The fiscal adjustment plan is aimed at cutting ‘wastage,’ ensure that clinical services are prioritised and proper budget management practices are put in place. It must be over-emphasised that these measures are not aimed at cutting the budget or expenditure in general but to ensure that we reprioritise and give priority to health care service core functions.
The plan also seeks to ensure that the Department of Health brings to balance its budget which has a cumulative over expenditure of around R2 billion in the last two financial years. The over spending trends have been studied by the department, together with treasury and we have identified areas that are driving the budget beyond the allocation. These are largely things that the department can do without, compromising service delivery (i.e. delivering quality health care to the 88 percent of the people of KwaZulu-Natal).
In the current financial year we envisage savings to the tune of R584 million by March 2010.
First and foremost, the department has had to put expenditure controls around; overtime, general inventory, telephone services, travel and subsistence claims, car rentals, events, filling of non-core posts, to mention a few. As you may notice, all these do not affect service delivery where service delivery refers to the provision of health care services.
The plan identifies cost cutting measures that would yield results in the short, medium and long-terms. In the immediate (for an example), the department has had to put in place stricter control measures including ensuring that people who serve on Supply Chain Management (SCM) committees declare their interests, revoking procurement and stores delegations and centralising these at head office.
In the medium term, we want to ensure that we get value for money. This will ensure that the department does not pay exorbitant prices but rather those that are market related. We also want to benefits accruing to economies of scale. The most important goal is to ensure that we get all the required goods at institutions on time and in good usable quality. As it stands, the department engages in national tenders where these are proving to be beneficial than provincial tenders.
In the long term we want to develop contracts of periods between 24 to 36 months instead of buy-outs and short-term contracts that our institutions have had to resort to in many instances. The other problem that has been identified is the lack of adequately qualified persons to manage the huge hospital budgets. This, we believe, may be a cause for concern vis-à-vis the department’s lack of commitment to provide quality health care.
In this regard, we are already discussing separating the systems and finance portfolios where in many hospitals this is managed by one person. We are also engaging the public service college in developing courses to train suitably qualified persons for the posts of finance managers in hospitals. We have also identified that the budget process, in hospitals, has weaknesses that need to be strengthened.
The proposed cost savings, which appeared in the Mercury of 3 November 2009, are only proposals by Addington Hospital to be presented to the department. At face value; a number of them will not be accepted as they are directly linked to service delivery and the department, on receipt, will advise the hospital accordingly.
A Ministerial minute to all finance managers emphasises that; “The reprioritisation process must protect service delivery items and cut out non-core, non-clinical items that our health care system can do without, for an example telephone costs, office furniture, travel and accommodation, etc and all other items that do not endanger the lives of patients.”
That is the spirit of the fiscal adjustment plan.
Issued by: Department of Health, KwaZulu-Natal Provincial Government
3 November 2009
Source: Department of Health, KwaZulu-Natal Provincial Government (http://www.kznhealth.gov.za/)
