Australia: Deadbeat State government hospitals

The Auditor-General has damned the financial management of the NSW health system, saying area health services had failed to pay bills on time and had routinely misused trust funds. Peter Achterstraat said the financial audits for 2007-08, which were made public yesterday, showed that some health services had classed bills as "in dispute" to buy time because they did not have the funds to pay small businesses.

His report noted that health services had dipped into trust accounts to pay bills and wages and the worst offender was Northern Sydney and Central Coast, which had 1000 trust accounts that were $9.9 million overdrawn in November 2007. The overdraft coincided with desperate attempts by the former health minister Reba Meagher to improve operations at Royal North Shore Hospital after a patient, Jana Horska, miscarried in a hospital toilet. The incident became the subject of a parliamentary inquiry.

Mr Achterstraat said bills totalling $312 million were outstanding at June 2008, and $75 million of that was more than 45 days overdue. A year earlier $174 million had been owing, none of it more than 45 days late. He found that only two of the eight area health services paid their bills within the benchmark of 45 days. "From a financial point of view this is not a particularly good report card," he said. "They are not paying their bills on time, they're not managing their budgets properly, they didn't get their annual statements in on time and they are using trust fund money for reasons they were not intended."

He recommended that the Treasurer, Eric Roozendaal, or the Health Minister, John Della Bosca, order area health services to pay interest on late bills as an incentive to clean up their act. "I am concerned about the $320 million in trusts and special purpose accounts. They need to make better use of these funds. In some cases these funds have been there for a long time and the department is not clear what they can be used for," Mr Achterstraat said. "Some funds have been used to subsidise overexpenditure in other areas."

Yesterday Mr Della Bosca said he would consider interest payments but pointed out that the data was more than eight months old. "Let me be clear, I want creditors paid on time. No question. But we are getting on top of the problem," he said. "In November last year, more than $15 million was owed to small businesses across the state. That figure has dropped by more than 80 per cent to just $3.4 million this week."

The Premier, Nathan Rees, said there was a plan to reduce all of the debt to creditors "to acceptable levels" by June. "Things are better than reflected in that report, and there is a plan to continue to drive down those creditor issues," he said.

The Opposition spokeswoman on health, Jillian Skinner, said the Government was financially irresponsible and reckless. "We have a $380 million health budget deficit, more than $300 million in unpaid bills on top of that and donated money in trust funds being used for recurrent expenditure instead of the hospital projects they were given to build," she said.

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