The Ministry of Health distributed the total of CZK 4.8 billion to three university hospitals without monitoring the use of this financial aid.
Press release on Audit No 22/13 – 14 August 2023
The contribution to discharge the debts was treated by some university hospitals in an uneconomical manner.
The Ministry of Health distributed extraordinary contributions of CZK 4.8 billion to three directly managed university hospitals to discharge the debts, for renumeration for workers at risk of COVID-19 and for the operation of a backup field hospital in Prague – Letňany, without monitoring their use. The contribution to discharge the debts was treated uneconomically by some of the hospitals and in contravention of the conditions laid down in the aid scheme. The Supreme Audit Office (SAO) found that although the Ministry declared that after deleveraging of the hospitals it would increase supervision of their management, it did not happen. SAO conducted the audit of the management of the Hospital Bulovka (FNB) and the Hospital of Královské Vinohrady (FNV) in Prague and the Hospital at St. Anna in Brno (FNUSA) and the Ministry of Health (MZd) as their founder. The audit covered the years from 2019 to 2021 and, in the case of areas that are closely interrelated, also the previous or subsequent periods. On the selected sample, the audit furthermore showed that hospitals purchase most of the medicines and medical devices outside the procurement procedure. This practice has already been pointed out by the SAO audit No 17/19.
The audited university hospitals repeatedly reported a cumulative loss and were no longer able to cover it by the improved economic outturn. This unfavourable financial situation was addressed by the Ministry of Health in 2020 on the basis of a government resolution with a one-off contribution to debt relief, in total CZK 3.4 billion for the above-mentioned hospitals. The SAO found that the FNB used CZK 9.3 million out of those debt relief funds and FNUSA even CZK 646.2 million in contravention of specified terms – e.g. for payment of liabilities before maturity. FNB and FNUSA did not fulfil the assigned tasks in the most cost-effective way, as they incurred additional interest or fees totaling CZK 105.6 million from 2016 to 2022 (CZK 67.1 million for FNB and CZK 38.5 million for FNUSA) with regard to the debt financing. In addition, the FNB did not save CZK 21.3 million because it paid long-term liabilities before maturity and related interest in full. In the opinion of the SAO, the discharge of debt by the FN in 2020 was non-systemic as it addressed merely the consequences, not the cause of the debt.
Additional extraordinary contributions of CZK 1.4 billion was provided by the Ministry of Health from the state budget audited by the FN for remuneration for workers at risk of COVID-19 and at the backup field hospital in Prague – Letňany. It was established on the basis of a government resolution in relation to the prevention of the spread of COVID-19. The establishment and operation of the field hospital was subsequently refunded to the FNB by CZK 88.2 million without carrying out proper financial audit. Although it was an operational non-investment contribution, the SAO’s audit showed that the Ministry of Health also paid investment costs of CZK 1.4 million. The Ministry of Health refunded the purchase of property (e.g. laptops) of CZK 1.5 million, which the FNB did not use for the establishment and operation of the field hospital.
The SAO further audited the purchases of medicinal products (drugs) and medical devices. It turned out that the audited university hospitals purchased most of the medicines and medical devices outside the procurement procedure, e.g. on the basis of direct orders. On an audit sample of 15 types of identical centric drugs and 15 types of drugs from the group ATC – J (anti-infectives) with a total value of almost CZK 123 million, auditors found that these drugs were purchased on the basis of a tender procedure only ranging from less than half a percent to 49 %. The rest of the purchases, in some cases more than 99 %, took place outside the procurement procedure. This is despite the fact that university hospitals, as contracting authorities, are obliged to proceed under the Public Procurement Act.
For a sample of centric drugs, the FNB used procurement procedures in 49 %, FNUSA in 31 % and FNKV in just under 2 % (1.7 %). For a sample of anti-infectives, FNUSA used the tendering procedure in 36.5 % of cases, FNB in less than 24 % and FNKV only for less than half percent of purchases (0.4 %). Although there were also purchases, where there was a single producer or distributor, and where the competitive environment and the possibility of buying on more favourable terms disappear, the share of direct and random purchases is considerable and the SAO sees the possibility for reducing costs in this area. Similar practice has also been demonstrated on a sample of purchases of medical devices or consumables. In their case, the share of supplies acquired outside the procurement procedure ranged from 78 % to 100 %. The SAO found on the audit sample of medicinal products and medical devices that the audited university hospitals had acted in violation of the Public Procurement Act for a total of CZK 41.6 million at the time of their acquisition.
A similar practice of university hospitals has already been pointed out by the SAO audit No 17/19 completed in 2018. Although the Ministry of Health took a number of measures at the time, it did not ensure if the measures were met. Even in the audited period from 2019 to 2021, for example, it did not have relevant information on the unit prices of purchased medicines or medical supplies, so that it could not manage the university hospitals in such a way that their expenditures ware as economical, effective and efficient as possible.Communication Department
Supreme Audit Office