R2 billion looting of Tembisa Hospital shows what can happen with NHI

South Africa’s Special Investigating Unit (SIU) recently released an interim report that revealed widespread looting of over R2 billion at Tembisa hospital.

The scale of corruption found at this hospital, including the involvement of top health officials, has raised questions about the government’s ability to implement National Health Insurance (NHI) in South Africa.

Anti-corruption bodies like the Organisation Undoing Tax Abuse (OUTA) have called for these officials to be held to account and for increased transparency from the government.

Through its investigation, which came after damning reports from News24’s Jeff Wicks about the assassination of Tembisa whistleblower Babita Deokaran, the SIU found evidence of wide-scale corruption at the hospital.

The SIU’s interim report identified nine syndicates that were behind the looting of at least R2.04 billion over a period of around four years from Tembisa Hospital.

Notably, OUTA pointed out that this sum came from a hospital with an annual budget of only R1.6 billion.

The organisation said these nine syndicates were linked to 207 service providers who used 4,501 purchase orders to extract money from Tembisa, using at least 13 officials in the hospital and the Gauteng Department of Health 

“Instead of acting diligently and exercising their oversight duties, the Gauteng Department of Health did nothing to stop the looting, and went as far as enabling the looters in doing so,” OUTA claimed.

“This is what our government has come to – an entire hospital can be captured, repurposed for looting by ‘medical supplies’ from ‘service providers’ who are not registered to sell them, and be used to extract R2 billion in just a few years.”

“This is what happens when national government, provincial government and far too many local governments ignore all complaints of state capture and endemic corruption.”

The looting reportedly took place between 2018 and 2021, during which time the hospital’s spending on “goods and services” rocketed from 33% of its budget to 53%, then 69%, then 75%.

The SIU has prepared 116 disciplinary referrals against 13 officials and sent 108 referrals to the Gauteng Department of Health.

However, OUTA and other experts have expressed their doubts about the efficacy of these referrals and the possibility of any consequences flowing from the SIU’s findings.

“While we must commend the SIU for their good work, this is a real concern for us because justice delayed is justice denied,” OUTA CEO Wayne Duvenage said. 

“It is a real issue in this country. It takes far too long to hold people to account for the looting and waste of taxpayers’ money.”

“And in the meantime, people escape the country, people send their gains offshore, and it’s very difficult to recover some of the assets that have been used by these perpetrators.”

NHI concerns

Renowned economist Dawie Roodt explained to Daily Investor that corruption and incompetence have become a part of South Africa, not just the healthcare sector.

“If you look, for example, at the confidence in the police, the confidence in politicians, the consumer confidence, the investors, everything is at a low,” he said. 

“So we really have to draw a line in a sense somewhere, and the leadership must come from our political leaders. And I’m afraid, in many instances, they are actually compromised as well.”

He warned that the country’s health sector, and almost every other sector the government is involved in, is in crisis.

“The quality of our education is horrible, and the quality of our health service is horrible. The infrastructure is collapsing and local authorities are collapsing,” he said.

“We have to start somewhere to fix these issues. And maybe now is the time, but again, I’m not holding my breath. I just do not have confidence in this government.”

Roodt further explained that this situation raises questions about the viability of NHI in South Africa.

While the NHI Act has been signed into law, with plans to implement it over the next few years, Roodt said it would not happen for two reasons.

Firstly, the incompetence and mismanagement in government-run entities mean the state may simply be unable to effectively implement its NHI plans.

Other critics have also pointed out that the NHI, which looks to implement a centralised purchasing power under a single state-run entity, could create significant corruption opportunities.

Medical aid provider Bonitas has warned it is unclear how the government will ensure the required “rigorous governance” of the fund.

The company highlighted that the impact of potential corruption and misuse of health funds under the NHI presents a significant risk to its sustainability and structure.

Secondly, and more importantly, Roodt said the government simply does not have the money to implement its NHI plans.

Several private sector players have pointed out funding concerns regarding the government’s NHI plans.

The Health Funders Association (HFA) has estimated that implementing the government’s NHI scheme in its current form will require personal income tax rates to more than double in South Africa.

In this scenario, healthcare spending would consume 33% of the national Budget. In less efficient scenarios, taxes could triple, and health expenditure may take up to 44% of the Budget.

“So, NHI, the way that the ANC envisages, is not going to happen, and this is just another reason why it shouldn’t happen,” Roodt said.