Healthcare spending not adding up

Healing financial management systems is part of the new deal if the country really wants to stop leakages of limited resources. In this second and last part, JAMES CHAVULA reveals how district council officials are playing with figures to balance the books while efficiency suffers.

Just last year, Diana Carmack discovered that the district commissioner in Rumphi would take money from the DHO’s account to pay non-health payments, including wages of local staff for other sectors.

In February this year, Carmack–working hand in hand with social researchers, Professor Chijere Chirwa, Cindy Carlson and Nick Hall—published a study that exposed worrying loopholes related to how district councils manipulate the  Integrated Financial Management Systems (Ifmis) to hijack funds meant for healthcare delivery.

While the use of an appropriate code is supposed to ensure that no more payments are made against actual allocations that have been exhausted, the controls are not hewn in stone.

Highlighting how the health workforce circumvent exhausted votes, the findings show: “In these cases, the payment can be coded to a budget line where the budget is not yet exhausted.”

With drugs centrally procured from the Central Medical Stores Trust by government, the manipulation of codes usually affect allocations for fuel, food and maintenance of buildings.

The research team draws readers to a scenario where a District Health Management Team (DHMT) decides to make payment to a garage for fuel.

“When it is later discovered that the fuel budget is exhausted and the balance will not accommodate the entire payment, the whole or part of the payment is coded to another budget line where the budget is not yet exhausted,” the report reads.

This way, the district and central hospitals spend up to 99.9 percent of their annual budget and balance their books even though the money is spread to several expenditure lines without the approval of Parliament.

Heads of hospitals said the coding of payments according to where the budget is available is a widespread tendency.

“Ifmis reports are useless,” Chitipa hospital administrator McDonald Nkhonjera said.

The findings of Chijere’s team back this perspective, highlighting that it can be misleading when it comes to planning and reporting.

“The consequence is that reports of actual expenditures against budget for the full year show on most lines that actual expenditure precisely matches the budget because the coding of actual expenditures have been manipulated to fit the budget,” the researchers rightly point out.

The only reliable information about actual expenditure on an Ifmis report is the total, they warn.

“In this way, the value of Ifmis for line-by-line budgetary control has been lost,” they deduce.

Also up in smoke is the Ifmis reports’ credibility as a basis for bargaining when the hospitals and health offices need more funding the following year.

The researchers visited two central hospitals, two district facilities and five health centres where officials testified that Ifmis reports are not used as a management and planning tool.

Blaming Ifmis as a seedbed for corruption, theft and misallocation of finances for health evokes claims of then Vice President, Khumbo Kachali, who was charged with the duty to relaying the events that had unfolded to Parliament on September 23 2013.

The strange spin was aptly rejected by donors who rejected that claim that Ifmis was to blame, with German Ambassador Peter Woeste leading the retort.

Shortly after Kachali’s statement in Parliament, Woeste told The Nation: Thanks to the IT system used—Ifmis—we seem to be able to trace who and where people took money. So, please, do not blame a computer for corruption. That would be a distraction from the real issue. It’s some criminal elements who are committing fraud.”

When it comes to funding for healthcare services, the manipulation of the contentious financial management system happens in district councils through which the DHOs receive their funding from Treasury.

“An additional risk is created by lack of recording of arrears on Ifmis. Instead, budget management operated only monthly, based on total funding received and on which invoices are put top of the pile,” Chijere and Co report.

The flaws in coding create room for recording of payments of goods not supplied.

This heightens the risk as trends of procurement in public health facilities show the tendering process for the supply of goods and services is prone to be infiltrated by people in positions of power and influence, especially the hospital officials themselves and politicians belonging to governing parties.

The political and business heavyweights, who usually connive with members of the hospitals’ internal procurement committees, often scramble for tenders to supply foodstuffs for inpatients and health workers on duty, insiders say.

The sources also spoke of hospital managers using their spouses, friends and relatives as fronts to win contracts to supply goods and services.

Naturally, payments for such suppliers are often prioritised, both studies and inside stories show.

In the corridors of health facilities, a can of worms pops open.

The three researchers’ narratives lift the lid on the symptoms of graver integrity issues and conspiracies that lead to exaggerated pricing of goods.

According to them, the rot hidden in plain sight flashes past: favours being traded, procurement committee members demanding up to 15 percent from winners of contracts they are supposed to regulate, the committees shedding insubordinate members and recruiting new ones, district health officials fuelling their personal cars on free at the same filling stations that refill ambulance tanks and other managers repairing their motor vehicles in garages that work on hospital fleets.

Such is the give-and-take transactions, that many payments that are not made when first due result in the accumulation of arrears and then prioritising is distorted by which payee have the most influence.

Ordinarily, the health management teams draw a list of payees in the frame to be paid considering that the consequences of delaying until the following month is tolerable or not.

The study team observed that hasty decisions are made as individuals in the management teams present a strong case for payment of a particular invoice “either because the supplier has political or any other relationships” or because there may be “a small gift” from the payee.

The team also allude to decisions being frequently made to hurry particular payments outside the health management meetings.

“Often, such decisions resulted from a supplier exerting pressure on a senior member of the management team either by phone or personal visit,” the brains behind the study on inefficiencies in the healthcare sector write.

The case in point includes an encounter when they visited a hospital administrator at one of the hospitals surveyed.

As the meeting continued, they report, the door suddenly opened and the hospital director walked straight in and began to talk to the administrator without acknowledging the researchers’ presence.

They recount: “The bwana had something on his mind and looked under pressure. A supplier was chasing payment.

“The bwana was holding the paperwork and waving it at the administrator, saying payment to this specific supplier had to be paid immediately.”

When the bwana stormed out, the overpowered administrator was left glancing apologetically and the study team wondering “what influence the supplier had that compelled the bwana to adopt such behaviour.”

Such is the infiltration of the system that it not only pushes clean transactions further down the rungs when it comes to outstanding dues.

They also create undue urgency and laxity in scrutinising backing documents at a time creative use of coding expenditure in Ifmis has been relegated to a resented formality.

The country cannot continue to blame computers for leakages the size of Cashgate which goes uncurbed in facilities that are supposed to safeguard the health of the nation.

The glaring wounds affecting hospitals’ financial management systems need no bandaging, but a healing. The country could significantly reduce its gap by plugging the neglected holes and making efficient savings. n