Ever-increasing piles of unpaid suppliers’ invoices are compounding challenges at government hospitals, particularly in Gauteng, with risks to stocks of basics like needles and gloves adding to the hazards faced by staff and patients.
In fact, Gauteng Health is unlikely to ever emerge from its currently dysfunctional state, according to a statement by DA MPL Jack Bloom, who urges the Premier to suspend Head of Department Lesiba Malotana and put the department under administration to avert a dire situation where patients die because of chronic maladministration
In a statement in PoliticsWeb, Bloom writes that the department is running out of money to pay not only suppliers but possibly even salaries as it faces a R4.8bn budget shortfall before the financial year ends on 31 March – hence the freeze on new recruitment, while equipment purchases have also been put on hold.
The Gauteng Provincial Government Second Quarter State of Finances report released last week shows the GHD spent R35.2bn (54%) of its R64.8bn budget within the first six months. The projected shortfall is R4.88bn by the end of the financial year on 31 March 2025.
Reasons given include:
– R1.2bn on Compensation of Employees due to salary raises.
– R3.2bn on Goods and Services due to payment of accruals, new security contracts, increased food prices and the payment of legal fees.
– R396m projected overspend on machinery and equipment due to payment commitments for emergency ambulances from the previous year.
Meanwhile, it paid only 52% of suppliers within the required 30 days for the July to September quarter, while R1.9bn is owing for more than 30 days. The department spends about R5.3bn a month, so will run out of money in early March next year.
Some companies are now refusing to supply hospitals because of non-payments, including Smith & Nephew, which is reportedly owed R62m, and which recently suspended all supplies over the outstanding debt – one of a number of unpaid invoices due to suppliers totalling almost R1bn.
The multinational supplier of orthopaedic and other medical supplies has told the department that for reinstatement of services, it would require immediate payment, reports Daily Maverick.
Open orders with Smith & Nephew were R6.7m while the Department had additional outstanding debt of R9.8m in consignment and loan stock.
Gauteng Health has confirmed the debt, saying R15m had been paid in the past three months.
“We are engaging service providers to agree on payment arrangements,” spokesperson Motalatale Modiba said.
The department owes suppliers R860.4m. Modiba confirmed that R117m has been owed to 125 suppliers for more than six months. Over a year, 69 suppliers are owed R743m.
Dr Arthur Manning, CEO of the Rahima Moosa Mother and Child Hospital, said the hospital had to contract additional nursing services, while orders for consumables such as needles and gloves could be affected by non-payment.
Staff from other facilities said supply procurement inefficiency was a perennial problem and that they never know what is due to non-payment and what to general slackness.
“Most basic items are often not available, from certain size needles or IV cannulas to life-saving consumables used to deliver high-flow oxygen. Doctors have been known to drive to different hospitals to get stock, at their own peril,” said one doctor.
“A number of mitigation measures have been put in place to remedy the situation,” Modiba said, among them monthly reconciliation and verification of all accruals through clearing the work cycle; accountability by facility CEOs, who assume full responsibility for oversight as accounting officers, as per section 38 of the PFMA Act; and 70:30 cash allocation strategy, which entails allocating 70% of monthly cash to supplier payments within 30 days of processing invoices.
The remaining 30% is provisioned for invoices processed outside of 30 days.
Last week, Premier Panyaza Lesufi defended the GDH Head of Department Lesiba Malotana, despite the SIU investigating him on allegations he shared R10m in bribes with two other officials relating to the award of contracts.
PoliticsWeb article – Gauteng Health is running out of money – Jack Bloom (Open access)
See more from MedicalBrief archives:
Gauteng Health owes millions in unpaid hospital electricity bills
Slow-payer Gauteng Health owes R1.2bn to over 800 companies