The Government Of Ghana Accounting Essay

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The Government of Ghana since the initiation of the Economic Recovery Program (ERP) in April 1983, have sought to improve its financial management in the Ghana health service case study Wa Regional Hospital under the Structural Adjustment Project (SAP) and the Economic Management Support Project (EMSP). However, all the above measures were adhoc in nature and did not meet the requirement of an Integrated Financial Management Support (IFMS). Recognizing these deficiencies in the Public Financial Management (PFM), the government of Ghana (GOG) with the assistance of Canadian International Development Agency (CIDA), Department of Foreign International Development (DFID) and the World Bank developed a medium term program called Public Financial Management Reform Program (PUFMARP). The PUFMARD is aimed at improving Efficiency, Accountability and Transparency in the public financial management.

One of the sectors where this program was implemented is Ghana Health Service (GHS) which happens to be one of the most vibrant and essential sectors in Ghana. It is an undeniable fact that the presence of good health care is essential in achieving curative and preventive health needs of the people. As a result, this does not lead to increasing expectation through education and general interests but also people are able to attain longevity.

It is crystal clear that, lack of quality health delivery system is inimical to the progress and development of any society. It is in the light of this, that resources are put in place to provide quality health care for the people. However, this object can only be attained when there is effective financial management.

Ghana Health Servicedepends largely on financial resources appropriated through the national budget. Financial management in the Ghana Health Service (GHS) has been a problem since time immemorial. There have been instances where funds belonging to public sector organizations including the health sector are misappropriated by management.

Many changes have been initiated in the health sector with the aim of not only enhancing effective financial management but also to provide efficient health service to the populace.

STATEMENT OF THE PROBLEM

The success of any establishmentwhether profit or non-profit oriented depends largely on the generation and management of finance. Financial management is carried out effectively when ample care is taken in the generation and disbursement of funds. There are many ways in which funds are generated into Government hospitals .These include Government Subvention (GS) through the Consolidated Funds (CF), Donor Pool Fund (DPF),National Health Insurance Scheme Fund (NHIS) and Internally Generated Funds (IGF) such as the sale of drugs, consultancy fees and issue of cash to patients.

Generation of funds in the Ghana Health Service (GHS) has been a problem not only because Government Subventions (GS) Non Government Organization (NGO) National Health Insurance Fund (NHIF) are not received timely but are also woefully insufficient. Internally Generated Funds (IGF) are also inadequate since patients are not charged to even cover cost, due to poverty in the region

Moreover, disbursement of funds is one of the greatest problems facing the Ghana Health Service (GHS). Some health administrators do not disburse monies on projects purposely for their self-interest. Estimates for projects are often over invoices by these Directors. Ghana Health Service (GHS) especially the Regional Hospitals have many departments such as Out Patient Department (OPD), Department of Diagnosis (Theatre, X-ray and Hematology ),which do not make profit at all.

There are some classes of patients who are given free medical care. These patients fall under the exemption list. They include the aged, indigent, antenatal care, staff, dog and snake bites victims, tuberculosis (TB); paupers and. Government is expected to pay for the above listed patients. Sometimes this refund is delayed because the hospitals prepare refund for exemption to the government covering the whole year. In some cases, government fails to refund these amounts. All these pose serious financial problems to government hospitals since the hospitals are to pay for the drugs used before they are replenished.

In the light of these deficiencies, there is the need to carry out a study into the Ghana Health Service (GHS) so as to provide appropriate recommendations where necessary.

OBJECTIVES OF THE STUDY

This study is intended to:

Find out the shortfalls in the financial management of the Ghana Health Service

Arrive at a strategic means of managing resources in the Ghana Health Service

Assess the sources of finance and to determine whether monies collected are properly accounted for.

Test the sufficiency of Internal Control in the Ghana Health Service

To determine some problems of finance especially in the area of manpower development

Assess whether targets set by the Ghana Health Service are often achieved

Find out in the Ghana Health Service, their effect on health delivery, performance of employees and patients and to provide recommendations where necessary

To make recommendations when necessary

RESEARCH QUESTIONS/ METHODOLOGY

This survey shall be based on the following research questions:

What are the main sources of funds available to the Ghana Health Service (GHS)?

How often are these funds received?

What is the mode of recording financial transactions in the health sectors?

Is there any health insurance scheme instituted in this hospital?

What are some of the expenditure areas in the health sector?

What are some of the measures put in place by management to deter and detect fraud and embezzlement?

Arethe funds adequate for meeting the health needs?

1.4a SIGNIFICANCE OF THE STUDY

This study brings to mind how financial management in the health sector is carried out hence it would unearth some of the loopholes of financial management in the Ghana Health Service.

The study also offers information on the historical background of Wa Regional Hospital and the systems put in place by the hospital administration so as to improve financial management.

In addition, the study would provide techniques in financial management thus helping to bridge the gap between the inflows and outflows of funds in the Ghana health sector. The results of the study if implemented will improve the planning and budgeting of expenditure in the health sector and thus contribute to safeguard fiscal policy formulation and implementation.

Finally the study will serve as source of reference for students who may want to undertake a study about the topic.

1.4b BRIEF HISTORY OF WA REGIONAL HOSPITAL

Wa Regional Hospital was established in 1952 as the only hospital in Wa and it environ .Wa Regional Hospital strategically located in the heart of the regional capital, Wa Regional Hospital performs a dual function as a regional and district hospital for over years now. It provides services to the population of the region and its environs.

Indeed, as a centre of excellence (within the healthcare delivery system) in the region, its catchment area extends beyond upper west are to Bole, Tuna etc. in the Northern Region and the neighboring country e.g. Burkina Faso.

5.1 PURPOSE OF THE STUDY

The major objectives why the researcher wants to embark on the project are stated below

The researcher intends to find out the major sources of finance in the health sector

He also wants to bring to mind how financial management in the Ghana Health Sector is carried out

The researcher gives information on the historical background of Wa regional hospital and the systems put in place by the hospital's administration and how it can contribute to the improvement of financial management in the health sector.

Again the researcher wants to find out the over view of the planning and budgeting of the income and expenditure in the health sector.

Finally the study may serve as source of reference to students who may want to undertake a study about the topic.

ORGANISATION OF THE STUDY

For systematic and orderly presentation of ideas, the study would be organized into five chapters.

Chapter one shall deal with an introduction to the research topic: background of the study; statement of the problem; objectives of the study; research questions; significance of the study; and limitation and delimitation of the study.

Chapter two shall cover literature review of the study.

In chapter three, the research would be geared towards the methodology. Areas such as population sample, sample procedures and data analysis procedures will be delved into.

Analysis and presentation of the study would be dealt with in chapter four. This would be achieved through the use of tables and figures, statistical presentation and discussions of results.

Finally, chapter five would be devoted for the summary, conclusion and recommendation to the topic seeing researched.

LIMITATIONS

The prime limitation of this project stems from the lack of co-operation from some staff and patients of the Wa Regional Hospital. For no apparent reason, an appreciable number of the respondents dismissed and ignored our humble and modest approach to them. The few who responded were the very key ones whose data was indispensable for the study. In spite of their un- readiness to release vital information, our persistence and comportment finally opened the way.

The inadequacy of funds at all stages of the study was another serious impediment on our way. Since there was no sufficient funds, travelling to far flung destinations for data collection was sometimes avoided, hence our inability to obtain data as much as we speculated.

As a matter of fact and genuineness, inadequate funds have been the most excruciating aspect of the study which introduced some amount of boredom

Apart from the Regional Hospital, no hospital generates enough administrative revenue to meet its

administrative expenditure.

This is more imminent in the face of diminishing GOG/DPF budget releases which seems to be the trend for years.

I am looking forward to our greater resolve to address all the bottlenecks that impede service delivery in the Ghana health service. It is my hope that our efforts will lead to the improvement in the health status of all Ghanaians

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

Since time immemorial, scholars, researchers, authors, health administrators have written literature on financial management in the Ghana Health Service (GHS).

The chapter intends to take a re-look at the attempts made by the aforementioned people in the definition, manner of operation, revenue mobilization, capital budgeting, investment appraisal and the managerial problems of fund in the Ghana Health Service (GHS).

2.1 FINANCIAL MANAGEMENT

According to Brigham andGapenski (1985), financial management involves the actual management of a firm and it is important in all types of organization including banks and charitable organization. They contended that, financial management is essential to the government, schools, departments and health sectors.

Also, financial management also defined by Brigham and Gapenski (1985) is the actual management of a firm, which in this case includes banks and charitable organization. They contended that, financial management is of much importance to the government, schools, departments and health sector.

Peterson (1984) defined Financial Management as; the management of the cash flow of a firm to make profit for its owners. She further explained that, a firm may be a business enterprise such as manufacturing companies, an accounting firm, an oil producer, a credit union or it may be a charitable organization.

Van-Horne (1996) also states that, financial management involves solution to the three major decisions, namely investment decision, financial decision and dividend decision. These three major decisions in combination determine to an immeasurable extend the real value of the business to its owners or shareholders. In order to maximize this value, they suggest that the company should take the optimal combination of the three major interrelated decisions. For instance, the decision to invest into a new project, for example, necessitates by investment financing which in turn is influenced by dividend decisions for retained earnings used internal financing represent dividend forgone by shareholders.

In a more general sense, financial management can be defined as the acquisition, management and financing of resources for firms by means of money, with due regards to prices and other economic factors in the market.

2.2 FUNCTIONS OF FINANCIAL MANAGEMENT

According to F. Brighan and Gapenski (1985), the primary function of a financial manager is to give account on the financial matters of the firm. Thus, by taking into account the sources and uses of money towards the maximization of the firm's value or the owners' interest in the case of a company. They further explained that, financial management should plan the alternative decision of sources of funds and the uses of those funds in order to achieve the goals and objectives of the organization. Various functions of the financial management are noticed and among them are:

Planning and forecasting; this involves setting of objectives and goals for departments and sub-divisions and establishing policies and stands to keep workers towards the achievement of the set goals and objectives. The financial manager shall be a joint work with other executives to look ahead and lay down plans, programmers and procedures to structure the future position of the firm.

Coordination and control; coordination is the means of directing all efforts towards a central point or goal by which all activities of all sides of a business aim at achieving .It is concerned with harmonizing all the different segment of an organization to avoid conflicts. Controlling on the other hand is the process of measuring progress by comparing actual results with planned results and taking corrective measures. Controlling involves all the activities the manager undertakes in trying to ensure that actual results tallies with planned or targeted results. It answers among others the following questions;

Have we achieved our target?

Why? and

How did we achieve it?

Financial managers must interact with executives in other departments of the business if the firm is to operate as efficiently as possible. All management decisions have financial implications and all financial managers must take this into consideration. Government initiative in resource management in the United Kingdom, government initiative in resource management sought to involve doctors, nurses and other health care professional staff more actively in the issue of costing, budgeting and other performance related to monitoring and control system after Griffiths inquiry of (1983).

Financial Decisions and Major Investment; as stated by Block and Hirt (1995), finance is closely related to the fields of economics and accounting, it is in consonance with this that, financial managers must understand the relationship between these fields.

It is the responsibility of financial managers to appropriate (allocate) funds to both current and fixed assets to obtain the optimum mix and usage of financial alternatives and to develop an appropriate dividend policy within context of the organization's objectives.

According to Block and Hirt(1995) the daily activities of financial management include credit, management, inventory control and the receipt and disbursement of funds. On a more broad base, financial management functions are categorized into three (3)

Daily function:

Credit management

Inventory control

Receipts and disbursement of funds

Occasional functions:

Stock issue

Bound issue

Capital budgeting

Dividend decisions

Profitability function

Trade-off-an agreement to do something if someone else does something.

Also Peterson (1994) stated that the day-to-day purpose of a firm's financial management is to meet current and future operational needs. According to her, the financial manager's task include development, application and monitoring of policies and decisions regarding business activities such as:

Collection of customer receipts

Raising long terms funds

Payment of obligation

Investment in marketable securities

Investment in long term assets such as building

Departments that perform financial management task include accounts receivable (collection of customer credit accounts), financial planning (planning for cash inflows and outflows), accounts payable (payment to suppliers) and capital budgeting (investment in long term assets).

Peterson (1994), further said an organization like hospital has a specific goal of providing some services such as raising funds for research on specific illness. The goal of financial management of such institution is to raise funds and to lobby to maximize the amount of research on illness, providing maximum benefit for their constituency (those afflicted with the illness).

According to Vanttorne (1996), in an attempt to make optimal decisions, the financial manager makes use of certain analytical tools in the analysis, planning and control activities of the firm. He stated that, financial analysis is a necessary condition or pre-requisite for making sound financial decisions. He further stated that, one of the important roles of financial manager is to provide accurate information on financial performance of the organization.

Manness (1988) also stated the following as the functions of the financial manager:

The financial management is responsible for the administering and making decisions and giving recommendation about the most important aspect of the finance sectors, long-term financing, dividend policy, capital expenditure and resource allocation within the organization.

The financial manager involves deeply in planning and control of capital expenditure for the acquisition of property, plant and equipment and other assets that accrue both short and long-term benefits for the organization or firm.

The financial manager involves also, in the monitoring, analyzing and reporting on the organizational performance.

One other scholar, Brookington (1980) stated that, the financial manager is one member among a team of management and thus, his activity is not of an individual but a contribution towards the total management effort and must therefore be coordinated properly with the other members of the management. Some unique functions of financial manager as indicated by Brookington are;

To make funds available at the right time

To obtain funds for the firm at the right time

To ensure the most efficient use of the funds

In 1980s, a management information system for ministries was developed in the United Kingdom (UK) and the aims of this type of analysis was to identify what it being in pursuit of policy objectives, what is costs and whether an alternative procedures that could produce efficacious results more cheaply, better value for money and not a poorer standard of services.

In 1982 the UK Government reply the parliamentary treasury and civil service committee on the efficiency and effectiveness of the report. The government introduced a periodic policy reviews and discipline of cash limits, which was meant to determine and control the total public spending and competing service allocations.

What the United Kingdom (UK) Government introduced is called Financial Management Initiative (FMI). The main objectives, of financial management initiative are to promote in each government department/organization, the system which have clear view of objectives: well obtained responsibilities: and the necessary information to help to discharge them. It sets out to promote self reliance and enthusiasm and to increase their job satisfaction by giving them independence as personal responsibility for the achievement of objectives as the management of their staff and budget is consistent with accepted principles and policies with individual freedom of action

The Ministry of Health (MOH) Financial management Medium Term Strategy (MTS) towards vision 2020 has it that, the Ministry wishes to strengthen its financial management in order to:

To improve training for accountants

To improve expenditure control

To ensure the efficient running of internal audit system

Compare cost for similar instruments

The Ministry of Health (MOH) Financial Reports (1990s) maintained that its financial staff should be reliable and ensure that:

Financial reports are prepared accurately

Expenditures are valid, accurately recorded and based on sufficient documentary evidence

Approved budgets are not exceeded

Professor A.B. Akosa a past president of the Ghana Medical Association (GMA) and the current Director General of Ghana Health Service (GHS) said that, health professionals should not be administrators. According to him, health administrators occupy the proverbial secretary position of the Hospital. The day-to-day management of the hospital are in their hands, which means that they are the procurement managers and work in collusion with suppliers or work in close harmony with contractors on the award of contracts

Professor Akosa means that, health administration is complex and cannot be relied solely on three year postgraduate programmed in administration and doctors in management are therefore important resources that cannot be dispensed with. He continued by stating that, health sector management is the most difficult task because unlike most jobs where managers are real bosses, with health, one comes up against very top professionals who traditionally lords it over others rather than the other way around and there is no where in the word that the chief surgeon and chief physician on whose effort the hospital generates fund (money) will allow administrator to boss over them. He said they will not allow the wholesale hijacking of the management of their health facilities by people who care less about the welfare of the patient

He noted that, administrators must concern themselves with bed management, personnel, management, management of records, efficient appointment systems, health information ensuring friendly environment and financial management rather than procurement and awarding contracts which have all been so streamlined (ulterior motive) that is bleeding the hospital of the Internal Generating Fund (IGF) as governments subvention through infection of the cost supplies, supply of poor quality materials and inflation of contract sums must be checked.

2.3 INVESTMENT APPRAISAL

Ghana National Health Service (NHS) terms investment appraisal as option appraisal. The fundamental reason behind this alternation is to emphasize the fact that, organizations with limited resources (capital) and a wide range of alternative investments based their decisions on assessing the merits and demerits of each investment, either than focusing on a particular type of investment.

According to Perrin (1992), Professor Emeritus of Wanwicks University and Honmry Fellow of University of Exter the biggest capital investment of the National Health Service (NHS) are the building of new hospitals, provision of space and facilities for laboratories and other technical support services.

As a result, this increases the unit cost of treating a patient and for that matter, total cost of treating patients. In situations where discounted cash flows is used as a technique for appraising investment in the health sector, this seldom shows a positive Net Present Value (NPV). The rationale behind this, is the, fact that, main motive of the Ghana Health Service (GHS) is not to make profit but to make quality health service accessible and affordable to all.

2.4 HEALTH CARE FINANCING IN GHANA

2.4a Introduction

Mr. Daniel AidooMensah,Chief Executive of Metropolitan Insurance Company in his article on daily graphic page nine(9) captioned :Health Care Financing- the Way Forward: lamented that, the rising cost of providing health care has become an albatross hanging over the heads of most countries both developed and developing, Ghana is no exception.

He noted that, while most countries adopted the "Health for all by 2000 AD" as a goal by the World Health Organization (WHO), there were not clear guidelines towards the translation of this goal into reality as a delivery by health service and whether such services would be affordable. Year 2000 is gone and "health for all" remains a day dream.

2.4b HISTORICAL BACKGROUND

Still in his article "Health care Financing- the way Forward", Mr. AidooMensah explained that, Health Care financing in Ghana has milled different phases before independence. According to him, the colonial government provided limited health care facilities for its employees - civil servants and their dependents- and financed this largely through general taxation, while non-civil servants attended private and mission clinics at their own cost.

He further elaborated that, the funding of the health care service infrastructure was made by government and the mission/private practitioners. It could be again noted that, immediately after independence, the government initiated programmes to improve and expand the health care facilities. The socialist policies ushered in opportunities for increased social welfare and well-being and the health services became virtually free.

By late 1960s, the realities of the continued economic decline had compelled the government to introduce nominal out-of-pocket contribution to health care services and the Hospital's Fees Decree, 1969 (NLCD 260) was passed. Mr. Mensah further explained that, the cash and carry system whereby money for the purchase of essential drugs and other items has to be provided before any treatment was introduced in 1992 with it own attendant. This system of financing health services has not received the support of the general public who continued to oppose it.

The Government of Ghana (GOG), according to Mr. Daniel AidooMensah, was therefore looking for a more efficient method of funding health care services and health insurance idea as the opportunity presented itself.

2.4c GOVERNMENT POLICY ON HEALTH CARE FINANCING

The financing and provision of health care has been a challenge facing many countries in the word.

In 2003 the National Health Insurance Scheme (NHIS) was established in Ghana. It seeks

to secure the provision of basic health care services to persons resident in Ghana through district mutual, private mutual and private commercial health insurance schemes.

The National Health Insurance Scheme in Ghana is deemed as one of the legacies of the John Kufuor administration. Seeking the mandate of the people in the 2000 elections, Kufuor promised to abolish what was known at the time as the "cash and carry system" of health delivery. Under this system, patients - - even those who had been brought into the hospital on emergencies - were required to pay money at every point of service delivery. Imagine being sent to a hospital with a bleeding accident wound and being asked to pay before a doctor attends to you. People died. In some cases, lives were lost for the simple reason that friends and relatives were not around to make the required advanced payment.

The New Patriotic Party (NPP) Government's health policy as contained in its manifesto for the 2000 presidential and parliamentary election stated "under the NPP government, workers and their employers, local communities, religious bodies etc will be encouraged to establish their own health insurance scheme. The public health facilities will be improved to give quality service at affordable cost even to those not covered by any insurance scheme".

It was further stated "a special institution will be created for supervising health insurance. That institution shall be managed independent of government. Social Security and National Insurance Trust (SSNIT) shall concentrate on administering the National Pension Scheme and will not extend its coverage to health insurance.

The National Democracy Congress (NDC) health policy as contained in its manifesto for the 2008 presidential and parliamentary election stated under the NDC government will introduce one time premium also public health facilities will be improved to give quality service at affordable cost.

2.4d NATIONAL HEALTH INSURANCE

Health insurance is a method of paying for health care. This is an arrangement such that risks of incurring health care costs are shared by a group of people over time. This is done by setting up insurance or a sickness fund that is shared among the group. Members of the group will have to contribute regularly to the fund so that should one fall ill, the insurance scheme pays your medical bills.

According to Mr. Daniel AidooMesah, Health Insurance is defined as a method of providing members of a defined group or community with protection against the cost of medical care. He further stressed that, Health Insurance is based on the principle of pooling of risks and therefore the redistribution of financial resources for that segment of a community which does. To Mr. Daniel AidooMensah, Health Insurance is about sharing of risk and ensuring financial cover, should the individual need medical care, the cost of which is well beyond his /her means.

He highlights; because under normal circumstances, there are more healthy people than sick ones, it is possible and reasonable to pool together the contributions received and pay the medical claims of those who do fall it.Those who are well still enjoy the benefit of being covered by themselves should they require medical care. Health Insurance thus provides protection for the insured against financial hardship resulting from illness or injury.

Mr. Daniel AidooMensah pointed again that, an insurance benefit, whether national or private is not a free gift dished out by the insurance company or government. It is a benefit which must be earned by contribution in the form of premium payments, like any other form of insurance. He again noted that Health Insurance works better hen a large cross section of the community is insured. When risks and resources are pooled among the large groups of persons with different probabilities of requiring health care, the security of individual is enhanced. He still went ahead to say that a large group ensures a better spread of risk and that can lead to lower premiums. It is also, a condition necessary for making the scheme viable.

2.4e TYPES OF HEALTH INSURANCE SCHEMES

As stated in his article "Health Care Financing - The Way Forward", Mr. AidooMensah mentioned that, there are different types of health insurance schemes. To him, the criteria for definition are usually based on whether or not they are voluntary as opposed to compulsory and whether or not rates of contribution are based on individual risk assessments.

"There are therefore, two (2) main generic categories; National/Social Health Insurance Schemes and Private Health Insurance Schemes" he said. Again, he mentioned that, there are variations of generic categories. National Health Insurance Schemes may include community based schemes whilst Private Health Insurance Scheme may include employee based schemes.

NATIONAL/ SOCIAL HEALTH INSURANCE SCHEMES

According to the Chief Executive officer (CEO) of the Metro Politian Insurance Company, National Health Insurance Schemes are generally sponsored by the government and membership is usually compulsory for specific segment(s) of the population.

He further hinted that, social insurance is made feasible by the principle of solidarity which works well in a society that acknowledges or accepts this type of mutual support. With social insurance he said, Premiums/Contributions are not usually based on individual risk assessment and usually financed by tax on incomes.

Mr. Daniel AidooMensah stressed that, the core group normally covered by social insurance is made up of workers in the formal sector whose participation is on compulsory basis so as to avoid "adverse selection".

With regards to the benefits of this system of insurance scheme, Mr. AidooMensah pointed out that, if this system is properly implemented, it will lead to a situation where the community provides for hospitalization, surgery, essential drugs and medicine, general practice care and occasionally special care, laboratory services and dental care.

On the demerits of this system of Health Insurance, he pointed out the following:

Administration cost which are normally high due to inefficiencies and bureaucratic structures.

The population in the informal sector may be difficult to be included due to problems of assessing their incomes and an ailing social insurance scheme will have to be propped up by government financial subsidy. This will put an additional burden on government that is trying to avoid subsidy on goods and services.

PRIVATE HEALTH INSURANCE

As far as Private Health Insurance is concerned, Mr. Daniel A. Mensah has the following comments:

Private health insurance schemes are offered on voluntary basis and are based on assessment of risk of each individual. Different benefits are usually available for selection according to one's needs and ability to pay. The agencies that provide voluntary health insurance coverage are insurance companies, medical society, unions, community groups and mutual associations. Below according to him are some of the advantages of private health insurance:

Services are more likely to be efficiently managed and delivered;

There is more equity in those premiums assessed which are usually directly related to the risk insured.

It is flexible and will readily make adjustments to benefit schedules and other conditions as a consequence of competitive pressures.

On the contrary, the disadvantages are enumerated below:

The principle of mutual support does not apply, thus making it expensive to insure certain groups of people. For economic reasons, private schemes shy away from certain segments of the society, thus depriving them of the needed coverage. It is the practice for most companies to provide free medical services to their employees as part of collective bargaining agreements based on trade unions or employee groups.

Most of these schemes are group self-insurance schemes and retain a particular service provider on a fee-for-service basis to extend facilities to employees and in some cases a specified number of registered dependents. The greatest problem with this method is cost containment arising mainly from abuse by employees and over-servicing by providers.

COMMUNITY BASED HEALTH INSURANCE SCHEMES

Mr. Daniel AidooMensah in his article "Health Care Financing - The Way Forward" published in the "Daily Graphic" (April 7, 2001, Page 23) said "Community based insurance scheme is organized locally by the community on voluntary basis. Premiums are paid by households and are generally not based on individual risk assessments". The Community-based schemes have been recognized as a means of providing insurance coverage for rural communities, which are unlikely to benefit immediately from either a social or private health insurance scheme.

2.5 PRE-REQUISITE FACTORS TO BE CONSIDERED WHEN INSTITUTING HEALTH INSURANCESCHEME

On the same article captioned on daily graphic page nine "Health Care Financing - The Way Forward", the Chief Executive Officer (CEO) of the Metropolitan Insurance Company enumerated the following basic condition for the effective operation of National Health Insurance:

The prevailing health policies and goals.

The state of the health delivery system.

Demographic issues and occupational distribution of labor force and income levels and the economic potentials and growth prospects of the economy.

The existing system of healthcare financing, social and cultural attitudes and availability of administrative and technical personnel.

2.6 BUDGETING AND BUDGETARY CONTROL

In the September - October 2002 edition of "The Professional Accountants", the under listed comments regarding budgeting were featured.

Budgeting is an important management accounting technique, which can benefit all forms of business enterprise if fully understood and properly operated. A budget is defined as a quantitative analysis prior to a defined period of time of a policy to be pursued for the period to attain a given objective.

Budgetary control on the other hand, is the establishment of departmental budgets relating the responsibilities of executives to the requirements of policy and continues comparisons of actual with budgeted results, either to secure by individual actions the objective of that policy or to provide a basis for its revision.

Successful budgeting is not an automatic outcome but budgeting process is more likely to succeed when the following conditions are prevalent:

Top management involvement and support;

A clear definition of long-term objectives within which budgeting operates;

An organizational structure, which has clearly defined responsibilities and authorities;

Full acceptance and involvement in line managers;

An effective accounting information system that is supportive and not threatening.

In summary, "The Professional Accountant" (2002) stated that, recognition of both technical and behavioral aspects of budgeting are essential if organizational goals are to be achieved.

Budgeting is not simply a purely technical process. It includes numerous behavioral problems, which can be particularly disruptive if managers do not participate in the setting of budgets or if budges levels are perceived as unattainable.

Perrin (1992), argued that, financial control in the National Health Service (NHS) and similar public services had concentrated on the control of cash flow. Purchasing procedures and the accountability of budget holders for current expenditure and resource inputs. He stated that, greater financial heights in business is best achieved by monitoring revenues received and measuring and controlling the cost of resources consumed in the production and supply of specific goods and services.

Henley (1985), Controller and Auditor General (Britain) has it that, in studying the evolution of budgetary control in the National Health Services (NHS), two (2) main fundamental conditions must be considered:

Effective budgetary control system, which concentrates on organizational and accountability framework in the organization.

For budgetary control to be effective, it is essential that, the cost or expenditure reported against budges must be accurate and available for discussion, and remedial action taken where necessary.

2.7 ACCOUNTABILITY IN THE HEALTH SECTOR

Perrin (1992), described accountability in the National Health Service (NHS) as a vexing task. He argued that, while in commercial business, attention focused on the satisfaction of customers on one hand and shareholders on the other hand, this is not the case in the National Health Service (NHS). It is so because, the National Health Service (NHS) has no share holders and is only meant to make health service accessible and affordable to all rather than being profit oriented.

He further stated that, the National Health Service (NHS) has few customers who pay personally and directly for services they received. The NHS is largely in monopoly supply of public goods and customers of its products/services have a limited choice in the services they receive. Patients generally lack the skill to evaluate the quality of the service provided by the National Health Service (NHS). That is, patients are often in no mental state to shop around so as to assess the technical efficiency or value for money of the care they received.

He lamented that, there has a conflict within the National Health Service (NHS), since the leading role in health delivery is being taken by doctors and other medical practitioners, whose objectives and code of ethics are not always fully compatible with the search for efficiency and value for money carried forward by National Health Services (NHS) managers and accountants to meet government policy directives.

CHAPTER THREE

METHODOLOGY

3.0 INTRODUCTION

This survey is intended to look into financial management in the Ghana Health Service (GHS). The chapter concerns the various methods used in collecting data for the study. In order to make the exercise meaningful and helpful, issues such as instruments for the collection of data, population, sampling and sampling procedures, interviews and data analysis are considered in this chapter.

3.1 POPULATION

The issue of financial management in the Ghana Health Sector (GHS) is of major concern to all well meaning Ghanaians. This stem from the fact that, the cause of providing health service in Ghana has increased tremendously since the middle days of 1980s.

To access the efficiency, effectiveness and economy (The 3Es) in the use of financial resources of the Ghana Health Service (GHS), the main population to this study will include: The Upper West Regional Director of Health Services, the Accountant of Upper West Regional Health Administration, The Administrator of Wa Regional Hospital forgetting not the accountant of Wa regional hospital.

Also to be taken into considerations are: senior medical officers, pharmacists , dispensary technicians, nurses, and patients.

3.2 SAMPLING

Respondents were selected based on the afore-mentioned population categories.

3.3 METHODS OF SELECTION

Random sampling was used for the selection of respondents from the targeted population groupings.

3.4 INSTRUMENTS USED

The main instruments employed for the collection of data for this survey included the following: questionnaires, personal observation, interviews and documentary sources.

3.4.1 QUESTIONNAIRE

As part of the process of collecting data, designed questionnaires were administered personally to ensure that right and relevant information was obtained. Open questions required in-depth explanation from the respondents. Specifically, questionnaires were distributed to personalities:

Respondents to questionnaires

GROUP

QUESTIONNAIRES

DISTRIBUTED

QUESTIONNAIRES

RETAINED

Regional Administrator

Hospital Director

Hospital Accountant

Pharmacist

Nurses

Patients

Revenue Collectors

Medical Assistants

Medical Officers

1

2

1

2

10

2

4

2

2

1

2

1

1

6

2

3

2

2

TOTAL

28

20

Source : Field study,July 2011

Responses received from the above-mentioned people will be analyzed and used as such.

Admittedly, questionnaires enabled the researchers to obtain with ease frank and elaborate answers more sensitive and embarrassing questions, as the respondents felt it easy in providing answers to such questions.

3.4.b OBSERVATION

In order to look into the nitty-gritty of issues (Financial Management) in Ghana Health Sector (GHS), the researcher took it a responsibility to contact personal observations. That is, many visits were made to the Wa Regional Hospital and the Wa Regional Health Directorate where researchers personally saw activities pertaining to Financial Management and other related issues and data accordingly related. By this agreement, data was taken after every visit and no attempts were made to modify any information obtained.

3.4.c PERSONAL INTERVIEW

Through personal interaction (interviews) with a cross-section of the target population, the researchers were able to obtain from target population, some data. In this process, the researcher were able to interact freely and unreservedly with interviewees. Better still illiterates (patients) who could not respond to written questionnaires were covered through this process.

3.4.d DOCUMENTARY SOURCE

Data was obtained from reports, magazines, newsletters, newspapers, journals, leaflets and many other sources pertaining to financial management in general and in Ghana Health Sector for that matter. As a result, relevant information was obtained from the Wa Regional Library.

Furthermore, the accounts clerk at the various departments of the Wa Regional Hospital was contacted for information containing 2011 revenue as follows:

Out-Patient Department (OPD);

Revenue Books;

Laboratory Revenue Books;

Dispensary Revenue Books;

Revenue Analysis Books;

Also, financial reports of the Hospital for the year 2011 and the exemption list for same period were obtained. I gathered information from the Ministry of Health (MoH) expenditure controls on Internally Generated Fund (IGF), Ministry of Health (MoH) revenue collection procedures and Financial Management Training for Non-Financial Managers in Health Sector.

3.5 VALIDITY AND RELIABILITY

Due to the fact that a number of research methods were employed before arriving at those pieces of information obtained, it suffices for one to be sure of the firm base and reliability of information gathered.

Also, people from whom data was collected represented true members. In most cases, questionnaires, interviews and documentary sources methods employed proved the areas they were questioned on. Under the interview, the personnel of the scheme were personally interviewed.

Furthermore, a cross-section of nurses, out-patient and other paramedical staff were interviewed. Coincidentally, the information obtained from the workers was the same as obtained from the officials. This gives strength to the fact that, data collected is accurate, dependable and reliable.

From our personal observation, it could be said at convenience and with confidence that, the data for the study is valid, accurate and hence reliable for any future work on Financial Management in the Ghana Health Services (GHS).

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.0 INTRODUCTION

This chapter presents the analysis of finding of data obtained on which the final summary, conclusion and recommendation shall be made.

The analysis of the data will be presented in combined form taking into account all the questionnaires distributed and other modes of data collection such as interviews, observations and documentary sources.

4.1 HISTORICAL REVIEW OF WA REGIONAL HOSPITAL

4.1(a) History and Location

Wa Regional Hospital was established in 1952 as the only hospital in Wa and it render quality health services to the natives of Wa, in the Upper West Region. Wa Regional Hospital strategically located in the heart of the regional capital and performs a dual function as a regional and municipal hospital and also serves as a point of reference to places like Lawra, Nadowli etc.

As a Centre of excellent (within the Health Care delivery system) it renders quality health services in the region and its catchment areas which extend beyond Upper West are to Bole, Tuna etc. In the Northern Region and the neighboring countries like Burkina Faso and Cote d'Voir due to its nearness.

Recently, Wa Regional Hospital has a bed compliance of one hundred and eighty nine (189) spread over nine (9) wards with the casualty ward inclusive.

Currently, plans are far advanced for the hospital to be upgraded to the status of a teaching hospital.

4.1(b) The set up

The hospital has various units headed by respective qualified personnel with the overall head being the Regional Director of Health Service. Other units within the hospital include Accounts Unit, Internal Audit Unit, Pharmaceutical Unit, Accident and emergency Unit, Out-Patient Department, Kitchen/Laundry, Workshop/Store, Mortuary, X-ray, Physiotherapy, Private ward and Eye Unit. Other wards include Relative lodge, Isolation/Medical Ward, Surgery Ward, Psychiatric Ward, Gynecology Ward, Operating Theatre, Laboratory and E.C.G

4.1(c) Accounts and Records Unit

This Unit is headed by a senior accountant who is the head of the finance unit, five (5) other accounting staff, comprising two (2) senior accounts officers, one (1) accounts officer, one(1) Junior accounts officer and one(1) accountant. Additional six (6) revenue collectors, three(3) national service personnel and two(2) people on attachment.

4.1(d) Hospital Management

A sober look at the hospital's organizational chart revealed that, the Wa Regional Health Director is the overall head of the hospital. The hospital has a management committee membership which includes: Administrator, Accountant, Deputy Director of Nursing Service (DDNS), Pharmacist, Deputy Director of Pharmacy Service (DDPS) and the Medical Superintendent. The committee is headed by the Medical Superintendent with its functions being planning, organizing, heading, supervising and controlling the affairs of the hospital.

4.1(e) Procurement Committee

As a requirement by the Government, the Wa Regional Hospital has a procurement committee membership of which include the supply officer, procurement officer, account, medical superintendent and head of administration. The committee meets quarterly and its major function is to help the hospital purchase items of highest quality but at a reduced price.

4.1(f) Organizational Chart of the Hospital

Detail's is an organizational chart of the hos

GHANA HEALTH SERVICE

REGIONAL HOSPITAL, WA ORGANISATIONAL CHART

REGIONAL DIRECTOR OF HEALTH SERVICES

REGIONAL HOSPITAL

HOSPITAL MANAGEMENT COMMITTEE

MEDICAL SUPRINTENDENT

PUBLIC HEALTH

CORE MANAGEMENT TEAM

INTERNAL AUDIT

ADMINISTRATOR

DEPUTY MEDICAL SUPRITENDENT

MATRON

GENERAL ADMIN

HEAD OF FINANCE

HEAD OF PHARMACY

PHYSIO

LABORATORYCLINICAL HEADS

CLINICAL PHARMACY

REVENUE ACCT

WARDS

SECURITY

DRUG MANAGEMENT

EXPENDITURE ACCT

X-RAY

OPD

NURSES

LAUNDARY

EYE

OBS/GYNAE

PHARMACY STAFF

MONITORING ACCT

DENTAL

SURGERY

MIDWIVES

TRANSPORT

PSYCHIATRY

INT. MEDICINE

AUXILIARY STAFF

CATERING

HEALTH AIDES

REGISTRY

THEATRE

LAB/MORTUARY

ACCIDENT & EMERGENCY

ESTATESS

4.2 SOURCES OF FUNDS

According to the ministry of Health (MOH) financial report for the period January 1st to 31st December 2011, the following are the main sources of funds available to the Ghana Health Service (GHS).

National Health Insurance Fund.

Financial credit

Internally Generated Fund (IGF)

Donors

Government of Ghana(GOG) Subvention

Others

The report indicated that for the period under review, the following amounts were received by the Ghana Health Service (GHS) from the aforementioned sources.

Table 4.1

Sources of funds available to the Ghana Health Services (January to December 2011)

Source of funds

Gross Revenue Distribution by Sources of Funds (SOF) for the period ending 31st December 2011

Amount US Dollar Percentage (%)

(Ghana Cedis)

NHI Fund

986.0 111.48 46.57

F/Credits

166.1 18.77 7.85

IGF

264.7 29.93 12.50

Donors

571.3 64.59 26.99

G O G

68.8 7.78 3.25

Other

60.1 6.80 2.84

TOTAL

2117.0 239.35 100.00

Source: Ministry of Health Financial Report (January to December 2011)

Chart 1: SOURCES OF FUNDS AVAILABLE TO THE GHANA HEALTH SERVICES FOR THE PERIOD 1ST JANUARY TO 31ST DECEMBER 2011

The analysis of the above data revealed that the MOH financial report for the year 2011 reported slight variations in both funding and spending patterns relative to the same period of the year 2010. Donor pool fund (DPF) contributions from donors wasGH¢332.41 in the reporting period whiles there wasGH¢259.78. Contribution in the same period of the previous year, an increase of27.96% Internally Generated Funds (IGF) increased by 32.31% on the same period of last year and National Health Insurance (NHI) contribution also increased by46.38% over the same period of the previous year mainly due to salaries and Additional Duty Hour Allowance (ADHA).

In terms of percentage contribution by the various sources to the sector, NHIS and IGF contributed 59.1%. in the reporting period as compared with in the previous year. Donor contribution was 29.8% of Gross Revenue as against 27.5% of the previous year. Financial credit contributed 7.85% as against 10.2% of the previous year and finally;GOG contributed 3.25% in the reporting period.

The same repot revealed the expenditure distribution by SOF Group for the period ending 31st December 2011 as shown in the table in page……

Table 4.2 EXPENDITURE DISTRIBUTIONS BY SOURCES OF SPENDING CSOS GROUP FOR THE PERIOD ENDING 31ST DECEMBER 2011

Sources of Funds

Expenditure Distribution by SOF Group for the pending Ending 31st December 2011 (Amount in Ghana Cedis)

Item1

%

Item 2

%

Item 3

%

Item 4

%

Total

US $ (m)

%

NHI

792.30

97.60

39.77

21.63

68.20

10.40

1.79

0.70

902.06

101.97

47.34

F/Credit

0

0

166.08

65.28

166.08

18.78

8.72

IGF

19.56

2.40

62.19

33.83

150.06

22.89

9.87

3.88

241.68

27.32

12.68

DHF

0

81.89

44.54

160.64

24.51

27.63

10.86

270.16

30.55

14.18

MOH

0

9

0

276.61

42.20

0

0

276.61

31.27

14.57

GOG

49.04

19.28

94.04

5.55

2.57

TOTAL

811.86

100.00

183.85

100.00

655.51

100.00

254.41

100.00

1905.6

100.00

% of total

Expenditure

42.6

9.6

34.4

13.4

100.00

Source: MOH Financial Report for the period ending 31st December 2011.

Chart 2: EXPENDITURE DISTRIBUTION BY SOS GROUP 31ST DECEMBER 2011

SOURCES OF FUND

Source: Ministry of Health Financial Report (January-December 2011)

It can be inferred from the above table and chart that, in terms of expenditure, the ministry recorded a total ofGH¢ 1,905.6 Ghana Cedi for the period out of this amount, 42.6% was personal emoluments as against 43.6% for 2010. Items 2 and 3 were 44.1% as against 37.70% of the previous year and investment expenditure was 13.35 as compared with 18.72% for 2011.

4.3 FUNDS FROM NATIONAL HEALTH INSURANCE AUTHORITY (NHIA)

As the name suggests, this is a fund from the national health insurance authority and with this releases are made on re-imbursement of claims in order to cater for the day-to-day running expenses of the hospital. It is managed through the hospital administration by the authorization from medical director.

All the beginnings of the final quarter, provisional estimates are received by the head of the finance unit based on the estimates approved for the last quarter of the just ended financial year. Thus vote holding Budgeting Management Centers (BMCs) are first advised of their authority to spend funds by a letter from the MOH which is accompanied by the first quarters provisional estimates. After this, the Budgeting Management Centers (BMC) has to prepare Financial Encumbrance (FE) as required by Financial Administration Regulation (FAR) section 289 which states "Financial Encumbrances shall be prepared for each item of recurrent expenditure on which sub-items allocations could be listed and should be signed and forwarded for approval for certifying internal audit" on approval by the certifying treasury, the head of the finance unit requires that, a Memorandum Journal Voucher (MJV) is prepared for each sub-head that summarizes all (fee) issued-for that quarter.

According to section 57 on Recurrent Expenditure of Financial Administration Regulation (FAR) 1979, Treasuring Officers are authorized to approve the release of funds by Financial Encumbrances (Fes) but may do so only up to the limit that such releases shall exceed the following limits:

First Quarter:- Not more than a quarter for the net authorized provision for the year.

Second Quarter:- Not more than a half for the net authorized provision for the year.

Third Quarter:- Not more than three quarters of the net authorized provision for the year.

Four Quarter:- Not more than the net authorized provision for the year.

Unless otherwise instructed by the hospital administration, no subsequent letter, notification or budget figures are provided to vote holders once annual budgets have been approved. The total re-imbursement for Wa Regional Hospital for the year ended 2011 is GH¢512,305.74

4.4 MODE OF SPENDING NATIONAL HEALTH INSURANCE RE-INBURSEMENT

Expenditures made out of national health insurance funds have been itemized into numbers as shown in the table 4.3 below. Expenditures are based on Commitment and Cash accounting. Funds are committed on foods and services to be handled by the petty cashier.

There are three (3) ways for the commitment of funds from NHIF. The first case is where a BMC would like to order for foods or services from a supplier through the issue of a local purchase order (LPO).

The third instance is where an official of the GHS travels on an official assignment, hence the travelling and transport expenses are borne by the NHIF.

From the onset, it can be observed that, the only two commitment documents that are used are either LPO or Travel Requisition Form (TRF). It is imperative to know that, no payment of any kind is made to a vendor or staff member unless a valid commitment or document has been raised, approved and entered into the expenditure budget ledger. This is applied to all sources of funds. In view of this, funds are committed and payment effected unless the following procedures have been followed:

All commitment of funds must be evidenced by either an LPO or TRF.

A member of accounting staff (within the finance office has certified LPO or TRF approved the Head of the BMC.

For sources of funds, the head of the finance must authorize the formal commitment of funds into the expenditure budget. For NHI Funds, approval from internal audit unit must also be obtained.

Approved commitment must be recorded in the expenditure budget ledger by a designated member of the accounts office and must be supported by either and original LPO or TRF which when returned to the original Payment Voucher (PV) and filled accordingly. In all the LPO, TRF and the PV must be signed before any cheque could be raised. Also, the treasuring officer has to review the PV before any payment can be made.

Lastly, the cheque has to be signed by the head of finance office and head of BMC before it can be cashed.

It was discovered through our study that NHI funds do not come early as expected. For example, the first quarter claims re-imbursement sometimes comes at the beginning of the third quarter due to bureaucratic procedure by which schemes are advised by their authority to spend funds by a total bills submitted from wa hospital which is accompanied by the first quarter claims bills estimates. Due to these delays, by the time the provisional estimate reach the various hospitals they might have been spent already.

Table 4.3 NHI REVENUE AND EXPENDITURE FOR THE PERIOD ENDED JANUARY TO DECEMBER 2011

Item (code)

Approved YTD

Budget (A)

Cumulative

Commitment (B)

Available Budget

- (B)

NHI/001

76,845.86

63,782.06

13,063.80

NHI/002

51,230.57

42,521.38

8,709.19

NHI/003

25,615.29

21,260.69

4,354.60

NHI/004

51,230.57

42,521.38

8,709.10

NHI/005

61,476.69

51,025.62

10,451.04

NHI/006

76,845.86

63,782.06

13,063.80

NHI/007

92,215.04

76,538.48

15,676.56

NHI/008

25,615.29

21,260.69

4,354.60

NHI/009

30,738.34

25,512.33

5,222.52

NHI/0010

20,492.23

17,008.55

3,483.68

TOTAL

512,305.74

425,213.76

87,091.98

Source: Accounts Unit, Wa Regional Hospital

From the table above, it can be deduced that the budgeted amount which was approved for the year 2011 was 512,305.74 cedis. Out of this, 425,213.76 representing 83% was actually expended, leaving an unexpended favorable balance of 87,091.98 representing 17%.

4.5 INTERNALLY GENERATED FUND (IGF)

These are funds which are generated internally by the Budget Management Centers (BMCs). In 1985 per legislative number 1313 as a source of revenue for government hospitals, clinics and health centers.

According to the ministry of health (MOH), Financial Report (1995), the aim of the hospital is to supplement government annual budgetary allocations to the health institutions. It would thus assist the institution to improve health delivery facilities as well as the general welfare and well-being of patients.

As stipulated in FAR Section 33, estimates of departmental revenues must be prepared each year by the heads of department and based on prevailing charges/fees schedule. The head of each regional/district hospital collaboration with other senior hospital management officials must prepare estimate of each source of item of revenue for the ensuing calendar year.

Table 4.4 IGF REVENUE OF WA REGIONAL HOSPITAL FOR THEPERIOD JANUARYTO DECEMBER 2011

Item Code

Budget (Cedis)

Actual (Cedis)

% of Actual over Budget

% of Actual

Variable

IGF/SERVICE/106

3,622.840

3,813.52

105

62.8

190,675.82

IGF/SERVICE/017

2,031.39

2,257.11

110

37.2

225,711.01

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