Financial & Supply Chain Management Support Services Realization

1. Ideal Clinic Realisation Component: Support Services Financial & Supply Chain Management Date : 16 September 2015 Presenter: MC Skenjana

2. “YOUR ATTITUDE DETERMINES YOUR ALTITUDE”

3. Introduction • Component: Support Services • Sub-Component: Finance and SCM • Elements: • 120: The facility manager is involved in determining • the budget of the facility. • 121: The facility manager has financial delegations • 122: The budget and actual expenditure of the • facility is available. • 123: The facility has access to an automated supply • chain system for general supplies • 124: Delivery of supplies are consistently in line with • terms and conditions of the relevant contract • (including turn around-times

4. Element: 120 • Alignment of planning process with budget process • development of operational plans • costing of operational plans/determination of budget. • Build financial management capacity of FM • Standardise the templates for operational plans and budget • submission. • Allocation of facility budget to be done at district level using • developed costing/allocation model. Model will include amongst • others, population, burden of disease, equity and efficiency indicators. • NDoH to review facility budget allocation based on the • approved model (ABC)

5. Element: 122 • There are two options that may be adopted, namely: • Option 1: Cost centres for each facility • create a cost centre for each facility • process starts in January, where requests are • submitted to provincial treasuries by provinces for • implementation from 01 April of each year. • Process will be initiated by NDoH on behalf of all • provinces. • Linking of Personnel can only be done once the cost • centres are created and will only be effective 01 April

6. Element: 122 • budget capturing, fund shifting and requesting of reports done • at facility level. • policy on shifting of funds that FM approval to be obtained • before fund shifting is processed. • sub-district and district to play an oversight role. • Facility Managers will be able to monitor expenditure, prioritise • and make informed decisions. • this is a quick win as it can be implemented before the • beginning of the next financial year

7. Element: 122 cont. • Management of cost centres can be a challenging exercise • and requires the following: • connectivity however creation not dependant on • connectivity – does not deter us from creating Cost Centres • strong IT support at sub-district level • training on cost centre management (initially NDoH and • monitoring and further training responsibility of sub-district, • district and province) • capital equipment (computers) • human requirements (finance clerk)

8. Element: 122 cont. • Option 2: Desktop exercise at sub-district level • one cost centre for all clinics at sub-district level – budget • for all clinics is consolidated into one budget. • CHCs currently have separate cost centres though not in all • provinces. • separation and management of budget done on microsoft • excel • spreadsheet is updated for every transaction and allocation • is done for each facility • reports can be produced per facility manually

9. Element: 122 cont. • Challenges • misallocation of transactions • effectively do not have control over their budget. • difficulty in obtaining reports • poor communication of financial performance between • facility and sub-district • Clinic committees unable to do comprehensive governance • and oversight due to unavailability of financial reports.

10. Element: 121 • Delegations are given based on capacity and level and also go with • accountability. • Inconsistently applied across provinces (petty cash) • A proposed delegation for facility managers; • Clinic Manager is R 30 000 • CHCs Manager is R 50 000 • Sub-district Manager R 500 000 (established) • District Manager is R 2 000 000 • This is based on the fact that clinics have less activities and functions • compared to hospitals and considering the proposed SCM system.

11. Element: 121 cont. • Facility Manager may not have delegations • to enter into a contract • shift funds from Non Negotiables (approval from district • CFO should be sought) except other items. • A comprehensive policy on delegations will be developed • covering financial, SCM and human resources • This will be part of provincial delegations.

12. Element: All • Design operational plan template • Create cost centres • Persal linkages • Develop allocation model • Policy on shifting of funds • Training on Cost Centre • Need analysis for Facility CFOs • Facilities with BAS • Delegations

13. Supply Chain Management

14. Element: 123 • Current development of Pharmaceutical automated SC Depot Cross Dock • To commence 0% • Rolled out in Limpopo, KZN, Eastern Cape and CoJ • Only collecting SoH, not yet active for goods received (this will give us consumption) • SOP’s 90% developed • SVS and Rx integration at 80% completed Direct • SOP’s at 90% developed SVS Supplier PMPU Rx SVS • Supplier Interface 90% developed SVS • Rx calculations and processes 100% developed Control Tower Clinic • SOP’s at 80% completed

15. Element: 123 • Implement SVS in all clinics and develop additional functionality • of SVS (namely order receiving) • Integrate SVS data into Rx Solution to automate order • calculation and generation – and automate sign off authority • Agree on products to load onto SVS (contract versus non • contracted items) • Address sustainability and support for Rx – access source code • Develop cross dock model and processes and trial – direct • from manufacturer OR direct from wholesaler/”retailer”

16. Element: 123 cont. The facility have access to an automated supply chain system for general supplies: • Challenges • Dependent on partners for implementation of processes and • systems – sustainability • SVS business model needs to be defined (Vodacom has • financed it to date through their Foundation) • Facility compliance to reporting of stock on hand • Authorization and delegations of authority need to be reviewed • and tools developed to support the expediting of approvals

17. Element: 124 • Spend analysis needs to be carried out • A categorization exercise needs to take place to identify which • products we move to contract and which do we procure direct • Decide on procurement model based on financial and non • financial benefits (Contract with manufacturer wholesaler/ • retailer) • Contract terms need to be defined and measurements • implemented The facility have access to an automated supply chain system for general supplies: The facility have access to an automated supply chain system for general supplies:

18. Element: 124 • Spend analysis needs to be carried out • Develop catalogue specifications (pricing, specifications and • coding) • Supplier scorecard to be developed and published monthly The facility have access to an automated supply chain system for general supplies: The facility have access to an automated supply chain system for general supplies:

19. Element: 124 cont. • Challenges • Codification standard for all items • Adherence to contract procurement by facilities • Monitoring systems to review contract/off contract spend at • facility/PHC level

20. Element: All • Roll out of SVS • Trial “informed push” model • Develop cross dock model • Identify items for contracts • Develop SOP’s for push model • Agree on delegations

21. Conclusion • Observation • As a sector we need to eliminate wastage and • inefficiencies in number of areas amongst others: • Overstocking • Expired stock • Stock not needed • So much money lost on the above as most budget goes to • pharmaceuticals and other consumables.