State hospitals could feel suppliers’ wrath

The Gauteng Department of Health owes suppliers more than R300 million.

The Gauteng Department of Health owes suppliers more than R300 million.

Published Nov 24, 2011


Fed-up medical suppliers have threatened to stop sending stock, including life-saving and diagnostic devices, until they are paid.

The Gauteng Department of Health owes the suppliers more than R300 million.

State hospitals could soon find themselves without daily essential consumables required to function adequately and deliver quality healthcare services.

These include surgical gloves, syringes, needles, sutures, and diagnostic reagents for TB and HIV.

Cancer diagnostic equipment is one of the supplies expected to be stopped, while suppliers of machinery like CT scanners, MRIs, ultrasounds and ventilators could follow suit.

On Wednesday, the SA Medical Devices Association (Samed), which represents members who supply 80 percent of products and devices used in public hospitals, revealed that more than R300m was owed to 45 members as of the end of last month.

Some invoices date as far back as 2005 and range from between R25m and R50m per company.

One supplier said patients’ lives were being placed in danger at Pholosong Hospital in Tsakane because their haemoglobin and glucose levels couldn’t be tested.

“Death could result if transfusions are done too late,” one supplier said.

Samed chief operating officer Tanya Vogt said the lack of payment was hampering suppliers’ potential to expand their businesses and preventing access to “new, innovative” equipment as companies no longer had the revenue to import international products.

Marius Malherbe, head of the Samed task team established to investigate the ongoing supplier non-payment issue, said the problem could drive away suppliers from the public into the private sector, widening the service gap between the two sectors.

“It’s going to compromise training of doctors and nurses in hospitals, which will impact on healthcare delivery,” said Malherbe.

He added that department officials were “patting themselves on the back” for being on budget, yet they had failed to account for outstanding supplier payments.

Many suppliers have been forced to take drastic steps to keep their companies afloat, including taking out high-interest loans and overdrafts, and downsizing.

One supplier of sutures and wound dressings, who did not want to be named, said the delayed payment had set his company back two years. The provincial health department owes him R9m.

“The lack of payment has had a significant ripple effect on us because we are now at the point where we’re struggling to pay our suppliers, and our reputation is being tarnished.

“We have had to put our houses up as surety to secure bank loans, and we retrenched people in 2009 and 2010,” he said.

Samed chairman Marlon Burgess suggested that a special grant be allocated to the department to settle the outstanding debt once and for all.

Gauteng Department of Health spokesman Simon Zwane said the non-payment was caused by cash-flow problems caused by old debts that hadn’t been serviced since 2009.

He said the department had paid between R200m and R300m a month to suppliers.

Zwane was unable to give an exact figure of the debt owed to suppliers, but said the Gauteng Department of Finance’s recent commitment to release at least R200m would relieve the pressure.

“The (provincial finance department) will identify possible underspending which should be surrendered to the Provincial Revenue Fund for reallocation to Health to address accruals, since the department was experiencing significant pressures in paying historical debts.

“The provincial government is of the view that this strategy will lead to full payment of accruals before this term of office comes to an end,” he said. - The Star

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