National Health Laboratory Service (NHLS) on its Strategic Plan and Budget

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Health

13 September 2011
Chairperson: Dr B Goqwana (ANC)
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Meeting Summary

The National Health Laboratory Service briefed the Portfolio Committee on Health on their Strategic Plan for 2011. NHLS had powerful databases which could contribute to the Department of Health (DoH) plan for management, planning and monitoring of disease profiles in the country. Thus the Strategic Plan had been carefully aligned with the Minister of Health’s Negotiated Service Delivery Agreement and the DoH Strategic Plan.

NHLS contributed to the DoH research capability; the 2030 Human Resources for Laboratory Medicine (pathologists, technologists, technicians and scientists); the HIV Counseling and Testing Campaign; and the GeneXpert for rapid diagnosis of Tuberculosis.

Currently there were 268 laboratories countrywide and NHLS experts were addressing whether to increase centralisation which would reduce costs and introduce point-of-care and innovative technology - and thereby maximise use of scarce skills.

Experts were also addressing the best-fit service delivery model from the perspective of the disease profile, clinician and tertiary/regional/hospital care requirements and whether to standardise platforms by level-of-care or by region. Infrastructure, support services and resources would then be aligned with the best-fit service delivery model to establish suitable pathology/technology/technician components in a standardised system. As with the Essential Drug Lists, Essential Pathology Lists were being developed. Standardisation was expected to take between three to five years and development of infrastructure for centralised service delivery would take ten years. The Minister had committed to reducing the provincial financial burden through the National Services Tertiary Grant. With the introduction of National Health Insurance, it was evident that NHLS would have to introduce a risk-associated capitation model of payment. Interaction with innovative private companies and other partners would advance the commercial viability of development of innovative technology.

Electronic Gatekeeping pilot studies involved a close relationship between pathologists and clinical teams for identification of repeat pathology tests. NHLS believed that introduction of a Unique Patient Identifier (for each citizen) would immediately stop repeat investigations and save costs to the health care system.

DoH was assisting with investment in TrackCare, which enabled NHLS to link with electronic health databases around the country to improve on service delivery and reduce costs. Another initiative was a pilot study whereby clinicians could fast-track results with the use of Blackberry phones and small computers with secure internet access to results. NHLS was also considering re-configuring laboratory staff working hours, as specimens typically arrived between 2pm and 4pm.

The NHLS had identified deliverables to establish an NHLS Academy for training of scientists, pathologists, technicians, technologists, finance and human resources in partnership with academic institutions.

Succession planning had not been successful and there was concern about who would mentor the next generation. NHLS was putting in place measures to bridge the gap; attract more black and African professionals; and for registrars to spend six months of their two year internship at NHLS.

In 2010/11 NHLS had imposed a 5% price reduction for all Priority tests and a 1% increase for all other tests, with a net effect of 0.1% increase across the board. However, over R1,8 billion was owed to NHLS by provincial health departments, with R800 million owed by the KZN Department of Health alone. This outstanding amount impacted on NHLS service delivery, capital projects, planning, staff salaries and staff morale. The capital expenditure budget was R231 million, largely for upgrading IT systems with TrackCare.

Members asked how NHLS retained health personnel after training them; what the plan was to bridge the gap between the old and young researchers at NHLS; how the Academy would be funded; and how the DoH and NHLS planned to address the under-spent conditional grant and the overstressed equitable share.

Members asked if National Treasury could assist by transferring the owed money from the provinces directly to the NHLS; what the legal standing was for provinces that had exceeded the 30-day arrears agreement; whether any action had been taken; if the Minister had confronted all provinces that were in arrears; what impact the Minister’s intervention had on KZN DoH; if provinces were charged interest on arrears; if interest was reflected in the financial statement; and what the solutions were that would address non-payment from provinces.

Members further asked if Electronic Gatekeeping and TrackCare for improved turn-around time would eradicate the current problem of backlogs; if it was likely that the advances in technology and research would result in enhanced HIV testing methods; and if, since there currently was no way of tracking the number of times a person tested for HIV, conclusions drawn from the data may not be a true reflection of HIV prevalence in the country.

Meeting report

National Health Laboratory Service (NHLS) briefing
Dr Sagie Pillay, NHLS Chief Executive Officer, said that although the NHLS was a para-statal organisation and was independent from a management point of view. Laboratory medicine was central to the clinical management processes of the DoH and although not clearly articulated in the National Health Insurance (NHI) Green Paper, pathology would be central to the NHI. The NHLS Strategic Plan for 2012 had been carefully aligned to the Minister’s Negotiated Service Delivery Agreement (NSDA) and the DoH Strategic Plan which addressed the key mandates: pathology service provision; teaching and training; and research.

Only 2.7% of the health budget was spent on pathology (at NHLS), while comparable countries spent 3.5% to 6% of their health budget on pathology. Although the perception was that too much money was spent on pathology, the reality was that pathology was a potential cost saver downstream in healthcare and was essential to quality health care and outcomes.

In terms of the link with the DoH, NHLS had powerful databases which could contribute to the DoH plan for management, planning and monitoring of disease profiles around the country. NHLS also contributed to the DoH research capability; the 2030 Human Resources (pathologists, technologists, technicians and scientists) for Laboratory Medicine; it made an important contribution to the HIV Counselling and Testing (HCT) campaign and had also been instructed by the Minister to implement the GeneXpert for rapid diagnosis of Tuberculosis.

Although models for service delivery had been useful to date, going forward - with respect to NHI - it was important for NHLS to respond to demands from the districts, which would be the purchasers of service. Currently there were 268 laboratories countrywide and NHLS experts were addressing whether to increase centralisation; introduce automated point-of-care technology; and thereby maximise use of scarce skills. Centralisation would also save costs for NHLS. However, the demands of the clinicians and patients had not yet been established. Experts were also addressing the best-fit service delivery model - from the perspective of the disease profile, clinician and tertiary/regional/hospital care requirements and whether to standardise platforms by level of care or by region. Infrastructure, support services and resources would then be aligned with the best-fit service delivery model to establish suitable pathology/technology/technician components in a standardised system. As with the Essential Drug Lists, Essential Pathology Lists were being developed. Standardisation was expected to take between three to five years and development of infrastructure for centralised service delivery would take ten years.

Eighty percent of pathologists in South Africa worked for the NHLS and the strategy was to continue to develop and train young pathologists. Although NHLS produced over 300 research publications per year in peer-reviewed journals, the concern was that these publications were not adequately impacting on policy and service delivery. However the work performed within the National Institute of Communicable Diseases (NICD) and National Institute for Occupational Health (NIOH) did indeed impact on service delivery.

Currently 80% of NHLS technology requirements were limited to about ten companies. Interaction with innovative private companies and other partners would advance commercial viability of developing new technology. NHLS also had a focus on medical waste management and effective use of energy for protection of communities and the environment.

Ten pilot projects for Electronic Gatekeeping had been introduced across the provinces of the Eastern Cape, Western Cape, Gauteng and Kwazulu-Natal. The protocols involved a close relationship between pathologists and clinical teams regarding pathology test requests. The Western Cape had succeeded in effectively controlling its budget and was beginning to have the desired effect in other provinces. The CEO was of the opinion that young doctors practiced over-diagnosis and defensive medicine in the public health system and gatekeeping tools were a rational way to manage the spend in the pathology area. Introduction of a Unique Patient Identifier for each citizen would stop repeat investigations immediately and save costs for the health care system.

A national programme for the current year was to address tracking of specimens and results at all times. The DoH was assisting with investment in TrackCare, which enabled NHLS to link with electronic health databases around the country. Another initiative being developed to fast-track access to results for clinicians was to expand on sms systems and introduce the use of Blackberry phones (Eastern Cape and Free State) and small computers with coded internet access to results. NHLS was also addressing reconfiguring the staff working hours to improve turn-around time for specimen results, as specimens tended to arrive at the laboratory between 2pm and 4pm.

While the staff component had increased from 3500 to 7000 in five years and the use of advanced technology had increased, productivity had not increased. The NHLS had identified deliverables with respect to an Academy of its own, where it would train scientists, pathologists, technicians, technologists, finance and human resource in the NHLS way of doing business in partnership with academic institutions as well as in-house. Succession planning had not been successful. At the top levels, staff were over the age of 55 and the concern was about who would mentor the next generation. NHLS was putting in place measures to attract more black and African professionals and for registrars to spend six months of their two year internship in pathology at NHLS.

The NHLS had to generate sufficient revenue to cover the costs of service, teaching, research and the NHLS Institutes - National Cancer Registry (NCR), the NICD and NIOH. The Minister had committed to reducing the provincial financial burden for the NHLS through the National Services Tertiary Grant. With the introduction of the NHI, it was evident that NHLS would have to introduce a risk-associated capitation model of payment for services from provinces to accommodate the defined population. For the past five years NHLS had kept its annual price increase at 3% average, which was way below inflation level.

Priority Testing constituted 40% of the National Health spend on pathology services. In 2010/11
NHLS had imposed a 5% price reduction for all Priority tests and a 1% increase for all other tests, with a net effect of 0.1% increase across the board.

The revenue turnover for 2011/12 was budgeted as just over R3.5 billion. Surplus (to reduce price increases) was R38 million. This was very little compared to previous years and the financial
crisis was largely due to the KZN DoH owing the NHLS over R800 million. Gauteng paid R88 million per month but spent R95 million per month and had a debt of over R500 million. The Minister had intervened with these DoHs but no progress had been made and the impact was that service delivery, capital projects, planning, staff salaries and staff morale. The latest total debtors figure was at R1.8 billion. NHLS owed creditors R300 million. The CEO appealed to the Committee to contribute toward finding an amicable solution. Without the owed money, the cash generated was R 5.9 million instead of the budgeted R22 million. Capital expenditure budget was R231 million, largely for upgrading IT systems with TrackCare.

Discussion
Ms B Ngcobo (ANC) asked how NHLS retained health personnel after training them.

Dr Pillay replied that NHLS had introduced policy that committed registrars to work at the NHLS for a period of two years after being trained. Scientists were hired on research grants or contract funding. All technologists and technicians who were trained were absorbed, either into the public or private sector. The plan was for the National Health Professionals Training Grant to assist with training of BSc graduates.

Ms Ngcobo asked how the Academy would be funded.

Dr Pillay replied that the Minister had agreed on principle that NHLS should receive funding from the National Health Professionals Training Grant and NHLS was also engaging with the Committee of Deans regarding alternate sources of funding for training at the Academy. 

Mr D Kganare (COPE) suggested that National Treasury should assist by transferring the owed amount of money from the provinces directly to the NHLS.

Dr Pillay said that there were technical reasons why National Treasury could not intervene. However, with the Committee’s assistance, it was hoped that National Treasury could relieve the stress of the situation.

Mr Kganare asked if the strategy for improved turn-around time would eradicate the current problem of backlogs.

Dr Pillay said that the only backlog was with cytology and one or two private providers were assisting in clearing the backlog. All facilities collected samples daily and results were available by the following morning. If turnaround times were not met, this was addressed at the regular monthly meetings with the provinces.

The Chairperson asked why the Electronic Gatekeeping was not effective in reducing backlogs in the provinces that were problematic.

Mr M Waters (DA) asked what the legal standing was for those provinces that did not honour their 30 day payment agreement; whether any action had been taken to date; if the Minister had intervened with DoH in KZN and Gauteng only, or with all provinces that were in arrears; if provinces were charged interest on arrears; and if the interest was reflected in the financial statement. Problems with provincial payments were not a new issue. He asked if NHLS had made solutions in this regard.

Dr Pillay said that according to intergovernmental law, NHLS could not sue the DoH for payment. It had followed proper procedure: a dispute had been declared and there had been no amicable solution. KZN did not respond to the dispute declared. The Minister had then intervened in the matter with both provinces. KZN then responded that it would appeal to NT for funding as there was no money available to make payment. Gauteng had agreed to reduce its expenditure and continue to make a monthly payment of R88 million.

Non-payment was charged with interest but the added interest did not encourage payment. The solution regarding all provinces would be the capitation model of payment whereby reimbursement for services would come from NHI. However, this would be ‘down the line’ once NHI was implemented. The districts would be the purchaser and the NHI would be funder.

Ms M Segale-Diswai (ANC) asked for clarification on the NHLS mission statement ‘to train for health science education’. She asked who was being trained, where training occurred, if training had begun and if so, how it was unfolding.

Dr Pillay replied that health service education was about strengthening health service from the perspective of laboratory medicine. NHLS trained pathologists, technicians, technologists and scientists.

Ms Segale-Diswai asked how NHLS as a service provider would contribute to implementation of the NHI. She also asked how the DoH and NHLS planned to address the under-spent conditional grant and the overstressed equitable share. Lastly, she asked what impact the Minister’s intervention had on the DoH in KZN.

Due to time constraint, these questions would be answered in writing and submitted to the Committee.

Ms M Dube (ANC) commented that impressing the Committee with plans which had not been researched, such as the Blackberry project, or those that did not have funding, was futile.

Dr Pillay replied that all issues raised were happening in practice. Pilot studies such as with blackberry phones had been implemented and were up and running.

Ms Dube asked what would be the plan to bridge the gap between the old and young researchers at NHLS.

Ms T Kenye (ANC) asked if it was likely that the advances in technology and research would lead to enhanced HIV testing to the extent that the three-month window period would no longer be a factor.

Due to time constraint, these questions would be answered in writing and submitted to the Committee.

Mr M Hoosen (ID) asked if he was correct in saying that since there currently was no way of tracking how many times a person tested for HIV, the conclusions drawn from the data may not be a true reflection of the HIV prevalence in the country.

Dr Pillay said that although NHLS’s IT system was advanced, the reality was that there could be duplication if a patient went to two different institutions for the same test. NHLS was focusing on developing capacity and intervention to ensure that the data was in fact meaningful data.

The Chairperson requested that outstanding questions be answered in writing.

Dr Pillay invited the Committee to visit NHLS to witness the Public Sector success story. 

The Chairperson asked for NHLS to investigate the probability of the statistics not being a true reflection of the prevalence of disease, particularly with regard to HIV and TB. Without a centralised pathology information system and with repeated visits under false names, it was possible that the information was incorrect. This was not criticism of NHLS but was a Health Sector problem and would have political implications.

The meeting was adjourned.

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