National Health Laboratory Services (NHLS) on their Budget and Strategic Plan

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09 May 2012
Chairperson: Mr B Goqawna (ANC)
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Meeting Summary

The National Health Laboratory Services Annual Performance Plan was informed by the following documents:
▪ Maputo Declaration on the Strengthening of Laboratory Systems, WHO, 2008
▪ Moscow declaration on
Non-Communicable Diseases (NCDs)
▪ Government’s Programme of Action 2009 – Human Development Cluster: Health 
▪ NHLS Strategy 2010-2015 (2011 Review)
▪ NHLS Annual Report 2010/11.
▪ Department’s
Negotiated Service Level Agreement.

strategic objectives included developing a new service delivery model that is more affordable for the public sector and determine a best fit service delivery model. The briefing gave details of each strategic objective.

The NHLS stated that its major accomplishments were its quality of testing compared favourably with international laboratories and best practice models. The NHLS had also improved access to medical diagnostic services across the board.

The NHLS highlighted the cash flow crisis as a key challenge and thanked staff for their continued commitment and the Portfolio Committee for its guidance and support. Payment date was over 160 days by some provinces.

Members raised concern at the lack of resources allocated for research and development; the high cost of laboratory services; the continuing backlog at NHLS; and provincial debtors. They recommended improved distribution of logistical services.

Meeting report

The Chairperson said the primary objective remained to regulate the cost of health care. He commended the senior management of the National Health Laboratory Services for its handling of the cash flow crisis.

National Health Laboratory Services (NHLS)
Annual Performance Plan and Budget 2012/13
Mr Sagie Pillay, NHLS Chief Operating Officer, presented the Annual Performance Plan and Budget 2012/13-2014/15 and included an update on the cash flow crisis experienced by NHLS.  He explained that the plan aimed at reducing the burden of what is commonly referred to as the “quadruple epidemics” that included the more severe and expensive burden of HIV and AIDS and TB, unacceptably high levels of maternal and child mortality, alarming increases in the incidence of non-communicable diseases (high blood pressure and other cardiovascular diseases, diabetes mellitus, chronic respiratory disease, the various cancers and mental health) and the pandemic of violence and injury.

Mr Pillay stated that accessing alternate streams of funding remained a key challenge for the NHLS

Mr Pillay recognised the challenges which resulted from the cash flow crisis and commended the staff of NHLS for their commitment and support. He reported that the cash flow crisis resulted from provinces not paying their bills on time.

Mr Pillay added that staff retention strategies would assist in boosting the morale and productivity of staff. He also recommended that a learning academy be established to facilitate leadership development and assist in succession planning. He cited private sector costs as being well above the inflation rate while the costs of NHLS laboratory services were well below inflation. Mr Pillay explained that centralisation of laboratory services delivered more favourable procurement outcomes and reduced the cost of goods and services through bulk purchases. He noted that an implementation plan to align the strategy with the National Health Insurance, would be submitted.

Mr Pillay provided a brief analysis of the key assumptions made in the budget that included a 0% increase in volumes. The assumption aimed to ensure provinces operated within their means. He stated that the budget provided for a 6.5% salary increase. The testing price would increase by 5.5% and he noted that the increase was 1% below the inflation rate.  Another assumption in the budget, provided for a forty five day payment period for debtors. Currently the debtors’ payment date was over 160 days in some provinces while others were below 60. The payment date for creditors exceeded 130 days at the time of the cash flow crisis.  He reiterated that the provision of supplies and services were disrupted if provinces did not pay their bills on time. He highlighted the seriousness of the matter by citing an example of how non-payment by a province resulted in a stock-out of Anti Retroviral medication.

Mr Pillay stated that the major accomplishments of NHLS were that the quality of testing compared favourably with international laboratories. The NHLS had also improved access to medical diagnostic services across the board.

The Chairperson cautioned against adopting one-size-fit-all strategies when comparing two vastly different countries such as South Africa and England. He asked how the retail pharmacy sector had impacted on the work of the National Health laboratory Services (NHLS) and cited Clicks as an example.

Mr Pillay agreed
that further research was required when using countries as benchmarks where the burden of disease was not the same. In England it was inclined towards non-communicable diseases whereas in South Africa infectious diseases bore the greatest burden on health resources. He noted that the retail pharmacy sector had broadened access to pharmaceutical services and said that further research in this area was required.

Ms B Ngcobo (ANC) asked if the NHLS had consulted the Department of Environmental Affairs to assist with the logistics of the disposal of medical waste. She said that the function had the added potential to encourage economic empowerment at district level if it were decentralised.

Mr Pillay accepted the suggestion and agreed to consult with the Department of Environmental Affairs and other relevant agencies. The logistic functions and processes of the NHLS were inadequate in terms of turnaround time and were being developed. The price for the distribution of waste was controlled by the national tender process and incinerators were not distributed evenly across the provinces. The development of more incinerators was required but was too expensive. He suggested public-private initiatives to assist with this.

Ms D Robinson (DA) asked if it was realistic
to forecast a 0% increase in volumes given the increase in population growth and she questioned the impact this would have on service delivery.

Mr Pillay agreed and said that the 0% forecast was a strategy to ensure provinces worked within their means.

Ms P Kopane (ANC) asked about the staff retention strategies and if the task team resource allocation was included in budget.

Mr Pillay replied that the NHLS had made input to the Department in March 2011 about the staff requirements for pathology services.

Ms T Kenye (ANC) wanted to know how the NHLS strategy would be integrated with the roll-out of National Health Insurance.

Mr Pillay replied that a costed implementation plan would be presented to the Committee by September 2012.

Ms B Ngcobo (ANC) wanted to know what the equity distribution of NHLS was.

Mr Pillay replied that the NHLS had a bias toward the employment of women but that it proved a challenge to turn around equity representation numbers. He highlighted a significant improvement in terms of gender equity and reported less progress in employing persons with a disability. The intake at medical schools reflected an increase in the number of women pathologists and medical technicians.

Ms D Robinson (DA) asked how the cash flow crisis had affected the morale of staff.

Mr Pillay explained that the cash flow crisis had a negative impact on staff morale. Some staff members had been lost but mechanisms had been put in place to deal with the matter.

Ms Segale-Diswai (ANC) pointed out that it has been reported by provinces that the NHLS fees were too high. She wanted to know what the quality enhancement and cost reduction strategies were.

Mr Pillay reported that a task team had been set up to look into the matter. He declined further comment to avoid compromising the mediation processes. The tender process was awarded as a national tender to reduce costs. The prices of NHLS services were 30 to 40% lower than the private sector. The National Department of Health (NDOH) had ensured that the Bill on the Office of Health Standards and Compliance would ensure that quality and norms and standards were met.

Ms H Msweli (IFP) asked what the NHLS aimed to do about the challenges of child mortality.

Mr Pillay responded that laboratory services were central in the implementation of child mortality prevention strategies. He proposed adequate testing services at point-of care as a useful prevention strategy.

Mr D Kganare (COPE) asked if there were still excessive backlogs in data capturing.

Mr Pillay replied that the private sector had not provided the necessary data citing concerns around confidentiality. The enabling legislation allowed the NHLS to access data and it would present a report on all systems implemented. The backlog would be cleared by the end of 2012.

Ms B Ngcobo (ANC) asked if the NHLS had a proposed maintenance strategy and asset register for equipment.

Mr Pillay agreed on the need for a maintenance strategy and would report on work-in-progress at the next committee meeting.

Members highlighted the challenge of lack of funds for research and development.

Mr Pillay replied that South Africa spent only 1% on research when it should be 5%. New funding models such as conditional grants would be explored. He thanked the Committee for its support during the cash flow crisis.

The Chairperson concluded that the National Health Insurance created an opportunity to effect the necessary changes to public health.

The meeting was adjourned.


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