Budgeting Control System and e-Procurement: an Integrated Tool for Limiting Misconducts in Healthcare Purchasing Procedure

Corruption and misconducts, “the abuse of entrusted power for private gain” (Pope, 2008), are pervasive virus that negatively affects the public lives of many Countries. Given that the 9% of the worldwide GDP on average is represented by health expenditure, healthcare is particularly vulnerable to corruption (Petkov and Cohen, 2016; EU, 2017). Due to the large number of services delivered, Public Hospitals and Local Health Authorities undergo a high risk of misconducts, which could bring not only to a waste of public resources, but also to undermine access to the services, impoverishing their quality and the possibility for sustainable development of countries (Braithwaite, 2013; Neu et al., 2013). Corrupt practices and fraud affect up to 25% of expenditure on medical and non-medical goods (Sorenson and Kanavos, 2011); these increase inequality and determine substantial well-being and value losses (Porter, 2010). Corruption can be expressed by the Klitgaard’s equation (1998): Monopoly plus Discretion minus Accountability. Hence, to limit corruption phenomena an efficient way seems to be increase accountability and transparency by strengthening of internal controls (Christensen and Skærbæk 2007; Fadda et al, 2017).Accordingly, e-Procurement in the public domain can be seen as a tool to support the delivery of public purchasing process, improving efficiency and transparency of transactions (Carayannis and Popescu, 2005; Croom and Brandon-Jones, 2005); Budgeting control system is a powerful tool to align strategies and plans with operational decisions (Garrison et al, 2010), suitable for simultaneous controls in daily management and purchasing decisions (Provenzali, 1991). Therefore, the goal of this work is to understand if it is possible to integrate the simultaneous budgeting-based control system with the e-Procurement procedures (through an ERP software), and how this integration could potentially limit misconducts in healthcare purchases. After a theoretical background about themes of Corruption, e-Procurement and Budget, a single pilot qualitative case study (Yin, 2014) has been conducted. In particular, we developed a qualitative inquiry (Patton, 2002) based on face to face interviews (Said et. al, 2017) with two high-qualified SAP developer-providers. This contribution attempts to clarify how internal controls impact on the “responsibility chain” (roles, responsibility, transparency degrees of discretion) of procurement process in public healthcare, by increasing level of accountability. This paper fosters debate about relationship between corruption and level of internal control system of Healthcare Organization. This would have considerable consequence also for practitioners involved in ERP software development.