Chapter 3 - Management and Financial Resources

 

Management

Organisational Chart

The Hospital operates under the direction of the Board of Governors (BoG) which gets its mandate from the Board of Trustees of the Diocese through its Chairman (the Bishop) and is managed by the Hospital Management Team (HMT -graphic A) with its executive body (the daily board formed jointly by the Hospital Officers –Administrator (HA), Medical Superintendent (MS) and Senior Nursing Officer (SNO). Contrary to the present arrangement in Government Hospitals, the function of the Chief Executive Officer is not statutorily exercised by the MS. The Chief Executive Officer is at present the Hospital Administrator, but the Constitution of the Hospital allows for this function to be held by any of the Hospital Officers on the Bishop’s nomination. During 1998 the Hospital Administrator (a doctor and Comboni Brother) was substituted, after 11 year of service, as he was appointed Public Health Officer and Executive Secretary at the Uganda Catholic Medical Bureau by a new Comboni Brother, at present abroad because of the injuries received during an ambush to the Hospital Ambulance on the 15th of August 1999.

The BoG was held twice during the financial year, as per the Constitution.

 

Graphic A: Organisational Structure of Matany Hospital Management

 

Source: Matany Hospital Constitution, 1993

 

 

 

The Chief Executive Officer has direct access to the Bishop in case of need and ensures the function of liaison with the Diocesan, District and National Health Authorities. The Nurses’ School Staff operates under the supervision of the Daily Board (more specifically of the Senior Nursing Officer) and reports through it to the Hospital Management Team (HMT).

 

Introduction to the Financial Report

The rescue of the emergency situation caused by the shortage of funds against a very high workload of heavily subsidised services of 1997 was explain in the previous edition of this Report.

In summary this was achieved by:

·         the increase and structuring of  fees in a way that would discourage improper utilisation of service

·         The allocation of Delegated Funds from Government

·         Two major capital development project enable the Hospital to  maintain levels of employment of the technical staff and to download on the projects itself a quota of the cost of the generators  and equipment use

·         Two fund raising mission from the Administrator and from some former volunteers

This allowed the Administration to close the financial year in an equitable way and it allowed the possibility to reduce the fees in November 97 to try to reverse the dramatic reduction of utilisation of the Services and therefore to abide by the Mission statement of the Hospital to provide services at accessible levels of fees for the poor.

The determination of Government of continuing and increasing the allocation of Delegated Funds, the ongoing capital development projects and the steady flow of donated funds from benefactors gave a better outlook of 98-99 financial year.

Because of that the Board of Governors decided a further reduction of fees to increase accessibility. The impact of these will be analysed later in this chapter.

As mentioned the cost centre structure is operating since the starting of the financial year 98-99. For a better presentation and comparison the following table, which has been taken from the previous edition of this Report, is presented with the update data:

 

 

Financial Report Details according to the cost centre structure – Y 1996, 1997, 1998 and FY 98-99

 

 

INCOME

1996

1997

1998

FY98/99

EXPENDITURE

1996

1997

1998

FY 98/99

 

Balance from previous y.

14,357

112,234

104,722

148,701

Balance to next year

112,234

104,722

148,701

 

 

Fees

60,039

77,757

89,692

104,161

Hospital Running

209,627

266,478

362,199

342,284

 

Government ^

16,000

74,645

76,809

119,496

Administration

28,821

37,483

60,477

71,314

 

External Aid §

302,070

187,795

242,488

217,307

PHC

19,586

24,668

39,984

40,556

 

Donations in kind

22,486

42,073

11,172

112,477

 

 

 

 

 

 

Ancillary Activities °

46,594

82,115

285,627

381,998

KHRDCH* and Guest H.se

 

10,452

9,256

11,558

 

 

 

 

 

 

Technical Department

52,364

84,967

137,541

204,242

 

Nurses School

9,860

14,033

11,652

28,776

Nurses School

48,774

61,882

63,964

52,350

 

Total

471,406

478,418

717,400

935,438

Total

359,172

485,930

673,421

722,297

° Income from KHRDCH, Technical Department, various sales, projects

 

^  Delegated funds, supplies in kind, earmarked funds for PHC

 

§ Danish aid, various benefactors – unconditional donations in funds

 

* KHRDCH = Karamoja Human Resources Development Centre for Health

 

 

 

 

 

In the following table the cost centres  income and expenditure for the FY 98-99 are showed:

 

Cost  Centres FY 98-99

INCOME

EXPENDITURE

HOSPITAL

640,760,541

341,144,963

ADMINISTRATION

24,101,537

71,409,638

NURSING TRAINING SCHOOL

28,776,000

52,530,850

PUBLIC  HEALTH  DEPARTMENT

13,997,903

40,651,204

WORKSHOP

198,399,683

205,002,137

KHRDCH

29,402,650

11,558,511

TOTAL

935,438,314

722,297,202

 

 

 

 

 

 

 

 

 

 

 

 

 

Income

On the income side it is evident the high increase from 1997 to almost double in 98-99 financial year.

This increase is due to a general increase in all the sources of income, but especially from the Ancillary activities, mainly related to capital development projects and to Government aid mainly as Delegated Funds.

It can also be noticed a remarkable increase of income from fees of about 30% compared to the ones of 1997, which appear in contradiction with the statement that fees have been reduced twice along the same period. The reason for this increase  is simply related to an unexpected increase in the number of patients, showing that the accessibility of Services has increased.

If we compare the sources of income in percentage of the last two financial years (graphic 1), we can notice that there are no great differences apart from a slight reduction of the dependencies from abroad, mainly in terms of donation in kind, and an increase from Government support.


A remarkable increase in absolute terms can be noticed for the Nursing Training School due to the support as sponsorship from Danida/HSSP.

 

 

Expenditure

The global expenditure of FY 98-99, as compared to FY97-98 shows a net increase of 35%. This increase is related mainly to two factors:

·         Hospital expenditure due to the increase of salaries, drugs and medical sundries because of the increased workload.

·         The expenditure for the capital development projects, which on the other side are the causes of the substantial increase of income.

The comparison in percentage is shown in the graphic 2, where it shows also the remarkable increase of the administration costs, either because of increase of costs related to the capital development projects or because of a better apportionment in the cost centre structure.


 

 

 

 

 


The Cost Centre Structure and the attribution of expenditure to each cost centre on the basis of stock consumed for service and not on stock purchasing, gives a better idea now of the relative cost of each centre, even though more fining of the apportionment system are envisaged for the on-going financial year. For example the technical department is still absorbing almost all the labour costs for maintenance especially of the vehicles and the administration costs centre should be apportioned to each cost centre to have a more complete and precise cost of them.

As a rough indicator of costs (table 1), the cost of an Hospital bed has increased about 20% compared to 1997 (calculated on Hospital plus 30% of Administration expenditure), while the cost per IP activity unit (n.OPD/6 + n.IP) and the OPD activity unit (6*n.IP + n.OPD) have been reduced about 10% showing an increase of efficiency. The cost of training a Nurse has remained stable (given that the Nursing Training School qualifies on average 25 nurses per year, and cost= NTS cost centre expenditure + 15% of Administration cost centre expenditure).

 

INDICATORS   OF   COST

 

 

1997

FY 1998-99

Cost per bed per year

1.38 M Ush

1.65 M Ush

Cost per IP activity unit

29,600 Ush

26,900 Ush

Cost per OPD activity unit

4,900 Ush

4,500 Ush

Cost per trained nurse

2.5 M Ush

2.52 M Ush

Table 1: Indicators of cost (Basis of calculation: Hospital running and administrative expenditure)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of new fees structure on utilisation

The new fees structure introduced in August 1997 as a drastic decision by the Board of Governors to attempt to rescue the Hospital from bankruptcy, had two purposes:

·         Increase the income with a general and significant increase of fees.

·         Introduce a positive discrimination of patients in the attempt to improve the rational use of the referral system and therefore to reduce the workload and the amount of subsidies for patients coming from other Districts or bypassing their first level Unit in Moroto District.

In summary 3 progressively higher level of fees were introduced:

·         “Patient of the system fees”: patients from the 3 sub-counties around Matany Hospital with no first level Units (strictly patients from the System) and patients “out of the system” but within Moroto District and correctly referred by their first level Unit.

·         “Patient out of the system, but within Moroto District fees”: patients within Moroto District not referred.

·         “Patients out of the system and outside Moroto District fees”: patients from other Districts.


The impact of the new fees on utilisation is dramatically show in the next graphic:

 


It was soon evident that the drop of the utilisation was remarkable and especially for the weakest and largest sector of the society (women and children), triggering the faithfulness to the Mission statement of the Hospital. That is why, immediately after the emergency interventions (Government plus fund raising missions) to rescue the financial crisis, the level of fees was reduced in November 1997 and again in September 1998, leaving the fees structure itself intact.


The positive impact on utilisation of the reduction of fees appears clear by the following table, this shows that the outpatients attendance of the under 5 children after the drop of 1997 has reached the same level of the comparative months of 1996:


On the rational use of the Health System the new fees structure had also a positive impact as shown in the following table, where the trend to increase OPD attendance is higher for the patients “belonging” to the System:

 

 

 

 


The fees structure also gives the opportunity for more detailed analysis of the provenance of the patients as shown in the following table:

 

 

 

OUTPATIENTS PROVENANCE MATANY HOSPITAL

SOURCE: RECEIPTS OF OPD FEES (FY 98-99)

 

 

N.of Pt. that paid

N. of Pt. treated

% of  Pt. That paid

% from Matany, Lokopo, Lopei subcounties

% from others subcounties of Moroto District

% from other Districts

 

MALE

 

2463

 

8751 (male +female)

 

69.2% (of Adults)

 

59.2%

 

26.2%

 

14.5%

 

FEMALE

 

3597

 

 

 

64.2%

 

23.5%

 

12.2%

 

CHILDREN

 

10267

 

11441

 

89.7%

 

92.2%

 

6.5%

 

1.3%

 

 

 

 

It is s difficult to explain the 30% shortfall in adult patients paying. However two contributing factors are:

1)       patient seen at outpatient is admitted, does not pay OPD fees.

2)       Patient who are exempt, eg. Tb patients on regular manteinance and epileptics, do not pay.

It appears also very clear that the majority of the children are patients of the system, while for the adults it is clear that the OPD function as a “referral” centre for other Districts. The same impression can be drawn from the table concerning the inpatients:

 

INPATIENTS PROVENANCE   MATANY HOSPITAL

SOURCE: RECEIPTS OF IP FEES (FY 98-99)

 

WARD

N.of Pt. That paid

N. of Pt. Discharged

% of Pt. That paid

% from Matany, Lokopo, Lopei subcounties

% from others subcounties of Moroto District

% from other Districts

 

MATERNITY

 

 

728

 

837

 

86.9%

 

52.9%

 

33.4%

 

13.7%

 

MALE

 

 

620

 

1005

 

61.7%

 

43.1%

 

37.6%

 

18.9%

 

FEMALE

 

 

777

 

1057

 

73.5%

 

50.7%

 

30.1%

 

19.2%

 

CHILDREN

 

 

2548

 

4495

 

56.6%

 

70.3%

 

25.9%

 

3.8%

 

 

This function of  “referral centre”is evident by the high percentage of adults coming from other Districts (about 20%). Yet in a deeper analysis this is only partially true:  the high percentage of Maternity cases from other Districts,  are complicated cases, as obstructed labours requiring Caesarean sections. But the question is: are these really  adequate “referral” for a “Referral centre/Regional Hospital”?

An other  surprising fact is  the high percentage of patients who did not  pay for the service they received.

The low percentage of children who pay can be explained by the fact that they are usually admitted in critical condition creating administrative problems in obtaining fees at time of discharge.

The low percentage of male adults who paid,  does not appear justified at all, considering that  they are the ones controlling  the  finance of the families, assumption confirmed by the data that they had the lowest reduction of utilisation of services at the time of the increase of fees in Aug 97.

Therefore a strengthening of the system of collection of fees is highly necessary in order to improve the sustainability of the Hospital, beginning with the local communities.

The effect of the reduction of fees on the income and on the utilisation of OPD is show in the following graphic where it appears clear that the trend to increase of patients is higher then the trend to increase of the income from  fees, showing that the average fees paid have been reduced:


 

 

 


Considering what  was said above, the trend of the income from fees is not so true since we are aware that every month there is some missing income because not all  patients pay.

In the next table is presented instead, the comparison of the average fees charges, before and after the increase, and after the 2 readjustments:


 

 


It is clear that the OPD service is subsidised especially for children, less for the adults but on average still subsidised and therefore runs at a loss, considering also that in this cost is not included the depreciation of the buildings and equipment.

Of course, according to the fees structure there are, among the adults, categories more subsidised then others, as the patients of the system which pay on average 3,700 Ush per episode. The Hospital instead recovers something more than the cost from the patients coming from other District, that pays on averages 12,500 Ush.

It can be noted also the high fees applied with the increment of Aug 97, even though with these fees the children were still receiving a subsidy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Government intervention

As said the Government support to the finance of the Hospital has been crucial in 1997 and it has continued in a more formalised way in FY 98-99 following and recalling the Memorandum of understanding signed in 1996 with the District Authorities, and the assumption of the amount of the financial support for the financial year for which a series of  objectives and strategies have been developed and costed within the framework of a Service level agreement in which are stated the intentions of collaboration of the two parties. The entire document is presented in Annex 1.

Appreciation should be given to the Government not only for the financial support itself but also because the co-operation  has been very smooth, the release of funds by the District Authorities very punctual and 

the trust accorded to us by Government.

The service level agreement has also been  a useful tool to monitor regularly  the series of indicators identified in the agreement, some of which were new and not usually monitored in the HMIS. This can be seen as a way of measuring  and improving  quality assurance. Therefore  use of it and improvement would be recommended. The following table is self-explanatory and it is extracted from the document reported in Annex 1:

 

         OBJECTIVE 3: increase the accessibility of hospital services to the vulnerable groups of the population.

 

INDICATORS

1st QUARTER 1st JUL-

30th SEPT

2nd QUARTER 1st JUL-

31st DEC

3rd QUARTER 1st JUL-

31st MAR

4th QUARTER 1st JUL-

30th JUN

GOALS

Utilisation rates IP children

1,425

2,414 (989)

3,027 (613)

4,989 (1,962)

3,000

Average fees’ paid on sampling IP adults O/S

21,700 Ush

21,950/=

(22,200/=)

21,240/= (20,500/=)

21,000/=

(19,600/=)

18,900 Ush

n. of adult TB patients admitted

 

59

 

111 (52)

 

182 (71)

 

272 (90)

 

160

Samaritan fund refund IP

130,000 Ush

 

723,500 Ush

(593,500/=)

1,050,500/=

(327,000/=)

2,286,000/=

(1,235,500/=)

2,000,000 Ush

Utilisation rates OPD (children)

3,533

5,744 (2,211)

8,805 (3,061)

15,198 (6,393)

8,000

Average fees’ paid on sampling OPD adults O/S

11,000 Ush

10,100/=

(9,200/=)

9,500/=

 (8,200/=)

11,440/=

(15,163/=)

20,400 Ush

n. of  TB patients followed-up

 

43

 

78 (35)

 

123 (45)

 

232 (109)

 

100

Samaritan fund refunds OPD

592,000 Ush

1,087,000/=

(495,000/=)

1,806,350/=

(719,350/=)

2,590,350/=

(784,000/=)

2,200,000 Ush

 

 

In this financial year Government has also started the implementation of the Health Sub District policy selecting Matany Hospital as head of Bokora HSD and therefore officialising  the responsibilities of Matany Hospital for the implementation of the Health Activities in Bokora County. For these  responsibilities officially “new” although not new for Matany Hospital which was already carrying out these activities in  the District. Some provision of funds and guidelines on the use of them,  were made available by the Government but unfortunately without the same clarity of the Delegated Funds.

To summarise there  was no written agreement for the assumption of responsibilities and for the financial implications of them, neither was indicated an acceptable accountability procedure as the one of the Delegated Funds for example. These and others relevant problems foreseen and not clarified in the Guidelines issued by the Ministry of Health were raised at both District  and  National level with a letter of request of clarifications, indicated among  other items the need of a rational criteria of allocation of funds within the District Health System according to the different costs to carrying out PHC activities in relation of the size of the HSD, the number of units and so on.

Considering  the vacuum in which we were left, the management decided to proceed in writing a Service Level Agreement in the same line as the one of the Delegated Funds, accepting responsibilities only for what was covered by the funds made available by the District authorities out of the PHC Conditional Grant. The agreement was accepted and signed by the District Authorities although late in the financial year and according to it the Hospital Administration accounted for the funds received.

 

 

Conclusion

The critical situation reached in the year 1997 seems a long way away  from  todays situation and even though the trend to increase the expenditure will continue considering the “free market” policy adopted by the Government. There is a fair hope that Government will continue the implementation of the new Health Policy with the strengthening of the integration of  the PNFP sector in “one Health System” and therefore recognising the “public oriented” concern of them and the need of supporting even with public funds if need to in the overall view of the common goal of improving the Health for the people of Uganda. On the same line there is a fair hope that the network of external support so far created is reasonably stable and can continue providing a substantial support to the income of  the Hospital.

Therefore the outlook of the ongoing financial year is better than the previous one, yet the financial stability of the hospital is still very uncertain for the next few years.

As points of action for the ongoing financial year 99-00 can be envisaged:

·         Continue the dialogue with the Government at District and at National level through the strengthening of co-operation and mutual trust.

·         Strengthen the Administration of the hospital by securing more qualified staff and by improving the collection system of the fee charges.

·         Continue looking for other ways of funding the running costs of the Hospital, starting with the reestablishment of a reserve fund.

·         Refining the cost centre structure with a better apportion system of the overall cost to define a baseline cost of services in view of cost-efficiency interventions.

 

 

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