Health MEC’s cost committees bring budget into line

The Eastern Cape department of health says it is reaping the rewards of its cost-containment strategies. 

In her policy speech this year, health MEC Dr Pumza Dyantyi said: “I am very proud that health has been proactive in responding to the call for radical enforcement of austerity measures.

“As early as September 2015 the department instituted various austerity measures including provincial and district cost containment committees whose responsibility has been to manage departmental expenditure and commitments and redirect spending from non-core items in favour of non-negotiables.”

Health SG Thobile Mbengashe said three things had raised the threat of potential overspending:

lUnions received a 7.6% wage increase, more than the 5.6% budgeted for, plus a new accommodation allowance;

lThe new labour relations act requires employees who had been on contract for more than six months to be made permanent; and

lInflation.

“The accommodation allowance was an additional R60-million which was not there. Regarding making contract employees permanent, they had to be paid according to government salary levels, which are higher than contract and include benefits, which saw salary increases of about 37%, which was a substantial amount.

“The impact of all this was that we needed R1.2-billion as an additional amount.

“Treasury gave us R527-million but we couldn’t get the rest,” Mbengashe said.

“This meant if we continue at the same rate of expenditure, at the end of the period we’d be in the unauthorised zone,” he said.

This is why the committees were established: to weed out non-essentials from what was being procured.

Mbengashe said non-negotiables included doctors and nurses, security, cleaning material and staff, medicines, laboratory and blood services, and food.

At district level the committees are made up of district managers, HR directors, clinical services and supply chain. At facility level it is the operations manager.

“Their inputs are consolidated into a provincial structure which consists of programme managers, the CFO and representation from the office of the accounting officer.

“We have reviewed this strategy and will continue for the conceivable future,” he said.

Mbengashe said the department had “avoided incurring unauthorised expenditure” for eight months due to the new system. “By the end of November we’d balanced our budget and had sufficient funds for the following months.

“We operate on a budget of R1.6-million per month, and we were able to maintain costs. At the end of the financial year we had underspent by R60-million, but the books are still being balanced. We spent over 99.8% of our budget,” he said.