILITY: Institutional benefits payable 14 702.48 260.83 CURRENT LIABILITIES: Payables 15 1,715.31 1,257.36 Current portion of Institutional benefits payable 14 916.59 1,314.47 2,631.90 2,571.83 16,342.29 16,840.21 The financial statements on pages were approved by the Board of Management on 30 July 2018 and signed on its behalf by: . Gregory Mair Everton W. Anderson Chairman Chief Executive Officer The accompanying notes form an integral part of the financial statements

66 to 104

66

 

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67

 

NATIONAL HEALTH FUND

STATEMENT OF CHANGES IN RESERVES

YEAR ENDED 31 MARCH 2018  

Institutional General Trust Benefits Revaluation Fund Fund Fund Reserve Total Note $M $M $M $M $M BALANCE AT 1 APRIL 2016 5,774.84 7,724.23 175.31 - 13,674.38  TOTAL COMPREHENSIVE INCOME -   Surplus/(deficit) for the year 1,121.81 655.81 (1,447.15) - 330.47   Other comprehensive income - . - . - . 2.70 2.70 1,121.81 655.81 (1,447.15) 2.70 333.17 Transfer to Trust Fund 13 ( 366.36) 366.36 - - -  Transfer to Institutional Benefits Fund (2,161.10) - . 2,161.10 - - .   (1,405.65) 1,022.17. 713.95 2.70 333.17. BALANCE AT 31 MARCH 2017 4,369.19 8,746.40 889.26. 2.70 14,007.55 TOTAL COMPREHENSIVE INCOME - (Deficit)/surplus for the year ( 12.57) 336.29 (1,323.36) - ( 999.64)      Transfer to Trust Fund 13 ( 399.90) 399.90 - - - Transfer to Institutional Benefits Fund (2,097.13) - 2,097.13 - - . (2,509.60) 736.19 773.77 - -( 999.64) BALANCE AT 31 MARCH 2018 1,859.59 9,482.59 1,663.03. 2.70 13,007.91         The accompanying notes form an integral part of the financial statements

68

NATIONAL HEALTH FUND

STATEMENT OF CASH FLOWS

YEAR ENDED 31 MARCH 2018

2018 2017 $M $M CASH FLOWS FROM OPERATING ACTIVITIES: Surplus/(deficit) for the year: General Fund ( 12.57) 1,121.81 Trust Fund 336.29 655.81 Institutional Benefit Fund (1,323.36) (1,447.15) ( 999.64) 330.47 Items not affecting cash resources Property, plant and equipment adjustment - 1.17 Depreciation 91.07 60.56   Gain on disposal of property, plant and equipment - ( 0.65) Provision for impairment of receivables 3,057.08 2,000.00   Unrealized foreign exchange translation 127.92 ( 272.65)   Amortisation 7.50 7.40 Interest income ( 621.23) ( 620.00)   1,662.70 1,506.30 Changes in operating assets and liabilities: Inventories ( 486.50) ( 126.28) Receivables (1,165.12) (1,111.34) Taxation recoverable ( 0.19) 0.10 Institutional Benefits 43.77 ( 236.86) Payables 462.86 ( 498.04) Cash provided by/(used in) operating activities 517.52 ( 466.12) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment and intangible assets ( 217.36) ( 142.80) Securities purchased under resale agreements (net) (1,052.37) ( 202.69) Investments (net) 227.36 ( 175.01) Proceeds from sale of asset - 2.14 Interest received 630.22 612.29 Cash (used in)/provided by investing activities ( 412.15) 93.93 105.37 ( 372.19)  Exchange (loss)/gain on foreign cash balances ( 2.77) 3.53 Increase/(decrease) in cash and cash equivalents 102.60 ( 368.66) Cash and cash equivalents at beginning of year 646.70 1,015.36  CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 12) 749.30 646.70  The accompanying notes form an integral part of the financial statements    

69

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

1. IDENTIFICATION AND PRINCIPAL ACTIVITY:

(a) National Health Fund (“NHF” or the “Fund”) was established by the National Health Fund Act No. 23/2003 (“NHF Act or “the Act”) of 11 December 2003, effective 1 April 2003, with a mandate to reduce the burden on healthcare in Jamaica. On 1 March 2004, the operations of the Fund came under the responsibility of a Board of Management appointed by the Minister of Health in accordance with the Act.

On 8 March 2011, the NHF Act was amended to allow for a transfer of the assets and liabilities of Health Corporation Limited (HCL) to the NHF. Consequently, on 1 April 2011, the NHF assumed responsibility for the procurement, warehousing and distribution of pharmaceuticals and medical sundries, and the retail pharmacy operations of Drug Serv.

The head office of the Fund is situated at 25 Dominica Drive, Kingston 5, Saint Andrew, Jamaica.

Under Section 16 of the NHF Act, the income of the Fund arising under the Act is not liable to income tax.

Since 1 April 2011, the principal activities of the NHF have been to:

• Provide prescribed health benefits to all residents, regardless of age, gender,

health or economic status; • Provide greater access to medical treatment and preventative care for specified

diseases and specified medical conditions; • Secure improvement in the productivity of residents by reducing time lost on the

job that is attributable to personal and family health care problems; • Reduce the Island’s disease burden through health promotion and protection

programs;

• Provide support to health services and promote and encourage the utilization of primary health care to improve the quality of life of the Island’s population; and

• Make pharmaceutical and medical supplies accessible and available to

government-owned health facilities.

             

70

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

1. IDENTIFICATION AND PRINCIPAL ACTIVITY (CONT’D):

(b) Operationally, the NHF is expected to achieve its mandate through the following programs: (i) Individual Benefits – pharmaceuticals and supplies are provided to individuals

to treat chronic illnesses under two programs:

(a) NHFcard – provides a drug subsidy for Jamaican residents of all ages, to treat prescribed chronic conditions; and

(b) JADEP – provide drugs, free of cost to Jamaican residents, 60 years of

age and older, and to treat prescribed chronic conditions.

(ii) Institutional Benefits – Grant funding is provided for health-related projects through two programs:

(a) Health Promotion and Protection Fund – This program covers a range of health prevention and promotional activities through private and public sector organizations; and

(b) Health Support Fund – This program covers infrastructural development and improvement in the public sector in support of the Government’s National Health Fund policy through the purchase of equipment, renovation and refurbishment of facilities and construction of new facilities. Pan American Health Organization’s (PAHO) essential Public Health Functions are also used as an evaluation guide.

(c) Cabinet Decision No. 5/17 dated 6 February 2017, gave approval for: (i) The rescission of the following elements of Decision 12/13 dated 23 March

2013:

(a) The creation of a new entity called National Health Fund Pharmaceuticals;

(b) The transfer of responsibility for the management and delivery of

pharmacy services from the portfolio of the Regional Health Authorities to the portfolio of National Health Fund Pharmaceuticals, with effect from 1 April 2013;

(ii) The transfer of the management and delivery of pharmacy services from the

portfolio of the Regional Health Authorities to the National Health Fund, with effect from 3 February 2014.  

 As at year ended 31 March 2018, fifteen public sector pharmacies have been taken over and are now operated under NHF.

(d) Effective 2017/2018, NHF became responsible for the salaries and wages of all public

sector pharmacies.  

71

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018  

1. IDENTIFICATION AND PRINCIPAL ACTIVITY (CONT’D):  

(e) Sustainability Study: The Board of Management directed that a sustainability study be conducted to assess the financial strength of the National Health Fund. KPMG Advisory Services was contracted in November 2016 to carry out the study. The advisors were required to conduct an assessment to determine the financial sustainability of the Fund’s functions and its related activities taking into consideration the Fund’s proposed business model which, subject to an agreement with the MOH and MOFP became effective 1 April 2017. Under the new business model NHF discontinued the mark-up charged to MOH and replaced it with billing on a cost recovery basis plus a 5% management fee. Under the base case scenario the key findings of the study indicated that, under the new business model:

• The Fund’s financial position will weaken while remaining profitable for the near term. (note 5 (e))  

• The Fund will have limited ability to provide additional benefits unless additional funding is received or existing individual benefits are restructured.  

 • The Fund will not be able to expand benefits and healthcare infrastructure in a

way that is consistent with its goal.    

The sustainability study is expected to inform Management’s action plans in relation to the Fund’s strategic imperatives. As ongoing support to NHF’s Management the advisors developed a financial model which is flexible and modular to enable the NHF to quickly respond to the evolving changes in the options presented.

(f) Public Sector Pharmacy Partner Pilot Programme

On December 19, 2016, the Fund launched its Public Sector Pharmacy Partner Pilot Programme. Under the programme NHF entered into an agreement with private pharmacies that allow for public sector patients to have their prescriptions filled at these pharmacies at an agreed fee. The pilot was to test the viability and how successful it could be in reducing waiting time in the public sector pharmacies and makes it more convenient for patients to get their medication. As at the year ended 31 March 2018, seventeen (17) pharmacies have partnered with the Fund on this initiative.

 2. REPORTING CURRENCY:

Items included in the financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (‘the functional currency’). These financial statements are presented in Jamaican dollars, which is considered the Fund’s functional and presentation currency. All amounts are presented in millions of Jamaica dollars ($M) unless otherwise indicated.

    72

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018  

3. SIGNIFICANT ACCOUNTING POLICIES:

The principal accounting polices applied in the preparation of these financial statements are set out below. The policies have been consistently applied to all the years presented.

 (a) Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and have been prepared under the historical cost convention as modified by the revaluation of property, plant and equipment that are measured at revalued amounts.

 The preparation of financial statements to conform to IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Fund’s accounting policies. Although these estimates are based on management’s best knowledge of current events and action, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4. New, revised and amended standards and interpretations that became effective during the year Certain new standards, interpretations to existing standards and amendments to existing standards have been published that became effective during the current financial year. The Fund has assessed the relevance of interpretations and amendments and has concluded there were no new standards or interpretations that became effective during the period that are applicable to the entity operations. New standards, amendments and interpretation not yet effective and not early adopted

  The following new standards, amendments and interpretations, which are not yet

effective and have not been adopted early in these financial statements.  

IFRS 9 ‘Financial Instruments’ (effective for periods beginning on or after 1 January 2018) The Fund is required to adopt IFRS 9, Financial Instruments from 1 January 2018. The standard replaces IAS 39, Financial Instruments: Recognition and Measurement and sets out requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. It contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through surplus or deficit (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale. Based on preliminary assessment, the Fund does not believe that the new classification requirements will have a material impact. However, the Fund is still in the process of its assessment and the final impact has not yet been determined.

 73

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018    3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):    

(a) Basis of preparation (cont’d)  

New standards, amendments and interpretation not yet effective and not early adopted (cont’d)

 IFRS 9 ‘Financial Instruments’ (effective for periods beginning on or after 1 January 2018) (cont’d) IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with a forward-looking ‘expected credit loss’ (ECL) model. This will require considerable judgement about how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. The new impairment model will apply to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments.

Under IFRS 9, loss allowances will be measured on either of the following bases:

(i) 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and

(ii) Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.

Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset’s credit risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime ECL measurement always applies for short-term receivables without a significant financing component. Management has not yet completed their assessment of the financial impact which this standard will have on the financial statements on adoption.

IFRS 15 ‘Revenue from Contracts with Customers’ (effective for periods beginning on or after 1 January 2018)

The Fund is required to adopt IFRS 15, Revenue from Contracts with Customers from 1 January 2018. The standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18, Revenue, IAS 11 Construction Contracts and IFRIC 13, Customer Loyalty Programmes.

                  74

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018    3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):    

(a) Basis of preparation (cont’d)

New standards, amendments and interpretations not yet effective and not early adopted (cont’d)

 IFRS 15 ‘Revenue from Contracts with Customers’ (effective for periods beginning on or after 1 January 2018) (cont’d)  

The Fund will apply a five-step model to determine when to recognize revenue, and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. Depending on whether certain criteria are met, revenue is recognized at a point in time, when control of goods or services is transferred to the customer; or over time, in a manner that best reflects the entity’s performance.

Management has assessed that the main impact of this standard is in respect of revenue. Based on preliminary review, IFRS 15 is not expected to have a material impact on the timing and recognition of revenue. However, management has not yet completed its assessment and the financial impact has not yet been determined. IFRS 16, 'Leases', (effective for accounting periods beginning on or after 1 January 2019). The standard primarily addresses the accounting for leases by lessees. The complete version of IFRS 16 was issued in January 2017. The standard will result in almost all leases being recognized on the statement of financial position, as it removes the current distinction between operating and finance leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short term and low-value leases. The accounting by lessors will not significantly change. Management is considering the implications of the standard and the impact of the Fund.

 Management is assessing the impact that these standards and amendments to standards will have on the financial statements when they are adopted.

 (b) Foreign currency translation

Foreign currency transactions are accounted for at the exchange rates prevailing at the dates of those transactions. Monetary items denominated in foreign currency are translated to Jamaican dollars using the closing rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated using the exchange rates as at the date of initial recognition.

 Exchange differences arising from the settlement of transactions at rates different from those at the dates of the transactions and unrealised foreign exchange differences on unsettled foreign currency monetary assets and liabilities are recognized in the statement of surplus or deficit.

   

75

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):    

(c) Property, plant and equipment

Items of property, plant and equipment are recorded at historical or deemed cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Fund and the cost of the item can be measured reliably. The carrying amount of any replaced part is derecognized. All other repairs and maintenance are charged to the statement of surplus or deficit and other comprehensive income during the financial period in which they are incurred. Depreciation is calculated on the straight line basis at such rates as will write off the carrying value of the assets over the period of their expected useful lives. Land is not depreciated. The expected useful lives of the other property, plant and equipment are as follows: Buildings 5% Leasehold improvements 33 1/3% Equipment, furniture and fixtures 20% Motor vehicles 20% Computer hardware 33 1/3%

  When an item of property, plant and equipment is revalued, at the date of revaluation,

the accumulated depreciation on the revalued asset is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued asset. On disposal of the asset the balance in the revaluation reserve is transferred to general fund.

Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are taken into account in determining surplus or deficit. The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each reporting date.

 (d) Intangible asset

Intangible asset which represents computer software is deemed to have a finite useful life of three years and is measured at cost, less accumulated amortisation and accumulated impairment losses, if any.

             

76

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):    

(e) Impairment of non-current assets

Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the greater of an asset’s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which, there are separately identified cash flows. Non financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

 (f) Financial instruments

A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity in another entity.

 Financial assets (i) Classification

The Fund classifies its financial assets as loans and receivables and held to maturity investments. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables) but also incorporate other types of contractual monetary asset.

The company’s loans and receivables comprise trade and other receivables, securities purchased under resale agreement and cash and cash equivalents. They are included in current assets.

Trade receivables are carried at original invoiced amount less provision for impairment.

             

77

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):  

(f) Financial instruments (cont’d)

Financial assets (cont’d)  

(i) Classification (cont’d)

Loans and receivables (cont’d)    

Securities purchased under resale agreement (“reverse repurchased agreement”) are transactions whereby securities are bought with simultaneous agreement for reselling the securities on a specific date at a specified price. Although the security is delivered to the “buyer” at the transaction date, title is not actually transferred unless the counterparty fails to repurchase the securities on the date specified. Reverse repurchase agreements are accounted for as short-term collaterised borrowing.

 Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand.

 Held to maturity investments

Held to maturity investments are non-derivative financial assets with fixed or determined payments and fixed maturity that the Fund has the positive intentional ability to hold to maturity. These are classified as non-currrent assets.

 (ii) Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Fund commits to purchase or sell the asset. Financial assets are initially recognized at fair value plus transaction costs for all financial assets. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Loans and receivables and held to maturity investments are subsequently carried at amotrized cost using the effective interest method.

 The Fund assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

             

78

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018    3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):  

(f) Financial instruments (cont’d)  

Financial assets (cont’d)

(ii) Recognition and measurement (cont’d)    

For loans and receivables impairment provisions are recognized when there is objective evidence that the Fund will not collect all of the amounts due under the terms receivable. The amount of the provision is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables which are reported net, such provisions are recorded in a separate allowance account with the loss being recognized in surplus or deficit. On confirmation that the trade receivable is uncollectible, it is written off against the associated allowance. Subsequent recoveries of amounts previously written off are credited to surplus or deficit.

 Financial liabilities

The Fund’s financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amotrized cost using the effective interest method. At the reporting date, the following items were classified as financial liabilities: payables and institutional benefits payable.

Payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if payments are due within one year or less.

(g) Inventories

Inventories, comprising pharmaceuticals and other medical supplies, are valued at the lower of weighted average cost and net realisable value. Cost represents invoice cost plus direct inventory-related expenses. Net realisable value is the estimate of the selling prices in the ordinary course of business, less selling expenses.

 (h) Employee benefits

(i) Defined contribution plan

The Fund provides post employment benefits through a defined contribution plan.

A defined contribution plan is a superannuation plan under which the Fund pays fixed contributions into a privately administered fund. The Fund has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution.

Contributions to the plan are recognized as an expense in the period that the relevant employee services are received.

79

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018      3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):  

(h) Employee benefits (cont’d)  

(ii) Vacation leave benefits    

Employees’ entitlements to annual leave are recognized when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to year end date.

 (i) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Fund and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, and other sales taxes or duty. Specific recognition criteria are as follows:

 (i) Remittances

Revenue is recorded on the accrual basis in respect of remittances collected by the following entities on behalf of the Fund: Tax Administration Jamaica - Special Consumption Tax (SCT) Jamaica Customs - Special Consumption Tax (SCT) and Tobacco Tax National Insurance Fund - National Insurance (NIS)

 (ii) Sale of goods

Revenue is recognized in the statement of comprehensive income when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably and there is no continuing management involvement with the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances and discounts.

(iii) Interest income

Revenue is recognized in the statement of surplus or deficit for all interest bearing instruments on an accrual basis using the effective interest rate method unless collectability is doubtful.

             

80

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):  

(j) Related parties

A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to in IAS 24 Related Party Disclosures as the “reporting entity” that is “the Fund”)

(a) A person or a close member of that person’s family is related to the Fund if that person:

(i) has control or joint control over the Fund;

(ii) has significant influence over the Fund; or

(iii) Is a member of the key management personnel of the Fund or of a parent of the Fund.  

 (b) An entity is related to the Fund if any of the following conditions applies:

(i) The entity and the Fund are members of the same group (which means

that each parent, subsidiary and fellow subsidiary is related to the others);  

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

 (c) An entity is related to the Fund if any of the following conditions applies

(cont’d):  

(iii) Both entities are joint venture of the same third party;  

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third party;  

 (v) The entity is a post-employment benefit plan established for the

benefit of employees of either the Fund or an entity related to the reporting entity;  

 (vi) The entity is controlled, or jointly controlled by a person identified in

(a); or    

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity)  

     

81

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):   (j) Related parties (cont’d)

A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. The Fund has a related party relationship with the Ministry of Health, Board of Directors and key management personnel which represents certain senior officers of the Fund.

 (k) Leases

Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to surplus or deficit on a straight line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which the termination takes place.

 (l) Reserves

General Fund Reserve -

 General Fund Reserve includes all current and prior retained surpluses and deficits, distributions to government, and transfers to the Trust Fund and Institutional Benefits Fund.

 Trust Fund Reserve - The Board of Management made a decision to implement a reserve named the Trust Fund as part of the Fund’s 25-year strategic plan, 2005-2030. The Trust Fund was originally designed to be financed by an allocation of 40% of revenue, effective January 2005. All returns realised on the Trust Fund’s investments are retained in the Trust Fund. However, during the 2007/2008 financial period, the Board of Management discontinued transfers of revenue to this account.

 Effective 1 April 2012 the Board of Management reinstituted an annual transfer of 5% of the remittance from the Government of Jamaica from the General Fund to the Trust Fund in keeping with the purpose for the Trust Fund, which is to: (i) preserve its long-term viability, sustainability and financial independence; and  

 (ii) meet its mission and the mandate under the NHF Act by increasing subsidies and

adding benefits as the basis of a more comprehensive National Health Insurance Plan.

 

82

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D):  

(l) Reserves (cont’d)    

Institutional Benefits Reserve -    

The Institutional Benefits Fund (IBF) was established by a decision of the NHF Board during the financial period 2005/2006. The IBF was established to facilitate the allocation of revenue for the approval of institutional benefits payments (see note 1 (b)(ii)). Allocation is based on the net revenue available after transfers to the Trust Fund and all operating expenses are charged against revenue.

(m) Grant income

Grant income is recognized when the grant is received. 4. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES:

Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 (a) Critical judgements in applying the Fund’s accounting policies

In the process of applying the Fund’s accounting policies, management has not made any judgements that it believes would cause a significant impact on the amounts recognized in the financial statements.

(b) Key sources of estimation uncertainty

The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

 (i) Fair value estimation

A number of assets and liabilities included in the Fund’s financial statements require disclosure at fair value.

 Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

       

83

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018  4. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D):

(b) Key sources of estimation uncertainty (cont’d)  

(i) Fair value estimation (cont’d)

The fair value measurement of the Fund’s financial and non-financial assets and liabilities utilizes market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorized into different levels based on how observable the inputs used in the valuation technique utilized are i.e. ‘the fair value hierarchy’:

Level 1 Quoted prices in active markets for identical assets or liabilities. (unadjusted)

Level 2 Inputs other than quoted prices included within level 1 that

are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

 The Fund has no financial instruments that are carried at fair value subsequent to initial recognition.

 (ii) Net realisable value of inventories

 Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made of the amount the inventories are expected to realise. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period.

Estimates of net realisable value also take into consideration the purpose for which the inventory is held (see note 3 (g)).

 (iii) Residual value and expected useful life of property, plant and equipment

The residual value and the expected useful life of an asset are reviewed at each financial year end, and if, expectations differ from previous estimates, the change is accounted for. The useful life of an asset is defined in terms of the asset’s expected value in use to the Fund.

            84

 NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

   5. FINANCIAL RISK MANAGEMENT:

The Fund is exposed through its operations to the following financial risks:

§ Credit risk § Liquidity risk § Market risk

In common with all other businesses, the Fund’s activities expose it to a variety of risks that arise from its use of financial instruments. This note describes the Fund’s objectives, policies and processes for managing those risks to minimize potential adverse effects on the financial performance of the Fund and the methods used to measure them. For the period under review (2017/2018) there was no substantive change in the Fund’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

 (a) Principal financial instruments

The principal financial instruments used by the Fund, from which financial instrument risk arises, are as follows:

 - Receivables - Securities purchased under resale agreement - Investments - Cash and cash equivalents - Institutional benefits payable - Payables

 (b) Financial instruments by category

Financial assets

  Loans and receivables Held to Maturity 2018 2017 2018 2017 $M $M $M $M

Cash and cash equivalents 749.30 646.70 - - Receivables 3,193.27 4,378.19 - - Securities purchased under resale agreement 5,328.39 4,406.08 - - Investments - - 4,557.96 4,785.32

  Total financial assets 9,270.96 9,430.97 4,557.96 4,785.32

        85

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018      5. FINANCIAL RISK MANAGEMENT (CONT’D):    

(b) Financial instruments by category (cont’d)   Financial liabilities

Financial liabilities at amortized cost 2018 2017 $M $M

Payables 1,172.54 771.89 Institutional benefits payable 1,619.07 1,575.30 Total financial liabilities 2,791.61 2,347.19

(c) Financial instruments not measured at fair value The fair value of held to maturity investments and securities purchased under resale agreements are disclosed in notes 8 and 11, respectively. The fair value is only calculated for disclosure purposes. The fair value of cash and cash equivalents, receivables, payables and short term institutional benefits payable is assumed to approximate their carrying value due to their short-term nature and/or ability to effect offset of amounts.

The fair value of long-term institutional benefits payable is assumed to approximate to its carrying value as no loss on realisation or discount on settlement is anticipated.

(d) Financial risk factors

 The Board of Management of the Fund, subject to provisions of the National Health Fund Act has the responsibility to establish a risk management framework for the general administration of the affairs of the Fund. The Board of Management is appointed by the Minister of Health with directives for the establishment of this framework.

 Risk management policies and procedures are established to identify, evaluate and analyse the risk faced by the Fund, to set appropriate controls, and to monitor adherence to the established standards.

86

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

5. FINANCIAL RISK MANAGEMENT (CONT’D):

(d) Financial risk factors (cont’d)  

The risk management policies may be affected by public policies, local laws and regulations and the Government of Jamaica’s socio-economic policies in specified areas. The Board of Management has the responsibility for establishing a risk management framework which incorporates these other policies. The Board of Management also establishes policies to address market and liquidity risks on an ongoing basis which are also monitored and reviewed regularly to reflect changes in current market conditions.  Risk management policies and systems are reviewed regularly to reflect relevant changes in the local statutory regulations, government policies and the social and economic environment. The Fund, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligation.

(i) Credit risk -

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Credit risk arises from trade and other receivables, and cash and cash equivalents, securities purchased under resale agreement and investment.

Cash and cash equivalents

Cash and cash equivalents are placed with approved financial institutions for short-term period and management believes that these institutions have a minimal risk of default. The Fund has policies that limit the amount of credit exposure to any one financial institution.

Securities purchased under resale agreement

Securities purchased under resale agreement are collateralized by Government of Jamaica securities.

  Investments

Investments are allowed primarily in secure liquid instruments and with counterparties that the Board of Management believes do not offer any significant credit risk and in Government of Jamaica securities. The Board of Management manages credit risk by having an investment policy which includes written authority levels and prior approval by the Board of Management of significant investment transactions. Based on its assessment, the Board of Management does not expect any counterparties to fail to meet their obligations.

      87

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

5. FINANCIAL RISK MANAGEMENT (CONT’D):

(d) Financial risk factors (cont’d)

(i) Credit risk (cont’d) -

Investments (cont’d)

There are no off-balance sheet investments and, therefore, the maximum exposure to credit risk, i.e., the maximum amount of loss that the Fund would suffer were all counterparties to default at once, is represented by the total carrying amount of financial assets.

Trade receivables

Revenue transactions in respect of the Fund’s primary operations are settled either in cash, cheque or direct transfer. For its operations done on a credit basis, the Fund has policies in place to ensure that sales of goods are made to customers with an appropriate credit history.

Other receivables

The other concentration of the Fund's credit risk is with remittances receivable and trade receivables from other government institutions and non-government trade receivables. Receivables from non-government institution is mitigated by regular credit evaluation of those customers with the result that the Fund's exposure to bad debts is not considered to be significant to the end of the reporting period.

Maximum exposure to credit risk

Amounts due from contributing Government of Jamaica departments are followed up for collection. There is significant concentration of credit risk as approximately 87% (2017: 90%) of sales is generated from the Government of Jamaica's (GOJ's) health facilities, which represents approximately 96.9% (2017: 95.7%) of the trade receivables balance as at the end of the reporting period. Receivables due from the GOJ's health facilities are not expected to become uncollectible within the next twelve (12) months from the end of the reporting period.

The aging of the amount due from Ministry of Health at the end of the reporting date is as follows:

2018 2017 $M $M Current 166.10 520.63 1-2 months past due 537.34 458.00 2-3 months past due 230.44 402.59 More than 3 months past due 4,238.09 2,879.00

5,171.97 4,260.22

88

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

 31 MARCH 2018

5. FINANCIAL RISK MANAGEMENT (CONT’D):

(d) Financial risk factors (cont’d)

(i) Credit risk (cont’d) -  

Maximum exposure to credit risk (cont’d)   The aging of remittance and other trade receivables at the end of the reporting date is as follows:  

2018 2017 $M $M Current 861.04 770.30 1-2 months past due 17.59 13.08 2-3 months past due 5.05 48.14 More than 3 months past due 1,190.87 970.49

  2,074.55 1,802.01  

 Receivables that are past due but not impaired.  

2018 2017 $M $M Receivables – Pharmaceutical and Drug Serv Division 22.13 879.00 Remittances receivable in respect of taxes and other receivables 394.01 601.32 Short-term receivables 129.47 229.47

 - 545.61 1,709.79

 As at 31 March 2018, receivables of $545.61M (2017 – $1,709.79M) were past due but not impaired.

 Receivables that are past due and impaired Movements on the provision for impairment of receivables are as follows:

2018 2017 $M $M

At 1 April 2,000.00 - Increase in provision for impairment of receivables 3,057.08 2,000.00 At 31 March 5,057.08 2,000.00

89

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

 5. FINANCIAL RISK MANAGEMENT (CONT’D):

(d) Financial risk factors (cont’d)

(i) Credit risk (cont’d) -  

Trade receivables that are past due and impaired (cont’d)  

The creation of a provision for impaired receivables have been included in expenses in surplus or deficit. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. Impairment estimates have been adjusted based on actual collection patterns.

 (ii) Liquidity risk

Liquidity risk, also referred to as a funding risk, is the risk that the Fund will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at or close to, its fair value. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed facilities.

 Due to the nature of the business, management aims at maintaining flexibility in funding by following up on revenue and receivables and by maintaining marketable securities and other financial instruments.

 An analysis of the contractual undiscounted cash flows of the Fund's financial liabilities is presented below. The analysis is provided by estimating the timing of the amounts recognized on the statement of financial position.

  31 March 2018 .

       Total   Within 3 3 to 12 Over 12 Cash Carrying

Months Months Months Outflow amount $M $M $M $M $M

Financial liabilities Payables 953.34 219.20 - 1,172.54 1,172.54 Institutional benefits payable 169.85 746.74 702.48 1,619.07 1,619.07 1,123.19 965.94 702.48 2,791.61 2,791.61

   

90

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

 31 MARCH 2018

5. FINANCIAL RISK MANAGEMENT (CONT’D):  

(d) Financial risk factors (cont’d)  

(ii) Liquidity risk (cont’d)  

31 March 2017 .        Total   Within 3 3 to 12 Over 12 Cash Carrying

Months Months Months Outflow amount $M $M $M $M $M

Financial liabilities Payables 698.70 73.19 - 771.89 771.89 Institutional Benefits payable 243.57 1,070.90 260.83 1,575.30 1,575.30 942.27 1,144.09 260.83 2,347.19 2,347.19

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange and interest rates, will affect the Fund's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the returns on risk. Market risk exposures are measured using sensitivity analysis. All sensitivity analysis rates under IFRS 7 included in these financial statements are recommended by the Institute of Chartered Accountants of Jamaica (ICAJ).

  (i) Foreign currency risk

Foreign currency risk is the risk that the market value of, or the cash flows from, financial instruments, will fluctuate because of changes in foreign exchange rates.

Foreign currency risk arises primarily on transactions that are denominated in a currency other than the Jamaican dollar. Such exposures comprise the monetary assets and liabilities of the Fund that are not denominated in the functional currency of the Fund.

The principal foreign currency risks of the Fund are denominated in United States dollar (US$).

The Fund manages foreign exchange exposure by maintaining adequate liquid resources in foreign currencies and by managing the timing of payments of foreign currency liabilities.

   

91

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

5. FINANCIAL RISK MANAGEMENT (CONT’D):  

(d) Financial risk factors (cont’d)  

(iii) Market risk (cont’d)  

(i) Foreign currency risk (cont’d)  

The principal foreign currency risks of the Fund, are as follows

2018 2017 US$M US$M Cash and cash equivalents 0.95 2.61 Securities purchased under resale agreement 16.66 14.43   Investments 25.79 27.03 Payables ( 8.17) ( 0.34)   35.23 43.73

The bank of Jamaica exchange rates in terms of Jamaican dollars to United States dollars were as follows:

Exchange rates 31 March 2018 124.65 31 March 2017 127.77

Sensitivity analysis:

 A 4% (2017: 6%) strengthening of the United States dollar against the Jamaican dollar would have increased the surplus/decreased the deficit for the year by $175.66M (2017: $335.24M). A 2% (2017: 1%) weakening, would have decreased the surplus/increased the deficit by $87.83M (2017: $55.87M). This analysis assumes that all other variables, in particular interest rates, remain constant.

 The analysis is done on the same basis as in 2017.

               

92

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018 5. FINANCIAL RISK MANAGEMENT (CONT’D):  

(d) Financial risk factors (cont’d)  

(iii) Market Risk (cont’d) (ii) Interest rate risk

Interest rate risk is the risk of loss from fluctuations in future cash flows or from fair value movements of financial instruments due to changes in market interest rates.

 At the reporting date, the interest profile of the Fund’s interest bearing financial instruments was:

Carrying amount 2018 2017 $M $M Fixed rate instrument: Financial assets 7,153.04 6,808.00 Variable rate instrument: Financial assets 2,733.31 2,383.40     Fair value sensitivity analysis for fixed rate instruments

The Fund does not account for any fixed rate financial assets at fair value through the statement of surplus or deficit and other comprehensive income (OCI). Therefore, a change in interest rates at the reporting date would not affect the statement of comprehensive income.

Cash flow sensitivity analysis for variable rate instruments:

Increase/(decrease)

In surplus 2018 2017 $M $M 0.5% (2017: 1%) increase 13.67 23.83 0.5% (2017: 0.5%) decrease (13.67) (11.92)

The analysis assumes that all other variables, in particular, foreign currency rates remain constant.

     

93

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018    5. FINANCIAL RISK MANAGEMENT (CONT’D):  

(e) Reserve management

The Fund’s objectives when managing reserves are to safeguard the Fund’s ability to continue as a going concern, in order to meet all future liabilities and expenses and to fulfil its mandate. In order to assess its ability to achieve this the Board of Management directed that a sustainability study be conducted. The sustainability study was carried out by KPMG Advisory Services giving consideration to the proposed business model as described in note 1d.

 In 2017, as part of the transition to this proposed arrangement, management had proposed to the MOH a write-off of $2,000M of existing receivables, contingent upon a payment plan being agreed among NHF, MOH and MOFP with respect to the remaining balance. As at 31 March 2018, no agreement has been arrived at and management has provided for an additional amount of $2,260.22M which relates to amounts due from MOH for over 365 days.

 Under the new arrangement, whereby a fee is charged for managing the supply of pharmaceuticals to MOH pharmacies, the cash flow burden on the NHF has been reduced, since MOH has been settling amounts outstanding in a timely manner.

                                           

94

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018    6. PROPERTY, PLANT AND EQUIPMENT:

Furniture, Leasehold Fixtures & Improvements Office Motor & Building Equipment Vehicles Total $M $M $M $M Cost/deemed cost - 1 April 2016 99.73 228.01 94.34 422.08 Additions 51.35 86.12 - 137.47 Disposal ( 60.71) - ( 5.59) ( 66.30) . Revaluation - (160.67) - (160.67)   Adjustment 88.08 37.72 10.71 136.51   31 March 2017 178.45 191.18 99.46 469.09   Additions 61.33 127.82 26.35 215.50   31 March 2018 239.78 319.00 125.81 684.59     Depreciation - 1 April 2016 18.76 125.26 27.98 172.00 Charge for the year 7.46 35.81 17.29 60.56 Disposal ( 60.71) - ( 4.10) ( 64.81) . Revaluation adjustment - (163.37) - (163.37) Adjustment 88.12 38.81 10.75 137.68   31 March 2017 53.63 36.51 51.92 142.06   Charge for the year 8.69 61.48 20.90 91.07   31 March 2018 62.32 97.99 72.82 233.13   Net Book Value - 31 March 2018 177.46 221.01 52.99 451.46 31 March 2017 124.82 154.67 47.54 327.03  

The assets of the National Health Fund classified as computer hardware, furniture, equipment, fixtures and fittings located at its Head Office facilities at 25 Dominica Drive, Kingston 5 and its other seventeen locations islandwide were appraised by Delano Reid and Associates Limited during the period 19 January 2017 to 31 March 2017. The appraisal was done in order to determine the deemed cost for the assets assessed.

       

 

95

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018    7. INTANGIBLE ASSETS: Computer software $M

Cost: 1 April 2016 56.22 Additions 5.33 31 March 2017 61.55 Additions 1.86   31 March 2018 63.41  

Amortisation: 1 April 2016 44.13 Charge for the year 7.40   31 March 2017 51.53 Charge for the year 7.50   31 March 2018 59.03

Net Book Value: 31 March 2018 4.38 31 March 2017 10.02  8. INVESTMENTS:

2018 2017 $M $M

Held to maturity: Government of Jamaica Bonds

8.00% - 10.625% (2017: 8.00% - 10.625%) United States dollar bonds $25.79M (2017: $27.03M) 3,237.80 3,481.02 10% (2017: 10%) Jamaica dollar bonds 1,320.16 1,304.30   4,557.96 4,785.32

The fair value of the Government of Jamaica Bonds is $5,257.34M (2017: $5,327.55M) a level 2 recurring fair value measurement.

  The terms to maturity of these bonds are analysed as follows:

2018 2017 $M $M Long-term investments: Over 5 years 4,557.96 4,785.32

96

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018      9. INVENTORIES:

2018 2017 $M $M Pharmaceuticals and other supplies 1,850.88 1,456.15 Goods-in-transit 144.34 52.57 Less: allowance for impairment ( 1.60) ( 1.60) 1,993.62 1,507.12

10. RECEIVABLES: (a) Due from the Ministry of Health

2018 2017

$M $M Amount receivable in respect of Pharmaceutical and Drug Serv Division 5,171.97 4,260.22 Provision for impairment of receivables (4,260.22) (2,000.00).

  911.75 2,260.22

 A provision has been recognized for MOH balances greater than 365 days.

 (b) Other receivables at the end of the reporting date were as follows:  

  2018 2017 $M $M Remittance receivables in respect of taxes 1,853.00 1,610.82 Other trade receivables 221.55 191.19

2,074.55 1,802.01 Less provision for impairment of remittance receivables ( 796.86) -

1,277.69 1,802.01 Interest receivable 77.50 86.49 GCT recoverable 543.84 470.03 Other 316.73 309.71 Current maturities of long-term receivables 129.47 229.47

  2,345.23 2,897.71  

97

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS  

31 MARCH 2018

 10. RECEIVABLES (CONT’D):  

Other receivables include $82.91M (2017: $89.07M) due from the Ministry of Health Jamaica Second HIV/STI project.

 11. SECURITIES PURCHASED UNDER RESALE AGREEMENTS:

2018 2017 $M $M Trust Fund 4,799.70 3,841.35 General Fund 528.69 564.73 5,328.39 4,406.08

 The fair value of the underlying securities, held in respect of resale agreement, amounted to:

2018 2017 $M $M Trust Fund 5,446.19 4,068.00 General Fund 771.96 581.44 6,218.15 4,649.44

12. CASH AND CASH EQUIVALENTS:

2018 2017 $M $M

Interest-bearing accounts 746.44 643.78 Non-interest bearing accounts 2.86 2.92 749.30 646.70

                             

98

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018      13. TRUST FUND:

2018 2017 $M $M Balance at beginning of year 8,746.40 7,724.23 Foreign exchange (loss)/gain ( 130.06) 255.68 Interest income 466.35 400.13 5% remittance from GOJ transferred from general fund 399.90 366.36 9,482.59 8,746.40

  At the reporting date, the Trust Fund is represented by:

2018 2017 $M $M Investments (note 8) 4,557.96 4,785.32 Securities purchased under resale agreements (note 11) 4,799.70 3,841.35 Revenue receivables 124.93 119.73 9,482.59 8,746.40

   14. INSTITUTIONAL BENEFITS PAYABLE:

As at the reporting date, institutional benefits committed and payable were as follows:

2018 2017 $M $M Balance at April 1 1,575.30 1,812.16 Projects approved during the year 1,826.56 1,950.74 Amounts disbursed during the year (1,457.70) (2,166.90) Amounts written back ( 325.09) ( 20.70) Balance at 31 March 1,619.07 1,575.30 Less: current portion ( 916.59) (1,314.47)

702.48 260.83

99

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

 31 MARCH 2018  

 15. PAYABLES:  

2018 2017 $M $M Trade payables: Head Office (JADEP Drugs) 0.28 0.77 Pharmaceutical and Drug Serv Divisions 1,172.26 771.12

Statutory deductions 37.56 23.21 Accrued incentive 86.33 93.11  Accrued vacation leave 52.89 52.44 GCT payables 55.01 91.68  Other payables and accrued charges 310.98 225.03

  1,715.31 1,257.36

 The aging of the trade payables in respect of the Pharmaceutical and Drug Serv Divisions at the end of the reporting date is as follows:   2018 2017 $M $M 0-30 days 322.83 281.53 31-60 days 343.66 270.94 61-90 days 287.35 145.46 More than 90 days 218.92 73.19

  1,172.26 771.12  

 Other payables and accrued charges include amounts accrued for pension and other staff related costs.  

16. GRANT INCOME:    

During the year grant income was received from the Tourism Enhancement Fund (TEF) and the Culture, Health, Arts, Sports and Education (CHASE) Fund, in relation to the Cancer Treatment Centres Project at Cornwall Regional Hospital and St. Josephs Hospital as follows:

  2018 2017 $M $M CHASE Fund 105.00 444.52 TEF 73.11 38.37

  178.11 482.89

100

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

  17. STAFF COSTS:

2018 2017 $M $M Salaries 1,130.41 990.78 Employer’s contributions 87.75 81.68 Other payroll costs 104.89 120.03

1,323.05 1,192.49

The number of persons employed by the Fund at the end of the year was:

             2018 2017   Temporary 296 174

Permanent 228 241  18. EMPLOYEE BENEFITS:

The Board of Management operates a contributory pension scheme which became effective 1 November 2011, for all employees who have satisfied certain minimum service requirements. The scheme is a defined contribution plan and is administered by Victoria Mutual Pensions Management Limited (formerly Prime Asset Management Limited).

Contributions made during the year amounted to $38.96M (2017: $38.89M).

                                     

101

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018  

 19. EXPENSES BY NATURE:

Total administration and other expenses:

Head

Office

Pharmac

eutical Division

Drug

Serv Division 2018 2017

$M $M $M $M $M

Depreciation and amortization 32.93 28.03 37.61 98.57 67.96 Rental of building 17.00 22.19 4.18 43.37 39.93 Rental of equipment - 1.62 1.88 3.50 3.69 Maintenance - building 31.89 22.04 14.60 68.53 54.98 Insurance 4.30 4.76 2.84 11.90 12.81 Professional fees 9.81 2.03 4.70 16.54 25.34 Legal fees 1.20 2.07 - 3.27 5.52 Board meeting expenses 2.59 - - 2.59 2.11 Refurbishing expenses - - 20.15 20.15 11.11 Motor vehicle expenses 3.20 - - 3.20 2.44 Repairs & maintenance - equipment, fixtures

and furniture 36.40 10.10 48.65 95.15 73.70 Other administrative costs 5.65 0.93 1.78 8.36 13.94 Postage and courier 1.26 0.53 3.22 5.01 3.28 Information technology expense 14.49 - - 14.49 23.58 Printing, stationery and office supplies 20.53 7.55 31.90 59.98 48.80 Temporary staff salary - 12.70 262.09 274.79 174.92 Audit fees - current year 2.67 2.34 3.93 8.94 8.09 - prior year overprovision - - - - (9.52) Summer employment programme 20.26 - - 20.26 13.53 Consultancy fees - NHIP 95.81 - - 95.81 - Staff welfare 2.40 1.35 3.19 6.94 7.14 Staff training 6.84 3.87 5.00 15.71 19.42 Security 1.19 25.65 32.20 59.04 51.67 Dues, subscription and donations 0.39 0.12 - 0.51 0.28 Board fees 1.18 - - 1.18 1.33 Utilities - 34.56 12.39 46.95 25.87 Local & overseas travel and accommodation 1.72 4.00 16.14 21.86 19.79 Cleaning & sanitation - 7.57 6.77 14.34 7.58 Telephone and fax expenses 13.05 7.76 23.31 44.12 29.15 Pension fund management fees - - - - 0.17 Bank processing fees 1.14 4.42 7.53 13.09 13.49 Dispensing fees - - 24.81 24.81 2.87

327.90 206.19 568.87 1,102.96 754.97

102

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018  20. RELATED PARTY BALANCES AND TRANSACTIONS: (a) Surplus/(deficit) for the year includes the income earned from, and expenses incurred

in transactions with related parties, as follows: 2018 2017 $M $M

 Remittances in respect of share of taxes 7,997.86 7,327.31 Operating revenue - Pharmaceutical Division 1,892.46 2,506.82 - Drug Serv Division 2,631.67 3,382.96 Ministry of Health - HIV Management project 9.09 30.34 - Management fees 308.23 - - Recoverable expenses 1,668.44 -  Interest income on investments in GOJ securities 131.02 129.53 Institutional benefits expensed relating to various GOJ health related projects (1,823.68) (1,929.51)

  (b) Key management compensation –

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Fund, directly or indirectly, including any Director. The Board of Management and ten senior executives of the Fund are its “key management” personnel. Compensation for such persons was as follows:

2018 2017 $M $M  

Board of Management and Executives Emoluments:- Fees (note 19) 1.18 1.33 Management remuneration (Included in staff costs) 63.40 58.92 Other key management personnel - short-term

employee benefits (Included in staff costs) 36.22 41.26 Board meeting expenses (note 19) 2.59 2.11 103.39 103.62

  (c) Year-end balances arising from transactions with related parties

2018 2017 $M $M

 Investments in GOJ securities (note 8) 4,557.96 4,785.32 Amount due from Ministry of Health (note 10) 5,171.97 4,260.22 Remittances receivable in respect of share of taxes from Tax Administration Jamaica, Jamaica Customs and National Insurance Fund (note 10) 1,853.00 1,610.82 Payables (statutory deductions) (note 15) 37.56 23.21 Institutional Benefits payable to Ministry of Health (for health related projects) 1,614.00 1,561.88 Amount due from Ministry of Finance, Planning and the Public Service (note 10) 129.47 229.47

 

103

 

NATIONAL HEALTH FUND

NOTES TO THE FINANCIAL STATEMENTS

31 MARCH 2018

21. LEASE COMMITMENTS:

Rentals are payable by the Fund under operating lease agreements as follows:   2018 2017 $M $M Within 12 months 59.31 63.05 Subsequent years 49.76 28.78 109.07 91.83  22. MINISTRY OF HEALTH - JAMAICA SECOND HIV/STI PROJECT:

Health Corporation Limited had a contractual arrangement with the Ministry of Health (MOH) (acting through the Project Coordination Unit of the Jamaica Second HIV/STI Project), for the procurement, transportation and storage of drugs and other medical supplies. This contractual arrangement was assumed by National Health Fund upon the transfer of assets and liabilities and operations of Health Corporation Limited. The agreement was scheduled to continue for the duration of the project to 30 November 2012, or as extended based on further arrangements.

 At the reporting date, the project was not yet closed.

104

Position

Board MemberBoard MemberBoard MemberBoard MemberBoard MemberCommittee MemberCommittee MemberCommittee MemberCommittee MemberBoard MemberBoard MemberBoard MemberBoard Member

Grand Total

Directors/co-optedMembers

Director 1

Director 2

Director 3

Director 4

Director 5Co-opted Member 1

Co-opted Member 2

Co-opted Member 3

Co-opted Member 4

Director 6

Chairman

Director 7

Director 8

Stipend for Secretary-audit CommitteeEmployer Statutory

Meeting Cost

Mileage/Travelling

Board Retreat

Board Fees

42,000.00

112,000.00

84,000.00

154,000.00

135,000.00

14,000.00

130,000.00

184,000.00

140,000.00

154,000.00

28,000.00

1,177,000.00

34,500.00

94,300.00

73,600.00

186,500.00

75,100.00

6,900.00

27,600.0027,600.00

103,500.00

134,900.00

41,400.00

2,500.00

59,280.00

867,680.00

Total Gross Paid to Members

76,500.00

206,300.00

84,000.00227,600.00

321,500.00

89,100.00

6,900.00

27,600.00

157,600.00

287,500.00

274,900.00

195,400.00

28,000.00

2,500.00

59,280.00

540,214.04

692,085.28

497,146.00

3,774,125.32

692,085.28

692,085.28

MVMileage

Committee Fees

Other

Position ofDirector

Fees

Motor VehicleUpkeep/Travelling or Value of Assignment

of Motor VehicleHonoraria Total

Board Members 1,177,000.00

867,680.00

1,177,000.00

867,680.00

540,214.04

497,146.00

692,085.28

Committee

Meeting Cost

Board Retreat

Mileage/Travelling

540,214.04

497,146.00

692,085.28

All Other Compensation

including Non-Cash Benefits as applicable

Directors Compensation 2017/2018

NB: Where a non-cash benefit is received (e.g. government housing), the value of that benefit shall be quantified and stated in the appropriate column above.

Board Directors April 2017-March 2018

540,214.04

497,146.00

1,037,360.04

Emolument Package

105

Position OfSenior Executive

CEO

Snr VP Finance

Snr VP ICT

VP Operations

Chief Internal Audit

VP Pharmaceutical

VP Human Resource and Administration

VP Drug Serv

Procurement Specialist

Project Manager

Year

2017/2018

2017/2018

2017/2018

2017/2018

2017/2018

2017/2018

2017/2018

2017/2018

2017/2018

2017/2018

Salary

$M

9,655,632.00

6,455,482.50

7,097,112.41

5,927,693.94

5,349,255.97

4,846,161.35

5,363,116.73

4,606,282.91

7,660,436.57

6,434,307.07

Total

$M

16,953,233.28

10,634,377.51

10,223,443.55

8,785,900.79

8,051,774.64

8,071,400.80

7,904,561.11

7,407,014.76

11,542,817.17

10,038,645.72

Gratuity & Performance

Incentive

$M

3,865,701.24

2,475,564.46

1,006,848.10

846,813.42

748,969.03

1,956,175.27

554,456.25

1,148,223.36

2,463,756.56

2,185,714.61

Travelling Allowance or

Value of Assigment of Motor Vehicle

$M

1,341,624.00

1,024,596.41

1,332,771.76

1,341,624.00

1,341,624.00

707,448.00

1,341,624.00

1,190,656.81

1,341,624.00

1,341,624.00

Other Allowances (Security &

Lunch Allowance)

$M

98,000.04

59,144.96

77,000.04

77,000.04

77,000.04

77,000.04

77,000.04

66,677.57

77,000.04

77,000.04

Non-Cash Benefits

(housing)

$M

1,992,276.00

Pension or Other

Retirement Benefits

$M

0.00

619,589.18

709,711.24

592,769.39

534,925.60

484,616.14

568,364.09

395,174.11

0.00

0.00

Senior Executive Compensation 2017/2018

** Other Allowances represents lunch and security allowance for 2017/2018 where eligible Notes 1. Where contractual obligations and allowances are stated in a foreign currency, the sum in that stated currency must be clearly provided and not the Jamaica equivalent. 2. Other Allowances (including laundry,entertainment, housing utility, etc) 3. Where a non-cash benefit is received (e.g. government housing), the value of that benefit shall be quantified and stated in the appropriate column above.

106

NATIONAL HEALTH FUND

HEAD OFFICE: 6th Floor, The Towers, 25 Dominica Drive, Kingston 5, St. Andrew,Jamaica

Telephone: (876)906-11061-888-DIAL NHF (342-5643)1-888-GO JADEP (465-2337)FACSIMILE: (876)906-1105

EMAIL:info@nhf.org.jm

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