Provinces need R7,5bn ‘bail-out’

According to Tamar Kahn of the Business Day, “The Treasury and the Department of Health are discussing a possible bail-out for SA’s cash-strapped provincial health departments. They had collectively run up a deficit of more than R7,5bn by April last year”.

Surely such a bail out will simply encourage more of the same mismanagement that we have become accustomed to in the public healthcare sector. Indeed, Tamar Kahn notes that according to a report commissioned by the previous Minister of Health, Barbra Hogan, that “The financial crisis facing most provincial health departments [is the result of] a deadly combination of poor financial management, inadequate monitoring and evaluation systems, and a lack of leadership from the national department”.

According to Kahn, the report also states that there was “insufficient evidence” to support the claim that the public healthcare sector was underfunded. “Over the past 14 years, health sector funding has been between 13% and 14% of available government funds, with per capita expenditure increases at a level which exceeds inflation.”

Temba Nolutshungu of the Free Market Foundation has recommended that those who work in hospitals should be given a stake in their ownership. This would be the best time to genuinely turn around the ailing public health care system by implementing this proposal. The owners may decide to contract out the management to the private sector and concentrate on doing what they do best – providing healthcare. Ownership of the healthcare facilities by the staff will change their incentives and increase the quality of service. At the same time the government will be relieved of accountability, which will become the direct responsibility of the service providers, and allow healthcare officials to exercise greater control over costs and the quality of care

Source: Tamar Kahn Provinces need R7,5bn ‘bail-out’ Business Day, 01 June 2010 and Temba Nolutshungu, “A Not-to-be-Missed BEE Opportunity in the Public Health Sector”, 27 June, 2006

For text: http://www.businessday.co.za/articles/Content.aspx?id=110503

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FMF Policy Bulletin/ 01 June 2010