A House committee investigation into hospitals has uncovered serious irregularities in the management of taxpayer dollars intended to operate the facilities.
Parliament’s Public Accounts Committee (PAC) – Central government, in a report released last week, found serious financial mismanagement in the 16 major health facilities and specialist health votes that made the subject to investigation during the 2021/2022 financial year. According to the lawmakers, this comes against a backdrop of problems with overbudgeting and hiding “funds under statutory items, when they far exceed actual needs.”
The Committee said this was in addition to the failure of the facilities management to pay pensions and allowances despite availability of funds in some cases and unauthorized withholding of employees’ salaries. Other sticking points include the heavy workload due to staff shortages, as well as the inability to set up IT systems to monitor the use of medicines and other health products.
“Most of the misappropriations were made on statutory expenditure items relating to salaries, pensions and allowances. For example, Lira, Kawempe and Jinja hospitals recorded billing errors amounting to Sh105 million, Sh47 million and Sh75 million respectively,” the report reads in part.
It was further discovered that Sh1.17 billion at Mulago Hospital was irregularly misappropriated without seeking and obtaining necessary approvals.
“The committee further observed that misappropriation of funds is not only contrary to the Public Finance and Management Act, 2015, but also adversely affects service delivery and defeats the purpose of budgeting by distorting approved plans,” the report reads.
However, in their official response to the allegations, the Accounting Officers (AO) explained that the diversion of resources was due to insufficient budget allocation by the entity. The AOs also said hospitals faced unforeseen emergencies such as “frequent equipment breakdowns, water and sewer crises, frequent power outages that required more fuel, and infections in wards.” and theaters due to high number of patients, hence the need for urgent fumigation services.”
Other AOs, the Committee report said, explained that hospitals had a pension deficit but there were additional funds in the gratuity budget. To avoid accumulation of pension arrears, hospitals paid the pension from the gratuity budget, Committee officials said.
Lawmakers, however, were not convinced by their response. Instead, the Committee recommended that the “concerned AOs be reprimanded” by the Finance Ministry for diverting funds from an expenditure item without seeking permission. They asked the AOs to provide a report to Parliament within six months.
“The Committee further recommends that AOs should use the PFM Act 2015 which provides guidance on wire transfer (the process of transferring items from one financial account to another) and reallocation of funds within a vote if necessary”, recommended the deputies.
The PAC report was based on the Auditor General’s report on national/regional referral hospitals and other specialist health votes for the financial year ending June 30, 2022.
Under the projectors
While presenting the report in the House last week, Mr. Medard Lubega Sseggona, Chairman of the Commission, disclosed that the Commission had held meetings with AOs and staff of the entities, among others.
The entities considered included the Ministry of Health, Mulago National Referral Hospital, Butabika National Referral Hospital, Kiruddu National Referral Hospital, China Uganda Friendship Hospital, Naguru, the Kawempe National Referral Hospital and the 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, l 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 (1 billion shillings returned from the 11 billion shillings received), the Auditor General revealed an underpayment of 22 million of shillings for pension and gratuities. This was common in other establishments.
The AO of Jinja Hospital explained that the insufficient salaries were due to bans and problems with bank details. Pension underpayments were meanwhile due to non-validation of beneficiaries on the Integrated Personnel and Payroll System (IPPS) and strict deadlines for making corrections in this regard.
“The committee observed that underpayment of salaries affects staff morale and productivity, thereby hampering service delivery. Underpayments of pensions lead to accumulation of arrears,” the report said.
Citing Sh2.7 billion accumulated in four of the 16 facilities (Kiruddu, Kawempe, Jinja and Entebbe hospitals), the lawmakers said AOs should be held accountable for the arrears.
“The Committee observed that in some cases, the approved budget estimates for the year under review did not make any provision for the settlement of domestic arrears. These entities cannot operate effectively without some of these services,” the lawmakers said. They added: “Contracting more debt is contrary to the commitment control system established by (the) government to curb the budgetary indiscipline of the AOs. The Committee observed that the AOs committed the government beyond the approved budget without authorization, contrary to the commitment control system.
However, the AOs, in their official response to the investigation team, explained that the accumulated arrears mainly stemmed from “inadequate funding for the entities, as well as insufficient releases which drove up the costs of public services” .
After giving explanations, the legislators still stated that the AOs should ensure compliance with the commitment control system to minimize the accumulation of domestic arrears, a budget for the payment of domestic arrears and also develop a settlement plan debt. MPs said this was an urgent matter as it would lead to litigation and associated costs.
“The Committee recommends that AOs be held accountable for creating arrears. The Ministry of Finance, Planning and Economic Development should also be held accountable for the failure to clear domestic arrears, which poses the risk of insufficient and ineffective service delivery,” they recommended.
Mr Sseggona said despite receiving the required funds for operations, most entities have not fully implemented their results.
“Many AOs with whom the Committee interacted attributed this partial implementation to the lockdown instituted by (the) government of the day, as a measure to curb the spread of the Covid-19 disease,” Mr Sseggona said .
“It should be noted, however, that although Covid-19 disruptions were a reality, health workers were at the time classified as ‘essential workers’ and therefore had to continue to implement some of the planned activities , although the Committee notes that the number of employees of these institutions had been significantly reduced at the time, which hampered the implementation of the quantified results. This particularly concerns non-medical staff,” he added.