The report is finally out. Wonder how their patients are feeling about this. Betrayed, I think. Downright betrayed...

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Patients got just 10 cents from every $1 donated

Ex-management had claimed it was 52 cents. Patient and subsidy figures also misleading

By Salma Khalik Dec 20, 2005 The Straits Times

ONLY 10 cents out of every dollar donated to the National Kidney Foundation (NKF) went towards the direct treatment of patients, not 52 cents as claimed by the charity organisation.
This misleading statement was among several made by the former NKF management on its patient care that was disclosed in auditor KPMG's report released yesterday.

NKF also inflated the number of patients it treated and the amount it gave out in subsidies.And instead of giving its dialysis patients cheaper care, NKF made 'high gross profits' from its sale of drugs to them.

KPMG uncovered these findings after five months of scrutinising the way NKF used to work.
It concluded: 'By means of creative presentation of numbers and a liberal and casual definition of 'beneficiaries', the true extent of assistance given by NKF was misrepresented.'

The misleading information included:

Number 1:

Last year, NKF said it supported 2,000 patients. The actual figure: 1,745.

The difference may appear small, but when used to calculate how much it would need to care for patients over 10 years, it is 'an overstatement of $62.4 million'.

NKF claims to have helped 5,000 to 6,000 patients over the years.
The actual number was 3,388, which is 30 to 40 per cent lower than claimed.

Number 2:

The NKF Children's Medical Fund said it helped between 2,900 and 3,600 chronically ill children and their families.

KPMG called the figure an 'overstatement' as only 145 got financial subsidies.

The higher figure was because everyone who had used the fund's equipment and subsidised medical treatment was included. There was also double-counting of patients attended to by the fund's nurses, educators or therapists.

Number 3:

NKF's letters to donors said the Children's Medical Fund had supported '45,000 suffering children and their families'.

But this number included all primary school pupils who had health screenings done at their schools by NKF.

Number 4:

NKF pegged the cost of haemodialysis at $2,600 per patient per month. By KPMG calculations, it was $1,502, about $1,100 less.

The NKF arrived at its inflated figure by including the cost of many non-related items like public health screenings, public relations and education, non-dialysis programmes, drug costs and even the amount for peritoneal dialysis.

It also charged $1.2 million a year - or 90 per cent of the running cost of its chief executive officer's office - as part of treatment cost.

'It is unlikely the CEO would have spent 90 per cent of his time on clinical activities, much less haemodialysis in particular,' said KPMG. It used 50 per cent in its calculation.

Number 5:

NKF claimed its patient subsidy averages $1,475 a month. The actual subsidy: $377 a month. The subsidy per patient is, therefore, 25 per cent, not 57 per cent as claimed.

NKF said it saved patients more than $3.5 million by offering them lower drug prices and subsidies. This was not true. It made close to $1 million each year, in 2003 and 2004, in gross profit from the sale of such drugs.

The gross profit margin worked out to almost 40 per cent each year. And that was because NKF did not pass on the rebates it got on its bulk purchase of medicine.

For example, it said one drug cost $25. It gave patients a $13 discount and charged them $12. But NKF paid only $8.20 for the drug. It pocketed a 46 per cent profit.

Number 6:

Last year, NKF claimed in fund-raising materials that it helped or served more than 260,000 people every year through its health-care programmes. But this included the 45,000 Children's Medical Fund beneficiaries and about 210,000 who went for its health screenings in 2003.
Said KPMG: 'We are of the view that the number of 260,000 is inappropriate since a majority of this number consisted of persons who attended the NKF health screenings.'

Original source: http://www.asiaone.com/st/st_20051220_359996.html

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His power, his people

NKF under T.T. Durai was a one-man show, auditors found

By Lee Hui Chieh Dec 20, 2005 The Straits Times

ON PAPER, the National Kidney Foundation's former board of directors was its ultimate decision-maker, but in reality it did nothing more than rubber-stamp decisions that had already been made.

Independent auditor KPMG found that the board had delegated its powers to an executive committee, which in turn handed over almost all authority to former chief executive officer T.T. Durai.

The NKF was, in effect, a one-man show.

'Mr Durai drove the NKF and as a result of such trust and confidence placed in him, all effective power centred around him,' KPMG's report said. 'This made meaningless the facade of a hierarchy of the checks and balances which were ostensibly in place in the NKF's organisational structure.'

Mr Durai vested power in a few trusted individuals - what the auditors called 'his coterie of long-serving assistants' - including former employees who continued to wield executive powers even after they had resigned.

Former associate director turned 'volunteer' Ong Su Ying, for example, continued to oversee the NKF's communication centre and sponsorship departments and was involved in determining staff's pay, salary increments and bonuses even after she first quit in August 2000.

The NKF's official structure advocated separation of powers, but in fact the people who were supposed to vet decisions were often the same people who made them.

Key individuals were both on the board of directors and the executive committee and also headed, or were members in, a whole host of other committees - finance, audit, technology evaluation - which had been set up to provide additional checks and balances.

The auditors named former directors Richard Yong, Loo Say San and Alwyn Lim as those who, together with Mr Durai and Ms Ong, made up the senior management primarily responsible for the NKF's operations.

The former seven-member board had clearly 'abdicated its responsibilities', the auditors said.
'The function of a board of directors is to decide and act collectively and in concert, and not be divided up and spread across numerous sub-committees and executive departments...that do not report back to the board,' the report noted.

The NKF's records show that the former board had only two meetings after July 2001, during which 'the only meaningful topic of discussion was the delegation of total power to manage NKF to the executive committee'.

The 11-member executive committee might have inherited the full mantle of authority from the board, but after reviewing the minutes of its meetings held from 1990 to 2005, the auditors found that 'these meetings were in effect a forum for the executive committee to be updated on material events and decisions already taken by the NKF or Mr Durai'.

One example of how this worked came in 2001, when the NKF awarded a software development contract to Forte Systems.

Under the formal structure of the NKF, the board of directors would have taken the final decision. But the directors had delegated power to the executive committee, so the decision should have been made by them. In fact, the decision had apparently already been made by a technology evaluation committee.

And on this committee were Mr Richard Yong and Mr Alwyn Lim, the chairman and vice-chairman of the executive committee respectively.

There were no written rules on when the executive committee had to be consulted, except one set in 1996 stating that it had to approve any expenditure of more than $100,000.
Even then, this sole explicitly stated rule 'was in practice ignored and disregarded at will', the auditors said.

Some executive committee members did not even know the rule existed.

Mr Loo, the executive committee's honorary treasurer, told the auditors that the executive committee was informed only of 'unusual' purchases, like building a new dialysis centre, but not for routine purchases like dialysis machines, even if they cost more than $100,000.

Mr Yong told the auditors that in general, if executive committee members chose to dissent, their concerns would be addressed. But he said this rarely happened as members believed all proposals put before them were in the NKF's best interests.

The auditors described the committee as 'ineffectual and collectively inept', but many of the findings 'point towards excessive zeal on the part of the people who gave a lot of their time to turn the NKF mission into reality, in whose minds, the end justified the means'.

Original source: http://www.asiaone.com/st/st_20051220_359989.html

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