Other Provinces’ Inability to Pay Accounts Impacts on the Western Cape

Minister Theuns Botha

Western Cape Minister for Health

Although the Western Cape is not affected directly by the inability of other provinces to pay accounts, the reality is that the undeniable breakdown of services – particularly in the Eastern Cape – has resulted in many people seeking health care in the Western Cape. It would be impossible to determine whether and to what extent this influences the decision of people to move to the Western Cape for health services, since the factors motivating this would be multi-factorial of which purely for services would be one. A Special Investigation Unit probe into the Eastern Cape health department this week revealed corruption involving R200-million and thousands of officials. The investigation, launched in December, found that 15 900 department officials were illegally receiving child support grants totaling R58 million per year. The leaked report also revealed that almost 4 000 officials were illegally receiving housing subsidies from the human settlements department amounting to R86 million. Assets valued around R19 million, which were transferred to district offices, apparently went missing.

The Eastern Cape health department reportedly paid R42.8 million to 226 companies linked to 235 civil servants, while 174 officials’ spouses were linked to companies that benefited R9 million. The report indicated problems faced by investigators included missing supply chain management documents, believed to have been stolen or sold to a recycling plant.

The Eastern Cape health department lost R800 million to corruption between January 2009 and June 2010. One of the manifestations of the break down in health services in the Eastern Cape is the failure to pay suppliers and in recent times even pay staff. 30 doctors from just one region in Eastern Cape had not been paid in April and two people had worked for three months without pay. It seems some of the problems were caused by clerical errors, others by the health department hiring staff without the authorisation of the provincial treasury.

Reports that doctors have not been paid in the Eastern Cape recently is supported by the fact that a nurse who was appointed from the Western Cape to a hospital in the Eastern Cape was never paid. In desperation she returned to the Western Cape where fortunately the Department was able to re-employ her. A situation such as this cannot promote quality health care and is to an extent the cause for the continued rise in patient numbers that the Western Cape Department of Health has experienced over the last several years.

I have been informed that in Gauteng unpaid suppliers are a major part of the health services problem, but also inefficiency in ordering and holding sufficient stock. The NHLS in the Western Cape, whilst able to continue to provide the department with the necessary laboratory services, has indicated to the department that had their cash flow crisis continued, they would not have been able to do so due to the failure of other provinces notably Gauteng, Limpopo and Kwazulu-Natal to make payments to address the outstanding accounts that amounted to more than R1 billion.

The biggest debt owed to the NHLS was from KwaZulu-Natal, which had yet to pay R1.2 billion. The Eastern Cape owes R118 million, Limpopo R52 million, the Free State R34 million, North West R33 million, and the Northern Cape and Mpumalanga owed R10 million and R4 million respectively. In fact, without a “bail out” from the National Treasury, the NHLS would have been unable to pay essential suppliers. Fortunately NHLS is the only supplier for national government, but under normal circumstances, if this was a private sector company, would have been declared bankrupt! This would have had catastrophic implications for the Western Cape. The Western Cape has a history of prompt payment for which it has been complimented in public by the NHLS CEO Mr Sagie Pillay. A similar situation has occurred with the South African Blood Transfusion Services, but fortunately the Western Cape has its own blood transfusion service, the Western Province Blood Transfusion Services.

The latter is funded by the purchase of blood products by health providers both public and private in this province and is solvent! NHLS CEO Sagie Pillay told Parliament during his budget presentation that the National Health Laboratory Service is still owed billions of rand by the provinces, compromising its ability to pay its suppliers and threatening its capacity to provide vital diagnostic tests for patients. In his presentation Mr Pillay provided March month end figures for 2012, and the R22 million for the Western Cape which he mentioned, refers to the balance of advance invoices. The Western Cape received pro-forma invoices from the NHLS, and paid some of the accounts in advance. In fact, for the current financial year, the Department received discounts from NHLS for early settlement of accounts to the value of R4.3 million. Several pharmaceutical companies have also indicated that the failure to pay accounts by provinces, largely other than the Western Cape, has impacted on the cash flows of the business operations. Again, whilst this has not directly affected the province, if the trend were to persist it could impact negatively on the whole country.

In the light of the above the National Minister has moved to address the matter by proposing that the funding of certain items in provincial health budgets be regarded as “non-negotiable” and that funding for items such as medical supplies, laboratory investigations, blood products and cleaning services be ring-fenced and must be fully funded according to the actual requirements and not the funds allocated by the respective provincial treasuries. This is already the practice in the Western Cape and many strategies such as for instance “electronic gate keeping” to limit laboratory expenditure developed in the Western Cape, are being adopted as national best practice. Speaker, it is evident that maladministration in ANC-governed provinces is leading to a collapse of their health system. At the same time there is an unnatural haste to expedite the National Health Insurance which is only in pilot project stage, and I am informed that the national minister is driving to present a NHI white paper in the weeks to come.

I stand by my stance – first govern well, get the systems in place, maintain financial discipline. Then we can talk about a health insurance scheme.

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