Underspending of budgets has critical implications, and Gauteng Health’s failure to spend more than R1.1bn of its 23/24 budget, when there are so many urgent needs within provincial facilities, including for cancer patients, is worrying and shows “a degree of negligence”.
Poor financial planning was also in the mix, and the department “might have to look into attracting greater skilled personnel, especially within the finance unit”, according to Gauteng Health Portfolio Committee chair Ezra Letsoalo.
The underspend was revealed by the head of the department, Arnold Malotana, at a meeting last week of the Gauteng legislature’s Health & Wellness Portfolio Committee, reports Daily Maverick. The department was allocated R60bn for the 2023/2024 financial year.
The DA’s Gauteng health spokesperson, Jack Bloom, said that at the meeting, Malotana revealed that the GDoH had applied to Treasury to roll over R780m of the unspent money into this financial year, but approval had not yet been given.
This meant that at least R320m of last year’s budget had been lost, and potentially a lot more if Treasury did not approve the rollover, said Bloom.
“It is a highly undesirable way to run a Health Department,” he added.
Reasons
Letsoalo said there were several reasons for the underspending. “It really has to do with the (in)ability of the department to manage its financial systems. Primarily, you have challenges pertaining to financial controls and distribution towards financing some of the programmes,” he said.
He also cited a lack of proper planning and issues with the supply chain process, including poor financial controls, planning deficiencies and supply chain delays.
“The acquisition of a specific product and running of specific processes then obscures the quick attainment of those specific outputs. It is actually quite subversive that one contract … can take anything between three to six months to finalise in terms of evaluative as well as adjudicative process,” he said.
The department’s efforts to reduce medico-legal claims had resulted in funds being redirected, which could also have contributed to the underspending.
Letsoalo noted that there had been a reduction in underspending over the years. The department allegedly failed to spend R2.7bn of its 2022/23 financial budget.
“It’s about having compromised – or even poor – financial planning systems in place. The department might also have to look into attracting greater skilled personnel, especially within the finance unit and including those who are responsible for programmes and management,” he said.
“Every programme has a manager… we must ponder the effectiveness of some of the managers in executing their programmes relative to the budgets they are allocated.”
‘Degree of negligence’
The underspending has had impacts on ongoing health projects and critical services such as cancer treatment. Bloom said it was likely that most of the R250m budgeted last year for urgent cancer treatment had not been spent – it is the subject of an urgent court application by the Cancer Alliance.
“They (the GDoH) were supposed to do a contract with the private sector to treat the patients because they don’t have state resources. They are short of radiation machines and these patients need urgent treatment. All they’ve told us is that they’ve got a planning contract with Siemens for R17m,” he said.
“Urgent treatment is urgent. These are patients who should have already been treated. It is just plain incompetence that (the GDoH) didn’t spend the money in the proper year and didn’t spend it urgently. I think people are dying as a result and I think there’s a degree of negligence here,” he said.
Letsoalo acknowledged that the delay in radiation treatment for cancer patients was a blight. “The thing about the healthcare sector is that we are dealing with lives, so any delay whatsoever implicates a life. We are seeing that (underspending) implicates the quality of the provision of health services,” he said.
“Radiation oncology is one of those, but we’ve also detected that even for maintenance for some of the facilities there is a bit of underspending there and we are quite concerned about that.”
Letsoalo emphasised the critical link between quality health services and adequate infrastructure.
“Without functional health facilities equipped with essential machinery and medicine, it’s actually quite deleterious. It’s aggressive, it’s regressive and it undermines the ability of the health system to address the healthcare needs of our communities.”
He noted that despite significant spending on emergency medical services, funds had been underspent which could have significantly improved service provision.
Chronic underspending
Matshidiso Lencoasa, a budget researcher at SECTION27, said the Gauteng Department of Health had been notorious for its underspending for years.
“Underspending is something to be concerned about – it means the resources we’re trying to mobilise so we can fund healthcare and the constitutional rights to access quality healthcare services… there is a gap,” she said.
“It is a concern because it means the money isn’t going where it should be… it is probably returned to Treasury… in a country struggling to actually advance some form of universal health coverage.”
Lencoasa said underspending was a systemic issue.
“There will be projects that are assigned budgets and the budgets are approved, but then the projects don’t actually reach completion or reach the stages that they should in that year and then government has no choice but to send the money back to the national department,” she said.
“Treasury should be thinking about investing (funding that gets returned) to bolster our capacity to hire people with the qualifications and expertise to spend this funding for healthcare realisation.
“When underspending happens, there don’t seem to be consequences for that.”
It was typical for Treasury to cut budgets, especially in healthcare, in areas where there was underspending, added Lencoasa
“Theoretically, you would think that because that budget is not being spent, it should be going towards a department that can spend it. Unfortunately, the approach punishes the healthcare users, because they’re not the ones who underspent the money and they do need quality healthcare services.
“Budget cuts should not be used as punishment, because they don’t arrest underspending, they just punish the ordinary person.”
Letsoala said enhanced financial controls were needed.
The Health Committee had asked the department to develop mitigation plans and the department had indicated it was working on a turnaround strategy, especially in areas of concern raised by the committee.
These included delays in oncology treatment, maintenance of health facilities, provision of goods and services, the overpopulation of patients in some facilities and the slow roll-out of information and communications technology infrastructure.
By the time of publication, the GDoH had not responded to Daily Maverick’s request for comment.
See more from MedicalBrief archives:
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Gauteng Health sued over unspent cancer millions
Gauteng Health fails to spend its budget, despite service backlogs