Gauteng Health owes R1.2 billion to suppliers

15 March 2017

The Gauteng Health Department owes R1.234 billion in late payments to 808 companies that have not been paid within the legally required period of 30 days.

This is revealed by Gauteng Health MEC Gwen Ramokgopa in a written reply to my questions in the Gauteng Legislature.

According to Ramokgopa, only 38% of companies were paid within 30 days as at 31 January this year.

Longer-term non-payments include the following:

- 332 companies owed a total of R555 million for longer than 3 months

- 204 companies owed a total of R135 million for longer than 6 months

Amounts owing for more than 6 months range from R169 owed to Lane Optical to R18.4 million owed to Johnson and Johnson Medical (full list will be supplied on request).

Ramokgopa says: “The department is facing a serious challenge when it comes to paying suppliers because of a budget allocation that is not sufficient to honour all outstanding supplier payments within the PFMA requirements.”

She gives the following reasons:

1. Settlement of medico legal claims

2. Payment of prior year accruals due to an increase in foreign patients and patients from other provinces

3. Shortfall in compensation of employees due to getting a salary adjustment amount that is lower than the one announced by the DPSA

4. OSD for medical officers and the impact of salary adjustment for Specialists

5. Changes in policies not initially budgeted for e.g. Test and Treat

6. Section 27 (1) of the constitution which compels treatment for anyone presenting at any of the facilities in the province

The problem is that many companies, especially small ones, are in extreme distress because of non-payment and some are laying off workers or going out of business.

Some companies are refusing to supply essential medical services or instruments, which is negatively affecting patient care.

Poor management is to blame for much of the financial shortfall in this department which fails to get a clean Auditor-General’s report. Extra costs arising from the Life Esidimeni debacle will also worsen the department's budget deficit.

A short-term bailout from the provincial treasury is needed but this needs to be followed by real reform to improve efficiency and rein in costs.

Promises have been made for many years that the department will pay all its bills on time. It is high time these promises are kept.

Issued by Jack Bloom, DA Gauteng Shadow MEC for Health, 15 March 2017