Crisis at Groote Schuur Hospital: briefing

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04 March 2003
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

4 March 2003

Mr L V Ngculu (ANC)

Documents handed out:
Groote Schuur Management Presentation (Appendix)

The Committee commented on the high numbers of medical personnel employed at Groote Schuur hospital noting that the policy of transformation was not taking place as it should. The Committee heard that there seemed to be resistance to transformation at the institution slowing down the process. There were 509 medical doctors against bed occupancy of 850 in addition to about 200 part-time doctors. It was explained that the huge salary bill necessitated the drastic decision to terminate services offered by part-time doctors.

Groote Schuur hospital was in the process of renegotiating the 1957 Agreement it had with UCT regarding the remuneration of academic staff so that the education department could meet this cost. This measure would ensure that conditional grants were dedicated only to core services of the hospital.

The Chair drew the attention of the committee to newspaper reports that highlighted a crisis at Groote Shuur hospital and that the management of the institution would address members on this item.

Briefing By Dr. Norman Maharaj: - CEO Groote Shuur Hospital
Dr. Maharaj regretted the fact that newspaper reports had painted the hospital in a very negative light and that therefore it was necessary to counter these reports by demonstrating that in fact the institution is a place of excellence. He admitted that 2002 was a particularly difficult year for the hospital in that there were many problems most of which were incidental and therefore out of management hands. Most of these problems tended to stem from historical factors and that the hospital was currently faced with a transition with a new board expected to take office.

Dr. Maharaj informed the committee that the hospital incurred an over-expenditure in the region of R90 million and that by June last year the institution was faced with the difficulty of balancing the budget to address this significant deficit. Some of the cost cutting measures the hospital had instituted were to cut down on some services and consolidate the hospital into 850 beds and that theatres were as well consolidated to accommodate only what was absolutely necessary. These measures aimed at ensuring that the institution was as lean as could be practical and that in the end the entire scheme paid off with a saving of R20 million.

Dr. Maharaj noted that one of the enduring historical encumbrances to the hospital is the 1957 Agreement with the University of Cape Town (UCT) which provided that the hospital would fund 51% of the academic staff whilst UCT would provide the remaining 49%. The hospital was trying to renegotiate this Agreement so that the education department paid academic staff. This measure would ensure that conditional grants were dedicated only to core services of the hospital, which was the provision of health care. This measure was important especially given the fact that the hospital spent 70% of its budget on the staffing component.

Dr. Maharaj further informed the committee that the other burden the hospital had to grapple with was the over concentration of medical doctors in the institution at the expense of other health institutions countrywide. He noted that there were 509 medical doctors against bed occupancy of 850 in addition to about 200 part-time doctors. The huge salary bill necessitated the drastic decision to terminate services offered by part-time doctors. He continued that it was the desire of management to use resources optimally and buy new equipment and drugs to improve on service delivery.
Briefing by Dr. Saadiq Kariem - Senior Medical Superintendent
Dr. Saadiq informed the committee that being a national institution any problems affecting Groote Schuur automatically reverberated nationally and that was why the administration decided to adapt cost-cutting measures in order to salvage the institution from further decline in service delivery. The hospital had a clear policy that supported the recruitment and training of young black professionals in order to address the challenge of a shortage of doctors throughout the country.

Dr. Saadiq pointed out that the pressure on intensive care at the hospital was phenomenon noting that the hospital transplant unit alone had a waiting list of about 800 people. Management was currently exploring ways and means of generating additional revenue to supplement its budgetary allocations. It was, however, emphasized that whatever cost cutting measures the hospital undertook it made sure that no patient's life was compromised thereby.

Dr Jassat (ANC) urged the hospital management to urgently address the issue of over staffing in view of the inequities in the supply of medics countrywide. He however asked the institution to accept those who volunteer to offer service to the institution since in so doing they also benefit in honing their skills. He pointed out that there was no doubt that the services the hospital offered were excellent which was why it attracted patients from afar other provinces.

Mrs Malumise (ANC) sought clarification on the allegation that there was only one life-saving machine in the hospital.

Dr. Maharaj replied in the negative stating that the institution has several life-saving machines but that they are not enough to cater for the huge number of trauma patients that crowd the intensive care unit.

Mrs Malumise sought for further clarity on the Agreement with UCT and how it impacted on the crises the hospital is now faced with.

Dr. Maharaj explained that the Agreement the hospital entered with UCT was essentially about co-funding the academic activities related to medical care noting that other provinces had similar arrangements with tertiary institutions in their locality. The hospital only paid for research and other academic activities that translated into patient care.

Ms Baloyi (ANC) asked if the hospital had a contingency fund from which it could tap should it be faced with unforeseen developments.

Dr. Maharaj replied in the negative noting that the reality of budgetary constraints was such that there was no room for a contingency fund in spite of the strategic importance of such a measure. In terms of the PFMA all departments were required to plan in advance on how funds would be spent and that there were huge backlogs on equipment that should be procured and medical store which scenario does not lent itself to the sustenance of a contingency fund.

Ms Baloyi (ANC) asked if any, relationship existed between Groote Shuur hospital and tertiary hospitals in other provinces.

Dr. Maharaj confirmed that there was a healthy working relationship between his institution and other tertiary hospitals but suggested that work should be undertaken in the area of protecting specialised units so that provision of health care was rationalised with a view to avoid incidences of duplication.

Ms Baloyi observed that given the incident of over-concentration of medical personal at Groote Shuur hospital it was felt that the policy of transformation was not taking root as it should.

Dr. Maharaj admitted that there were pockets of resistance to transformation at the institution but reiterated that this was what the vision and mission of the institution was all about - to pursue change in terms of efficiency and the promotion of the ethos of the employment equity. The hospital was trying to encourage people to take up health care responsibility in rural areas. He however acknowledged that the institution had a long way to go in achieving this important objective.

Dr. Rabinowitz (IFP) asked if hospital made use of private/public partnerships.

Dr. Maharaj replied in the affirmative noting that whenever opportunities arose provision of services was out-sourced where the hospital had no capacity and the infrastructure to deliver. He however hastened to clarify that such a venture was only undertaken provided it posed no danger to patients.

Dr. Rabinowitz asked if at all, part-time doctors were monitored to ensure that they give value for the money they were paid.

Dr. Maharaj pointed out that staff monitoring was paramount for the administration and that this applied to all staff and not only doctors.

Dr. Rabinwitz wondered if the national mandate was unrealistic in comparison to the resources allocated to the hospital.

Dr. Maharaj noted that the hospital was under a constitutional obligation not to turn away any patient who was in need of emergency care and that conditional grants kick in to ensure that services were extended to other provinces as well.

Ms Mnumzana (ANC) asked if the hospital budgets for the replacement of obsolete hospital equipment.

Dr. Maharaj admitted that for many years this item had never been provided for and that management was seriously looking into making provision for equipment replenishment.

Ms Mnumzana inquired how the institution would go about reviewing the services offered by part-time doctors.

Dr. Maharaj explained that the issue of part-time doctors fell within the review process the institution was currently undertaking noting that so far salaries had increased exponentially yet this aspect did not match the consumable budget that was allocated to the institution.

Ms Mnumzana wondered how the institution would carry out changes in the face of the building resistance among the vested interests in the medical fraternity.

Dr. Maharaj acknowledged that the implementation of these measures had been slowed by resistance to change but pointed out that it was a challenge the administration had to pursue.

Mrs Mnumzana (ANC) noted that a cut down on services would have the unintended results of having a superannuating of staff and equipment.

Dr. Maharaj pointed out that specialists could never at any one point be regarded as a liability but that on the contrary this cadre are an asset to be tapped into whenever a short fall in felt elsewhere.

Ms Mnumzana asked if the hospital was faced with the menace of theft and pilfering that was so rampant in other institutions around the country.

Dr. Maharaj admitted that these incidents were often reported but that he was not in a position to quantify to what extent they were prevalent noting that staff were encouraged not to vandalise hospital property. He added that so far management spends a sum of R 4 million on security and that this was a management nightmare.

Dr. Gous (NNP) inquired to what extent the increased load at the trauma unit was attributable to the incidence of HIV/Aids.

Dr. Mahraj said that he did not have the actual figures but admitted that indeed HIV/Aids pandemic added a significant burden to the trauma unit.

Ms Kalyan (DP) asked if the private hospital bed unit was inclusive of the 850 beds and whether it was housed on a different floor and whether this section was contracted to the medical aid scheme.

Dr. Maharaj replied that the additional 50 beds were in the same hospital but on a different floor adding that not all of them were contracted to the medical aid scheme.

Ms Kalyan inquired if the hospital had approached the Minister of Education regarding the Agreement with UCT.

Dr. Maharaj replied that he had not approached the Minister as such but that indeed the Minister was very much aware of the situation and was keen to discuss the issue.

Dr. Luthuli (ANC) expressed disappointment that transformation was coming too late at the institution. She asked the hospital administration to urgently address the issue of duplication of services that was apparent in the tertiary institutions. Was there an influx of private patients from overseas seeking treatment at the institution?

Dr. Maharaj clarified that there was no influx of private patients from overseas save that some patients from the SADC region and the sub-continent had occasionally sought treatment at the institution. He however pointed out that there were some inquiries from western countries' nationals regarding the available services at the institution. However, these inquires were only exploratory. Foreigners had indeed been reported seeking treatment at institutions that offered plastic surgery and this may easily be confused with the health care programs offered at the institution.

Dr. Maharaj admitted that there was need to encourage specialist to take rounds at level II hospitals in order to transfer skills to these disadvantaged facilities.

Dr. Cachalia (ANC) asked if there were any cost-cutting measures that had been achieved through out-sourcing of services.

Dr. Maharaj replied that out-sourcing may be cheap but it was not necessarily. More research was needed to determine the actual utility of this measure.

Dr. Sibeko from the Department noted that many tertiary institutions offered services, which did not fall under their mandate hence causing a strain on the scarce resources that should go to patient care. The Department set aside RI billion for tertiary institutions in the Western Cape and another R360 million was set aside for health profession's training fund hence the question of renegotiating the Agreement with education institutions did not arise at all. He added that the education department also funded the training of health professions.

Dr. Sibeko pointed out that the Department did not expect any hospital management to cut back on the provision of services to members of the public. The Department's policy on hospital revitalisation was geared toward addressing the problem of migration of health professionals to level I facilities. New legislation on medical aid provided that all civil servants must seek treatment at government institutions adding that though medical schemes would be up in arms regarding this development hospitals like Groote Shuur should be able to reap significant benefits thereby.

The Chair noted that there was no clear interrogation on the issue of the collapsing service delivery at the hospital. The critical question was if the new measures the administration was instituting - for instance reduction of beds occupancy from 200 to 150 - would impact negatively on the fundamental of service delivery. He questioned the qualitative improvements conditional grants brought to the whole system of health care. He noted that the health profession's training funds were voted for in the national budget and pointed out that the critical intervention was to ensure that these funds were not subsumed into other expenditures.

Meeting was adjourned.

Briefing to the Portfolio Committee on Health - Groote Schour Hospital Crisis

1. Introduction and background

As requested by the Portfolio Comm ittee, the following serves as a brief synopsis of the crises at Groote Schuur Hospital ( GSH ) during the current financial year2002/03.

In large measure the various crises that have been reported in the media are the result of financial pressures experienced by the institution. It must be bome in mind that the services offered at GSH are not provincially unique but also nationally unique services including transplants, as well as numerous other tertiary services. The enormous financial pressure placed upon GSH must also be seen in the context of the re-allocation of the National Tertiary' Conditional Services Grants to achieve funding equity amongst the provinces for highly specialised services. Further to this presentation the hospital CEO and myself will make a formal presentation to the honourable Portfolio Committee on the 28 February 2003.

1.1 The finding envelope for the hospital for the financial year 2002/ 03 was R644,104 million inclusive of the National Tertiary' Grants, earmark funds and ICS adjustments.

The projected funding envelope required to fully serve the functions of the hospital is approximately R 680, 000 million at the current economic levels.

The funding of the hospital is drawn from the National Tertiary' Services Grant. the Conditional Grant, as well as the provincial equitable share.

2002/2003 was the implementation year of the revised National Conditional Tertiarv Grant, effectively reducing funding available to Groote Schuur Hospital.

This was a national project pioneered by Dr M Henscher a EU Consultant appointed by National Department of Health. At this junction we wish to highlight the disparity of funding for Healthcare in the Western Cape of 27% against the 3 1% in Gauteng of the total Provincial Budget Allocations. Furthermore the priority of the national and provincial departments of health is towards primary health care and thus the tertiary' institutions have received even further reductions in their allocations.

The hospitals was thus faced with a budget deficit of R 89. Imillion for the financial year 2002/03.

1.2 In terms of the Public Finance Management Act, no 1 of 1999, the department is legally obliged to come within budget. Institutional managers' responsibility' is to manage the hospital's budgets towards the overall departmental objectives incorporating brining the department within budget.

1.3 There have been a number of negative media reports on various of these aspects above and the effect they are having on patient care. Management viewed this in a very serious light and implemented various damage control measures to align the fears of staff members of possible job losses and minimise the impact on the community in terms of health care services at Groote Schuur Hospital.

2. Factors impacting on Groote Schuur Hospital's financial situation.

2.1 Macro economic factors.

The impact of the rate of exchange of the rand against the major international currencies. Starting the financial year with a rand weakened by 37% and it's inflationary impact on the domestic economy. We experienced increases in basic foodstuff in a region of 20%, a hike of 4 percentage points over a six months period on the interest rate and continues petrol price increases. These economic factors are completely' beyond the control of the hospital, either determine by international events or domestic factors, but had a definite impact on the health inflator. Examples of inflatory increases Blood 17%, X-ray films 24%, Pharmaceuticals 20-25% and Medical/ Surgical consumables 25%.

2.2 Cost saving initiatives and impact on patient care.

In order to come within budget, the hospital introduced a number of severe costsaving measures. This has been fully discussed with the Head of Department ofHealth . Some o the more severe measures include:

· Reducing the number of beds by 100 from 950 to 850.

· Cutting 22 operating theatre lists, meaning less procedures and operations.

Stopping patient transport, resulting in indigent patient had to find there own way to and from the hospital

Reducing the number of sessional posts by 50 % (these are doctors who render services to the hospital),

· Putting out a notice to review the commuted overtime of doctors.which met with plenty of resistance.


· Returning government transport vehicles - thus impacting severely upon staff mobility and training.

2.3 These measures were estimated to provide a saving of R 30 000 million but with untold severe patient consequences.

2.4 In addition the waiting lists of patients for various types of operations, already' incredibly long ( for example the waiting list for patients waiting for hip replacements is approximately 800 or 3 - 4 years ) will now be increased beyond even this.

2.5 Other impacts include the reduction and even stopping of some clinics that provide a unique service - such as colorectal surgery, pregnant women delivering on stretches in passages of the maternity' centre, and a number of other consequences.

2.6 An additional pressure on the service is the severe trauma epidemic in the WC. These patients represent a significantly heavy burden on the hospital resources, as they require intensive care, incredible amounts of consumables such as blood. operations etc.

2.7 In addition the HIV epidemic is having an equally heavy burden on the resources of the hospital. The hospital has highly specialised HIV clinics where patients are seen with severe opportunistic infections or requiring highly specialised medical care that cannot be provided elsewhere.

3. Revenue Generation Projects

In order to generate revenue to support the indigent patient services the hospital has specifically increased the number of private patients and those on medical aid into the hospital. This has been in addition to the number of indigent patient beds that the hospital serves; i.e. indigent patient beds have not been replaced by the private patient beds. To date the hospital has generated almost R 2.7 million on only 15 beds within 6 months. As this project has been enormously successful. the hospital intends expanding on this in order to generate much needed revenue for the hospital. Healthcare 2010 future impact, shifi patient contact and subsequently funding to primary and secondary level. Tertiary and Quaternary will onlv access 2% of funding

4. Conclusion

The above serves to highlight some of the difficulties experienced by Groote Schuur
Hospital for consideration bv the honourable Members of Parliament. A further formal briefing will be presented by the hospital CEO, Dr. Norman Maharaj as well as Dr Saadiq Kariem.

In conclusion the Health care 2010 conceptual vision will have a further funding impact on Groote Schuur Hospitals budget as patient contact will shift to primary and secondary levels

Dr. Saadiq Kariem

Senior Medical superintendent GSH


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