Challenges and hope: RHAP report on public spending and procurement in South African healthcare

26 July 2023

Today, the Rural Health Advocacy Project (RHAP) launches its highly anticipated report titled Procurement and Audit Outcomes in the South African Health Sector, the report not only sheds light on the critical gaps in the South African health sector’s procurement and spending. It also offers valuable insights into the factors affecting audit outcomes, the challenges associated with the NHI’s procurement, institutional arrangements and the potential for reform through the proposed Public Procurement Bill.

South Africa’s Constitution, enshrined in the Bill of Rights, promises access to healthcare services as a fundamental right for all citizens. Sections 27 and 28 of the Constitution highlight the government’s duty to protect and promote these rights. However, recent audit findings reveal a concerning deterioration in public spending, casting a shadow over the effective realization of these rights.

The report highlights the deteriorating state of public finanacial management in the health sector over five years (2014/15 to 2018/19), as revealed in the Auditor-General’s audit reports. The number of auditees receiving clean audits has declined, and non-compliance with key legislation remains a major concern. Irregular expenditure has risen substantially, particularly in the area of supply chain management (SCM), indicating a significant factor in poor public spending. It also provides insights into the audit performance of provincial health departments. It highlights the impact of large medico-legal claim payments on audit outcomes, indicating that these payments have contributed to financial strain and affected departments’ ability to manage their budgets effectively.

South Africa’s Bold Move: The National Health Insurance (NHI) Scheme

In response to the healthcare crisis, the government introduced the National Health Insurance (NHI) scheme. This scheme aims to ensure affordable and accessible healthcare for all citizens through the management of a National Health Insurance Fund. However, the report highlights concerns regarding the lack of clarity and potential challenges in implementing the NHI’s procurement provisions. The analysis of procurement entities associated with the NHI reveals vulnerabilities that could expose the scheme to corruption, mismanagement, and irregular practices. This mirrors the challenges observed in the broader health sector. These concerns underscore the importance of addressing procurement reforms and ensuring transparency to effectively realize the NHI’s mission of equitable healthcare provision for the nation. 

Corruption and Mismanagement: A Thorn in Public Procurement

The report highlights various corrupt practices in public procurement, including favoring specific suppliers through tailored specifications, manipulating procurement methods, and collusion among suppliers. Fronting, where bidders misrepresent qualifications, is another major concern. Corruption during the adjudication process and post-award irregularities are also rampant, leading to fund misallocation and subpar service delivery.

Draft Public Procurement Bill

The proposed Public Procurement Bill is currently before parliament, the report provides comments and recommendations. It acknowledges the bill’s potential to streamline and consolidate the legislative landscape governing public procurement. However, it may also suggest specific amendments or improvements to strengthen the bill’s effectiveness in curbing corruption, promoting transparency, and ensuring better utilization of public funds in the health sector

Recommendations for reform

RHAP’s report recommends several measures to address the crisis in public health spending, including:

  1. Implementing robust systems integration and improvement to capture accurate data across the entire public health system.
  2. Adopting a strategic approach to public procurement, aligning it with departmental objectives and leveraging it for effective service delivery.
  3. Enhancing internal control mechanisms to prevent irregular expenditure and mismanagement.
  4. Considering increased allocation of health budgets through conditional grants to mitigate the impact of litigation claims.
  5. Urgently addressing corruption and irregular practices to safeguard public funds and ensure effective healthcare service delivery.

The report sheds light on the critical issues plaguing the South African health sector, affecting the most vulnerable; rural communities. Corruption, mismanagement, and deteriorating audit outcomes threaten the constitutional guarantee of healthcare for all citizens. The proposed Public Procurement Bill, along with the recommended reforms, offer a ray of hope for steering the health sector away from crisis and towards sustainable and equitable healthcare provision.

Add this info into the statement It provides some insights in the audit performance of provincial departments of health notably the impact of large medico-legal claim payments on audit outcomes provides some analysis of the procurement entity with the nhi 

lastly provides some comments and recommendations on the public procurement currently before parliament 

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