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

2. “YOUR ATTITUDE DETERMINES YOUR ALTITUDE”

3.  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 Introduction

4.  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) Element: 120 The facility manager is involved in determining the budget of the facility:

5.  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 Element: 122 The budget and actual expenditure of the facility is available:

6. 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 Element: 122 The budget and actual expenditure of the facility is available:

7.  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) Element: 122 cont. The budget and actual expenditure of the facility is available:

8.  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 Element: 122 cont. The budget and actual expenditure of the facility is available:

9. 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. Element: 122 cont. The budget and actual expenditure of the facility is available:

10.  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. Element: 121 The facility manager has financial delegations:

11.  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. Element: 121 cont. The facility manager has financial delegations:

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

13. Supply Chain Management

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

15.  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” Element: 123 The facility have access to an automated supply chain system for general supplies:

16. 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 Element: 123 cont. The facility have access to an automated supply chain system for general supplies:

17.  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 Element: 124 The facility have access to an automated supply chain system for general supplies: Delivery of supplies are consistently in line with terms and conditions of the relevant contract (incl. set turn-around time)

18.  Spend analysis needs to be carried out Develop catalogue specifications (pricing, specifications and coding) Supplier scorecard to be developed and published monthly Element: 124 The facility have access to an automated supply chain system for general supplies: Delivery of supplies are consistently in line with terms and conditions of the relevant contract (incl. set turn-around time)

19.  Challenges Codification standard for all items Adherence to contract procurement by facilities Monitoring systems to review contract/off contract spend at facility/PHC level Element: 124 cont. Delivery of supplies are consistently in line with terms and conditions of the relevant contract (incl. set turn-around time)

20.  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 Element: All Way forward - indicators

21.  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. Conclusion