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EXCLUSIVE: ‘NHIS on the brink of collapse’ – governing council raises the alarm

EXCLUSIVE: ‘NHIS on the brink of collapse’ – governing council raises the alarm
September 10
07:58 2018
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Six months after Usman Yusuf, executive secretary of the National Health Insurance Scheme (NHIS) was recalled from suspension, he has been enmeshed in a fresh crisis with the governing council of the scheme accusing him of running it into “ruin”.

On July 6, Isaac Adewole, minister of health, suspended Yusuf over allegations of fraud levelled against him. Insiders had told TheCable that since his appointment on July 29, 2016, Yusuf had violated procurement laws and dished out contracts to cronies.

He later got back to office after the house of representatives called for his reinstatement, pending the outcome of the probe into the issue.

But the executive secretary (ES) is facing fresh allegations from the governing council that his office is pushing the NHIS to near collapse, according to documents seen by TheCable.

In a letter addressed to Adewole and obtained by TheCable, the council raised an alarm that unless an urgent intervention is done, the risk of the pending collapse “will have catastrophic consequence for the Buhari change mandate.”

The letter, signed by Enyantu Ifenna, chairman of the council, and dated August 8, raised various issues of concern, including “dwindling annual revenues”, “inefficient operations” and “alarming net operating cash position”.

The council said, for instance, that whereas the scheme’s total annual revenue should be on the increase, it has continued to decline since 2015, blaming this on “shortfalls in the remittance of enrollee’s contributions.” It noted that the contributions the scheme is getting from the federal government enrolees reduced from N6 billion in 2017 to N4.2 billion in 2018 “whereas a recent forensic audit revealed that about N138 billion is currently trapped in commercial banls”.

NHIS net operating cash position

S/NDescriptionAmount (N)
1Operating cash inflow (contribution)44,919,911,789.97
2Operating cash outflow (transfers)40,365,885,161.81
3Net operating cash position4,554,026,628.16

It also expressed reservations with the scheme’s 2018 budget which it said does not conform to standard accounting practices, and is ruined with cases of alleged padding that would lead to the loss of N265 million, “arbitrary inclusion of $28 million” projects on information and communication technology and “disturbing budget deficit of N36 billion” (with projected expenditure of N80.8 billion when the projected revenue for the year [2018] Is N45 billion).

‘N61M FOR RENOVATION OF ES OFFICE’

The governing council said the overall 2018 budget proposal was “skewed towards administrative costs in the headquarters to the detriment of field operations” and that “in fact, expenditure in zonal and sates offices is skeletal and for the most part token.”

“Conversely, direct expenditure from the executive secretary’s office, which was increased from N945,254,250.00 to an unjustifiable sum of N12,649,331,850.00 by management in its second submission, mostly targets external beneficiaries, not covered by NHIS enabling Act,” the letter read.

“First, this misapplication of funds is financially reckless. Secondly, it has legal, policy and operational implications for the scheme if this trend continues. For example the budget proposals allocated N100,000,000.00 for corporate social responsibility, N10,000,000,000.00 for tertiary health institutions, N300,000,000.00 for flood victims and internally displaced persons, and even included N61 million to renovate CEO office. This reckless spending is unsustainable and contravenes NHIS act. Accordingly, Council stepped down the controversial proposals.”

‘OVERSTAFFING’, ‘PUNITIVE STAFF POSTINGS’

The council said the NHIS is overstaffed – with 133 drivers at the moment – and that it has also been reeling from the effect of “punitive postings”.

It said the scheme’s administrative costs currently constitute 43.63% of revenue compared with 10% and 5% in Federal Inland Revenue Service and Tertiary Education Trust Fund respectively, adding that “ironically, NHIS has serious capacity gaps despite the overstaffing.”

“About 200 NHIS staff were posted in 2017, many of them twice in the same year. Although, the strategic benefit of the postings is doubtful, the financial cost, in staff relocation/disturbance allowance was about N500,000,000.00. Despite the colossal waste, yet, the 2018 budget still proposed N100,000,000.00 for staff postings without justification,” the letter read.

“Council approved four strategic objectives for the 2018 financial year namely. Council also directed management to present a road map for actualizing these objectives. Unfortunately, there is no link between the proposed budget and the road map.

“Significantly, less than 5% of total expenditure is dedicated to activities that may actualise the strategic objectives. To address these flaws, council directed the inclusion of development of a 5-year strategic plan within the 2018 fiscal year.”

The governing council further lamented that some of the scheme’s operations are inefficient and are eating deep into its accounts. It said while the act enabling the NHIS stipulates it is expected to cover its administrative costs from 10% of its revenues, factors such as “poor management decisions, overstaffing and frivolous expenditures” have pushed administrative costs to 43.63% of its entire revenue.

It allayed fears that from the assessment of NHIS operations in the last six months, “the sad reality is that NHIS is dysfunctional and financially vulnerable.”

“It is evident that the convergence of recurring financial mismanagement, organizational fatigue and the unpredictable and conflict-driven leadership style of the Executive Secretary has steered the agency to the brink.

“We foresee two consequences arising from this sad reality. First, NHIS cannot deliver universal health insurance to Nigerians in 100 years in Its current state. Secondly, the risk its collapse in the medium term is real and will have catastrophic consequence for the Buhari change mandate because possible outcomes in the health arena, such as expanded health insurance coverage to more Nigerians, would literally touch lives and underscore the change philosophy of this administration. For these reasons and for the sake of three million Nigerians currently enrolled and millions more who need access to health insurance, NHIS must be pulled from the brink.”

TheCable reached out to Yusuf to respond to the allegations but neither responded to calls nor replied a text message sent.

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