Drug Supplies Across Programmes Merged Into Lump-Sum Budgets: MOH

By Boo Su-Lyn | 09 November 2020

Bandar Kuching MP Dr Kelvin Yii says reclassifying the allocations for treatments, previously delineated according to specialty, into consolidated budgets under “highly discretionary” Specific Programmes adds bureaucracy and impacts patients, as clinicians can’t plan their budgets ahead.

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KUALA LUMPUR, Nov 9 — The Ministry of Health (MOH) clarified that medical supplies previously budgeted separately according to clinical specialty have now been consolidated into two lump-sum budgets in the government’s proposed Budget 2021.

MOH said the allocations transferred to two new budget items next year — RM2.89 billion for health facilities’ medical supplies and RM1.4 billion in financial commitment for private concession of medical laboratories and stores – APPL — had been originally budgeted in 2020 as medical supplies in each respective programme separately: medical, public health, pharmacy services, and dental.

These two new budget items totalling RM4.29 billion — which were allocated under Specific Programmes in the operating expenditure of MOH’s Budget 2021 — cover all medical supplies, including drugs, medical gas, reagents, vaccines, consumables, and X-ray film, for pharmacies across MOH hospitals and public health clinics (Klinik Kesihatan), including dental clinics.

“This is meant to enable comprehensive monitoring of allocation and expenditure for all MOH health facilities. Therefore, allegations of significant reductions in MOH allocations are not accurate,” MOH said in a statement sent by Health Minister Dr Adham Baba to CodeBlue last Saturday.

CodeBlue reported wide-ranging cuts across nearly all health care services in MOH’s 2021 budget, with reductions of above 58 per cent for radiotherapy and oncology, cardiothoracic, and nephrology, as well as a 74 per cent cut for pharmacy and supplies, under the medical programme. MOH’s public health budget also received a 12 per cent reduction, amid the Covid-19 public health crisis in Malaysia. Budget 2021 was tabled in Parliament last Friday. The Dewan Rakyat debate on the budget starts today, amid a razor-thin parliamentary majority held by the Perikatan Nasional government.

Bandar Kuching MP Dr Kelvin Yii said reclassifying the allocations for treatments previously delineated according to specialty into consolidated budgets under “highly discretionary” Specific Programmes would lead to bureaucracy and extra paperwork, as he questioned how each clinical department could apply for the funds and who would make funding decisions.

“This is less transparent and we do not exactly know whether there is a reduction or increase in each department, and we will not be able to gauge if it is sufficient and adequate,” the DAP lawmaker said in a statement yesterday.

“How can the clinical departments across hospitals and states plan ahead, especially when it comes to patient care, when they don’t even know how much they are truly getting? Without a clear budget now, how will clinicians know how many patients they can treat in a year?”

“Because in the end, without planning, I foresee patients getting the short end of the stick. Imagine being told by your clinician — I’m not sure if we can treat you because it depends if our funding application is approved.”

Dr Kelvin Yii, Bandar Kuching Member of Parliament

MOH did not state which company has or will receive the RM1.4 billion concession (or concessions) under the 2021 budget to supply medicines to government hospitals and clinics. The previous Pakatan Harapan (PH) administration had decided to replace Pharmaniaga Bhd’s concession for public drug procurement with an open tender system after deeming it a “monopoly” that cost the government over RM1 billion annually.

In November last year, MOH extended Pharmaniaga’s exclusive drug procurement concession for two years from December 1, 2019 until December 31, 2021. The interim extension of Pharmaniaga’s 10-year concession ending November 2019 was to allow MOH to take over the local pharmaceutical company’s functions so that the government can purchase medicines directly from pharmaceutical manufacturers without going through a middleman.

Pharmaniaga, which has warehousing and logistics facilities, is the biggest Bumiputera tender agent in the country with exclusive concession to supply 700 items in the Approved Product Purchase List (APPL) comprising medicines and other medical items, determined by MOH, to government hospitals, institutions, and clinics. This makes up over a third of the government’s drug supply.

RM2.065 Billion For Hospital And Clinic Support Services Moved From Operating To Development Budget

MOH acknowledged that its 2021 operating budget of RM27.2 billion marked a 2.57 per cent reduction from its 2020 operating budget of RM27.9 billion, equating to an RM700 million decrease.

MOH attributed this to reclassing RM2.065 billion in allocations for hospital support services involving concessionnaires (RM1,928,583,000) and clinic support services (RM137 million) from the operating to development budget, but did not offer a reason for the shift. (MOH’s statement did not give the exact funding allocation for clinic support services).

However, it is unknown where exactly hospital support services and clinic support services are allocated in MOH’s development budget. According to the Estimated Federal Expenditure 2021 on the Treasury’s website, hospital support services were allocated RM98,359,700 under Specific Programmes in MOH’s operating budget for 2021, down from RM1,934,710,500 in 2020.

This means that for 2021, hospital support services received a slightly bigger overall allocation of RM2,026,942,700 (a total of RM1,928,583,000 under the development budget and RM98,359,700 under the operating budget).

Meanwhile, clinic support services were allocated RM137,290,000 for 2020 under Specific Programmes in the operating budget, according to the Estimated Federal Expenditure 2021 document, but zero for 2021. Presumably, the entire clinic support services allocation was transferred from operating to development, as MOH states, unlike the concessions for hospital support services that were split between the operating and development budgets (95 per cent under the development budget).

The Estimated Federal Expenditure 2021 document does not list individual RM1.9 billion and RM137 million budget items under MOH’s development budget for 2021. Hospital facilities were allocated RM2.86 billion for 2021, the biggest item in the development budget. The second largest item for 2021 in MOH’s development budget was RM589 million for equipment and vehicles.

MOH’s development expenditure almost doubled from RM2.7 billion in 2020 to RM4.7 billion for 2021, whereas its operating expenditure declined slightly from RM27.9 billion in 2020 to RM27.2 billion for next year. MOH was given an overall budget of RM31.9 billion for 2021, a marginal 4.3 per cent increase from this year’s RM30.6 billion budget. An operating budget is a projection of the actual costs expected to be incurred in operating various programmes, whereas a development budget identifies costs that will be incurred in developing projects.

Hospital support services for MOH facilities include services like facilities engineering management services, biomedical engineering maintenance services, cleansing services, linen and laundry services, and clinical waste management services.

One of the concessionnaires appointed for peninsular Malaysia, Medivest Sdn Bhd, provides hospital support services for all government hospitals in Johor, Melaka, and Negri Sembilan in a 10-year concession from 2015 to 2025 — a repeatedly renewed concession since 1996 when it was then known as Tongkah Medivest Sdn Bhd.

The independent inquiry into a fatal 2016 hospital fire at Sultanah Aminah Hospital (HSA) in Johor Baru, Johor, had expressed concern about Medivest’s 2015 appointment that it said was done without open tender, according to the inquiry’s findings that were declassified from the Official Secrets Act in October 2019. The independent investigation headed by former Court of Appeal judge Mohd Hishamudin Yunus had found that Medivest provided a fire extinguisher that malfunctioned during the HSA blaze that killed six patients.

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