Health Conditional Grant performance: 1st quarter 2011: National Treasury & departmental briefings
Meeting Summary
National Treasury briefed the Committee on the first quarter 2011 spending on Health Conditional Grants, summarising that the average spending by provinces was 17.6%. Issues affecting spending included internal supply chain procurement process, capacity and inter-departmental communication. The Grant covered Forensic Pathology Services, Hospital Revitalisation and HIV/Aids. Hospital Revitalisation continued to be problematic, with underspending of R1 billion in the last year, largely ascribed to poor infrastructure planning, poor communication and cooperation with Department of Public Works (DPW). Teams had been deployed to the Eastern and
The
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The Mpumalanga Provincial Department of Health identified its vacancy rate and the absence of a university in the province as major contributing factors to provision of proper services. It struggled to attract skilled staff. Because it had the lowest per capita spending it had a low baseline. It admitted that planning had to improve, as well as communication with DPW. The Hospital Revitalisation Grant showed 7% spending, because of shortage of skilled staff, but the Department was now sitting on bid committees to try to ensure that inexperienced contractors would not be appointed. Three hospitals were under construction. One contractor had to be removed. Funds would be diverted to try to revive schools of nursing. The Forensic Pathology Grant programme was understaffed, and bodies were being transferred to other facilities, pending an upgrade of cold rooms. The HIV Grant spending was 17%, which was too low, and the Department concentrated on mines and trying to raise awareness.
The Provincial Department of Health in
Members commented that stability was needed, pleaded for proper research on contractors and advised Departments to try to recruit learners into these professions from grade 12. They confirmed that intergovernmental relations were a challenge.
Meeting report
Election of Acting Chairperson
Mr C De Beer (
The Acting Chairperson announced that the Committee would hear presentations from provincial departments on the spending of Health Conditional Grants. There appeared to be little deviation from reports on spending over the past three years. Apologies had been tabled by the MECs from
National Treasury presentation
Ms Ogalaletseng Gaarekwe, Director, Intergovernmental Relations Unit, National Treasury, outlined the purpose of the Healthcare Conditional Grants, noting that they were supposed to enable the health sector to develop an effective response to HIV and Aids, to support the implementation of the national prevention plan and subsidise funding for Anti Retroviral (ARV) treatment. The purpose of the Forensic Pathology grant was to continue and improve the development of pathologic services. The Hospital Revitalisation Grant was meant to improve hospital infrastructure.
Ms Gaarekwe said spending was very low in the first quarter of 2011, averaging only 17.6%. She said the Eastern Cape (EC) was projecting to under-spend by R19 million, whilst KwaZulu Natal (KZN) was projected to over-spend by R17.9 million. Other provinces showing below 17.6% spending were
Ms Gaarekwe said that the factors cited as affecting spending were mostly internal supply chain procurement processes in the health departments. Poor internal capacity of staff and Chief Financial Officers was a challenge. National Treasury had deployed teams to the Eastern and
In respect of the Forensic Pathology Services Grant, Ms Gaarekwe said there was an overall decline from the previous year, with of 15.5% spending in the first quarter. Only few provinces spent over 25%, and the EC was also projected to under-spend by R25 million, despite increasing its spending by 44%. She said procurement was identified as a major factor.
The Hospital Revitalisation Grant had always encountered challenges. In the last financial year there had been under-spending by R1 billion. Although
There were inaccurate cash-flow projections, inadequate technical skills, unexplained delays and variations order approvals, and poor performance in procuring construction equipment, poor performance by contractors, who were awarded large projects that they could not fulfil, and insufficient monitoring by senior managers. The National Department of Health (NDoH) and National Treasury (NT) had instituted actions to tighten the management and monitoring of projects.
Discussion
The Chairperson said the purpose of the meeting was not to fight, but to improve the service. He described it as “astonishing” that no representative was present from the NDoH, despite invitation. The Committee was particularly concerned about the repeated challenges around communication, and called on officials to improve this. He also asked why there was a decline in procurement spending.
Mr D Bloem (
Ms Julinda Gantana, Chief Director: Intergovernmental Relations Unit, National Treasury responded that the Human Resource Initiative (HRI) strategy was focusing on planning, but National Treasury realised that in order for this to work, better guidance was needed, as well as matching of skills. Both the National Department of Health and National Treasury would visit the provinces to assess reasons for slow spending.
Mr A Lees (KZN, DA) wanted confirmation whether the R1 billion under-spent was repatriated to the national fiscus. If not, then he enquired what had happened to it. He asked if any roll-overs were requested and subsequently approved.
Ms Gantana said that only R50 million of the R1 billion found its way back to the Provincial Revenue Fund, as Provincial Revenue could not find evidence that this had been committed already. Provinces were allowed to utilise money if committed, but what was not used would remain with the National Revenue Fund.
Mr Lees wanted to know the status of the R51 million, given that the second quarter of this financial year was now ending. He asked if the money had been surrendered, and if it still available for use by the provinces.
Mr S Montshitsi (
Ms Gantana promised to provide the Committee with a report that contained the list of hospitals who were under-spending the Hospital Revitalisation Grant. She said any funds not transferred were with the National Revenue Fund, and could go anywhere.
Mr J Bekker (WC, DA) wanted to know if there were any other ways to measure performance.
Ms F Memela (KZN, ANC) raised a concern about the yardsticks used to measure capability and failure of departments, and to measure performance of incoming MECs, where there were changes. This was a very serious issue. In some cases, she felt that the Committee must delve deeper and analyse other ways of measuring performance.
The Chairperson said it was a pity that the NDoH was not at the meeting to share its experiences in monitoring output by provinces. He noted that the EC had reported decline in expenditure for the past three years.
Western Cape Provincial Department of Health briefing
Following on the remarks on attendance of junior staff, the Chairperson noted that the MEC for Health from the
Members agreed to accept the hard copy of the presentation, but did not hear the presentation. The MEC for Health would be invited again to appear before the Committee.
Mr Sicelo Kopana, MEC for Health,
Mr S Pillay, Head of Provincial Department of Health,
Mr Pillay said the biggest problem with the grant was not its spending but how it was structured. The Grant used a payment based accounting system that allowed for too many commitments and yet delayed payments. He said there was a problem with the Department’s ability to conform to and comply with legislation regulating public finance. Only half of the districts used an electronic method of accounting and all the rest used paper-based accounting. The computerised procurement systems did not talk to each other, and Medsas did not make any differentiation between grant purchases and purchases under the equitable share, so it was necessary to do journal entries to correct this. One system was used for orders, and another for payments. The Department then had to link and reconcile the two.
Mr Pillay said the Department had to put people on the Persal system when they were employed, but there was no link to Persal in relation to the Grant. Employment cost 13% of the equitable share budget, but this included employees working on the Grant.
There were also problems with issuing and finalising tenders, as this process took four months. He began to explain the process, but the Committee interjected and asked that he be brief and confine himself to comments on the presentation.
Mr Motshitsi said he understood why Mr Pillay was alluding to challenges, but thought that a collective statement should be forwarded to the Committee.
Mr Memela asked that the presentation finish before questions were asked.
Mr Pillay continued that the Department was allocated R2.4 billion for the grant in this financial year, and had spent about 66% of the projected spending of R519 million for the first quarter. Delay in the processing of payments had adversely affected spending. Another reason for lowered spending was stringent measures to curb spending, following discovery of fraud in the previous financial year.
Mr Pillay noted that the Department had over-spent by R2.8 billion in 2008/09 and was receiving around R2.4 billion in allocations. This situation forced the Department to use funds for coming years early, and it tended to run out of money in December, which created problems as National Treasury tended to order the halting of projects and contractors would move off site, resulting in the Department having to fix these problems in the first three months of the following year before being able to start more spending.
Mr Pillay confirmed again that non-linkage of systems for compensation of employees was a problem, as well as the Department’s inability to manage supply chain processes because of inadequate connectivity and IT systems, which led to late payment of accounts. He again cited large staff turnover as a problem. Transfers to institutions were problematic, and neither
Mr Pillay then outlined performance on the HIV/Aids grant, saying that the Department had hoped to have 350 000 people on ARV treatment by 2014. Although the Department had exceeded targets, owing to the increase in the number ARV sites, it still struggled to reduce the number of new infections. This was impacted upon by other factors, such as only one company supplying female condoms, the difficulties in meeting targets in high-risk areas, exacerbated by the loss of the programme head. The Department was targeting
The department had met its targets on reduction of mother-to-child infection, but this was not enough. Every public antenatal clinic should administer antenatal treatment and provide ARVs. Many HIV positive women only attended clinics in
The purchase price of ARVs had fallen, following Ministerial intervention, and so the Department had sufficient funds but had to ensure that it distributed properly.
Another challenge around home-based care was the failure of some non-government organisations (NGOs) to produce audited statements, and the Department would need to hold workshops. A seven-day tender process had been introduced.
Mr Pillay noted that there were challenges around the Forensic Pathology Grants, and the Department and the National Health Laboratory Services (NHLS) struggled to reconcile their accounts. In the previous year there were duplicate payments and invoicing, and reconciliation was being done. R37 million had been allocated for the purchase of blood. Most managers had, on transfer of these laboratories to the Department of Health, lacked the proper qualifications, but that was being remedied. Management of the Forensic Pathology Services was being reorganised and targets were being met.
Mr Pillay admitted that the Department had huge problems around the Hospital Revitalisation Grant programme. The Department had had to re-advertise tenders for
Discussion
The Chairperson said people suffered if the Provincial Departments did not spend the money allocated by Treasury. He asked if the
Mr Bloem sought clarity on the court case, and the impact that had on the taxpayer.
Mr P Zulu (KwaZulu Natal, IFP) wanted to know if the province had a plan around corporate governance. He noted that poor communication was one of the challenges cited by National Treasury.
Mr Makhubela wanted to know why the Department still had an acting Chief Financial Officer and when it would appoint a permanent CFO. He asked if the personnel at the pathology services were being developed, given that their qualifications were identified as a challenge. He also wanted clarity on the corrective measures to address fraud and corruption. He asked what the Department was doing about links and codes in the conditional grants.
Ms Memela requested the department to provide statistical details on child-headed families whose parents had died of HIV/Aids. She wanted to know if there was training of home-based care service providers.
Mr Montshitsi appreciated the engagements with service providers. He asked if the Department had systems at the department that would ensure that budget was spent. He also sought more details about the interventions to address fraud, and asked if actions were taken against those involved. He commented that the apparent lack of expenditure by the Department was worrisome, and wanted to know if the corrective measures were adequate.
Mr Lees wanted to know if any of the contractors who could not finish projects were linked to the fraud and corruption. He said it was not National Treasury’s fault that the Department had run out of funds. He also enquired about the roll-over money requested from National Treasury. He asked how it had come about that Conditional Grant Funds had been spent on other matters. He failed to understand why the Department would focus on correctional centres as high transmission areas.
Mr B Mnguni (
Mr Pillay said there were huge capacity problems at the Department, and many units did not have Deputy Director Generals or Senior Managers in position. People tended to prefer to seek jobs in other provinces, and the Department struggled to attract staff, and those who were in place were daunted by the tasks facing them. The Department had in fact fired a number of people who were incompetent, to try to raise its levels, and was hoping to set up an entire new Directorate for HIV, was building capacity and did have those who showed good direction. He announced that the Acting CFO, Ms Thabisa Majaja, would be made permanent. He noted that the Department had fired 720 officials to date, and corruption of over R47million was uncovered. A special anti-corruption task team that comprised South African Police Service (SAPS), Special Investigating Unit, National Prosecuting Authority, Treasury and the Department had been established.
Mr Pillay said the Department was not losing money on court cases, which were quite well presented, and the
Mr Pillay noted that the Department had about 350 ambulances, employed 812 people, and had opened its own
Mr Pillay said the Department had to take over the running of 13 mortuaries, which were previously run by police officials who had only a matric qualification. It was difficult, in the public service, to get rid of an incompetent person, but performance management tools could facilitate this. Facilities would be designated in the province, and the Department would specify post requirements.
Mr Pillay said there were two turn-around systems to deal with corrective measures in spending. Three people were deployed by National Treasury to load the required systems. The Department was undertaking a huge clean-up on fraud. The previous Chief Financial Officer and her family had 121 companies doing business with the provincial government, and this type of arrangement would be banned under the turnaround strategy.
Mr Kopana added that the Department was introducing a system of accountability, and anyone uncomfortable with the system was free to leave. He said the Department was under no illusion about the magnitude of the work it confronted but, working hand in hand with the Committee, was hopeful it would overcome the challenges.
Mr Pillay noted that the Department had received approvals on a roll-over of about R490 million and this had led it to make commitments, but the funds would only be paid in November.
Mr Pillay answered the question on child headed household by noting that the Department was now undertaking door to door visits, and employment of community health workers and practitioners would increase preventative management, rather than curative. This had been piloted in three sub-districts and would be used in future.
Mpumalanga Provincial Department of Health briefing
Mr Clifford Mkasi, MEC for Health,
Mr Johnson Mahlangu, Head of Provincial Department of Health,
Mr Mahlangu outlined the Hospital Revitalisation Grant spending, noting that the Department had been allocated R356.557 million and had spent 7% in the first quarter, lower than the previous year. The Department had filled most of the posts prescribed for in the grant, but it still struggled to attract highly skilled people because it had no tertiary institutions. The Department complied with the requirements for developing business cases and getting the designs approved by the National Department. In order to ensure that infrastructure was delivered, a standard monitoring process was followed. The Department of Health and DPW had agreed that the DoH could sit on bid committees, to ensure that there was not appointment of inexperienced contractors, as had happened in the past.
Mr Mahlangu said that three hospitals were under construction and all had project managers. Technical support had been provided by the NDoH and the National Treasury. The Department had no resident engineer, and had received no responses to its advertisement for one, because the salary was not market-related. The Department was now considering hiring an architect. There was support from the MEC and the Industrial Development Trust (IDT) had assisted.
Under-expenditure arose partially because of poor performance of contractors, and the Department had legal challenges around removal of a contractor. The Department was unable to move to new projects until this was resolved. Other problems included late delivery of materials, slow expenditure on committed funds, and a delay in procurement of consultants for projects being planned, or unavailability of consultants.
He noted that the Department had engaged with the Infrastructure Unit at the National Department of Health around diversion of funds to revive schools of nursing. One nursing college was operational, but it could be possible to open another in each of the four provincial districts. Implementation of projects should begin in the second quarter, as the Department had appointed new contractors with capacity to deliver big projects.
Mr Mahlangu confirmed that interdepartmental communication was a major challenge as well, and although there was communication with the DPW, this did not filter down to the level of delivery.
Mr Mahlangu said his Department was planning to capacitate the infrastructure unit.
Mr Mahlangu then turned to the spending on the Forensic Pathology Grant, which was intended to assist the criminal justice system with investigations of unnatural deaths. Funding allocated for the current financial year was R53.14 million. The Department was focusing on compensation of employees, goods and services and capital projects. About 120 people were needed to run the department, although it only currently had 98 junior employees. Bodies were transferred to other facilities, depending on availability of specialist services, such as to undertakers, which was in fact not in compliance with the law, although the Department had been forced to go this route because transporting bodies to Nelspruit was unaffordable. The Department was trying to upgrade the current leading in-store cold room in all hospitals, up to acceptable standards.
Mr Mahlangu noted that, once again, the shortage of personnel and specialist staff resulted from the province having no academic institutions of higher learning. The Department had under spent in the first quarter but was hopeful it would be able to catch up, and projected an over expenditure in the second quarter.
Mr Mahlangu outlined the performance on the HIV Grant. This had been a grant that was well-spent in the past. **
Expenditure was at 17% on the first quarter, and this was far too low given that the province was the second highest in infection rates. He said there was a dire need on the ground for the money. The department targeted high transmission areas which it identified as the mines. He said the availability of female condoms was a challenge as they were distributed by one supplier nationally. Awareness campaigns were required to switch to preventative mode than curative mode. He said a budget of R32 million had been allocated for awareness on schools, prisons, etc. He said expecting mothers presented very late at hospitals and when they came they refused testing, especially in rural areas around Bushbuckridge. The department had learnt from the EC and KZN that male circumcision had all the benefits.
Mr Mahlangu said there were delays in teams dealing with circumcision, non-delivery of condoms, and under expenditure on key drugs. He said the department wanted to strengthen monitoring and evaluation of the programmes. There had been under performance but the department was hopeful it would catch up.
Limpopo presentation
HIV/Aids grant
Ms Dave Mafubedu, HOD Department of Health Limpopo, said the Department had filled all posts at Deput Director General level and with her appointment as Head of Department, it was hoped to achieve stability.
The Department was expecting a 100% spend on the HIV/Aids grant. She said the Department had spent 96% of its allocated funds in the first quarter. Ms Mafubedu said the Department expected to spend the HIV/Aids grant in full. So far the province stood at 19% expenditure of its annual budget. She said the 6% under-spent in the first quarter was as a result of slow condoms delivery. Ms Mafubedu said there were no capacity constraints. The Department had a General Manager running the programme who had been relieved of all other duties to solely focus on HIV/Aids. The General Manager was supported by three senior managers and other staff.
Ms Mafubedu said ARVs worth R36 million had been donated. The new policy decision to increase the CD count at which a patient would qualify for ARVs would increase
Ms Mafubedu said the Department had been reporting monthly to the NDoH and all the conditional grants were closely monitored by the Executive Council. It was linking HIV staff currently paid through equity share to the conditional grant, in order to accelerate expenditure. The staff working on HIV/Aids were supposed to be paid under the conditional grant but the equitable share was used. It did not foresee under-spending, as reflected on the presentation.
Ms Mafubedu admitted that the Hospital Revitalisation grant was “a nightmare”. The department was at 10% expenditure in the first quarter in the financial year. Contractors who were unable to finish projects were the main challenge, and part of their problem was outsourcing. This gave the Department a false impression that they were capable, and improved their rating incorrectly. There were also internal problems in the supply chain management in procurement processes as bid committees did not sit as regularly as they were supposed to. This had now been corrected. She also noted that communication with the Department of Public Works was problematic, but a strategy had been devised and she personally had several meetings with the head of that Department. A list was compiled of all projects with blockages, but she noted that many of these were in fact minor issues that should not have resulted in blocking, if there had been effective communication. There were problems of capacity to manage the programme, which was managed at Deputy Director level, and the Department was hoping to appoint three engineers to assist with project monitoring, although it had trouble recruiting because no Occupation Specific Dispensation was in place.
Ms Mafubedu said the department had hoped to spend 41% at the end of September. She said this was informed by a meeting the Department had with DPW, when they two realised they could unlock R109 million.
Ms Mafubedu noted that the Forensic Pathology Services Grant spending in the first quarter was 23.6%.
There were no constraints in expenditure. The programme was managed by a Chief Specialist, assisted by a Manager, Chief Medical Officer and three Mortuary Managers. The 1.4% under expenditure resulted from delays in the delivery of goods and services. She said the Department was procuring protective clothing and equipment. From September, the Department would keep to the plan and that would take it to 100% expenditure.
Discussion
The Chairperson said that stability in every Department was a key building block for success. He pleaded with officials to research contractors thoroughly before awarding tenders. He advised Departments to visit schools with a view to recruiting Grade 12 learners to study the scarce skills. He enquired about the impact of intergovernmental relations and service delivery, noting that all departments had identified communication as a challenge.
The Chairperson asked the Mpumulanga department about the list of projects that had been incomplete since 1994.
Mr Lees said there was a problem with the Construction Industry Development Board (CIDB) and Departments did not need to rely on it for grading. He also wanted to know how transfers were controlled.
Mr Mnguni wanted to know if
Mr Makhubela asked what the Mpumalanga MEC was doing about improving the baseline. He too asked what plans the MEC had to improve communication with other departments. He also wanted to know the criteria were used to appoint contractors from both provinces.
Mr Makhubela asked
Both Departments gave a short and general response to these questions.
On behalf of the Mpumulanga Department, Mr Mkasi said he had elevated the matter of the baseline to the Executive Council. He said the Department would look at addressing the issues of salaries, as
Mr Mahlangu added that his Department had plans to recruit, but the baseline was too low and people would simply resign. When OSD was mooted the impression was given that salaries would be standardised and the Department was under severe pressure to review salaries. These issues needed to be elevated higher, for parity would address some of these challenges. He said an establishment of a university might well help in attracting skills to the province.
Mr Mahlangu said the issue of nursing schools was discussed at the National Nursing Summit and the Department was looking at opening nursing schools next to hospitals.
He agreed that the issue of CIDB grading was a challenge, and that the Department had asked for a seat in the adjudication committee to address that.
Mr Mahlangu agreed that the issue of intergovernmental relations needed to be looked at.
Mr Mahlangu also noted that transfers were based on projections and were paid on a month to month basis.
Ms Mafubedu from the Limpopo Department said a Ministerial task team had been set to look at policy that would inform the training of nurses. She said the Department was on track to meet all its deadlines by the end of September. The issue of employing engineers had to be clarified by the National Minister.
She said on the issue of condoms she had approached her colleague at NDoH for assistance.
Ms Memela asked provinces to work hard in ensuring that mortuaries were up to standard. She said provinces had to prioritise areas of improvement, including mortuaries.
The Chairperson said the NCOP and MPs from
The meeting was adjourned.
Documents
- Mpumalanga Department of Health: Forensic Pathology Services presentation
- Eastern Cape 1st Quarter spending on Health Conditional Grants
- National Treasury Report: Provinces spending of Health Conditional Grants
- Mpumalanga Department of Health report on Comprehensive HIV and AIDS Grant
- Mpumalanga Department of Health Report on Hospital Revitalization Grant
- Limpopo 1st Quarter spending on Health Conditional Grants
Present
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