The government has been sharply rebuked yet again for its tardiness in paying outstanding bills to small suppliers, with the SA Medical Device Industry Association (Samed) warning that small firms are increasingly reluctant to supply the state, which owes millions to desperate members.
The biggest offender, owing R650m – with R379.7m of the debt being older than 120 days – is the Gauteng Department of Health. Last year, it owed Samed members R493m.
Business Day reports that at the end of May, 49 Samed members were owed more than R1.4bn by provincial Health Departments, the National Health Laboratory Service and the SA Military Health Service combined – with more than R1.1bn of the debt being older than 30 days, in breach of the Public Finance Management Act.
Samed board member Monica Lucas said this resulted in massive cash flow challenges.
“More than 60% of our members are small to medium-size enterprises; they are not massive multinationals with huge amounts of capital flowing through the books,” said Lucas, adding that many companies were forced to rely on bank overdrafts just to pay their suppliers and salaries.
Samed members supply equipment ranging from hi-tech orthopaedic devices and implants to consumables like gloves and syringes, and some had already decided to stop supplying the government and focus entirely on the private sector.
“As a whole,” said Lucas, “the private sector pays within 30 days. It is a far more secure customer base from a risk perspective.”
The debt owed to Samed members has risen in the past year from the R1.1bn reported by 39 companies in May 2024.
Spiralling due to systems
Lucas said payments from Gauteng Health had worsened after the provincial Treasury had introduced a new payment system intended to improve financial controls. Samed had requested a meeting last week at which provincial officials committed to resolving the problems, she said.
The department had conceded its debts to medical device suppliers had grown in the past year, saying it was partly due to technical issues related to the new financial management system and teething issues, including integration delays and challenges with invoice verification.
“These have temporarily contributed to longer payment cycles,” said its head of communications Motalatale Motala.
The 2024/25 financial year had seen increasing demand for services and inflationary cost pressures without a proportional budget increase, he added, and the department was currently “implementing a phased payment plan in consultation with the Treasury to address the growing debt”.
The National Health Laboratory Service, which owes three Samed members more than R44m, said it sought to process all supplier payments timeously, but “occasional delays might arise to the comprehensive due diligence, document verification and regulatory compliance required” in its operations.
Other provincial Health Departments owing money to Samed include KwaZuluNatal (R163m), the Free State (R148m), North West (R138m), the Western Cape (R78.4m), the Eastern Cape (R52.8m), Limpopo (R25.8m), the Northern Cape (R27.6m) and Mpumalanga (R20m).
The SA Military Health Service owed Samed members R47.6m.
Business Day PressReader article – State owes medical device firms R1.4bn (Open access)
See more from MedicalBrief archives:
Health Department owes millions to medical equipment suppliers
State owes medical device manufacturers R1bn
Eastern Cape Health starts year owing billions in unpaid bills
Gauteng Health worst for non-payment of creditors
SA Medical Technology Industry Association: Unmask corruption in medtech sector