Gauteng Health drags payments to service providers

The South African Medical Device Industry Association, SAMED, says close to 50 of its members are owed in excess of about R400 million. The Gauteng Health Department has paid R600 million to service providers since late last year.  The payment has been viewed as a trickle by SAMED

‘€œFrom our statistics it would seem the situation has worsened. We have engaged the department once more and have been told that treasury is due to release an amount of R300 million to help pay the accruals, which are amounts outstanding from 2011 backwards. However, if you think of the amount that my members are owed, which is R400 million currently, that R300 million is not going to touch sides. And, my member companies are not the only companies’€™ owed money by the department. There are other industry sectors such as catering, security and even the National Health Laboratory Services that we know are owed money to’€, says Tanya Vogt, SAMED’€™s Chief Operations Officer.

Vogt adds that although the health department has made payments to some of its companies, the gap is still very large.

‘€œI have a member company who is owed R26 million and they paid them R4 million, then I have another company that is owed R8 million and they paid them R160  000. One gets the impression that they are paying bits and pieces just to make people happy and continue supplying. But, it can’€™t carry on forever. It is not sustainable’€, she says.

 ‘€œOne of my companies wrote to the DG (Director-General) of health in early January and, to date, has had no response. The company supplies life-saving paediatric equipment. This is equipment that keeps babies alive. If this company goes under, the repercussions could be dire. Some have stopped supply and, generally, what happens then is that the department pays them ‘€“ not in full – but just to get them to start supplying again’€, says Vogt.

As a consequence, some companies have shut down and others are retrenching staff. Progress Dental Laboratory is one of the few fortunate companies that did not go to the extremes of retrenching staff, even though they faced the possibility of closing down last October.   The company provides teaching technologies such as dentures to dental schools.

After repeated meetings in October and November between the company’€™s Managing Director and high-ranking members of the Gauteng legislature, the provincial Health Department eventually paid him his R600  000 ‘€“ in two instalments – the last of which was at the beginning of the year.      

Meanwhile, the Gauteng Premier, Nomvula Mokonyane, has now stepped in to try and make the processing of payments move swiftly. Mokonyane says a number of factors have contributed to the grim situation, citing poor leadership and mismanagement of funds as part of them. She says key personnel have been appointed to look into the matter.

‘€œWe are going to mobilise resources to sort out the accruals… the non-payments at the department of health.  We are putting together a clearing house because there are disputes as to who is owed how much by the department of health. The clearing house will consist of a team of independent auditors, supported by provincial treasury. And already national treasury has given us people whose responsibility is to work directly with the department to rework their budget for 2013’€, Mokonyane says.

She says investigations are currently under way to address any wrong doing that could have occurred from the department’€™s side.

‘€œAppropriate actions around those that have faltered have been taken. There are people who have been suspended and disciplinary actions are being taken against them. There are people facing charges out of the SIU investigation and, at the appropriate time, the MEC will share with you what the SIU investigations have come out with – and the measures that we will be applying in that regard’€.

Mokonyane says settling the debt accrued by the Health Department is high on the agenda. The Premier says the provincial government is committed to paying out all of its service providers by 2013. But will service providers survive until then?  


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