NHI worries medical device association

Provincial health departments owe medical device companies more than R1.1bn due to administrative weaknesses that are unlikely to improve under National Health Insurance (NHI), the SA Medical Device Industry Association (Samed) has warned.

Samed is an association for companies that manufacture products ranging from bandages to orthopaedic devices. The outstanding debts to medical device suppliers not only place the companies under financial pressure but also threaten the continued provision of vital equipment to state patients.

“There is a disconnect between planning, procurement and budgets,” said Samed board member Monica Lucas, who chairs the association’s outstanding payments project. The majority of the 39 Samed members that provided information on the debts owed to them by provincial health departments were small and medium-sized local manufacturers, she said.

“There is not a province with clean hands,” Lucas said, attributing the state’s delays in paying companies to its weak administration systems.

Even the Western Cape, which consistently gets clean audits from the auditor-general owes millions of rand to medical device suppliers.

Figures provided by Samed show 39 of its member companies were owed R1.109bn by May 24. Almost 45% (R493m) of this debt is owed by Gauteng, followed by KwaZulu-Natal (R149m), and North West (R97m). Western Cape owes R93m, of which R51.4m is debt of more than 120 days.

The NHI Act paves the way for a government-controlled NHI Fund that will purchase services, medicines and devices for patients.

Samed made submissions on the NHI Bill when it was before parliament, saying the legislation did not contain adequate measures to establish a framework for key administrative functions, including information technology and human resource infrastructure to process millions of claims, invoices and payments.

The NHI Act was vague and did not offer sufficient comfort to medical device suppliers, Lucas said. “I appreciate you can’t put every detail into legislation, but there should be some specifics about how this will work.”

The private sector used automated systems for the procurement and payment of medical devices, and paid suppliers promptly, she said. By contrast, the state relied on cumbersome manual processes that were time-consuming for staff and suppliers, she said.

The MD of a medical device company that supplies hospitals in both the public and private sector, who spoke to Business Day on condition of anonymity, said the delays in payments from the Gauteng provincial health department were affecting the amount of stock he could supply to other provinces.

Gauteng was “the worst offender”, accounting for more than R40m of the total R68m owed by the state. His company also supplies private hospitals, which generally paid invoices within 30 to 45 days, he said.

The Western Cape health and wellness department declined to answer Business Day’s questions saying only that it monitored supplier payments and reported to its provincial treasury monthly. “Each contract is managed individually with the relevant supplier, and where there are concerns about individual orders we address the resolution thereof with the specific supplier directly,” it said.

The Gauteng health department had not responded to a request for comment at the time of publication.

Health & Science Correspondent