EC Health Department is broke and cannot rely on Covid-19 funding to bail it out

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

The Eastern Cape Department of Health (EC DoH) is in dire need of additional funds to meet its financial commitments, but cannot hope to use national funding, earmarked to fight the Covid-19 pandemic, to pay off its historic debt.

A Finance Portfolio Committee meeting, held last week, was unwilling to address the accruals, stating that there was no need to worry about the impact this could have on service delivery, as additional national funding was being made available.

The accruals (accumulated unpaid expenses for prior years) have ballooned to a staggering R3 billion as at the end of the 2019/20 financial year. This R3 billion, will have to be paid out of the department’s current budget, leaving the department with an 11% shortfall by the end of this financial year.

The Democratic Alliance has repeatedly called upon the MEC for Finance, MEC Mlungisi Mvoko, to redirect funding from other departments to the EC DoH, to improve cash flow and reduce accruals systematically, having identified R1-billion in non-core expenditure that could be used for this purpose.

Download: letters dated the 6 April 2020 and 29 April 2020.

To date, only R300-million has been redirected, which is only a 10th of what is needed.

These accruals are over and above the money the department is haemorrhaging through medico-legal claims. This past financial year, the top 10 successful medico-legal claims against the department cost the province R191 million.

Download: IQP 32 Question 796.

The total contingent liabilities in respect of medico-legal claims is now sitting at over R29 billion, more than the Departments total 2020/21 budget allocation of R26,4 billion.

Given the above, the EC DoH has reached the point where it is factually insolvent. This poses a significant risk to the people of the Eastern Cape, caught in the middle of the Covid-19 pandemic, as service providers may become unwilling to do business with the department due to delays in receiving payment.

I have now written to the Minister of Health, Dr Zweli Mkhize, as well as the DG of Health, DR Anban Pillay, to bring the above to their attention (See attached letter dated 11 of May 2020).

I will also petition both MEC Mvoko as well as the Premier, Oscar Mabuyane, for an early adjustments budget to be tabled as soon as the 2020/21 budget has been adopted by the province.

I also invite all service providers of the EC DoH that have outstanding accounts with the department for 60 or more days to contact me on 082 462 0668 or retiefodendaal@telkomsa.net

If we fail to act, the Eastern Cape Department of Health could fail, at a time when the province can ill afford it to.

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