Modernization of university hospitals affected by questionable contracts and potentially uneconomic acquisitions
Press Release – April 8, 2013
The Supreme Audit Office (SAO) aimed at the Ministry of Health and state budget funds provided to four selected university hospitals for modernization projects within the period 2006–2011. The auditors scrutinized 14 construction works, which cost CZK 6,600 million, and purchases of medical devices in the amount of CZK 860 million.
Auditors warned that there was a certain risk of uneconomic acquisitions with the purchases of medical devices (e. g. CT and MRI scanners). The Ministry lacks a medium-term conception that would determine the distribution of the purchased devices, which are financially demanding. The Ministry also lacks an overview of hospitals and costs of their purchased devices. The commission for supervision of hospital purchases was dissolved in 2007 in spite of the consequences. For example, the University Hospital Ostrava modernized its CT scanner for CZK 15 million but only after 21 months the device was put into storeroom as the University Hospital received a grant from EU funds to purchase a new one.
In 2011, the Ministry proclaimed a new anti-corruption strategy, in which the Ministry planned to create a registry of some medicinal drugs, materials, and appliances that would help to compare prices. The registry has not been created yet. The SAO scrutinized purchases and modernization of 15 medical devices and concluded that in 73 % cases the tender documentation was sent to a group of candidates but in the end only one offer was submitted, which the university hospital accepted in spite of the fact, that the tender price exceeded the estimated value of the public contract. As stipulated in the Public Contracts Act, the hospitals are entitled to reject the tender in such cases.
From 2004 to 2010, the budget of the programme for reconstruction and modernization of university hospitals increased by 557 % to CZK 18,700 million. When compared to the original plan, the realization period was extended by nine years. The Ministry failed to perform running evaluations of the investments’ accomplishments. Most funds allotted to the Programme were drawn by the Motol University Hospital – by the end of the auditing operation the funds utilized by the Motol University Hospital amounted to CZK 5,100 million, which made 37 % of the budget expenditures.
Errors were found at construction works, namely during the projects’ preparation phases, awarding procedures, and when observing the grant conditions. In several cases, the SAO informed the respective financial authorities of suspected violations of budgetary regulations. In the audited period, the Ministry of Health performed 13 inspections but did not detect any errors.
For example, the University Hospital Ostrava used the allotted funds for reconstruction of objects, which did not apply to the subsidy conditions. The Hospital also reimbursed invoices for construction works without verifying the works’ completion.
When reconstructing the children pavilion, the Motol University Hospital concluded 11 amendments to work contracts using negotiated procedure without publication. As a result, the tender price increased by CZK 632.3 million. The Motol University Hospital tried to resolve the emergency condition of the children pavilion through five contract amendments, which were concluded after the negotiated procedure without publication. Investment costs of the emergency solution amounted to CZK 11,780 per one cubic meter.
For further details about the auditing operation No. 12/03 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-12-03.pdf (pdf 394 kB).
Communication Department
Supreme Audit Office