House red flags public hospitals

A House committee probe on hospitals has spotlighted serious irregularities in the management of taxpayers’ money meant for the operations of facilities.

Parliament’s Public Accounts Committee (PAC) - Central Government, in a report released last week, discovered gross financial mismanagement at all 16 major health facilities and specialised health votes investigated during the 2021/2022 financial year. This, the lawmakers said, was happening amid issues of over-budgeting and concealing “funds under statutory items yet they were over and above the actual requirement.” 

The Committee said this was in addition to the failure of the facilities’ management to pay pension and gratuity despite the availability of funds in some cases and unauthorised deduction of salary of employees. Other sticking points include heavy workload due to understaffing, as well as failure to establish IT systems for monitoring use of medicines and other health supplies.

“Most of the diversions were effected on statutory expenditure lines of salary, pension and gratuity. For instance, Lira, Kawempe and Jinja hospitals registered mischarges amounting to Shs105 million, Shs47 million and Shs75 million, respectively,” the report reads in part.

It was further discovered that Shs1.17 billion at Mulago hospital was irregularly diverted without seeking and obtaining the necessary approvals.

“The committee further observed that diversion of funds is not only contrary to the Public Finance and Management Act, 2015, but negatively affects the delivery of services and negates the purpose of budgeting by distorting approved plans,” the report further reads.

AOs respond
However, in their official response to the allegations, the accounting officers (AOs) explained that the diversion of resources was due to the inadequate budget allocation to the entity. The AOs also said the hospitals experienced unplanned emergencies like “frequent equipment break down, water and sewerage crises, frequent power outages that required more fuel, and infections in the wards and theatres due to high patient numbers thus the need for urgent fumigation services.”

Other AOs, the Committee report indicates, explained that the hospitals had a shortfall in pension but there were extra funds on the gratuity budget. In order to avoid the accumulation of pension arrears, the hospitals paid the pension from the gratuity budget, the Committee said the officers told them.

The lawmakers were, however, not convinced by their response. Instead, the Committee recommended that the “affected AOs should be reprimanded” by the Finance ministry for diverting funds from one expenditure item without seeking authority. They asked the AOs to provide a report to Parliament within six months.

“The Committee further recommends that AOs should utilise the PFM Act, 2015 which gives guidance on virement (the process of transferring items from one financial account to another) and reallocation of funds within a vote should need arise,” the MPs recommended.

The PAC report was based on the report of the Auditor General on national/regional referral hospitals and other specialised health votes for the financial year ended June 30, 2022. 

Under the spotlight
While presenting the report in the House last week, Mr Medard Lubega Sseggona, the chairperson of the Committee, revealed that the Committee held meetings with the AOs and staff of the entities, among others.

The entities considered included Ministry of Health, Mulago National Referral Hospital, Butabika National Mental Referral Hospital, Kiruddu National Referral Hospital, China-Uganda Friendship Hospital, Naguru, Kawempe National Referral Hospital and Arua Regional Referral Hospital.

Others included Gulu Regional Referral Hospital, Lira Regional Referral Hospital, Soroti Regional Referral Hospital, Jinja Regional Referral Hospital, Mbarara Regional Referral Hospital, Kabale Regional Referral Hospital, Mubende Regional Referral Hospital, Uganda Cancer Institute and Uganda Virus Research Institute.

At Jinja hospital, one of the facilities that returned money to the Consolidated Fund (Shs1 billion returned out of Shs11 billion they had received), the Auditor General revealed an underpayment of Shs22 million in respect of pension and gratuity. This was common in other facilities. 

Jinja hospital’s AO explained that the salary underpayments were due to interdiction, and challenges with bank details. The pension underpayments were meantime due to non-validation of beneficiaries on the Integrated Personal and Payroll System (IPPS) and stringent deadlines for making corrections on the same.

“The committee observed that under payments of salaries affects staff morale and productivity, which hinders service delivery. Underpayments of pension lead to accumulation of arrears, ” the report reads.

Culpability 
Citing Shs2.7 billion accumulated in four of the 16 facilities (Kiruddu, Kawempe, Jinja and Entebbe hospitals), the lawmakers said AOs should be held responsible for the arrears.

“The Committee observed that in some instances, the approved budget estimates for the year under review had no provision for the settlement of domestic arrears. These entities cannot run effectively without some of these services,” the legislators said. They added: “Incurring more debts is contrary to the commitment control system instituted by [the] government to curb budgetary indiscipline by AOs. The Committee observed that AOs committed government beyond the approved budget without authorisation contrary to the commitment control system.”

However, the AOs, in their official response to the probe team, explained that the accumulated arrears were mainly arising from “inadequate funding for the entities, as well as insufficient releases that escalated utility costs.”

Repair job
Following with explanation, the lawmakers still said the AOs should ensure adherence to the commitment control system to minimise accumulation of domestic arrears, budget for payment of domestic arrears and also come up with a debt settlement plan. The MPs said this is an urgent issue because it would attract litigation and the associated costs.

“The Committee recommends that AOs should be held responsible for creation of arrears. The Ministry of Finance, Planning and Economic Development should also be held liable for failure to clear domestic arrears which pose a danger of insufficient and ineffective service delivery,” they recommended.

Mr Sseggona said despite receiving the required funds for operations, most entities didn’t implement their outputs fully.

“Many of the AOs the Committee interacted with attributed this partial implementation to the lockdown instituted by [the] government at the time, as a measure to curb the spread of Covid-19 disease,” Mr Sseggona said.

“It should be noted, however, that although Covid-19 disruptions were a reality, health workers were categorised as ‘essential workers’ at the time and, therefore, were expected to carry on implementing some of the planned activities, although the Committee notes that the number of staff at these institutions had been significantly reduced at the time, which hampered the implementation of the quantified outputs. This, especially relates to the non-medical staff,” he added.