MEC admits debt for Bay facilities where contract costs doubled in two years
After months of obfuscation about the debt her department ran up at the only two fully state-funded frail care centres in Port Elizabeth, Social Development MEC Nancy Sihlwayi finally admitted this week that her department owed East Cape Frail Care R26-million.
Sihlwayi said a request to the provincial Treasury to bail them out had been turned down.
A forensic probe would be conducted to find out how the contract for frail care had more than doubled in price from R26-million to R54-million a year, over a two year period.
Sihlwayi was replying to questions by the DA’s Bobby Stevenson in the provincial legislature earlier this week.
Port Elizabeth’s only two specialist frail care centres – Algoa Frail Care and Lorraine Frail Care – were earmarked for closure when the contract for East Cape Frail Care was not renewed last year.
The plan was to move patients at the end of December.
However, the Port Elizabeth High Court ordered the department to extend the contract until a plan for their relocation had been approved by a curator or judge.
Stevenson said yesterday that the debt was not declared to the Eastern Cape legislature when the adjustment budget was discussed in November.
“The stench of maladministration hangs over this botched contract,” he said. “The tragedy of this is that it has caused disruption, heartache and fear to the 239 families involved.”
He said he was baffled by Sihlwayi’s assurance that the department would pay the entire debt by the end of next month, as the new financial year would only start in April.
“They state they ran up this debt because they did not have enough money, but in the same breath say that they will pay the debt,” Stevenson said. Sihlwayi is expected to spell out her plan to move the 239 patients from the two centres in the Port Elizabeth High Court this morning.
She was adamant in her answers to the legislature that there was no room for further negotiations with East Cape Frail Care, a company owned by the Life Healthcare Group, that ran the two centres.
“Procurement processes are under way to select suitable nonprofit organisations as service providers,” Sihlwayi said.
The department had missed its first payment to East Cape Frail Care in February last year and did not pay them until April, she said.
It then paid for April, May and June, but nothing since then.
The MEC said the department simply did not have the money to pay for the contract.
The contract with East Cape Frail Care was R26-million in 2014 – equal to just more than R9 000 a person a month, Sihlwayi said.
The next year the price almost doubled to R50-million. Last year, it increased again, to R54-million.
This meant that in two years the patient subsidy rose to R18 763.
East Cape Frail Care director Dr Nilesh Patel said they were not aware of any irregularities in the contract.
He said the specifications for the 2015-16 tender, designed by the department itself, were such that it required an increase in the patient subsidy.
He also said they had offered two cheaper options to the department at the time of the tender, but it had chosen the most expensive option.