The National Health Laboratory Services (NHLS) briefed the Committee on its Strategic and Annual Plans for 2015/16. It was created in 2001 from a merger and is the diagnostic pathology service for the public sector in South Africa, dealing with more than 80% of the country’s population through 274 laboratories and heath structures. It had recently undertaken an analysis of its particular strengths and weaknesses, which was important to assess the way forward. The NHLS acknowledged that in recent months there had been some negative media reports about its inability to pay some of its creditors on time, but explained later in the presentation that it was experiencing serious cash flow deficits as a result of provincial government failing to pay it.
Current strengths included its multi-sectoral approach, as it was not only a service provider but also educational institution providing training for pathologists. It had several specialist divisions, cross-subsidised by it, dealing with communicable diseases, occupational health, and cancer. It had a strong academic base and sustainable partnerships, substantial research output, was a trend-setter for qualitative assurance and excellent intellectual capital. It had an exclusive national integrated data warehouse, running 8 million tests per year, and ran a national priority programme, and would also influence legislation where appropriate. The major weakness, as well as threat to its stability, was the poor cash flow, and the ‘fee-for-service’ model was not working. There were also issues around leadership stability, succession planning and its ability to attract and retain skills. Some of the internal controls had been deficient although this was being addressed. One of the major causes for concern was the high drop out rates and failure rates of both pathologists and technologists. Opportunities included the broad range of multi-sectoral partnerships, and the National Health Insurance. It needed to align better with stakeholders, but this was already work in progress. It also needed to be assured of consistent and appropriate funding.
The Annual Performance Plan outlined that there was an agreement with National Treasury on the funding allocated to some functions as well as the teaching framework. Speaking to the debt, it was highlighted that NHLS owed its creditors about one sixth of the amounts owed to it, which were around R6 billion. No tariff adjustments were allowed in the 2014/15 year, so NHLS was still charging according to the 2013/14 tariffs and this, coupled with the fact of direct funding of some functions, meant it would collect 9% less in fee revenue and would see a real reduction in income of around 4% which would affect its operations. The different activities and purpose of each of the Programmes, and the allocation of budget, was outlined. It was stressed that Programme 2 on communicable diseases was well prepared for any potential outbreaks of Ebola inside South Africa, with testing systems in advance of those in UK and USA. The National Institute for Occupational Health faced policy and governance uncertainty, which was causing a problem, particularly since it had great potential to improve the lives of South Africans.
Members thanked the NHLS for the presentation but several expressed the need for it to improve its outreach, communication, relationships with stakeholders and general performance, which they hoped would be apparent by the time of the next meeting. Members asked for additional details on the financial situation of the organisation and the reasons underlying this lack of cash flow efficiency from the provincial governments. They also questioned the NHLS relationship and cooperation with the DoH. They were concerned about the drop in the pass rate and asked whether NHLS had done any studies into the reasons, and asked for a list of students, broken down according to various categories, to try to isolate where the problems were. Other questions addressed current staff and board structures, the work culture,staff salaries, and the relationship with the unions. Members asked if surveillance was sufficiently strong, how the NHLS would deal with rare diseases, and returned again to the question of financial stability and how exactly the NHLS would achieve this.
Chairperson's opening remarks
The Chairperson reminded the Members of the importance of respecting each other, in order to ensure the meeting could proceed positively. Health matters were highly sensitive and moving, and affected everyone.
She added that whilst Members should be free to express themselves in any of the eleven official languages, there was no translator in the venue and it would be useful for Members to use English as a common language.
National Health Laboratory Services (NHLS) Strategic plan for 2015-2020: Briefing
Dr Mahomed Fazel Randera, Deputy Chairperson, National Health Laboratory Services (NHLS), extended the apologies of Professor Perez, Chairperson of the NHLS, who was not able to attend the meeting, due to her obligations at the University of Cape Town, which was currently facing major debates and protests with regard to issues of transformation and symbolism in South African society and Tertiary education institutions.
Dr Randera stated that the media often tended to criticise the public health system, but he was confident that Members would be assured of the well rooted and capable nature of the Department of Health (DoH or the Department) and its entities. The NHLS abided by the Department’s mission statement as to develop the most effective clinics and health infrastructures across the country for South African citizens.
The NHLS focused on providing cost-effective and efficient laboratory services to public sector health care providers and governmental institutions, as well as to any private care facilitators who might request such services. He described the NHLS’ support of health research, and added that it also provided training for existing health science education.
There was quite an extensive footprint, with a network of 274 laboratories, including 17 that were providing viral load testing, and 61 undertaking CD4 testing. He explained that these structures were vital in the process of addressing HIV and TB in South Africa.
He also referred to the importance of specialised divisions of the NHLS, including the National Institute for Communicable diseases (NICD), the National Institute for Occupational health (NIOH) and the National Cancer Registry (NCR). These institutes are cross-subsidized by NHLS, which bills them on a quarterly basis, although they also received grants from the DoH directly.
Dr Randera began a critical appraisal of the structure, analysing its strengths, weaknesses, opportunities and threats (SWOT). He said that the main strength of the NHLS lay in its strong academic base and sustainable partnerships, its substantial research output, its internationally renowned intellectual capital, its trend setting in Qualitative Assurance initiative, and its national pathology laboratory footprint, mentioned earlier. He described its unique situation as an operational platform for training pathologists on a national scale. It had an exclusive national integrated data warehouse (which deals with no less than 8 million tests a year), and ran a national priority programme, and it would influence legislation where appropriate. He summarised that the structure could be seen as the platform of reference in the field of health, at a national and a continental level.
Dr Randera also addressed NHLS’s weaknesses and shortcomings. He firstly addressed the issue of cash flow, which had received significant attention from the media recently. The NHLS did face a difficult situation with regard to its financing from provincial and municipal governments, which operated on a ‘fee-for-service’ model. This was regrettably not performing as expected and revealed major shortcomings. He also revealed issues around leadership stability and succession planning, but said that in response to this, an interview process to hire skilled staff should be launched shortly. However, attraction of scarce skills and more significantly their retention also appeared to be a major issue, in the face of deepened competition from the private sector. He also mentioned problems in the organisational culture, as well as the need to update the current workforce model. Other challenges had been identified as the gaps existing within the career progression framework. Internal controls were deficient in some respects, and this would be analysed further in the briefing to follow. A major concern for the NHLS was the current high level of dropouts and failure rates of pathologists and technologists, with exam results on the decline in a broad perspective.
Dr Randera maintained that despite these challenges, there were some major opportunities for the NHLS. Firstly, its broad range of multi-sectoral partnership (which included NGOs) was defined as a definite positive prospect. The implementation of the roadmap to restructure the NHLS’s access was also a significant opportunity. The National Health Insurance (NHI) also remains a potential prospect of social improvement. The learning structures rooted within the NHLS were also assessed by Dr Randera as having a positive impact on staff skills.
Dr Randera finally explained the nature of the threats faced by the organisation, referring, amongst others, to the competition between the NHI and the private sector offer. He also described the major challenge posed by the fact that the 120 days imposed by creditors were regularly exceeded. The inaccurate alignment of training with s needed was also appraised as a significant threat. The international reduction in grant allocations could hinder NHLS’s development. Finally, there was a negative provincial perception of the NHLS, linked to the cash flow issues acknowledged by the Department.
Dr Randera explained that the primary objectives and underlying principles of the NHLS had not significantly changed over the last two years. He reassured the Committee that it was strongly pursuing its strategic objectives, and said that its structures and governance had been enhanced since he had last briefed the Committee, in 2013. He stressed the need for the organisation to become a substantial strategic information hub for public health benefit, through the strengthening of training and research. There was a need to improve the alignment with stakeholders, and this was already being addressed, through the DoH. Internally, there was a need to stimulate labour to achieve significant enhancement of employee engagement.
Finally, Dr Randera stressed that there was a need for NHLS to be assured of consistent and appropriate funding, as well as a more sustainable revenue generation.
NHLS Annual Performance Plan for 2015- 2016
Ms Joyce Mogale, Interim Chief Executive Officer, NHLS, presented the Annual Performance Plan (APP) to the Committee, beginning by describing the NHLS budget and the major changes undertaken.
She stated that the DoH and National Treasury had agreed to the change in funding of certain national functions, amongst which were the NICD, the NIOH, the NCR, as well as the functional framework of Teaching and Training.
NHLS currently owed its creditors less than what it is was actually owed by, most notably, provincial governments - in fact it owed to external creditors one-sixth of what it was owed. There was a gap in funding, because the DoH had estimated the total cost of functions to be R755 million, while the National Treasury only approved an amount of R678.5 million in the current budget.
Ms Mogale further addressed the Medium Term Expenditure Framework (MTEF) estimates focusing on tariff changes. She stated that the direct funding of the national functions would result in the NHLS having to collect 9.06% less in fee revenue. This must be seen against the fact that no tariff adjustments had taken place during the 2014/15 financial year, and the NHLS is still applying the 2013/14 tariffs. The concrete consequences would be that in the 2015/16 financial year the NHLS would see a real reduction of 3.97% across the board, and that its operations will be significantly affected due to the substitution of funding sources.
Ms Mogale then detailed the different programmes which were to be implemented and substantiated during the course of the 2015/16 financial years.
Programme 1 dealt with administration. Its purpose was to provide support services and ensure compliance with the relevant legislation, while ensuring effectiveness in NHLS’s administrative structures. To achieve this, NHLS needed to have effective financial management and accountability, on the basis of enhanced audit outcomes. This programme implied the development and implementation of the ICT governance framework, as well as of an efficient communication strategy. She highlighted the need for a responsive resource service, underlined by an effective recruitment process. She noted that the estimated budget for this specific programme would be of R565.677 million for the 2015/16 year.
Programme 2 related to the surveillance of communicable diseases and was driven by the primary objective of supporting the establishment of a National Public Health Institute for South Africa (NAPHISA). It aimed at enhancing the prevention and surveillance of communicable diseases, as well as preparing for potential outbreaks of public health concern, by developing the capacity to establish Emergency Operation Centres (EOCs). Ms Mogale added that such strategies must rely on an effective and appropriate communication system around communicable diseases, the management of national notifiable systems platforms on behalf of the DoH and the training and development of epidemiologists in communicable diseases. The approved estimated budget for this programme was R228.965 million. She noted that this was very important at the present time, because the NHLS would be the first line of defence in the case of any Ebola outbreak inside the South African borders.
Ms Mogale reiterated that NHLS faced some financial instability as a result of the fact that it both owed and was due to receive money. Without going into further details, she said that these amounts were "in the millions", mentioning that the debt towards one specific (unnamed) company was over R200 million. She reiterated that NHLS was hamstrung by the fact that many provincial governments had failed to pay what they owed to it, with KwaZulu Natal (KZN) owing the most. This situation created a dangerous financial imbalance.
Programme 3 dealt with occupational health, where the NIOH was a national resource with the great potential for improving workers' health. However, this organisation faced policy and governance uncertainty, and this was a serious challenge, for it was essential that policy decisions be made in a transparent and inclusive manner. The primary objectives of this programme were to promote workers’ health in a general way, to strengthen the district health system and to further develop surveillance systems, including an improvement of the current understanding of patterns and causation of cancer in South Africa. The original budget estimate for this programme was R99.158 million.
Programme 4 focused on laboratory services, and aimed to provide efficient and affordable cost-effective laboratory services maintaining high standards of service delivery. This entailed the respect of clinically acceptable standards of service, improving NHLS’s productivity. This entailed reliance on the optimisation of the current model of service delivery, as well as on an expansion of the number of NHLS laboratories accredited. Ms Mogale described a re-prioritised revised budget of R4.855 billion. This specific programme was the core of the performance plan for the financial year 2015/16.
Programme 5 enhanced academic affairs, research and quality assurance. The purpose was to strengthen the NHLS’s mandate of teaching training and researching, while ensuring that quality assurance standards were met, on the basis of an enhanced service policy development, accurate monitoring and sustainable development. This meant that there was focus on an improved total quality management, enhanced strategic information (notably through translation research), the necessity to ensure high pass and registration rates for pathology professional trainees, and the extension of organisational research platforms. This programme had a reprioritised and revised budget estimate of R394 million.
The Chairperson thanked the Departmental officials and asked Members to confine themselves to three questions in the first round.
Dr W James (DA) focused on the nature of the provincial debts owed to the NHLS. He asked for confirmation of how much money was owed, by which provinces, since when, and asked what strategy was being considered by the Department in order to get this money back. He joked that his question would normally have been asked by his EFF colleagues. He said that normally an institution owed such money could approach the courts, and wondered why this had not been done.
Mr I Mosala (ANC) expressed his concern that, in his opinion, the NHLS had not demonstrated that it had the capacity to achieve its objectives. He particularly referred to the weaknesses acknowledged, which seemed to seriously hinder the fulfilment of its duty of large scale service delivery. He then asked the NHLS members to explain why the provinces were incapable of meeting their payment obligations on time. He also noted that Ms Mogale was apparently the interim CEO and asked when the position would be filled, and what had happened to the previous incumbent.
Mr H Volmink (DA) asked whether the current scope of the organisation was large enough to cover the full scope of health issues in South Africa. He also asked what had been done towards restructuring the Board, how far this had gone. He asked to be reminded of the current systems of surveillance and asked whether they were well-developed and efficient enough.
Mr A Shaik Emam (NFP) said he would focus on the finances, and asked what the NHLS was doing to ensure short term but core improvements. He was worried about the high failure rates witnessed at the level of NHLS training and teaching structures, and said this suggested that the organisation had perhaps failed to target the right people with the right motivation and dedication. He asked what measures would be taken in order to reverse this trend. He finally asked to what extent NHLS graduates were taken care of, and how much they were generally earning.
Dr P Maesela (ANC) asked the Department and NHLS staff what they expected from Members of this Committee, and how Members could help the NHLS to better fulfil its duty and achieve the significant effectiveness it required. He stated that there could be more achieved through greater cooperation.
The Chairperson referred to the earlier question on failure rates and thought that the core problem of failure in the training structures also perhaps needed a better assessment of who was failing and for what reasons. She asked that details be given, which specified the race, social class, age and gender of those not able to achieve the required qualifications, and the relative proportions. She suggested that the NHLS officials did not seem to be committed enough to their task. The Chairperson also wanted to know about the relationship between NHLS and the DoH, and to what extent they coordinated their activities. She also enquired about the NHLS’s relations and interaction with the labour unions. She concluded by reminding the Committee of the importance of empowering youth through education.
Dr Randera thanked the Members for their input and suggestions. He introduced Dr T Tucker, a NHLS Board member, as well as Mr V Brijlal, an NHLS advisor, who would assist in answering questions.
Mr Vishal Brijlal showed a slide indicating the exact amounts of money owed by provincial governments to the NHLS structure as a whole, and explained that the table highlighted the debt due by each province. Certain provincial governments had paid - such as Western Cape - but others, particularly KZN owed significant amounts. The total amount owing to NHLS was more than R6 billion. Mr Brijlal described the initiative of the Minister in creating two forensic teams, with the objective of ensuring recovery of debt.
He referred to the Eastern Cape, pointing out that the province's total amount owing was R405 million as a sum of every NHLS service provided. However, the complexity of the invoicing, as well as the short time available to pay this money, created significant shortcomings in the collection process. He said that overall there was a very irregular pattern of payments, characterised by a serious lack of a constant base of revenue received regularly from the provinces, and this was hugely problematic as it threatened the stability of the NHLS.
There was another issue in terms of the content of testing - there was some tension as to whether the NHLS should be testing only for the disease suspected, or to broaden the investigation and test for other diseases also. This would ultimately strengthen and broaden prevention, but would also increase costs in the short term.
Dr Tim Tucker acknowledged that surveillance needed to be broader and more in depth within the NHLS structure, addressing a larger occupational spectrum. In regard to communicable diseases he stated that the allocated budget was sufficient and the issues were being effectively addressed. Non-communicable diseases, on the other hand, needed more focus. All infectious diseases were correctly attended to and treated in the right framework. Should a potential Ebola case be raised, the structures in place would be able to effectively identify and address it.
Mr Brijlal added that, in regard to Ebola, South Africa's structures were better developed than those in Britain or the US, so there was good surveillance.
Dr Tucker then addressed the issue of the trained pathologists, and noted that, in order to sustain and enhance the NHLS capacity to form and train large numbers in this profession, there needed to be strengthened ties and cooperation with Universities and Universities of Technology in particular.
He noted that there was no one single and simple explanation for the reduction of the pass rate. He urged Members not to attach excessively great importance to a single year’s exam result. A larger time frame must be viewed to properly interpret these results, and to see if there was a real trend of pass or failure. He said that there were expert committees within the NHLS, who were the core of the academic community, and qualified professionals were responsible for the training of students. Following the publication of the most recent poor pass rates, these expert committees had been asked to analyse and interpret these declining results, in order to highlight their underlying causes. The experts were still in the process of doing so, and would provide the Board with feedback and recommendations in due course, which could be discussed at the next meeting with the Committee.
Ms Mogale added that there had been substantial improvement in the technological capabilities of NHLS. She described professional equipment that she was introduced to, during a trip to Spain, which she never thought would be available for use in South Africa, yet it was indeed in place and being used in most laboratories for the benefit of South African citizens.
Ms Mogale noted that she had previously worked with a previous board, to 2008, and now, on being involved with it again as interim CEO, had noted a major change of working culture within the organisation, characterised by greater tensions and stress amongst staff, linked no doubt to the increasing uncertainty around the NHLS's stability.
Dr Randera noted that the contract of the previous CEO had expired and had not been renewed. The change of leadership was not linked to any form of misconduct or irregularities.
Dr Randera added that the composition process meant that the NHLS Board now included representatives from the DoH, the Council for Higher Education and the union movements. He mentioned also the involvement of foreign representatives,and said that the restructuring had been positive.
Dr Randera argued that the overall relationship with the DoH was positive and fruitful, although it would benefit from more regular meetings with the Minister. The relationship with the labour sector was driven by "positive and necessary tension". He referred to one particular case, to highlight this. One of the NHLS employees had been attacked and raped at the workplace, and there was enormous cooperation between the victim, her union and NHLS management to deal with the issue.
Dr Randera wanted to emphasise the importance of the NHLS in the broader picture of health in South Africa, and said it had a role of life-saver.
Dr James asked the NHLS members how they dealt with rare diseases, what sort of volume they might fact with these, and what mechanisms were in place to address them.
Ms M Scheepers (ANC) asked if NHLS believed it was empowered sufficiently to fulfil its objectives.
Mr Shaik Emam questioned how the NHLS was planning on achieving financial stability, commenting that the debts by some provinces were huge and this prevented NHLS from doing what it intended. He asked for more clarity on this point.
Mr Mosala asked for greater clarity on the table provided to the Committee which detailed the delays, amounts and circumstances of the different provincial debts.
Mr Volmink also referred to the table, and asked how, realistically, the NHLS would recover these amounts, particularly given the poor financial trends. He asked if measures had been taken at national level to address this dramatic situation.
Dr Maesela stressed the importance of the human factor in issues linked to health. He urged the NHLS to ensure cooperation within its various structures. He also emphasised the need for serious result and improvements in the NHLS, and hoped these could be displayed next time the NHLS met with the Committee.
Dr Tucker said that all tests were available to identify rare diseases from a given sample. He noted that this identification was taking place through a common technology platform relying on high technology. He also explained that this testing capacity was also required by other countries.
He then addressed the case of the NCR, which was at the moment involved in active consultation with the NHLS to seek better synergy. Greater cooperation, in order to enhance the public capacity to address cancer, was "work in progress". A strategy was currently being developed.
Mr Brijlal said that National Treasury had been asked to become involved at a national level to help with the process of trying to settle the debt. He stated the that the NHLS had significantly increased its capacity and the volume of work that it could cover, and he expressed his confidence that it would be further strengthened.
Ms Mogale described the change within the organisation, which had shifted from a monthly to a quarterly basis for reports. She argued that this change would leave more time for more accurate reports to be crafted, and this in turn would enhance the NHLS's ability to act on them. Speaking to inter-departmental cooperation, she noted that in each of the NHLS sub-committees, a member of the DoH would be represented, to try to enhance the cooperation.
She added that NHLS was currently keeping well up with technological change, for a certain share of its budget would be dedicated to the upgrading of certain machines, particularly in the least developed medical structures. She did, however, acknowledge that the NHLS might be facing shortcomings in communication, particularly with regard to these platforms of multiple capacities.
Dr Randera said that the NHLS had noted all the valuable input from members and would like to return and show significant results to the Committee. He concluded by reminding the Committee that the NHLS provided services to 85% of the South African population, and that, despite the criticism and the challenges it faced, it remained a professional entity deserving of pride. He added that this process could only continue if the NHLS was assured of sufficient cash flow.
The Chairperson noted that all input was intended to be positive and she hoped Members had not placed undue pressure on the NHLS. She hoped that concrete improvements would be seen by the next meeting and thanked all for their input.
The meeting was adjourned
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