Division of Revenue Bill: briefing by Department of Health

Standing Committee on Appropriations

24 February 2010
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The National Department of Health briefed the Committee on its comments on the draft Division of Revenue Act, 2010. Two representatives from National Treasury were also in attendance. The Committee raised the question as to what steps had been taken by the Department to finalise the appointment of a permanent Director General.

The Department outlined the six conditional grants in the draft Division of Revenue Act and noted that it was the department that managed the highest number of conditional grants, and was at pains to ensure that they were properly managed. They were listed as grants pertaining to HIV and Aids (Schedule 4), Forensic Pathology (Schedule 5), Hospital Revitalisation (Schedule 5), National Tertiary Services (Schedule 4), Health Professionals Training and Development (Schedule 4) and the new Health Disaster Response Grant, with cholera only being covered for the financial year 2009/10. Each of those grants was described in detail. It was noted that the Forensic Pathology Services grant was supposed to be short term, but the Department was currently discussing the option of absorbing it into the provinces. Public private partnerships were being considered for hospital revitalisation. There were currently 26 hospitals being funded by the National Tertiary Services Grant. The Health Professions Training Development Grant sought to fund undergraduate and post graduate teaching and training of health professionals, and to further the development and recruitment of medical specialists in under served provinces.

Members asked questions on why a disease like Tuberculosis was not funded by a conditional grant, and also expressed concern about the cost of building, the escalation in costs and the monitoring of building activities. They were interested to know what had been done to address the problems. This led to further discussions on planning and monitoring in general, including measures to address the lack of financial reports by the provinces on time. Members asked if the Department was in discussion with the Department of Higher Education on issues of further education and training, and what was being done about the nursing colleges. Further questions were directed to how the Department planned to prevent non government organisations from applying for funding at both national and provincial government, and the trend that some provinces were using funds earmarked for a specific purpose for other activities, and the Committee noted the need to check that this was also not happening in other departments.


Meeting report

Draft Division of Revenue Bill (DORB): National Department of Health (DOH) comments
Chairperson’s opening remarks
The Chairperson of the Committee welcomed the representatives from National Treasury, as well as the Acting Director General of the Department of Health, who in turn tendered the apologies for the absence of the Minister of Health, who had another engagement in Pretoria on this day.

The Chairperson asked that the presentation should detail the grants that the Department of Health (DOH) was currently managing.

Dr Kamy Chetty, Acting Director General, Department of Health, responded to questions from the Committee, saying that she had been in an Acting position for some time. Committee Members noted that they wanted to see finalisation on the staffing issues as they considered it incorrect that people were acting in positions for so long.

Dr Chetty noted that the DOH managed five of the conditional grants set out in the Division of Revenue Act, and these had been in place since 1998. Dr Chetty stipulated that the equitable share for some of the provinces was different as there was a variance in the service that is provided in the different provinces.

There was also a sixth grant that had been awarded to the DOH for the year 2009/2010, being the Disaster Response Grant (Cholera-Limpopo). The conditional grants accounted for around 96% of the National DOH budget. The six conditional grants were allocated into the following categories: HIV and Aids (Schedule 4), Forensic Pathology (Schedule 5), Hospital Revitalisation (Schedule 5), National Tertiary Services (Schedule 4), Health Professionals Training and Development (Schedule 4) and the new Health Disaster Response Grant, in which cholera only was covered for the financial year 2009/10.  Schedule 4 allocations to provinces and municipalities aimed to supplement the funding for programmes that were funded from Municipal budgets. Schedule 5 grants represented money for specific allocations for Provinces.

The total amounts for conditional grants had increased steadily since 2007/8, as shown by the figures on the grants and the projected spending for 2012/13. The forensic pathology grant had been very stable, and not much has changed but Dr Chetty made it clear that this grant would soon come to an end.

She noted that the Health Professionals Training Grant was currently under review.

Cholera is very specific and this grant has been exclusive to Limpopo. Dr Chetty emphasised that there would be dramatic increases in the HIV grant. The Hospital Revitalisation grant had not seen a big increase, considering the backlog.

Dr Chetty said that she would not detail each of the grants in great detail, but referred Members to the detailed presentation (see attached document) and other documents previously provided to the Committee.

She outlined the comprehensive plan on HIV/AIDS, emphasising that this related to HIV / AIDS planning, and not specifically to the distribution of anti retroviral drugs (ARVs). She also conceded that the DOH had run into shortages in terms of the distribution of ARVs. The allocation of this grant focused on ante-natal HIV prevalence, estimated share of AIDS cases and the population sizes post demarcation.

The trend, as outlined by Dr Chetty, showed that Kwazulu Natal had the highest prevalence rate of HIV and this trend was growing as the years went by. The challenges faced by the Department in this respect had ranged from inadequate capacity to overall management of the grant. There was a major issue in obtaining compliance from the provinces, insofar as submitting the financial reports on time was concerned.

The remedial action taken by the Department included the filling of posts both nationally and provincially, and improving the Department’s information management systems.
 
Dr Chetty, addressing the Forensic Pathology Services grant, indicated that this was supposed to be a short term grant, but problems arose and the Department was currently discussing the option of absorbing this grant as part of the provinces’ responsibility. The challenge in this grant had been the issue of renovating and building new buildings. Building costs were escalating at a rapid pace and the funding from the National Treasury was inadequate. Issues with the Department of Public Works were related, and included poor workmanship and delays in building. The remedial action included improving mechanisms and systems and looking for alternative funding.

The Hospital Revitalisation Grant was aimed at transforming and modernising the health infrastructure. It was a project based grant and the Department was also looking at Public Private Partnerships to achieve its financial shortfall. The DOH was in active conversations with the Development Bank of Southern Africa and National Treasury. Gauteng province was a beneficiary of this grant. The challenges once again included poor management of contractors and their inability to implement the building of new premises, as well as challenges in political red tape, in getting things done. One of the proposals being tabled at the moment, which was designed to address the challenges of building and cutting down expenses for architects, was that there should be a uniform design for all new hospitals, to avoid paying an architect for each. However the Minister of Health had instructed the Department to appoint an engineer in each of the provinces.

The National Tertiary Service Grant aimed to provide funding, to enable provinces to plan, modernise and transform services in tertiary hospitals. Dr Chetty outlined that there were currently 26 hospitals being funded by this grant. In comparison to the other provinces, the Western Cape and Gauteng received the highest proportion of this grant. The challenges related to this grant were related mostly to inadequate financial reporting. Even though this was a major problem, the Department was unable to withhold this grant, as it was a Schedule 4 grant. Another major challenge was that the funding did not work according to business plans and the Department hoped to rectify this by improving the business plan format, to enhance provincial accountability for expenditure linked to the targets.

The Health Professions’ Training Development Grant had a main purpose of funding costs related to undergraduate and post graduate teaching, and training of health professionals. It also aimed to further the development and recruitment of medical specialists in under served provinces. This grant was allocated specifically to previously disadvantaged provinces, to develop specialist teaching and capacity. The Health Professions Training and Development Grant only received normal inflationary increases. It was under review as to whether it should be integrated with the Department of Education funding.

The once-off grant to assist with health disasters such as cholera was then outlined. This had several challenges, and due to its current status of being “under review”, the funding had not increased. However, provinces still managed to under spend the money allocated through this grant. The late submissions of financial reports had resulted in inadequate compliance with the Division of Revenue Act. Donor funding was still needed to meet the short fall. This grant was allocated to Limpopo to address the cholera outbreak. Most of the money for this grant was to reimburse provinces for costs incurred during 2008/09.

Dr Chetty added that the formula must be revisited to include thinking about the burden of disease. She emphasised that issues around the burden of disease and equity needed to be discussed at length. Tertiary Services were expensive and they needed to spread out.

Discussion:
Mr J Gelderblom (ANC) wanted to know what the amount was that was outlined for tuberculosis (TB).

Dr Chetty said that there was no conditional grant for TB but that TB was funded in the normal budget of the department.

Ms Wendy Fanoe, Chief Director, National Treasury, added that TB was funded through the equitable share of the Division of Revenue Act.

Mr Gelderblom then wanted to explore the issue of building hospitals. He wanted to know if the DOH monitored the building of hospitals, and, if so, whether this was the first time it was doing so.

Dr Chetty conceded that cost escalation has been a major issue, as provinces were allocated a certain amount and would continuously ask for more. The department found that most of the money for which provinces were asking was for the escalation costs, as building cost differed in the various provinces. Peer reviews hade allowed for projects to be to be holistically planned, but she admitted that this was a lengthy process. However, it did allow for the planning of the project from start to finish. In particular, she noted that building costs had escalated by a large amount in the 2010 year.

Dr P Rabie (DA) touched on the same issues the Chairperson highlighted about staffing, enquiring why Dr Chetty had not said anything about the filling of posts in the Department. He also wanted to know whether the Department had any plans to provide tax incentives for doctors in the private sector who wished to work for free for one day a week in government hospitals.

Dr Chetty stressed that the national Department only had a vacancy rate of 25%. The Minister of Health had indicated that he would not like to have a large department, and funds should go directly to service delivery. However, the DOH was engaged in a work function analysis to look at how the functions had grown in relation to the growth of personnel. There was a need to fill strategic posts and DOH had also been instructed by National Treasury to introduce cost cutting measures. The filling of posts had cost implications. The Department wanted a leaner bureaucracy, which would involve a re-costing.

Dr Chetty directed the question of tax rebates to her colleagues in National Treasury and said the Health Department wanted to see tax rebates for all doctors.   

Dr Rabie also wanted to know why forensic services would be devolved to provinces and not stay at national level. He also wanted to ascertain why engineers were being appointed instead of architects in respect of the building.

Dr Chetty answered that forensic pathology had never really naturally belonged with the South African Police Service (SAPS) as the service was fragmented. The service was then integrated to comply with international standards. The service was a provincial responsibility.

Dr Chetty noted that in relation to the buildings, she believed that DOH needed to retain both engineers and architects as they had distinct functions. There was also a need to employ project managers to holistically monitor and manage the building of hospitals.

Mrs B Ngcobo (ANC) commended the DOH on having such a good relations with the National Treasury. She then also thanked DOH for taking over the government mortuaries from the South African Police Service, saying that they were now cleaner and kept in a better condition than before.

Ms Ngcobo asked what the Department’s policy was in regard to Community Health Workers and whether there was a working arrangement with the Department of Public Works’ Expanded Public Works Programme. She asked what the DOH was doing towards job creation.

Dr Chetty admitted that the DOH had received caustic complaints that it provided better facilities to the dead than to those who were alive. The issues around health and community based care, and the Expanded Public Works Programme were part of a bigger discussion. These were contained in the outcomes-based document that had just gone through Cabinet, to prevent government departments from doing the same work. Communities could not be bombarded with the same services from all sides of government. The focus was also on creating “decent work”.

Mr G Snell (ANC) commented that it must be extremely difficult to manage the Department and plan for what took place in the provinces. He noted that he does not know how DOH could possibly plan and budget without receiving the reports and data from the provinces.

Mr Snell discussed the planned National Health Insurance (NHI), saying that State hospitals were going to have to function optimally, and he believed that it was not being done at the moment. He wanted to know how DOH was working with other government departments to deliver government policy.

Dr Chetty said that, on the issue of monitoring of outcomes in provinces, DOH shared the President’s approach of having a one-stop government where there were clear service agreements. There were also continuous discussions with National Treasury to link the budgets of the various departments. On the issue of NHI and accreditation, the Department had filled in accreditation legislation, and had already started assessing against the office of standard compliance and core. There were also hospital improvement plans. If there was a failure to meet accreditation standards then there would not be accreditation approved.

Ms N Mkhulusi (ANC) asked for clarity on three matters; firstly, the demarcation of municipal boundaries and the effects on health service delivery. She wanted, in particular, to hear the DOH’s local, provincial and national plan to address situations where people were not in their own districts, but needed medical assistance.

Dr Chetty noted that demarcation did affect health service provision, but health was something that operated without boundaries. There were attempts to create a national health system. The idea was that there must be a working relationship with provinces. The DOH had drawn its own catchment areas. There was extensive work being done on travel referrals.

Ms Mkhulusi then noted that the Health Professions Disaster and Development grants were aimed at creating opportunities for rural areas. However, it seemed, from the statistics, that affluent provinces such as Gauteng were getting most of the support. She asked if the DOH should not be funding the rural areas instead.

Dr Chetty noted that the idea behind the Health Professions and Development grant was that there was a development proportion that was aimed at building up the rural areas. However, the main issue at hand here was the question of equity.

Ms Mkhulusi asked if personnel were also addressed in the Hospital Revitalisation grant. She asked how the DOH was dealing with acting positions, and asked how hospitals could function when posts were not filled.

Dr Chetty agreed that there was a national problem around acting appointments, and the Minister had initiated a project with the Development Bank of Southern Africa that aimed to do an audit of the job descriptions of professionals working in hospitals and clinical set ups. The programme would pay specific attention to managers in these facilities. Once this report was submitted, the DOH could then assess who needed to go for training and where final appointments needed to be made.

Ms RJ Mashigo (ANC) wanted to ascertain what the department was doing to prevent people from applying for both provincial and national grants, particularly in light of the fact that the DOH was not monitoring and evaluating the submissions properly.

Ms V Rennie, Acting Chief Financial Officer, conceded that the issue of double funding was a reality and the National Department was cleaning up the database to clearly see what was being funded by government and what was funded by donors. The Ministers had held a meeting with donors, who agreed not to fund provinces directly. Donors were also encouraged not to fund only one burden of disease.

The Chairperson stated that health was a concurrent function of government. However, the Committee had heard of many provinces running short of services and medicine, especially ARVs. He wanted to remind the Director General about the National Department’s role.

Dr Chetty spoke to Eastern Cape issues. She noted that there were historical problems, where some district hospitals were turned into community health centres, and communities wanted hospitals. The Department had also seen cases where new hospitals were supposed to replace old hospitals but the provincial health authorities did not communicate this to communities, who then expected two hospitals.

The Chairperson interjected to make sure that he was understanding that national and provincial departments were working together. The Eastern Cape hospital had been elevated to a higher status to ensure that it could become a tertiary training venue, to give medical students some idea of what it meant to work in rural areas.

Dr Chetty said that issues of concurrent functions and shortages in supplies had been a problem before, but the Department was now a lot more active in monitoring the overall functions of provinces. It now worked with pharmaceutical companies to keep tabs on debts and stock. DOH had been alerted to situations where one of the province had been hugely in debt in regard to goods and services. DOH was strengthening this. Provinces were projecting an over-expenditure on personnel.

Mr G Mackenzie (COPE) wanted to ascertain whether conditional grants were ring fenced, thus preventing the use of these grants to pay for overdrafts and shortfalls.

Dr Chetty wanted to make it quite clear that if provinces used monies deposited into their bank accounts for anything other than the purpose of the payment, then they would be breaking the law. They were not allowed to use these funds for anything else, and all provinces had been notified of this.

Ms Fanoe said that she would like to comment on conditional grants being used for other purposes. There was monitoring of this not only in DOH, but also at Treasury level. National Treasury had set up links with its provincial counterparts to look at this issue. The main issue was monitoring and evaluation, and departments could not attend to this fully in view of their limited numbers of staff.

Mr M Swart (DA) noted that this issue of using conditional grants for other purposed might be prevalent in other provinces

Ms Ngcobo wanted to know which grant catered for telemedicine, if telemedicine was practised.

Dr Chetty said that there were about 80 telemedicine sites in the country and DOH was further expanding this to look at tele-health, tele-education and the overall expansion of E health.
 
Ms Ngcobo enquired how the Department of Higher Education might be able to assist with the re-opening of the Further Education and Training (FET) nursing colleges.

Ms Mashigo said that she also wanted to hear about this issue, particularly as it had been mentioned in previous State of the Nation Addresses.

Dr Chetty responded that there was a cross-departmental task team that was looking at higher education and the Ministers of Education and Health were planning a meeting to further discuss this issue.

Ms Mashigo said that she wanted to hear clear timeframes.

Dr Chetty said an audit had been done and a response will be sent to the Committee in due course.

A representative of National Treasury alerted the Committee to the fact that many of the problems in DOH resulted from the Department’s various units being scattered across different buildings. It was waiting for renovations to a building currently not being used, and the permission of the Department of Public Works to move into the building.

Dr Chetty said that this could happen in April or May. She noted that the hospital revitalisation plan was growing by about R1 billion each day, and there were several major projects that were starting. DOH needed to focus on the capacity to deliver and to get into a state of readiness, to avoid underspending and to give full attention to the issues.

The meeting was adjourned.

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