A Hospital System Without Internal Controls

One of the investigative television programs last week was devoted to a report on the department head at an Israeli government hospital, who charged patients thousands of shekels for shortening the waiting period for eye operations. According to the report, those who paid were bumped to the top of the list, in total contravention of the law prohibiting the charging of a fee for medical services at public hospitals in Israel.

The existence of black market medicine at Israeli hospitals is not secret. Even so, the Israeli public required the good services of the media to expose − in the framework of complicated investigative reports − the doctors who are trampling the law and violating the sacred principle of equality in Israeli medical care.

Why does the media have to be the one to do the digging? Because no one else can do it. Even though Israeli government hospitals employ thousands of workers, serve millions of citizens and enjoy budgets totaling NIS 5 billion in public funding, not one hospital has an internal auditor.

Last year the State Comptroller devoted a chapter in his report to the absence of internal auditors at hospitals.'The legislature recognizes that internal auditors are essential − the lack of activity by an internal auditor at Israeli hospitals is not right,' states the report. The comptroller recommended the appointment of internal auditors to hospitals, and the Civil Service Commission promised this would be done.

A year has passed and no one will be surprised to discover that not only have internal auditors not been appointed to the hospitals, but no one is even working on such appointments.

The CSC, and mainly the Health Ministry, which is responsible for the supervision of the government hospitals, are passing the blame on to the Finance Ministry.

'The Health Ministry applied to the treasury for the allocation of 11 positions for internal auditors in the hospitals,' responded the Health Ministry spokesperson. 'So far these positions have not been approved.'

The Israeli health system has a budget of NIS 20 billion. The budget for the hospitals alone is NIS 5 billion, and the administrative department at the Health Ministry takes NIS 900 million for itself. The health system spends some NIS 700 million annually on drugs, without any supervision and without any attempt to cut costs. NIS 300 million in debts to the hospitals, owed by people who received treatment in emergency rooms and never paid, were declared lost debts after no one made an effort to collect them.

No budget could be found, however, for the 11 internal auditor positions at the hospitals, and this of course is the treasury?s fault.

In the absence of internal auditors, the person responsible for supervising events at the 11 government hospitals is the Health Ministry?s comptroller, Arieh Paz. Paz, who is considered one of the most successful comptrollers at the government ministries, can indeed be credited for exposing a number of cases of corruption at Israeli hospitals − including the affair that led to the conviction and seven-year jail term for Vladimir Yakirevich, director of the cardiac department at Tel Aviv?s Ichilov Hospital.

Even so, Paz said he had insufficient staff to conduct frequent and thorough reviews of the hospitals. The budget, like the human resources allocations at Paz?s disposal, are undoubtedly under the exclusive authority of the Health Ministry. The treasury has no access there. The budget allocated by the Health Ministry to Paz, who is supposed to oversee thousands of workers and the tens of billions of shekels that power the health system, consists of five employees and NIS 100,000 a year for hiring the services of external auditors.

For years the ministry has also been maintaining an office to handle the incorporation of the hospitals − a process that is still beyond the horizon − at an annual cost of NIS 1 million.

'Does the Health Ministry think it reasonable that a division of five workers can supervise the entire health system?' we asked the ministry?s spokesperson. 'The Health Ministry gives priority to allocating positions for treating patients,' came the reply.

In practice, the budget received by the Health Ministry?s comptroller does not enable him to conduct effective audits, not in the Health Ministry itself, and certainly not in the 11 government hospitals.

De facto, the government?s interest in safeguarding public health and the funds invested there has been abandoned.

This reality is worth pondering when examining the enthusiastic vote this week by government ministers on the ministries' right to enter financial relationships without tenders and without the supervision of the Finance Ministry.

This would 'increase the ministries' efficiency and ability to do their jobs properly,' according to the explanation provided to the public, but without revealing that the ministries are already operating without supervision, and there is no one capable of reviewing the dozens of financial undertakings to be conducted without a tender.