KZN Health to embark on cost saving measures

Wednesday, November 4, 2009

Pretoria - The KwaZulu-Natal Health Department is hoping to save about R584 million in the current financial year as it embarks on cost saving measures within the department.

Department MEC Dr Sibongiseni Dhlomo said that a Fiscal Adjustment Plan has been implemented to help cut wastage and ensure that clinical services are prioritised and proper budget management practices are put in place.

He explained that the plan seeks to ensure that the department brings to balance its budget, which has a cumulative over-expenditure of around R2 billion in the last two financial years.

Dhlomo said the over-spending trends have been studied by the department with provincial Treasury, where they've identified areas that were driving the budget beyond the allocation.

He identified areas that the department can do without, without compromising on service delivery. This included overtime, general inventory, telephone services, Travel and Subsistence claims, car rentals, events and filling of non-core posts.

"All these do not affect service delivery, where service delivery refers to the provision of health care services," Dr Dhlomo said, adding that the plan identifies cost cutting measures that would yield results in the short, medium and long-terms.

"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."

In the immediate measures, the department has put in place stricter control measures including ensuring that people who serve on Supply Chain Management 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 and 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," he said.

In the long term, the department wants to develop contracts of periods between 24 to 36 months instead of buy-outs and short-term contracts that the institutions have had to resort to in many instances.

In addressing the problem of managing huge hospital budgets due to the lack of adequately qualified persons, Dr Dhlomo said the department was currently discussing separating the Systems and Finance portfolios where in many hospitals this was 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."

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