Ministerial Statement

HEALTH, ORACLE CORPORATE SYSTEM

The Hon. J.D. HILL (Kaurna—Minister for Health and Ageing, Minister for Mental Health and Substance Abuse, Minister for the Arts) (14:15): I seek leave to make a ministerial statement.

Leave granted.

The Hon. J.D. HILL: In June 2007, I launched South Australia's Health Care Plan which aims to improve patient services by transforming the health system from individual, competing entities into a single, integrated system. System-wide service planning and delivery is essential in a jurisdiction the size of South Australia to ensure timely and equitable access to services and economies of scale. The 2008 Health Care Act provided the legislative framework for this new approach. The move to a statewide financial operating system, Oracle, and the centralisation of the financial services, provide the financial and procurement framework to support this new approach.

The new Oracle Corporate System is more than just a financial system replacing 18 separate and outdated financial systems. It includes a number of applications which, once fully implemented, will cover purchasing, procurement, cash and order management and warehouse management. In line with the move to an integrated health system, the Auditor-General has, quite properly, for the first time, audited the Department of Health and all of the regions and entities as a whole. Previously, the Auditor-General's Report to parliament contained only the financial reports for the Department of Health. The 2010-11 Auditor-General's Report identifies a number of audit issues, many of which, as has been noted, are associated with the implementation of the Oracle Corporate System.

In introducing this new system, SA Health sought advice from Ernst & Young, which raised similar issues to the Auditor-General in three reports presented in 2010. These reports, which I now table, point to an ambitious implementation schedule and an underestimation of the complexities of this task. SA Health endeavoured to mitigate the issues raised by Ernst & Young through a range of strategies, including engaging increased system support through the system integrator, IBM. SA Health has also engaged accounting firm PKF Business Advisers for work, which is now almost complete, at an estimated cost of no more than $1,700,00. This work includes a review of finance functions around—

Mr Marshall interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: This work includes a review of finance functions around—

Mr Marshall interjecting:

The SPEAKER: Order, member for Norwood, behave!

The Hon. J.D. HILL: This work includes a review of finance functions around Cash and Debt management operations, following their integration within the Oracle module in September 2011. From October 2011, PKF also assisted in the review and consolidation of legacy banking arrangements and provided additional support to the bank reconciliation functions for the former Adelaide Health Service and the Children, Youth and Women's Health Service. Later, the department extended this work to all the health regions and the consolidation of legacy banking arrangements and the provision of bank reconciliation support.

Based on PKF's knowledge of the SA Health portfolio and, in particular, the revenue function and processes through their existing involvement, and the time critical nature of the work, the department engaged PKF without going to public tender. I am advised that this approach complies with State Procurement Board policies and guidelines and, in particular, is consistent with the justification for a direct negotiation procurement strategy.

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: Following the reconciliation of around $60 million undertaken by SA Health, with the additional support of PKF, the residual 2010-11 bank clearing issues of $2.8 million are being finalised now. I am advised that throughout the reconciliation process no inappropriate transactions were identified. The bank accounts for all health entities are now being reconciled monthly.

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: The challenges experienced during the first stage of Oracle's implementation have led to a—

Mr Marshall: What a mess!

The SPEAKER: Order, member for Norwood! You will have a chance to speak in the grievance debate if you have a problem.

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: The challenges experienced during the first stage of Oracle's implementation have led to a reconsideration of the phase 2 implementation. Advice was sought on how to manage this and has resulted in slowing the implementation of phase 2, increased oversight and the introduction of an independent board. In 2007, when the government introduced the SA Health Care Plan, we identified that there were many things that needed to be done to give us in South Australia a modern healthcare system. The main focus has always been on better patient outcomes, and figures released—

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: Our focus has been on improved health outcomes for the patients who use our system every day. Figures that I was able to release yesterday, from the Australian Institute of Health and Welfare (AIHW), show that our approach has paid dividends. This has required a lot of focused work by my agency, working in cooperation with other government departments, along with the efforts of our many thousands of doctors and nurses who work in our system every day of the year.

In time, the integration of our financial systems and the implementation of Oracle will enable a single consistent reporting format to be used, providing standardised reporting to every functional cost centre across SA Health entities. This will allow real-time reporting and visibility over health service operations down to a ward-by-ward level, enabling far greater managerial and financial control. Once fully implemented, efficiencies will also generate annual savings of up to $8 million—

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: —how many chances does he get, Madam Speaker?—through finance staff reductions alone, and will support a total reduction of 220 full-time equivalent staff through reductions in financial, procurement and supply staff. These are savings which are administrative in nature and are designed to free up funds for frontline health services.

Members interjecting:

The SPEAKER: Order!

Mr Marshall interjecting:

The SPEAKER: Order! Member for Norwood, you will leave the chamber for 30 minutes.

The honourable member for Norwood having withdrawn from the chamber:

Members interjecting:

The SPEAKER: Order!