Consultants find $112 million of spending by Central Adelaide Local Health Network was not properly approved
Forensic accounting has uncovered $112 million in payments without proper approvals in the SA Health agency running the Royal Adelaide Hospital, including $4 million for staff travel.
Forensic accounting has uncovered $112 million in payments without proper approvals in the SA Health agency running the Royal Adelaide Hospital, including $4 million for staff travel.
The Advertiser can reveal that consultants KordaMentha have found scores of “ad hoc” payments for couriers, printing, freight, medical supplies and stationery.
Health Minister Stephen Wade has condemned as unacceptable and unsustainable the “exorbitant” spending with “no oversight and no accountability” .
He says financial controls are “almost non-existent”.
The payments were made without going through the usual channels or were for goods not on the catalogue of eligible products.
The Advertiser understands KordaMentha’s report, which is now being finalised and due later this month, will be scathing of the “fast and loose” use of taxpayer dollars in the Central Adelaide Local Health Network.
CALHN operates the $2.4 billion Royal Adelaide Hospital, The Queen Elizabeth Hospital and statewide agencies such as SA Pathology and SA Medical Imaging.
KordaMentha was brought in on a contract which itself has blown out to $2 million to try to rein in the network’s ballooning budget blowout of around $300 million, despite the army of SA Health bureaucrats running it.
A tender has been put out to implement their recommendations, which will be kept secret until a contract is signed, prompting Opposition predictions of cutbacks based on budget priorities rather than the best interests of patients.
Revelations of the amount of “ad hoc” spending within CALHN has shocked Mr Wade, who said that the RAH was “bleeding cash”.
“It’s unacceptable that this amount of money is being spent outside the normal procurement processes, with no oversight and no accountability,” he said.
“Costs such as $1.5 million on stationery are exorbitant. After 16 years of Labor mismanagement, the RAH needs to refocus and rein in.
“CALHN is not performing to the standards expected by patients, staff or the people of South Australia.”
Mr Wade said the Government understood the expectations of patients and taxpayers.
“They want quality and sustainable health care they can rely on, close to their home. That is why we are committed to turning the Royal Adelaide Hospital around. The RAH is bleeding cash. A cost overrun of more than $300 million is unsustainable.
“One of the key criticisms that has been highlighted in this report is that financial control is almost non-existent currently. Families know how to live within their budgets and so must our hospitals.
“We need to reposition the RAH and TQEH as high-performing hospitals, operating to Australian benchmark standards.”
Nine companies have responded to SA Health’s call for expressions of interest to supply the CALHN’s planned “Restructuring and Financial Turnaround Implementation Services” which could include moves to reduce patients’ length of stay in hospital. However, the public will not know what is in the plan until a private operator is warded the contract.
Mr Wade said “it makes sense” to withhold details of plans likely to dramatically cut into services in the RAH and TQEH until a private operator is appointed.
In August, The Advertiser revealed “general inefficiency” was to blame for the blowout in CALHN’s $1.3 billion budget.
“Approximately $130 million of the overspend can also be attributed to inefficiencies across the entire network when measured against the national efficient price,” CALHN chief executive Jenny Richer told The Advertiser as the agency called in KordaMentha to help.