'Services may need to be rationed': Western Cape health department expects budget cuts

Some healthcare services may have to be rationed in the Western Cape as the country grapples with dwindling tax revenue, a worsening fiscal deficit and the National Treasury tries to rein in spending.

Provincial health head Dr Keith Cloete warned managers, in a departmental communication last week, to tighten their belts and spend wisely as budget cuts were expected to be announced in the upcoming medium-term budget policy statement (MTBPS) on November 1.

As part of government’s austerity measures, the National Treasury, which cut the health budget by 4.9% in real terms for 2023/2024, issued a cost containment memorandum at the end of August urging departments to curb spending. Suggested cuts included a freeze on hiring staff, scrapping non-essential travel and considering postponing replacing machinery and equipment, such as laptops, telecommunications and construction items, until March 31 2024. 

Cloete warned looming budget cuts over the next three years could be as high as 10%. 

“There is no final clarity, but the scenario is one of a 9.72% reduction on the baseline for the outer year. There are provincial and national processes to arrive at final decisions over the coming months,” he wrote in the memo.

“We understand this uncertainty is unsettling, but we assure you we are managing this situation as transparently and efficiently as possible. This includes working with various budget scenarios and cash flow projections. We are taking a pragmatic approach that we need to fundamentally adjust the way we work in the short-term for long-term sustainability.” 

Health activists believe the poor will be hardest hit by more healthcare budget cuts.

Cape Metro Health Forum chair Damaris Kiewiets said budget cuts had already resulted in a deterioration of health service in the province with reports suggesting some clinics lack basic medical supplies. 

“Things such as wound care supplies are basic in healthcare, but I’ve been receiving calls that some clinics in the Western Cape don’t have these supplies and families have to buy their own or risk infections. 

“Our hospitals, including the province’s biggest hospital, Tygerberg Hospital, are critically short-staffed. Some of the crucial medical posts had not been filled and if a staff member is sick they don’t hire agency staff as replacements anymore. The poor are the worst affected by the budget cuts.” 

Kiewiets said bed cuts could follow and elective surgeries may need to be scaled back.

Cloete said the department, considering a “holistic and pragmatic approach” to deliver health services within the limited budget, had convened a multidisciplinary “think-tank to advise us on transparent decision-making and innovative solutions”. 

“The department has adopted a robot cash management system across all institutions and sectors to support us in monitoring and managing our cash flow. We are also actively engaging clinical and non-clinical managers for their input and ideas for how we could adjust how we work and bring about reduction in expenditure.” 

Provincial health department spokesperson Mark van der Heever told TimesLIVE  that while final numbers for the next round of expected budget cuts are yet to be decided, “we can acknowledge there will be service implications”. 

“Until such time, we are engaging our service managers on how best we as a department can prepare for these cuts, acknowledging there will need to be some service prioritisation and rationing across the health sector. 

“We are exploring a more holistic and pragmatic approach to achieving a balanced budget and not just focusing on compensation of employees, by working with variable budget scenarios and cash flow management planning as part of financial monitoring and sector financial planning,” he said.

“National Treasury acknowledges the health sector is underfunded to a minimum of R11bn, but we believe commutatively it is much higher,” health minister Joe Phaahla said during the health budget vote in May.

The 2023/2024 budget allocation for the national health department declined by R4.4bn from R64.5bn in 2020/2023 to R60.1bn in 2023/2024.

TimesLIVE