Gauteng Health is committed to paying suppliers
The Gauteng Department of Health is satisfied with the steady progress made in the area of payments within 30 days during the period July to October 2016.
For the period under review, 42 out of 54 institutions, representing 78% were able to pay invoices within 20 days from date of receipt of an invoice until an invoice is posted for payment.
In order to address the budget pressures, the Department has implemented measures to assist with the processing of payments within 30 Days. These includes: the implementation of the cost containment measures caused by accruals, litigations, increased number of patients and areas where, we pay more than the benchmark in the industry such gas, diesel and building costs. Exchange rate fluctuations which have resulted in higher costs than was originally budgeted for at the beginning of the financial year, for instance, we pay more for equipment.
The Department has also established a budget committee which is responsible for reprioritisation of the budget where funds will be redirected from non-core items and areas where there is under spending to areas where pressures are being experienced. Furthermore, regular monitoring and training of hospitals is continuously conducted and supported by senior and experienced chartered accountants from the South African Institute of Chartered Accountants (SAICA) in order to ensure that expenditure is contained and demand planning is being implemented to ensure that procurement is aligned to available budget.
Revenue Management
The department has managed to resolve the basis for the 2014/15 revenue qualification which related to the Auditor General (AG) not being able to obtain sufficient appropriate evidence for accrued departmental revenue amounting to R2 547 110 000 and its impairment amounting to R1 404 162 000. The department through the assistance of SAICA was able to ensure credibility of revenue disclosure and provide evidence to support the amount of revenue disclosed. The department has further intensified efforts to collect revenue and progress and it can be seen as demonstrated below:
Revenue from patient fees has increased by R24, 9 million during the current financial year compared to the same period last financial year. There is an overall increase of R13, 3 million in revenue collection as compared to same period during the 2015/16 financial year.
Irregular Expenditure
In line with the updated guideline on irregular expenditure, the Department has established an irregular expenditure committee to assess all reported cases of irregular expenditure related to consignment stock and to assess the merits of each case and to recommend relevant corrective action for each case. The committee is currently assessing previous year irregular expenditure but will prioritise the irregular expenditure relating to the 2016/17 financial year. The Department is further in the process finalising the consignment stock contracting that will also ensure that Irregular Expenditure does not occur.
Accruals
We are implementing mechanisms to reduce accruals by curtailing expenditure which we can do without but ensure that patient care previous year accruals do not affect current year budget as payments are only made during the current year. This leads to the budget of institutions being reduced by the amount of accruals paid which in turn leads to budget pressures.
NHLS
The department is looking forward to the payment of monies owed by NHLS to the value of R1.5billion excluding interest. Amounts that were overcharged previously could have been used to pay invoices of service providers over the past financial years.
Medical Supply Depot
During the 2015/16 financial year Medical Supply Depot (MSD) awarded the distribution of Medicine contract to a new service provider through a competitive bidding process.
MSD has further implemented a register to track compliance in terms of Tax clearance certificates and is engaging suppliers to ensure compliance. MSD has in the past few years managed to reduce irregular expenditure from more than R106 million to R31 million.
The Irregular expenditure relating to goods and services procured above R500 000 without inviting competitive bids relates to the extension of contracts of Rorisang Distribution which is responsible for distribution of medicine to health facilities from MSD for an amount of R1 417 155.00 and XJM consultants for a total of R2 595 951.00 for Support with Financial reporting, Internal control and Risk Management.
For both of the abovementioned cases the extension of the said contracts were necessary to ensure the ongoing provision of services and not to impact on the delivery of quality health care.
Investigations
The investigation into the alleged illicit activities was completed during the previous financial year and officials affected were deployed to various institutions within the Department. One official was found guilty on illicit activities charges and dismissed, He however appealed the outcome and based on the appeal the dismissal was uplifted and the employee was suspended for 3 months without pay and a final written warning was provided.
Enquiries:
Spokesperson
Steve Mabona
Cell: 072 574 3860
