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Medico-legal claims remain Eastern Cape’s biggest budgetary headache

Medico-legal claims remain Eastern Cape’s biggest budgetary headache
Eastern Cape MEC for Finance Mlungisi Mvoko. (Photo: Randell Roskruge / Wikipedia)

Eastern Cape MEC for Finance Mlungisi Mvoko has confirmed that the provincial department of health has paid close to R1bn in damages for negligence at state hospitals in the past financial year as the number of claims against the department spirals. In a budget bound to put the province on a collision course with organised labour, he announced extensive cuts to the salary bill, but said that the province lost millions of rands through conditional housing grants that had to be returned unspent.

Raising serious concerns about spiralling medico-legal claims against the Eastern Cape Department of Health, Eastern Cape MEC for Finance Mlungisi Mvoko said on Wednesday as he tabled his budget that the payouts of damages due to medical negligence for the past financial year totalled R920-million.

He said unused funds from other departments had been reprioritised to assist the struggling department. 

“These litigation [costs] are a burden. They are compromising government’s ability to render services. We are hard at work to fix this. Multi-pronged teams and strategies, involving the Office of the Premier, Provincial Treasury and Health have been set up to deal with this burden. These teams and strategies seek to improve our capacity on administrative systems, legal, clinical and budget aspects.

He said the budget aspect will aim to address liquidity challenges within the department. The Eastern Cape Department of Health has already used 10% of its budget for the 2021/2022 financial year and still has close to R4-billion in unpaid bills. The department admitted this week that service providers could not be paid because attorneys had attached the money in their bank accounts.

Mvoko has called on strict consequence management in provincial departments and municipalities for those breaking the rules.

The finance MEC said the provincial government would call for the urgent digitisation of patient records. “There is no reason the department of health can’t do this,” he said, adding that it would go a long way towards fighting fraudulent claims against the department or in settlements made because medical records had disappeared.

Highlighting the continuous qualified audits received by the departments of health and education, the two departments with the biggest provincial budgets, he said they would continue their efforts “to support these departments [to] turn around their audits, which although qualified, the number of qualifying items are reducing”.

“There remain concerns on the failure by the departments to comply with prescripts and regulations, especially on supply chain management, resulting in irregular expenditure of R819.26-million being incurred in [the] 2019/20 financial year and increasing the total balance to R4.2-billion as at 31 March 2020.

“These financial statements indicate that the progress we are making towards clean audit is rather slow, but we must consolidate from the positive signs. I know that my colleagues at the Executive Council share my view that a lot of work still needs to be done, hence the audit improvement will remain our focus. We must welcome the strides made at various quarters of the province towards the same goal, in particular the esteemed members of the Standing Committee On Public Accounts (Scopa) and the Auditor-General for keeping us on our toes on the issue of the audit,” he said.

Mvoko said the province had lost R28.2-billion due to budget reductions over the medium term and added that “R22.8-billion of that comes from the compensation of employees’ budget.”

“We have been struggling with a service delivery dilemma where over 60% of our budget in the province goes to the wage bill, thus crowding out investment spending. We therefore continue to appeal to all provincial departments to prioritise the review process of their organograms to ensure that core service delivery posts are protected and non-core posts minimised so as to improve the capacity of the state to deliver. In our quest to have an Eastern Cape public service that delivers, resourcing of the state with the requisite human capital base and skills in line with priorities of government is essential. Coupled with this, optimal management of human resources through performance management is critical to ensure maximum value is achieved on the wage bill. We believe that this exercise will augment our efforts of improving service delivery.” 

Mvoko said the “hierarchy” in the public service was another major issue that had to be addressed.

“In some departments you have a head of department, then four or five directors-general, then chief directors, then directors, then deputy directors, then assistant directors. It may not be the number of jobs [that is the problem], it is hierarchy.”

He said the province had an alarming rate of 47.9% unemployment.

“Sector performance shows that agriculture is one sector that has shown resilience, even during the hard lockdowns of the Covid-19 period with about 21,000 jobs created in 2020. Although we experienced some losses in other sectors, we remain hopeful that we will rebound as the country eases lockdown regulations, allowing for unrestricted economic activities.”

Mvoko said the bulk of the provincial budget of R82.6-billion would go to the social sector. 

The 2021/22 budget consists of R68-billion of the Provincial Equitable Share, R13.2-billion of conditional grants and R1.5-billion of the province’s own revenue. 

Our spending is already a notch higher than our income. In years to come, our own provincial revenue is not going to keep up with the runaway deficit. This problem is further compounded by the budget reductions that we are experiencing as a country.

Mvoko issued a stern warning to the provincial government that spending would have to be curbed. 

“Our spending is already a notch higher than our income. In years to come, our own provincial revenue is not going to keep up with the runaway deficit. This problem is further compounded by the budget reductions that we are experiencing as a country.”

The budget reduction for 2021 amounts to R7.2-billion. 

Mvoko said he had allocated R13.9-billion for 2021/22 and R40.5-billion over the medium term to the economic sector, including the departments of public works, agriculture and agrarian reform, economic development, environmental affairs and tourism, transport, and human settlements.

“This allocation will support a five-point plan for economic recovery of the province, to improve the economic trajectory of the Eastern Cape. Our pillars of this plan include infrastructure development, industrialisation and sector development, equitable and inclusive transformation, digital transformation and public finances. This will include investments in large infrastructure projects including those for water.”

Mvoko said R153.9-million had been allocated to the Department of Public Works and Infrastructure to coordinate the creation of 95,718 expanded public works programme jobs across provincial departments, municipalities and other public bodies, with a particular focus on infrastructure projects. “Additionally, the programme also intends not only to increase the number of work opportunities, but to also increase their duration, thus ensuring more decent and sustainable work opportunities.” 

Another R2.3-billion had been allocated for improving roads in the province with a special focus on service delivery and tourism. 

“For some time now, we have been supplementing our budget deficit through our revenue sources within the province. We are now going to implement a revenue study that we instituted with an intention to maximise our revenue generation. If implemented correctly, this exercise will provide further funds to assist to cushion our budget shortfall, although this is not sustainable in the long term.”

He said if done properly, new revenue streams from inside the province, with a special focus on infrastructure development, could generate an additional R7.6-billion.

Mvoko said the Department of Education had been allocated R35.1-billion for 2021/22, including an allocation of R1.6-billion for infrastructure development. Other programmes funded included support material, enhancing norms and standards, and teacher development.

“The Department of Health has been allocated R26.4-billion for this year. Of that amount, R1.4-billion is set aside for health infrastructure. Other funded programmes include human resource capacitation, tertiary and specialised hospital services, and medical supplies,” he said. 

Mvoko said the province was stepping up measures to identify and act against officials that conducted business with the state.

“Through interventions by provincial treasury, working with departments, we have seen a decrease in cases of officials who are either conflicted or potentially conflicted, by having their businesses registered in [the] government database with an intention to trade,” he said, explaining that the number of businesses where government officials held ownership or directorship had decreased from 585 to 422 in 2020. 

“Of the 422, only one had been found to have traded with the state, down from six officials that had traded in quarter one. As one of the measures currently being undertaken by the provincial government in its unwavering stance against fraud and corruption, we have adopted zero tolerance against officials that conduct business with the state.”

Mvoko also expressed concern over hundreds of millions of rands in unspent grants that had been returned to National Treasury.

“We are concerned by the recurring poor expenditure on conditional grants by the provincial departments and our municipalities. As a province characterised by poverty and unemployment, it is very alarming to discover that year after year, the conditional grants transferred by the national departments to be used for roads, water and sanitation as well as provision of electricity are not spent and at the end are returned back to the fiscus. 

“The levels of unauthorised, irregular, fruitless and wasteful expenditure in provincial government and provincial municipalities have shown an increasing trend over the years despite interventions,” he said. He had written to the premier to ask for better consequence management. Mvoko said he found that there was a “lack of will” to implement this and that progress was slow.

An amount of R338-million from the Human Settlements Development Grant “has been stopped” by the National Department of Human Settlements because of continuous underspending by the grant for 2020/21. 

Mvoko voiced concern over the financial sustainability of municipalities.

The DA’s Retief Odendaal said Mvoko had made no mention of the ongoing drought in the province. 

“Despite the premier’s assertions that drought is a priority, nothing was forthcoming from the MEC relating to drought relief measures. No farmer, emerging or established, can farm without water.

“The DA welcomes the steps mentioned by MEC Mvoko on addressing the issues leading to burgeoning medico-legal claims in the Department of Health, but he provided very little in terms of what is being done to address the existing claims, currently sitting close to R37-billion.

“The fact that funds have had to be redirected from several departments to bail out the Department of Health, and that even with the additional funding suppliers are still going unpaid, speaks volumes.

“Overall, a painful budget that will sober up all politicians and civil servants alike,” Odendaal said. DM/MC

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