OFFICIALS of the National Health Fund (NHF) and the Ministry of Health on Tuesday appeared before the Public Accounts Committee (PAC) of Parliament to address the findings of the auditor general’s performance audit report that was tabled in September, which found that it was not meeting the demands at its pharmacies and had written off half of the $4 billion owed to the fund for the audit period.

At the sitting, it was further revealed that the fund’s receivables have continued to balloon by another $130 million year to date as at August 2017, compared to March 2017.

Chief Executive Officer of the NHF Everton Anderson said, however, that payments to suppliers are current as of April this year. He also informed that the fund has $8 billion in reserves, but 20 per cent of that is committed for capital projects.

Of the $2 billion which remains on the books, Sancia Bennett Templer, permanent secretary in the ministry, which is the NHF’s largest debtor, explained to the committee that some of these amounts are as a result of pricing mechanisms and that the health ministry is to meet with the NHF and the Ministry of Finance to arrive at a payment plan.

According to key facts outlined by Auditor General Pamela Monroe Ellis, the NHF’s service levels for critical items and chronic illnesses remained below the target level for the review period, but was improving. It was also noted that the fund did not make timely payment for purchases 95.8 per cent of the time between the financial years 2013/14 and 2016/17. The audit was conducted for the fiscal periods 2011/12 to 2015/16, and also included information from 2016/17.

On Tuesday, she restated that the outcomes of the report suggested that the needs of beneficiaries were not being met, and pointed out that its large receivables balance is contributing to its inability to meet demands. The Ministry of Health is responsible for 94 per cent of those receivables.

In its management response, the NHF said there is improvement in supplier payments and better stock management which has resulted in little or no credit holds and stock-outs, with current service levels for critical items at 89 per cent and service level for items to treat chronic illnesses at 87 per cent.

The fund also pointed out — in response to the AG’s findings that only 65.2 per cent of orders from health facilities were filled during the period 2011/12 to 2016/17 — that for April 1 to October 18, 2017 service levels, “based on the method utilized in the report”, stood at 69 per cent.

Anderson pointed out that demand has increased at the pharmacies which are now run by the NHF.

“When we took over Bustamante there was a 66 per cent increase in demand for pharmaceuticals, [in] Port Maria there was 60 per cent, because we have been able to reduce the waiting time significantly,” he said, noting that the national inventory management system is improving service levels, but the major challenge is with the supply of medical sundries.

The audit, which focused on the management of inventory and the distribution of pharmaceuticals and sundries, determined that “the NHF’s inability to satisfy demand arose in a context where the pharmaceutical division experienced shortfalls in inventory due to a number of factors, including stock-outs due in part to credit holds, global shortages and timing factors related to customs clearance. As indicated in our earlier financial statements analysis, NHF experienced a high level of trade receivables, which affected its ability to pay suppliers”.

The NHF is projected to spend $7.1 billion during this fiscal year and expects to conclude the takeover of all public pharmacies by end of the period. The fund currently subsidizes up to 70 per cent of the cost of drugs to treat 16 illnesses.