Eastern Cape asks for R1.7-bn

Eastern Cape asks for R1.7-bn

The Public Service Accountability Monitor has issued a statement revealing details on the dire state of the Eastern Cape health department’s finances. It also called on the department to reveal how the situation will impact on patients.

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Government Must Guarantee Health Service Delivery in the Eastern Cape

The announcement by the acting Head of the Eastern Cape Department of Health, Dr Thabo Sibeko, that the Eastern Cape Department of Health will be requesting an additional R1.7 billion from Treasury at a Cabinet Budget Meeting is long overdue.

By the end of the 2009/10 financial year the Eastern Cape Department of Health had accrued debt of approximately R1.8 billion. This overspending was largely as a result of underfunded and unbudgeted mandates relating to human resources as well as higher than expected costs for pharmaceuticals and laboratory services.

The consequences of this debt were already clear well before the end of the financial year. Facilities throughout the province were experiencing stock-outs of the most basic medicines and the Department even had its telephone services restricted due to a failure to pay its account with Telkom.

The PSAM also received reports that some of the Department’€™s suppliers, including emerging contractors, were being forced to suspend services and others faced closure due to the Department failing to make payments.    

At the beginning of the 2010/11 financial year the Department received a budgetary allocation which was clearly insufficient to address the growing burden of accruals while sustaining current levels of service delivery. The PSAM estimated that once accruals had been taken into account, the Department’€™s R13.3 billion was at least R1.6 billion short of what was needed to ensure that the Department did not once again run into the kind of financial troubles experienced towards the end of the previous year.      

An analysis of the Department’€™s budget by the PSAM at the beginning of the financial year clearly showed that burden of growing debt and human resource costs was crowding out other critical payments. The allocation for the compensation of employees, for example, increased 26% in real terms for 2010/11 while the allocation for goods and services, which includes the purchase of medicines and medical supplies, had decreased by 13% in real terms against what the department estimates it spent on this budget item in 2009/10.

Considering that a portion of the Department’€™s debt in 2009/10 was accrued due to higher than budgeted goods and services costs, there were numerous reports of drug shortages at facilities and there is no indication that there has been any decrease in the burden of disease, it was already clear at the beginning of the year that facilities throughout the province could once again expect to experience shortages of basic medicines and medical supplies well before the end of the financial year.          

These predictions were confirmed by media reports in May which cited the concerns of several hospital managers and CEOs who argued that their goods and services budgets would only be sufficient to meet commitments until the end of June. They suggested that this would result in the further rationing of services and in extreme cases the potential closure of some facilities.

The issue, however, is not only one of inadequate funding. Over the last ten years the Eastern Cape Department of Health has consistently received poor audit opinions from the Auditor General. These opinions have revealed that chronic financial mismanagement continues to result in the misuse and misappropriation of public funds. This means that even those resources which are available have not been used appropriately. Any intervention involving the allocation of additional funds would therefore also need to pay urgent attention to financial management systems. This would also mean that it would be necessary to ring-fence any additional allocations to ensure that the funds are used for their intended purpose.    

Yet there is no clear indication that anything is being done to rectify the situation. The national Department of Health and Treasury remain conspicuously silent on the issue, while the provincial Department continues to give mixed messages; on the one hand stating that there is a crisis while at the same time stating that concerns are unwarranted.

Any further delays in dealing with the financial crisis in the Eastern Cape Department of Health are unacceptable.

The PSAM calls on the National Department of Health and the National Treasury to make public details of the Eastern Cape Department of Health’€™s financial status, and to publically guarantee that no patients in the province will be refused basic treatments because of a shortage of medicines and medical supplies.