The provincial government of Catanduanes has agreed with the recommendation of the Commission on Audit that the LGU introduce and implement a gainful Revenue Enhance Program to sustain the operation of the Eastern Bicol Medical Center as an economic enterprise.
Otherwise, the audit team which evaluated the hospital’s operation said, restoration of EBMC to its original status as a plain government hospital “is likely the proper thing to do.”
In its report on EBMC’s operations for 2023, the COA said the eco-enterprise was unable to generate revenues to sustain its operations due to its inability to introduce and implement a sustainable Revenue Enhancement Program as stipulated under SP Resolution No. 010-2010, hence, the goal of making the hospital a self-reliant, self-sustaining and viable economic enterprise remained unrealized.
The audit team’s study of the income projection of the eco-enterprise for 2010-2020 showed that it is dependent on the subsidy from the General Fund, with almost half of the operating funds to come from the yearly subsidies.
“The income projection clearly showed that for this period, the enterprise has no capacity to exist on its own without the subsidies coming from the General Fund of the Province,” the report said, noting that the subsidy was inappropriately made as an integral part of the budgeted revenue of the eco-enterprise.
A subsidy-dependent hospital had characterized the enterprise since its inception, the COA observed, with its financial instability prompting the agency to re-examine its prior study.
“Obviously, the subsidy-dependency of the economic enterprise was not given merit in the proposal for conversion, which alone is a sufficient ground for its disapproval,” it stressed.
Examination of EBMC’s financial performance from 2016 to 2023 showed that the eco-enterprise continuously received subsidy from the General Fund from 2017 to 2023, as opposed to the 10-Year Income Projection which is zero subsidy from 2017 to 2020.
While the revenues were sufficient to cover its expenses from 2016 to 2019 which is an encouraging result, the COA stated that this was not sustained as it was unable to meet the fund requirements for its own operating cost.
EBMC registered a deficit of revenue over cost amounting to P34.7 million, P32.7 million, P34.4 million, and P33.1 million for the years 2020, 2021, 2022 and 2023, the COA report said.
In 2020, it noted, the operations of the eco-enterprise resulted to a deficit of P8.7 million despite the P26 million subsidy from the General Fund, which indicates its inability to meet its regular and recurring expenditures.
Projected income from its own source for 2016-2020 were not achieved, showing only 78 percent for 2016, 64 percent for 2017, 50 percent for 2018, 62 percent for 2019 and 31 percent for 2020, in an almost decreasing trend, the audit team underscored.
“The realized income is much lower than the projected income, which means that even the projected inome were unrealistic,” it said.
While the audit recognized that the eco-enterprise had generated revenues from its own operations enough to cover its operational cost from 2016 to 2019, the fact remains that the subsidy from the General Fund continued to be an integral part of its total revenue, the team added, consistently increasing year after year from P23.79 million in 2010 to P60 million in 2023.
“The generated revenues from its own operation did not make EBMC as an income-generating business venture as self-reliant, self-sustaining and viable economic enterprise of the Province, hence, it should not have been considered as an Enterprise,” the COA concluded.
In another audit finding related to the provincial hospital, the audit team also flagged the disbursement of nearly P30 million for the procurement of a CT-Scan machine, noting deficiencies in supporting documents and non-compliance with various product specifications.
The contract for the delivery of a brand new 32-Slice CT Scan Machine including Electrical System and Third-Party Accessories for P29,998,000.00 was perfected on March 2, 2023 and the equipment was delivered on March 31, 2023.
Technical evaluation and review of supporting documents by the COA disclosed that the documents did not include tax receipts from the Bureau of Customs or BIR indicating the exact specifications and/or serial number of the equipment, proforma invoice of the foreign supplier with corresponding details, and breakdown of importation expensed.
These, the team said, are required as proof that the supplier was able to pay all taxes and duties due om the equipment procured by the government.
Some of the specifications required by the agency as enumerated in the Purchase Order were not found or included in the brochure, nor were there any documents attached to support and prove that these specifications were complied, the report emphasized.
Non-compliance with the specifications indicates that the provisions of the contract between the provincial government and the supplier were not fully complied, and likewise the absence of the supporting documents required rendered the transaction irregular, the COA said.
The chief of hospital would be required to submit immediately all the documents and provide proof that the required specifications which were not included in the brochure were complied with by the supplier.