Gauteng: Causes of the crisis

Gauteng: Causes of the crisisThe contributing factors that caused the crisis were improper budgeting and financial management, poor supply chain management and poor management.

The contributing factors that caused the crisis were improper budgeting and financial management, poor supply chain management and poor management.

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1. Budgeting and financial management: The province has been overspending its budget for at least seven years. It has been directly responsible for the annual cycle of shortages close to the financial year-end with reports already indicating that the same is about to happen.

There is also evidence of corruption and a lack of accountability with SECTION27 understanding that the health department has made several multiyear commitments and expenditure decisions that were corrupt and were not directly related to the delivery of healthcare services. These included the improper use of consultants and service providers for basic departmental functions, the irregular procurement of goods or services and tender fraud.

The Special Investigations Unit (SIU) was commissioned by the President in 2010 to investigate the department. No report has been made public, but according to SECTION27 the SIU is still investigating R1-billion tender fraud and have also recommended that R16.5-million be recouped from former officials.

Inadequate budgeting has meant the budget does not accurately reflect the cost of running an effective healthcare service.

Gauteng has also experienced an increased burden of care and patient numbers due to natural growth as well as migration from other countries and provinces.

The budget has also not changed in line with the increasing costs of healthcare. Budgeting has not taken into account that employment costs are particularly high with budgets failing to account for the centrally negotiated increases.

On a yearly basis the province has been accruing debt by exhausting goods and services (pharmaceuticals and medical supplies) prior to the financial year-end and paying it out of the budget for the following financial year.

2. Supply chain management: There is a high level of frustration over the lack of capability of those tasked with ordering essential medicines and supplies. In addition, allegations of corruption were widespread with many healthcare workers telling SECTION27 that the department was paying more for inferior quality goods than comparator products on the open market and that the department was paying high margins to agents rather than ordering directly from the manufacturers. A health department commissioned report into alleged corruption at the central depot in Auckland Park is yet to be made public.

3. Management capacity and accountability: Delays and bureaucracy at provincial level led to situations that were close to catastrophic. In addition, a lack of management capacity has also led to financial mismanagement and violation of the Public Finance Management Act. – Health-e News Service