National Health Laboratory Services on its 2012/13 Annual Report

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10 October 2013
Chairperson: Mr B Goqwana (ANC)
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Meeting Summary

The National Health Laboratory Services (NHLS) presented its annual report for 2012/13, setting out the highlights and challenges in this financial year. It was noted that, for the sixth consecutive year, the NHLS had achieved a clean audit. NHLS had restructured the way in which it was reporting in this year, and the basics of the five-year plan were presented. NHLS sought to be vertically integrated into the public health service, maintain its status as preferred provider of services in the public sector, become a preferred employer in laboratory health services, and increase its sustainability and excellence. It had a unique model and one major area of focus was affordability, to produce a “best fit service model”. Various parts of the plan were summarised, to explain service being put at the centre, improvement of service delivery and finding low-cost solutions and conduct research.  NHLS also aimed to build partnerships with private entities and NGOs. As a public sector institution, it would continue to be funded under the National Health Insurance scheme. It had a strategic and effective Board that adhered to all reporting requirements, and had achieved a smooth transition from one board to the next. It was managing to curtail costs, was offering services at about 37% lower than the private sector and had managed, in conjunction with the Department of Health, not only to keep costs low but actually to reduce some as well. During the financial year, NHLS had delivered 81 123 491 results and processed 27 623 869 test requests. It was rolling out gate-keeping tools to another 19 hospitals, and had deployed 31 newly qualified pathologists to seven cities outside academic centres. Its Virtual Learning Academy was training existing employees, and the Inaugural Research Summit had brought together faculties of health sciences across the country, to review the research agenda for diagnostics. Eleven new laboratories were now being accredited, 37 African Registrars had been employed and NHLS was strong on the international laboratory service front. Some of the achievements of its staff were mentioned. South Africa had adopted a phased roll out of the GeneXpert MTB/RIF test as the primary diagnostic test for TB. It had achieved 100% coverage in 30 districts, increases in viral load and TB tests. Overall, NHLS customer satisfaction was rated at 3.5 out of 5.

The financial statements indicated that the 2012/13 turnover was just over R4.6 billion and that revenue had increased, although the current debt was at over R2.5 billion, with the majority of that being historical debt built up over many years and owed by KwaZulu Natal Provincial Department of Health. This resulted in severe cash-flow problems that did not permit taking on extra staff, and this affected the targets, for about 25% of targets were not achieved.  

Members wanted to know what was being done to address the debt problem, and called upon the NHLS to submit a written report suggesting some possible solutions, as it had also been indicated that the matter may need to be taken up with the Minister. The Department of health was also asked to report in writing to the Committee. Members wanted to know where professionals were being deployed around South Africa, how many hospitals had the GeneXpert machine for tuberculosis (TB) diagnostics, how NHLS was going to recruit the staff it needed staff, and what was being done to overcome the challenges surrounding diagnostics and treatment, including reaching the turnaround time targets. Further questions related to pairing of provinces, and how customer service ratings could be improved.

Meeting report

National Health Laboratory Services 2012/2013 Annual Report
Mr Sagie Pillay, Chief Executive Officer, National Health Laboratory Services, tabled and gave a presentation on the 2012/13 Annual Report of the National Health Laboratory Services (NHLS). He explained that the NHLS had restructured the way that it was reporting. He outlined the vision and mission of NHLS (see attached presentation). He noted that the NHLS wanted to be vertically integrated into the public health system. It was already the preferred provider in the public sector, and aimed to build a sustainable and excellent entity over the next decade. He emphasised the uniqueness of the NHLS model. NHLS controlled all aspects of laboratory services.

Mr Pillay then set out the basics of the 5 year strategic plan and said that one major area of focus was on affordability. NHLS planned to deliver more relevant and more affordable services to the public health sector. The aim was to align resources, support services and infrastructural development for service delivery. He called it the “Best fit service model”.

He also drew attention to Part 4 of the plan, which was about putting service at the centre of what NHLS did. Part 5 of the plan was having the NHLS also as the laboratory services employer of choice, to attract the best and brightest talent. Part 6 emphasised research to improve service delivery and provide low cost solutions.  Part 7 related to the data warehouse for planning resource allocations and monitoring and evaluations. Part 8 was about building partnerships with private entities and NGOs.

Mr Pillay noted that the NHLS would in the future be funded by the National Health Insurance (NHI).

Mr Pillay was pleased to note that, for the sixth consecutive year, the NHLS had attained a clean audit. The NHLS has managed to contain its price increases to below inflation and was 37% cheaper than the private sector, having managed, in conjunction with the Department of Health (DOH) to reduce some prices too.  It had services and was involved with all communities at various pilot sites.

Mr Pillay said that the NHLS had a very strategic and effective Board which had adhered to all reporting requirements. The Board had clear roles and responsibilities. According to medical schemes data, medical schemes expenses, per capita, were five times higher than NHLS annual expenditure. Medical scheme costs per beneficiary were R456, compared to R86 per public sector dependent served by the NHLS.

In respect of the results and performance, he noted that the NHLS delivered 81 123 491 results and processed 27 623 869 test requests. There had been a reduction in the price of the GeneXpert. Gate-keeping tools were rolled out to a further 19 hospitals, flattening the volume growth in demands. For the first time, the NHLS deployed 31 newly qualified pathologists to seven cities outside academic centres. The NHLS was growing the next generation of pathologists. The Virtual Learning Academy is up and running,  and was training 822 employees for further professional development. The Inaugural Research Summit in the 2013 financial year brought together faculties of health sciences across the country, to review the research agenda for diagnostics.

Mr Pillay then moved on to discuss the strengthening of laboratory management and ensuring technical quality He noted that eleven new laboratories were gaining accreditation, to ensure that all other laboratories worked towards achieving a 5-star rating in the system. NHLS had attracted 37 African registrars. There was strong  African Leadership in laboratory medicine and this included the African Society for Laboratory Medicine (ASLM).

On the international front, NHLS also served as the Secretariat for the Pan African Harmonisation Working party in Kenya, and the reference laboratories for World Health Organisation (WHO), Central Drug Authority and DoH. NHLS produced 472 peer-review articles and 45 policy documents. Wendy Stevens, who headed the priority programmes for NHLS, had won the CEO’s Choice Award at the NHLS National Awards in 2013. A groundbreaking research discovery was made by a team led by Prof Lynn Morris and Dr Penny Moore from NHLS, which was published in Natural Medicine.

The transition from the old Board to the new one was very smooth. The Board was working hard to respond to the policy direction of the National Health Insurance pilots and other national priority projects. Under the leadership of the Minister of Health, South Africa had adopted a phased roll out of the GeneXpert MTB/RIF test as the primary diagnostic test for TB.

 NHLS, in collaboration with the DoH, developed a tool to manage and justify the use of laboratory service by clinicians and nurses, to ensure the continuous affordability of the service. This electronic gate-keeping tool had been implemented in the Western Cape, Gauteng, and Free State. Gate-keeping was important for aligning NHLS budget process with provincial budget processes. NHLS would be working with the provinces to ensure this. However, not all provinces were budgeting as required. The Board had approved results fed into the National Department of Health and National Treasury.

On the financial side, the 2012/2013 turnover of the NHLS was just over R4.6 billion. Revenue had increased due to changes in case mixes and was, in this year, at R950 455 in 2013, compared to R 1 052 538 in 2012, in relation to expenditure on materials, for example. The current debt was over R2.5 billion. The viability and sustainability of NHLS was seriously threatened, for the second year, due to there still not being any resolution with the debt situation, as the KZN Provincial Health Department owed the NHLS R2 billion alone. At the moment, the NHLS was really surviving from month-to-month because any income that it received was immediately taken up with paying salaries and other expenses.

Only 25% of the targets set were not achieved, and this was primarily due to cash flow problems. NHLS was also unable to hire staff, due to cash flow difficulties. Problems rolling out IT system also affected some of the targets not being achieved. He reiterated that provision would have to be made to sort out the for KZN debt.  

Mr Pillay said that the National Priority Programme included establishment of the Expert TB Working Group, and resistance detection compared well to reference methodology. There was 100% coverage in 30 districts, increases in viral load and TB tests. Overall, NHLS customer satisfaction was rated at 3.5 out of 5. Through the National Institute for Communicable Diseases (NICD), public health was becoming more of a priority.

In the future, the NHLS was striving for affordability and consolidation of service. The national mandate was to train people but not necessarily employ all of them, and the NHLS would be redefining research and training. Again, Mr Pillay stressed the fact that NHLS was part of the public health system, and thanked the Director-General and Deputies, and the Ministry of Health for their support.

Ms D Robinson (DA) said that the month of October was dubbed as Cancer and Mental Health Month. She said that more information was needed for better treatment of both conditions. She asked what the report was on the Cancer Register and when it would be operational and up to date. She asked if shortage of staff and the IT hiccup was affecting the progress of the Cancer Register.

Mr Pillay responded that the Cancer Registry was up and running by now. The NHLS was trying to get the several-year backlog sorted out by the end of financial year. He did not think that the Report Ms Robinson requested would be particularly be helpful, but he would provide it for the Portfolio Committee anyway.

Ms M Segale (ANC) commended the clean audit. She expressed concern about the debt of the Kwa-Zulu Natal provincial department, and asked how, in the absence of payment by KZN, the NHLS could manage to improve.

Ms T Kenye (ANC) also asked what would be done about the KZN debt, and added that there must be a deadline for when this debt issue should be solved. There was also a need, and she asked what specifically would be done, to improve debt collection also in the Free State and Gauteng.

Ms B Ngcobo (ANC) also asked about the KZN debt issue and asked what the possible suggestions are to tackle this matter.

Mr Pillay said that the NHLS had come up with a list of ten “non-negotiables” and number one on that list was that pressure must be brought on the provinces, in this financial year, to repay their debt. He hoped that this approach would succeed in bringing in the money, as NHLS could not scale back services. In respect of the KZN debt, the solution was to work with the National Minister. Provinces should pay over from their conditional grants.

Mr Faizel Randera, Representative, NHLS, said that the NHLS had come up with some solutions on the debt issues and pointed out that the KZN debt of R2.3 million  had accumulated over many years.  The provisions of the Companies Act would need to be borne in mind, and the NHLS would give the committee more specific information. He noted that the NHLS monthly spend was around R100 million per month on providing services. NHLS needed proper consultation, and the backup of laboratory and diagnostic services. The solution must be found through negotiations. The NHLS was open to solutions offered by the portfolio committee.

Ms Segale asked the DoH to provide a written response as to what it believed must be done, since it was a provincial DOH department that was the debtor.

Ms Ngcobo asked if all the NHI hospitals had GeneXpert MTB/RIF machines.

Mr Pillay confirmed that all NHI sites had GeneXperts and this would expand as the NHI sites also expanded.

Ms Kenye commented about the uptake of African registrars and the staff shortage. She asked what the recruitment strategy of the NHLS was, in respect of the vacancies still to be filled. She also wanted to know how the NHLS intended to improve quality of the services and upgrade its customer service satisfaction.

Mr Pillay noted that the NHLS paid all pathologists the same salary. The shortages in staff were due to shortage of resources to recruit more, and he also noted that it was hard to recruit particular specialists when the NHLS could not compete with private sector salaries, which were extremely high. The NHLS was identifying where the gaps were and training its own staff. It was also aiming to revise remuneration packages. In relation to training, the NHLS strategy was to identify people in the areas where there was the greatest problem. The NHLS tried to recruit according to the areas of greatest need, at any one time.

Ms R Motsepe (ANC) asked for specifics on the districts of the 19 hospitals and locations where the gate-keeping tools were rolled out. She also asked the specific location of the 31 pathologists deployed around South Africa.

Mr Pillay confirmed that the NHLS would make information available regarding gate-keeping and 31 deployed pathologists

Ms Ngcobo asked Mr Fazel Randera to repeat the information about pairing up various provinces that he had shared with her before the meeting started.

Ms Robinson asked for clarity on whether it took half a year to process blood samples, and wanted to know more about the  28 day turn-around-time (TAT) for testing in police laboratories for alcohol levels. She asked if this was part of the NHLS set up.

Mr Pillay confirmed that the NHLDS had not reached its targets on screening issues, but the NHLS target was to have 65% completed within one week. He pointed out that the South African Police Service Forensic Laboratories were distinct from, and not part of the NHLS, but that the NHLS did collaborate with the SAPS laboratories on forensic areas.

Ms Kenye asked for more information about the turnaround time for viral load targets not being achieved, due to staff shortage and implementation of a new laboratory information system. She asked what has been done since to rectify this situation.

Mr Pillay explained that the delay with the laboratory information system was an ICT system problem. There were setbacks with the system but many of these have been sorted out. The system had been  improved and there were mitigation plans for employment and performance issues.

The Chairperson thanked the NHLS and the DOH. He reminded the Department of Health that the Committee still needed to get a report from the Director General, and said that the NHLS must forward its restructured programme. The reports should be delivered by 14 October.

The Chairperson  noted the meeting with the Council for Medical Aid Schemes on 11 October.

The meeting was adjourned.


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