National Health Laboratory Service 2009/10 Annual Report

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02 November 2010
Chairperson: Dr B Goqwana (ANC)
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Meeting Summary

The Chief Executive Officer of the National Health Laboratory Service presented the 2009/10 annual report to the Committee.  The NHLS had declared surplus revenue of R206.2 million for the year and received an unqualified audit report from the Auditor General.


The mandate of the NHLS included research, laboratory services and training.  Not all performance targets were met.  Unpaid accounts for laboratory services submitted to the provincial Departments of Health amounted to R1.4 billion as at the end of September 2010.  The current average turnaround time for TB tests was 48 hours and plans were in place to meet the target turnaround time of 24 hours.  A new information technology system to track specimens was piloted in KwaZulu Natal.  Un-crewed Aerial Vehicles were being tested to deliver specimens collected by clinics to the nearest laboratory in an effort to address the logistical challenges.  A review of operations and procedures to meet the existing challenges and the challenges anticipated in the implementation of the proposed National Health Insurance scheme was undertaken.  In order to improve efficiency and better service delivery, the operations would be centralised.


The presentation outlined the contribution made by the NHLS and its supporting services, the National Institute for Communicable Diseases, the National Institute for Occupational Health and the National Cancer Registry to provide health care services.  Closer working relations with the Departments of Health, Higher Education, Mineral Resources and Science and Technology were fostered.


Members expressed concern over the late payment of accounts by provinces.  Questions were asked about the reasons for the recent outbreak of measles in the country, the role played in encouraging students (particularly from rural areas) to study technology, the UAV’s, the slow progress made to achieve employment equity targets and the potential impact of centralisation on employees.

Meeting report

2009/10 Annual Report of the National Health Laboratory Services (NHLS)
Mr Sagie Pillay, Chief Executive Officer, National Health Laboratory Services, extended the apologies of the Chairperson for not being able to attend.  Representatives of the senior management team were present.


Mr Pillay outlined the future plans of the NHLS to increase efficiency and meet the demands of customers (see attached document).  The NHLS planned to centralise, automate and standardise services and to optimise on the available scarce human resources. The plans would be implemented incrementally and would not adversely affect staff.


The Charlotte Maxeke; Chris Hani Baragwanath and Helen Joseph hospitals in Johannesburg were within a 15km radius and provided the largest number of HIV and CD4 count specimens.  The number of staff in the hospitals and the laboratory had not been increased but the turnaround time for completing tests had improved. By centralising testing facilities in a single centre and automating systems, results were delivered better, faster and cheaper.  The guiding principle was to reduce costs and improve turnaround time and quality.


Eight projects were initiated, i.e. gate-keeping tools and systems aimed at minimising inappropriate and unnecessary tests; cost comparisons between the NHLS and the private sector; a laboratory policy for the public health laboratory service; the evaluation of new point-of-care tests to improve access and turnaround times; cost containment; development of an essential test list by level of care; improving efficiency and reducing wastage across laboratories; strengthening and expanding the capacity of the NHLS to respond to surveillance and outbreaks; and improving turnaround times of test results.


The NHLS made a significant contribution to the country's health system. Customer focus was important to ensure efficient provision of services. A customer satisfaction survey had been conducted to establish a base-line against which customer perceptions could be monitored on an annual basis. The TrakCare Lab system was introduced in KwaZulu-Natal to improve the tracking of specimens, billing and the management of costs as well as provide access to information by clinicians.  Employment Equity data indicated an improvement in the senior executive management representation. However, attracting the required number of disabled employees remained a challenge. Several NHLS staff members had received recognition for excellent achievements in various disciplines.

The National Institute for Communicable Diseases (NICD) played a pivotal role in combating communicable disease such as measles and cholera. TB, HIV and cervical screening were among the key priorities.  The National Institute for Occupational Health (NIOH) and the National Cancer Registry (NCR) had developed closer working relations with Government Departments. The Department of Mineral Resources (DMR) had commissioned the Department of Health (DOH) to conduct a survey on HIV and TB in the mining sector. Support was provided to the DOH with forensic toxicology testing to assist with reducing the backlog.  A task team was appointed to work on point-of-care testing. The NCR had partnered with the DOH to finalise the Cancer Regulations.  The NIOH supported HIV/TB programs in the workplace, provided occupational health services for the public sector, assisted the DMR  and the DOH with HIV/TB/Silicosis initiatives; partnered with the Department of Defence and Military Veterans and the Office of the Surgeon-General on technology assessment and occupational health services and promoted links with trade unions and the private sector.


In order to address logistical problems in rural areas, the NHLS proposed to use Un-crewed Aerial Vehicles (UAVs) to transport specimens from remote clinics to laboratories. Authorisation from the South African Civil Avian Authority was awaited for trial samples to be flown from a clinic. The UAV had a range of approximately 50km and was controlled by a Global Positioning System (GPS).  The cost of a UAV was minimal.

The NHLS declared surplus revenue of R206.2 million, which was 6.8% of turnover in the year under review. However, this was a reduction from the 10.5% achieved in 2007, which was largely attributed to conscious attempts to keep average prices for services at affordable levels. The NHLS had achieved 57% of the annual targets set for 2009/10.  The NHLS had achieved an unqualified audit opinion from the Auditor-General.


The Chairperson had attended a meeting in Durban on primary health care and had been disappointed by the state of readiness of the provinces to deliver primary health care.  He commended the NHLS on its performance and remarked that leadership was about honesty, innovativeness and not being afraid of facing challenges. He expressed satisfaction with the achievement of an unqualified audit report, which reflected quality leadership. He was concerned over the lack of progress in providing primary health care and wondered what impact the innovations developed by the NHLS had on the delivery of service by the DOH. He congratulated the staff members who had received recognition for their work. The UAV was a commendable innovation that had the potential to improve the delivery of health services in the rural areas.  He was concerned over the late payment for services by the provincial authorities, which would be taken up by the Committee with the provinces.  He noted that certain clinics in KwaZulu Natal did not to know what their budgets were and collected specimens for testing without having a clue about the cost involved. Clinics should know what the budget for laboratory testing was and avoid unnecessary tests. South Africa had the highest number of both MDR and XDR TB cases in the world. Poorer countries such as Ethiopia appeared to have a lower prevalence of MDR and XDR TB.


Prof Barry Schoub, Director, National Institute for Communicable Diseases (NICD) explained that MDR and XDR TB was not unique to South Africa and was found throughout the world, in both the northern and southern hemispheres. The prevalence of TB in South Africa was aggravated because of the high rate of HIV infections.  The number of TB cases increased when patients did not complete the full course of treatment.

Mr Pillay agreed that the NHLS could play a bigger role in support of the Department’s initiatives to strengthen the primary, tertiary and secondary health care services. The biggest impact the NHLS had was in the provision of diagnostic and laboratory services. The relationship between the NHLS and the Department was affected by requests for unnecessary services. The NHLS had participated in several committees at both the provincial and national levels during the preceding 18 months.  The partnership model had been strengthened significantly under the leadership of the Minister of Health.  He concurred with the need for clinics to be aware of their budget allocations. The NHLS provided information to districts that allowed the local authorities to have a good sense of the tests being done and the associated costs. The NHLS was developing standardised request forms for primary, secondary and tertiary health care that would ensure that inappropriate and unnecessary tests were avoided. However, the process was paper-based and there were no electronic tools available for monitoring. Provinces needed to develop systems whereby a direct link with the laboratory was created the moment a doctor or nurse requested an investigation.  Such systems allowed for pre-authorisation for the tests and ensured a quicker response. The challenge was to develop a robust system that did not compromise the patient. A pilot program had been implemented in the Western Cape. The province had invested in information technology (IT) systems.  To date, 2,000 clinicians had been registered on the NHLS system. The NHLS wanted to move towards a system whereby pathology was led by pathologists and not by clinicians.


Ms M Segale-Diswai (ANC) congratulated the NHLS for achieving an unqualified audit report.  She expressed satisfaction about the improved relationship between the NHLS and the DOH. The annual report of the DOH had stated that one of the factors impacting on reducing the prevalence of TB was the turnaround time of laboratory tests.  She asked what the turnaround time was for the tests completed by the NHLS.


Mr Pillay responded that the turnaround time for TB tests was 48 hours. Patients generally returned home within 24 hours and the challenge was to find a way to get the result of the test while the patient was still at the clinic. The new technology that could provide results in two hours required a high level of expertise. Field studies were in progress with the DOH as we as with the WHO, CDC and FIND in Geneva. Currently there was no platform available to provide immediate results.  Further technological development in this field was necessary.


Ms Segale-Diswai asked if the UAV’s would benefit extremely remote areas, such as Pitsilisulejang, where lengthy delays were experienced in receiving sputum results.


Mr Pillay replied that the use of the UAV technology was critical in areas that were not easily accessible.  There was a need to form public/private partnerships to make the country-wide roll-out feasible.


Ms Segale-Diswai asked how much interest had accrued as a result of the late payment by provinces.


Mr Pillay explained that the NHLS charged interest on outstanding accounts in accordance with the Public Finance Management Act (PFMA).  He did not have the exact amount of interest charged per province to hand and undertook to provide a written response to the Committee. In certain cases, the interest charges were waived when the province concerned made a concerted effort to settle the outstanding amount.  The NHLS was aware of the lack of financial resources available to the provinces. The Minister had been made aware of the payment problems experienced by the provinces.  The NHLS had experienced major problems in the non-payment of accounts during the current financial year. The total amount outstanding at the end of September 2010 was R1.4 billion, which was the highest amount recorded in the history of the organisation.  The NHLS passed any benefits generated from revenue and cost-savings on to the Provinces in the form of reduced pricing.


Ms Segale-Diswai asked why there had been an outbreak of measles in adults.  She understood that the disease mainly affected infants and small children.


Prof Schoub explained that measles was not only a childhood disease but could be contracted by adults, particularly if they had not been immunised against the disease. Most cases were recorded in infants younger than nine months old. A significant outbreak of approximately 18 000 cases were diagnosed, which was the largest measles epidemic experienced in two decades.  The outbreak occurred as a result of inadequate vaccination coverage of the population. There was currently no data available to measure the extent of coverage in the country.  The only data available was on the number of vaccines distributed rather than on the actual utilisation of the vaccines.  The issue had to be addressed as a matter of urgency and it was essential to extend coverage, particularly in the under-serviced parts of the country.


Ms Segale-Diswai commented on the employment equity statistics provided.  She noted that women only occupied 20% of executive management positions, which was not acceptable.


Mr Pillay replied that the board of the NHLS shared the concern expressed by Ms Segale-Diswai and recognised the need to appointment more women to senior management positions.


Ms Segale-Diswai asked for more information on the contribution made by the NHLS to promote better health and prevent the spread of disease.  He remarked that there would be less need for laboratory services if primary health care was of a high standard.


Prof Schoub responded by stating that the role of the NICD was predominately surveillance.  Information on communicable diseases was forwarded to the DOH. The information was essential for devising vaccination and immunisation programs, which required resources. Another aspect was the early detection of outbreaks and surveillance played a critical role in preventing the spread of disease. The NICD assisted the Department to draw up guidelines for the response to particular diseases, for example rabies.  The organisation was represented on the various committees responsible for drawing up the guidelines. The NICD provided free consultations to the public and private health care practitioners on a 24/7 basis through its emergency hotline service.


The Chairperson asked if the recent outbreak of measles was a new strain of the disease.

Prof Schoub confirmed that the measles strain had not changed.  The outbreak was the result of inadequate vaccination of the population against the disease.


Dr Barry Kistnasamy, Executive Director, NIOH and NCR remarked that the measles epidemic was an indication of the breakdown of the primary health care system.  Measles was a preventable disease and the recent outbreak was a warning sign that something was wrong with the system. Another example was the recent cholera outbreak.  The three factors affecting health care were lifestyle (e.g. smoking, diet and a lack of exercise), genetics and the environment. Lifestyle and environment factors were controllable. Examples of environmental factors included health and safety issues in the workplace and the quality of the water supply.  The cholera outbreak was directly related to the quality of the water supply.  The contamination of the water supply by the mines in Gauteng was related to the health problems of mine workers.  The DMR was dealing with incidents of silicosis and TB caused by exposure to silica. Increased food regulation and the intervention of the Ministry of Sport and Recreation could play a significant role in improving the lifestyle of people.  The NHLS had a surveillance function but this was usually after the event rather than a preventative role. An example was the recent measles epidemic. The NHLS had substantial data on work related injuries and diseases in the mining sector and would be happy to brief a joint sitting of the Portfolio Committees on Labour, Mineral Resources and Health. Legislation on alcohol and tobacco had an impact on lifestyle changes.


Mr Pillay said that increased testing would result in the early detection of health problems and reduce the number of people ending up in hospital with major problems.


The Chairperson observed that the tobacco and alcohol companies generated significant profits.  The contribution to the tax revenue placed a developing country such as South Africa in a tricky position to strike a balance between health and wealth.

Mr D Kganare (Cope) asked how the performance targets of the NHLS were established.

Mr Pillay replied that a combination of a number of sources was used to set the targets, which were submitted to the board for approval. The process involved interaction with various stakeholders, such as the provincial and national Departments of Health. A strategic planning workshop was held with all the stakeholders to identify the strategic and operational objectives. The targets had to be aligned with the Minister’s 10 point strategic plan. The actual performance measured against the targets was reflected in the annual report.


Mr Kganare asked if negative customer perceptions had contributed to the non-payment of accounts by the provinces.


Mr Pillay replied that the NHLS had conducted a customer survey and established a baseline, against which performance could be monitored.  The NHLS was working with the provinces to address the issue of negative perceptions. Clearly identified problems had been resolved and an improvement of 5% had been registered. Certain issues were clouded by complaints over billing but these complaints were receiving attention. The NHLS was attempting to measure customer perceptions in an objective manner.  A measuring tool had been developed and the results would be evaluated on an annual basis.


Mr Kganare asked if the NHLS had agreements with universities for the placement of students with bursaries.


Mr Pillay said that the NHLS had no control over universities.  The grants for training in the health professions were provided by the Department of Higher Education and the number of students was pre-determined. The NHLS had resources available to increase the number of students but further discussions with the Departments of Higher Education, Science and Technology and Health were necessary. A meeting had been arranged by the Department of Science and Technology to discuss the matter. The NHLS was reluctant to commit more resources for training purposes as this would result in higher prices being charged to the provinces.  The NHLS was attempting to have access to the training grant available for health professionals. He agreed that the number of students studying at universities had to be significantly increased.


Ms E More (DA) commended the NHLS for achieving an unqualified audit report and the high standard of the presentation. She asked if the failure to achieve the targets set for TB testing and specimen collection had been caused by an increased workload or by other internal challenges. An increase in the workload could be affected by activity at the primary health care level, staffing issues or the quality of doctors. She wondered if there was a link between primary health care delivery and the performance of the NHLS.


Mr Sagie Pillay thanked Ms More for her compliments on the presentation. He acknowledged that the challenges faced by the NHLS were not always attributed to the Department of Health.  The NHLS was addressing the logistical challenges in order to improve the turnaround times.


Ms Nellie Mkhize, Regional Executive Manager, NHLS acknowledged that the NHLS experienced logistical challenges in moving specimens from the clinics to the laboratory and had problems with adequate staffing and an increased workload. A pilot program was underway in KwaZulu Natal to implement a tracking system that would allow better planning of shifts and ensure that staff was available to process the specimens delivered to the laboratory. The aim was to achieve a turnaround time of 24 hours. Many clinics had no proper filing systems for results, which made it difficult for the results to be found and resulted in unnecessary repeat tests. There was no system in place to measure turnaround time from the collection of specimen to the delivery of results.


Ms More noted that the annual report mentioned that certain targets concerning governance had not been achieved and asked for further information on the progress made in addressing the auditor-s comment.


Mr Devendra Erriah, Chief Financial Officer, NHLS reported that corrective action to address the audit findings had been completed.  The only outstanding matter concerned the transfer of property from the DOH to the NHLS.  All business related matters had been resolved.


Ms More asked what the nature of the offences as that were committed by staff and had resulted in disciplinary action being taken.  She asked if any of the offences had impacted on laboratory results.


Ms Mpho Lecoge, Executive Manager, Human Resources, NHLS replied that the two major areas of transgressions were misconduct and negligence. The employees involved had received coaching and counselling.


Mr Pillay allayed fears of poor quality of work and said that proper checks and balances were in place to ensure that patient care would not be compromised as a result of any transgressions by the staff.


Ms More asked how far the UAV’s could travel.


Mr Pillay replied that the UAV’s had a range of 50 km. Most clinics had access to laboratory facilities within this range. Based on international practices, the key strategy to improve turnaround time and cost effectiveness was to centralise; automate and standardise services. An effective logistics system would make it easier for specimens to be tracked.  The system was comparable to that used by for tracking the location of books purchased on the internet. Several groups of people within the NHLS were working on the development of the system and partnerships with CSI, the Department of Science and Technology, and other organisations were important.


Ms T Kenye (ANC) asked if the NHLS had a recruitment drive catering for rural schools, where students had no access to career guidance. She noted a drop-out rate of 69% of students at universities and the decline in the pass rate in 2009/10.


The Chairperson observed that there were three types of rural areas in South Africa, i.e. remote rural areas with a high concentration of people living in rural communities, farms where people were employed and lived and other under-developed areas closer to towns and cities.


Ms Lecoge replied that the NHLS had an outreach drive to reach rural communities and colleges.  Presentations were done and deserving students were invited to apply for bursaries upon successfully completing their matric studies. The students were placed at various universities of technology in the country. During the current financial year, the drive was aimed at reaching more rural than urban or peri-urban communities.  The decline in pass rates of the universities of technology had been noted and attributed to the internal challenges faced by many tertiary institutions.  Upon successful completion of their studies at the University of Technology, students completed an internship programme before being offered a permanent position. The major challenge was to attract sufficient numbers of suitable students to the profession.


Ms Kenye asked if the bursaries for the 155 undergraduates were provided by the DOH.  She asked if the NHLS visited the remote areas to ensure that deserving students had access to the bursary scheme.


Ms Lecoge replied that the bursaries for the 155 students were provided by the NHLS.  The total expenditure for the bursary scheme amounted to R1.84 million in 2009/10. The NHLS had begun the process to access additional funding from the respective Sector Education and Training Authorities (SETAs).


Mr Pillay said that the NHLS hoped to use the UAV program to develop an interest in science by high school students in rural areas by encouraging them to manage the UAV fleet. Training would be provided and stipends paid to sustain the students. The potential of the UAV’s extended beyond the application by the NHLS.


Ms Kenye asked about the geographic location of the five TB PCR sites and clarification on the 647 publications referred to in the annual report.


Mr Pillay undertook to provide a written reply on the location of the TB PCR sites.  He explained that the NHLS had produced 647 research publications during the financial year under review. The NHLS generated revenue to cover the cost of operations, research and training and bursaries.  The DOH would be approached to provide funding for bursaries and training, which would allow the NHLS to focus on operations and service delivery.


Ms M Dube (ANC) asked what the racial classification was of the majority of students who had dropped out of Universities of Technology.  She queried the decline of staffing levels in the central, coastal and KwaZulu Natal regions and asked if the centralisation of services would result in laboratories being closed down and staff dismissed or retrenched.


The Chairperson commented that technological intervention often had a negative impact on physical employment.


Mr Pillay responded that the majority of students studying to become technologists were black.  The majority of students dropping out were black as well.  The Department of Higher Education had recognised the inadequacy the support provided to students in the workplace. Many students had difficulty in passing the Board examinations even after successfully completing their university studies. The NHLS planned to strengthen the programmes offered by the Universities of Technology but was not responsible for the high drop-out rate.  Students often chose technology studies as a fourth or fifth alternative.  The NHLS attempted to elevate the appeal of the profession to students. The recruitment drive focused on achieving a balanced demographic representation and black applicants received preference over white applicants.  The lack of expertise was one of the reasons for the longer turnaround time. It took four years to train a technologist, two years to train a technician and up to 14 years to train a pathologist.  The lack of skills capacity would not be resolved overnight.  Diagnostics changed rapidly from a technology point of view and a balance had to be struck between changing for the sake of change versus the response to changing needs. An incremental approach would be used in the implementation of the centralisation process. Centralisation would not result in job loses but would help to alleviate the lack of scarce skills.  Affected staff would be redeployed to other laboratories.  The manner in which the laboratories were structured and operated had to be changed to improve service delivery.  Currently, staff members were on duty from 7.30 am to 4.30 pm but most specimens were delivered in the afternoons. If the working hours were changed, the turnaround time for completed results would be improved.


Dr Kistnasamy explained that the restructuring was based on a conceptual model that had to be tested first. Pathology services depended on technology, human resources and logistics. Political decisions had implications for service delivery and the NHLS would have to improve efficiency in order to be ready for the implementation of the National Health Insurance (NHI) expected in 2012. If the NHLS continued to work on systems that were applicable to a health system of ten years ago, the current executive management would have failed to prepare for changes in national policy. Issues such as public/private partnerships, the mixed economy and the proposed NHI had to be addressed to ensure success in the health sector. The NHLS had gone through a phase of consolidation and the IT system had been implemented. However, the challenges faced by the NHLS included non-harmonised IT platforms, a shortage of clinical engineers and equipment. Advances in logistics and technology would result in new job opportunities as the organisation geared itself to deliver improved health services. The proposed NHI would require a significant upgrading of the NHLS and the organisation was preparing to meet the challenge.


The Chairperson commended the performance of the NHLS.  He observed that professionals were attracted to positions at the NHLS rather than the private sector, which boded well for the public sector. The Committee would assist the NHLS to access more funding for research purposes.  He encouraged the NHLS to broaden the vocational guidance provided in the rural areas.


The meeting was adjourned.


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