The Eastern Cape, Free State and Limpopo Provincial Departments of Health were asked to present the key challenges faced by them within their provinces, as well as the ways that the departments were improving in terms of their audit outcomes. Their presentation was, however, introduced by an address from the National Minister of Health, Dr Aaron Motsoaledi. He noted that the World Health Organisation had suggested that there were six essential pillars for a health system to work effectively. Having outlined them, he noted that South Africa's National Development Plan and the National Department of Health 10-point plan had repeated those key elements, whilst other sessions held most recently to consider problems in the provinces had again isolated critical issues. These included having the right human resources in the right job at the right time, effective procurement and strong supply chain management. In relation to the finances, he illustrated how the health sector was particularly complex because what might be considered "household" kind of expenses in other departments were actually crucial to patient well-being, as well as the heavy demands of personnel and equipment and medicine. Particularly special skills were required of Chief Financial Officers. It was noted that the Department of Health was constrained by its continued reliance on the Department of Public Works for infrastructure, and suggested that every department needed its own infrastructure unit, whilst the budgets for infrastructure would also need to be better managed, with 30% put to maintenance backlogs, with adequate amounts also for routine maintenance, then for new infrastructure. The Minister noted that the media had made much of claims that the health system was running short of ARVs but he had visited the particular area and had found that the complainant had lied, with plenty of drugs having been delivered. One of the problems with tenders was the lack of well-functioning information systems, but the provinces and national departments were tending to shift the blame to each other, which did not help.
The Eastern Cape noted that it was a rural province, and gave the statistics. Its main medical burden related to HIV and TB.
The Eastern Cape Provincial Department of Health stated that it was working towards having a full top management team. It had received a qualified audit, with leave management and irregular expenditure still being issues, but this was an improvement on previous years. This Department had experienced underspending, except its programme for district health systems which overspent by R80 million. The main underspending was in machinery and equipment. The Department believed it had made significant progress in infrastructure. The Department expected it would need R2 billion more to expansion of service delivery to remote areas. The Department needed R325 million to efficiently operate their ems systems. The high number of medical legal claims also had a serious impact on the Department’s budget.
The Free State Provincial Department of Health received a qualified audit report for the 2013/14 financial year, with three matters in issue – those being irregular expenditure, assets and the state of financial statements. The Department expected this to remain the same in the 2014/15 period. The Department believed that at the heart of problems of inefficiency was the calibre of the workforce. The Department acknowledged that long queues as a result of improper systems was an issue, but also stated that the Department was lacking in staff and the demand for services far exceeded their expectations. The current budget for the Department was R8.6 billion, and the departments determined it would need R4 billion more. The Department had been placed under s36(3) of the Public Finance Management Act. The Department developed the Health Systems Governance and Accountability model. The Department faced difficulties recruiting personnel for infrastructure hence had underspent. The Department was also challenged by an inadequate budget, an ageing emergency fleet and were struggling with medical legal issues.
The Limpopo Department of Health had been placed under administration in terms of s100(1)(b). The Department does not currently have a Chief Financial Officer, who was fired and was subject to ongoing disciplinary procedures. This Department’s main audit issue was revenue. The Department struggled to provide quality service delivery. The Department had high medical legal costs and the emergency response times were not good. The Department had an ageing personnel profile and positions were being filled by unqualified people. In terms of financial management there had been budgetary shortfalls but an increase in demand. The Department had progressed in life expectancy and maternal and child healthcare.
The discussions mainly centred around the need for all departments and Members to set aside any political difference and work together to find the best solutions. In particular, those who had managed to curb their legal expenses were asked to help other provinces. Members also encouraged Departments to go to the media to talk to the people about the positive things happening and not let the media portray only the negatives. The Chairperson noted that the government wanted South Africa to move forward and so understood the problems with shortfalls, but would try to help the departments correct these and the audit issues, in order to improve.
National and Provincial Department of Health briefings: Challenges in Eastern Cape, Free State, Limpopo
The Chairperson began by raising concerns of the Committee about the performance of provinces, particularly noting that some were not doing well on their audit outcomes, but without wanting to reduce the work of the Committee to that alone, it was realised that much work was done outside of the audit. In 2014, there was a target that all provinces should get clean audits, but this had not been achieved. Three provinces would appear today, and three others on 2 June. The purpose was to hear from provinces what their challenges were. As far as the Committee knew, all provinces had political leadership at the provincial level, but some had permanent Heads of Departments (HODs) and if they did not, the Committee would want to know why. Only one Chief Financial Officer was mentioned in the introductions. She asked if other provinces had Chief Financial Officers (CFOs), and if there were enough support personnel. Members should be trained and have expertise to perform their jobs, and if there was no forward movement the Committee would question why, whether policy was at fault and whether interventions were needed by Parliament. Operational problems should be raised by HODs.
She reminded the departments that management letters were issued by the Auditor-General indicating the areas of focus and what the Department concerned would need to correct, and she wondered if provinces were taking it seriously. If these letter were taken seriously then why were there continually problems? She cited examples of long queues for medication and treatment and asked what it was preventing the systems being improved, and questioned if there were not enough people for filing or monitoring. She wanted to hear the main challenges in this meeting, which had time constraints, and the Committee would follow up or even visit the provinces.
Minister of Health opening remarks
Dr Aaron Motsoaledi, Minister of Health, apologised that he would need to leave the meeting after delivering his presentation, as he had many issues to deal with arising from his attendance at the World Health Assembly.
The Minister gave an overview of the problems faced. One was the perennial problem of audit results, and why they were not improving. He referred to the 2008 crisis in the Free State where the province had run out of Anti-Retroviral drugs (ARVs), under the then-Minister Barbara Hogan. The former Deputy Auditor-General was sent in to check, discovered the problem ran much deeper and performed investigations in other provinces, compiled by Integrated Support Teams, setting out all the problems experienced, province by province. Each province had their own copy for their specific problems. The national Department also had its own copy of national problems. The Chief Financial Officers (CFO) Forum had analysed these documents line by line to see how these problems could be solved. He stated that the Forum still existed, but the problems persisted
This raised the question whether South Africa had the capacity or ability to solve these problems. He suggested that the Committee visit the World Health Organisation (WHO) website which stated that a healthcare system must have six building blocks, without which it would be "shaky" and run into problems. These were:
- Leadership and governance.
- Pharmaceutical and other commodities – health was not necessarily only medicines, but this forms an integral part.
- Health workforce or human resources. However, the Minister stressed that this was not only about numbers, there must be specific people with specific qualities and skills, trained in a specific manner.
- Health information system – especially related to patients.
- Healthcare financing system.
- Healthcare delivery system – the pathways through which the country provided healthcare to the community.
In South Africa, in 2008, a diagnostic journey was taken to discover what went wrong in health for South Africa since the beginning of democracy. A ten point problem solving exercise was done independently of WHO. It was important to note that the first point was Leadership. The second point dealt with NHI. The analysis went on to talk about overhauling the healthcare system and improving its management. It also talked of human resources, and had many similarities to the WHO six pillars.
The Minister then wanted to fast-forward to the National Development Plan (NDP), which set out exactly the same problems with human resources. Last year, after the elections, all the Ministers sat down together to find where the problems were, considering those raised by the media or in meetings such as these. They came up with four solutions after considering the points for ten hours.
- Human Resources – not only in numbers but also appointing the correct people, in correct positions, with the correct skills.
- Financial management.
- Supply Chain – this referred to the procurement system (how and who procures). If WHO says the second building block relates to pharmaceutical and other commodities, these commodities need to be procured.
- Infrastructure – especially maintenance.
The Minister pointed out recurring themes between the WHO pillars, the NDP and the 10-point plan.
He noted that he had just arrived back from the WHO Assembly, where the Harvard Leadership Ministerial Round Table was held. Ministers from developing nations were usually chosen to partake, and lectures were held to help these developing nations to improve their healthcare systems. The topic of the lecture was fundamentals of efficiency and standards in service delivery. It was delivered by the Professor of Global Health systems at Harvard. This professor said that the sources of healthcare system inefficiency started at human resources. The Minister emphasised that the point about human resources continuously keeps coming up. Other continuous themes were procurement and thirdly, supply chain management. The Ministers who sat after the elections last year to discuss where the problems were had not been for any Harvard lectures and yet they had come up with the same problems, from their everyday experience.
The Minister reiterated that similar problems were faced in various systems around the world, but in South Africa they were compounded by the issue of infrastructure. Four years ago, there had been complaints about non-payment. Many companies stopped supplying goods. The Department of Health (DOH or the Department) then discussed what things they needed in order to run a healthcare system, termed the non-negotiables. The Department stated that there must always be budget for these non-negotiables, and each province must be able to say exactly how much they budgeted for them. The non-negotiables included medicines and pharmaceuticals, medicines used for children and pregnant women, food, vaccines, waste management, security, ARVs, TB medication – all items that would be noticed immediately if they were not available. He likened the healthcare system to a living body. The non-negotiables and the system as a whole had to be checked all the time to ensure that each was still functioning.
In order to have a proper financial system and proper supply chain management, there also needed to be a good CFO. There were currently four provinces without CFOs, and these provinces would suffer because there was no one to implement these strategies. In terms of financial management, there were six provinces under administration. The question here was - why was it only the Departments of Health under administration? He asserted that the reason was that finance in healthcare required special skill. He did not want to denigrate other departments, but used the Department of Education as an example. It got the biggest budget, but 80% of the budget went to human resource. A large chunk of the remaining 20% was transferred to schools, in what was known as norms and standards. The remainder was used for books and nutrition. However, in the Department of Health, everything needed in a household - linen, beds, soap, food, cutlery - was equally needed in the Department. In order to ensure that everything was a budgeted and balanced, a very specially trained and skilled person was necessary. In many provincial departments this was lacking. He asserted that supply chain management was not common sense, but a real skill, and he was speaking of the understanding of supply chain management, not the propensity for corruption.
Limpopo Province had been put under a section 100 dispensation before the current MEC was in place, and the Minister had visited Limpopo, with a team from the Office of the Auditor-General South Africa (AGSA) to meet with the managers. A disclaimer audit result was given. Some may have thought that the problem was only corruption, but there were issues with supply chain, because there were particular rules and regulations which should have been at the managers' fingertips and were not.
In Limpopo, the province lacked even the "household-type" items he had mentioned, for the patients. The procurement people were not even aware of the Transversal Tender process, or they did not want to use it because it did not give them room to manoeuvre. National Treasury every year prescribed this for commodities used in everyday life of departments and would not encourage departments to use normal tenders. A Transversal Tender could be used by every Department, and they would be awarded by Treasury based on a company’s ability to provide the goods, its ethics and their tax payment status and other considerations. Departments were given a database so they did not have to start from the beginning. The departments were, however, getting quotations every time they needed something – and these quotations were sometimes seven times more than there Transversal Tender.
When Limpopo was put under s100, its CFO was suspended. There have been attempts to charge the CFO because unless he was charged and his status confirmed it was impossible to hire another replacement CFO. Some of the investigative sections of government were still investigating. He asked that Limpopo not be blamed for not having a CFO, as there were bigger reasons, but he was pleased that a good Acting CFO was in place.
With all the provinces, the question was whether the provincial departments had what it would take to solve the problems, and whether the departments should take all the advice given?
The Minister moved on to deal with infrastructure. He said he had been dealing with the social cluster problems for past 21 years. He did not claim to have all the solutions but he did have the experience. There was a problem with homeless children. In 2005, Thabo Mbeki announced that there should be no children under trees or in shacks by the end of the year, and the City Press carried a headline later that year, "President Lies to the Nation", with pictures of homeless children under trees., with many of those pictures taken in Limpopo. The Minister at that time had essentially caused the President to lie, and came under fire.
The provinces depended heavily on the Department of Public Works (DPW), but this system did not work. The Minister said that departments needed to have their own infrastructure units (engineers, quantity surveyors) and this kind of team was being built in the National DOH. The Executive Council sometimes refused and says work should go to the provincial Public Works, despite not having the capacity.
Dr Motsoaledi had spoken with the Minister of Health in Ethiopa recently, who asserted that when public works was assigned to do all the work, the system does not work. Ethiopia now had its own infrastructure units in its departments. He noted that during a time when the Minister had been MEC for Education, that Department had its own infrastructure unit which, in two and a half years, produced more schools than in the last 12 years with public Works involvement, but that was abolished and this was a major setback.
MPs tended to complain after doing their oversight. There was indeed a backlog problem. Policies were, however, in place. The Provinces had to prove that 30% of the infrastructure budget was used for backlog maintenance, 5% would have to go to routine maintenance and the remaining budget was to be used to build new infrastructure. This had to be proven for them to get an additional grant.
In South Africa, there were huge responsibilities, but the authority lay elsewhere. People may complain to him, as Minister, about the state of the clinics. He knew the reasons for the problem, but did not have the instruments or the tools to fix them. The question was whether, in the widest global sense, South Africa was really willing to solve the problems and had the capabilities to do so?
He concluded that he was asking the Heads of Departments to be honest. In 2013, the then-Public Protector had done the rounds of healthcare institutions, asking questions, and the Minister was shocked to discover that most officials, feeling the heat, attempted to shift the responsibility to the National level. Last week, there were false reports that the country had run out of ARVs and he had gone to find out for himself. He found out that the Flagship Programme of drugs was working in abundance in the country. There was even buffer stock(10%): Gauteng had 834 000, KZN had 400 000 and the Free State had 27 7000. The Minister followed up and found that the lady who appeared on TV crying that she had no drugs, actually had all the drugs she needed. There were invoices to prove that she had already received two months supply of the drugs on 5 May, prior to appearing on national TV and claiming the opposite.
The Minister said that the country had paid around R4.4 billion for information systems, none of which were functioning very well. Council for Scientific and Industrial Research (CSIR) was asked to analyse the situation and report to the National DOH, which it had been doing for the last three years. The DOH was now about to get good information systems, but he acknowledged that tenders could not continue to be issued if the systems did not work. When the Public Prosecutor asked the provinces why their systems were no good, they had blamed it on the national level.
Eastern Cape Provincial report
The Chairperson asked the Eastern Cape Provincial Department of Health (PDOH) where the provincial Department had been standing over the past three years, in terms of the audit report, so that the Committee could see whether the province was progressing or regressing.
Ms Pumza Dyantyi, MEC: Health, Eastern Cape, stated that the Eastern Cape was a rural province. The province had 65.8 million people. Two-thirds of its population was under 30 years old, and 12.6% was under 5 years old. The province had eight health districts, six municipalities and two metros. The majority of the population was found in the OR Tambo district (the NHI pilot site). There were high poverty and unemployment rates and low socio-economic status. The poverty rate was at 57.2%. The most affected areas included the OR Tambo, Chris Hani districts.
This province had a medical burden dealing with TB, HIV and other unnatural causes of death, like injury. TB rates were at 11.4% and HIV was at 5.4%, and were the leading reasons for mortality. Other reasons such as cardiovascular disease were at 4.6% and diabetes was at 4.3%, with both also being common causes of mortality. The maternal and child mortality rate remained very high. The maternal mortality rate was 148.3 per 100 000 lives.
Mr Tobile Mbengase, HOD, Eastern Cape PDOH, said that he and the Department recognised the matters that the National Minister had identified as good governance and accountability of the systems, and he would speak to those. He would cover what the key issues or challenges leading to the province not having a qualified outcome, and the current position. The information was in the written report.
He clarified that this provincial Department had a CFO, who had been in his post for around three years, and had appeared before this Committee before. The Department was also working hard to have a full top management team. The Department had all its general managers, except one for supply chain, because it had not been able to find a suitable candidate to fill the position, despite having tried to do interviews twice. The Department also had a Human Resources manager but disciplinary procedures were ongoing at the moment. Interviews and reference checks had been done. Another managerial position for Strategic Information was not filled, but it was being dealt with and hopefully would be finalised by end June.
The Department focused on performance tools to strengthen it, and critical to that was the financial management system. The Department had a CFO, and a fully functional committee that sat every week, with a full internal audit committee (a unit manned by a general manager) and a risk management committee. These were essential instruments of governance, for internal strength and control of the Department and managing irregular and under spending.
The Department previously had 12 matters for qualification raised by the Auditor-General. Over the last financial year, the Department was left with two matters, those being irregular expenditure and leave management. The plan for the end of this financial period was to have an unqualified audit. In order to do this, the Department set up an audit improvement plan which outlines all key issues raised by the Auditor-General that need to be fixed, meticulously going over them and ensure they were fixed. There was also a steering committee that sat with auditors and would go through all these issues. All members of general management and the CFO had a responsibility to ensure that all the information necessary was given to auditors to ensure this this process was followed to move from a qualified to an unqualified audit.
The Department expected, on the basis of the plans put into place, that leave management may be improved but where there were aspects of irregular expenditure, that may remain difficult for the Department. When dealing with irregularities, the process required the Department to clear previous irregularities, and some of the Department’s irregularities went back ten years. The problem here was that the current information required may not be available. The Department was trying to at least gather information for at least the past three or four years. For current years, the Department expected to gather the information and would clear irregular expenditure. However, it could be held back because the totality of the irregular expenditure in the past may create a problem.
He noted that the financial performance was set out on Slide 5. He noted that over the last two years, there had been a qualified report with two matters, being the leave management and the irregular expenditure, for the 2013/14 financial year, and in years prior to that there were more qualifications; the Department had moved from 12, to nine to four and then to two qualifications.
The full financial performance up to 31 March 2015 was on slide 5. These were the provisional unaudited figures. Page 6 showed that in the last financial period, the Department had spent 99.3% of the adjusted appropriation, and underspent by R129.189 million, which was 0.7% of the total budget of over R17 billion.
The key issue here was the complexities of expenditure in the health system and the Department’s ability to procure, to achieve the level of expenditure. This showed that the Department had the capability to spend and account for money and had actually spent 99.3% of its budget.
All of the Department's programmes under spent, except for Programme 2 which overspent by R80 million - this was the biggest programme, dealing with the district health systems, where most of the resources were spent. The district health systems had the major component of service delivery. Service delivery in the health district system was composed of the community component, clinic component and the district health services. The Department must make provision for those who get sick, despite not knowing when this might happen, and services must be provided. He amplified that accidents happened, such as car accidents, and the Department had to be continuously prepared to deal with that. In addition, medicine prices went up, and although when and by how much was unknown, it must made provision for that. This resulted in the overspend. However, this at least showed that the Department had been able to respond to the increase in demand, over and above what was estimated.
In terms of the financial system, the Department then had to balance the appropriated amount given to it and ensure it did not exceed that amount, because this would then have been unauthorised expenditure. The R80 million was overspent in a manner the Department should not have experienced, but it was in response to increased demand. All the economic classification levels under spent, besides Goods and Services which over spent byR801 million. One of the biggest aspects of overspend in goods and services had been medicines and vaccines. This was caused by the collapse of the rand and the exchange rate, and the increase in prices around these goods. However, overall the Department remained within budget. It had faced a barrage of medical legal claims that had caused severe strain on the resources.
The over expenditure could not have been avoided, since clinics, medical centres and district hospitals formed the backbone of the primary healthcare system, and the Department had to ensure that the services that were needed still continued to be provided. The over expenditure had to balanced, hence the under expenditure in other programmes.
The main under expenditure was in Programme 8: Machinery and Equipment. This was due to delays in finishing specifications and tenders, which were mostly now finalised, around the end of the year. From the total under expenditure of R114.67 million, the Department had requested a rollover of around R54.99 million and R59.7 million from the conditional grants.
From the audit side, the Department currently had a qualified report, with the two matters being irregular expenditure and employee benefits. The aim of the Department was to have an unqualified report for the 2015 financial year. The rest of the information was about service delivery.
The Chairperson requested that the HOD move on to infrastructure.
The HOD stated that much of the infrastructure that the Eastern Cape had was as a result of the legacy of pre-1994. The Eastern Cape had more hospitals than most other provinces. This created a backlog in infrastructure, in both revitalisation and maintenance. One of the problems was that where the infrastructure existed today, it did not necessarily support or provide access to the people who actually required the infrastructure. The Department took the National Minister’s advice regarding spending 30% to deal with the backlog and was putting a lot into maintenance, with about 70% put to new infrastructure.
The last infrastructure assessment done by the national Department was around 2007, but since then the Eastern Cape Department had made huge investments, and he pointed to budgets for infrastructure of R592 million, R533 million and R558 million respectively to be allocated over the medium term period.
The Department had improved relations between themselves and some of their partners, making improvement in replacing eight clinics in the OR Tambo district, whilst 14 clinics were provided with extra consulting rooms and diagnostic equipment. The Department had completed a state of the art Oncology unit and critical care unit, the Department had upgraded some of the major hospitals (the TB hospitals) which provided big improvements in terms of infection control, and it had provided an expansion of the 72 hour observation unit at OPD paediatrics and other hospitals in 2014. The upgrading of another hospital would be complete by the end of this financial year. There was upgrading of various clinics, providing additional consulting rooms. The HOD noted that the Department does have a huge backlog but was making huge progress.
Maintenance contracts had been entered into with nine service providers for maintenance of critical medical equipment. A list of infrastructure was given for the OR Tambo, detailing where the improvement was, what the status of construction was,and the timeframe for completion of the project. The major areas being provided in OR Tambo were the St Barnabus new mental unit, Tabase Clinic, community health centres, the Philani Clinic, and the upgrade of St Elizabeth Hospital and Itombe Emergency base.
One of the biggest projects on tender now was in the Lusikisiki village, which would start in June 2015. The second biggest project was the upgrade of Bambisinale hospital. The Department had set up requests and proposals for these had begun. The third area was Sakhele Clinic and the upgrading of St Lucius Hospital where contractors had been appointed. The Department had 40 clinics scheduled to receive additional consulting rooms. The Department felt it had greater progress in infrastructure. There were one or two service areas where the Department faced challenges but infrastructure in general was moving in the right direction.
He moved onto supply chain management and spoke about the structure of supply chain that created the levels of assurances. The key point here was to invest in ICT to improve supply chain. The Department had a strong pre-order system, and would put every order through this. The Department provided training and was improving and professionalising the system.
He noted that 94% of senior management posts (120 out of 128) were filled. Seven out of eight district posts were filled. The Department was at an advanced stage of finalising organograms, and that would bring more resources to districts and health facilities.
Challenges and interventions were then discussed. Because the Department was primarily expanding services and improving qualities, and had to employ more nurses and doctors, making sure the hospitals had the right level of staffing, the Department anticipated that R2 billion more would be needed to expand these services to reach the most remote and poorest areas. The Department started rationalising their services to ensure it had internal savings while looking for additional resources.
Ambulance services were important and the Department had faced challenges but employed a lot of new people with the assistance of National Treasury, but still anticipated challenges with the follow through courses and ensuring those individuals were fully funded. The Department needed R325 million to operate the Emergency Medical Services (EMS) systems. The biggest infrastructure problem, despite advances being made, was the continuing need to upgrade and refurbish the infrastructure in the province. Budget was needed to upgrade the new provincial National Health Insurance (NHI) site.
There had been successful children’s programmes, where the Department would send 93-100 students per year. These programmes had helped poor children from rural areas to undertake medicine. However, the Department was short of R34 million to ensure students continued to get this.
The HOD then looked at the impact of litigation and the medical legal claims. There was serious litigation and the Department had taken steps to deal with this. However, the Department projected that the total liability, if every claim made to the Department was realised, could amount to about R8.251 billion, or an increase by R4 billion on a year on year. The Department owed the Department of Justice and Constitutional Development (DOJ) around R82.1 million due to these medical legal claims. The hospitals with highest litigation were identified as Butterworth, St Elizabeth Mthata and Dora Ingiza Hospitals. A table was inserted in the notes of the total legal costs and the settlements to be paid over the three year period.
This meant that interventions to address these would be key. These interventions would be aimed at reducing litigation, getting an ombud, getting a high-end legal expert and employing multidisciplinary committees to look at these events. The Department believed the Committee could assist it by noting the performance of the Department in the 2014/15 financial year. It requested that the Committee support its plea for additional funding to expand services, and it requested support in rationalising service delivery and improving utilisation of services. The Department requested the Committee to also note the medical legal claims and the proposal that was put forward.
The Chairperson asked whether Eastern Cape was under financial administration. The HOD replied it was not.
Free State PDOH briefing
Mr Benny Malakoane, MEC for Health, Free State, tabled some preliminary slides setting out the financial status or the budgetary status of the Department, with the following slides showing the effect of what the budgetary constraints may have put on the Department, and why the challenges were seen.
In terms of the audit outcomes, the Department received a qualified audit report in 2012/13, with about 11 matters, and in 2013/14 those were reduced to three. In 2014/15 the Department still needed to find out what the final outcome was, and was hoping for an unqualified report. The Department had a fully functioning audit committee, and a fully functioning internal audit unit, headed by a recently appointed director.
Mr Malakoane spoke to the point raised by the Chairperson regarding the management letter and what the departments did with them. These letters essentially tried to indicate to officials or to the Department what the root cause of findings were, and suggested measures that may be put in place to correct what had been found. The Free State PDOH had been doing this. This explained the reduction in the number of qualifications, from eleven to three matters in the previous financial year. The Department was awaiting the results for the 2014/15 financial year, but the findings would probably be the same – with qualifications on irregular expenditures, assets and maybe the state of the financial statements.
Regarding leadership and governance, CEOs had been appointed in most hospitals, with a few that did not have CEOs, because in order to qualify they must be classified as having 550 beds or more. The hospitals without CEOs had only 10 to 20 beds, and were not legally classified as hospitals, but as community health centres. The Department was keeping a watch on those, to ensure that there was command and control, and leadership and governance in the institutions.
Financial management was given impetus by the financial stewardship that was expected of the Department to perform, under the watchful eye of the audit committee. This was work in progress.
In relation to the workforce, the Department believed there had to be the right person, at the right time, on the right bus. At the heart of issues of inefficiency were the calibre or pedigree of the workforce. It was hard to find people who were specially qualified and the Department tried to make do with what it had. The MEC felt his Department was doing well, but could do better.
On predetermined objectives – the Department was trying to solve the biggest problems, which were maternal newborn child and nutrition health programme.
He noted the Chairperson's concerns about long queues and the six core standards. The queues could be seen as the result of improper archiving or not having systems to draw files quicker. The Department acknowledged that this was an issue for but also stated that it had an issue with inadequate workforce and being short staffed, which compounded the problem. The demand for services had exceeded the Department’s expectations. The province served patients from Eastern Cape, Northern Cape, Gauteng and Lesotho, who would not be turned away, although they were not factored in for the equitable share formula for allocation of resources. Only the rostered number of patients were considered for this. The Department implored the Committee to consider its plea for more finances and pointed out that when it made a presentation to Cabinet last year, it had done a zero based budget to find out how much it needed beyond the then-current budget allocation of R8.6 billion, and had calculated that it would need at least R4 billion more.
Vital functions or non-negotiables, as mentioned by the National Minister, continued to occupy the Department’s space. These were based on the accruals the Department had for the 2013/14 year, moving onto 2014/15 year budget.
Section 36(3) of the Public Financial Management Act entitled the Provincial Treasury to appoint an accounting officer into another Department, which was essentially the situation this Department was in. Mr Malakoane did not know if this was financial administration or simply the invocation of the provision of the Act.
The province had decided to take Mental Healthcare to different level, and add it as a specialised aspect of disease. Free State was number one in the country in terms of hypertensive cases, and second to Northern Cape with alcoholism. The province was amongst the top three with HIV/AIDS, after KZN and Mpumalanga. Free State was not amongst the lowest in terms of performance for maternal and child health, HIV/AIDS and TB programmes.
Free State had an operating health system called the Health Systems Governance and Accountability model which was considered to be the best way for the Department to deliver healthcare services, based on output 4. The crux was integration of health services, because the Department emphasised accountability of and to the communities the Departments served. This system, however, had to be funded adequately, and it would not work efficiently when there were budgetary constraints.
Dr David Motau, HOD, Free State Department of Health, acknowledged the challenges identified by the National Minister, especially in human resources and supply chain. He stated that most of the key positions had been filled; the HOD and CFO were present. Non-negotiables should be adequately budgeted for.
He presented an analysis of spending and noted that the province had suffered from inadequate budget since 2009 – there had been an increase from 57% in that year to 64% now. This meant that challenges on goods and services remained. Payment of employees as a percentage of total budget was actually decreasing by 2% from 2009 until 2013, when the Department had decided it could not continue like this and it had employed stronger fiscal discipline in 2014/15, which saw the compensation of employees increase by 1%. This hindered the Department from hiring people to run the programmes.
The CPI in 2009/10 was 6.9%. In 2012/13 it came down to 3.8%. This means the real value of goods and services in 2009/10 was 1.5 and then it went to 1.6, then 1.7 and so on. Nominally, the budget was increasing but inflation impacted negatively, and this was compounded by the fact that the price of medication increased by 24%, and this was not provided for in the Department’s budget.
The Department also had a problem with accruals. Mr Matau said the media sponsored this information without the Department’s permission. This meant the Department was operating at 70% of budget, especially on goods and services, so this was a serious problem as well.
Page 5 showed the current budget, total expenditure and available budget in terms of equitable share and conditional grants. For the equitable share, the Department had spent 100%, and 99% for conditional grants. In total, the Department spent about 99.6%. The problem here was cash versus budget. The Department also had a serious challenge in as far as infrastructure was concerned. It could not appoint and this was why the Department did not spend 100%. The Department was unable to recruit engineers, as it could not pay enough, but was working hard to fill those positions.
Page 6 demonstrated accruals, audited as at 31 March 2014 at an amount of R657 million, which came down to R237 million by 31 March 2015. It was operating at 70% capacity on goods and services.
The rest of the slides spoke to challenges. An exercise was done by the Department when it arrived at the figure for R4 billion more, the zero- based budgeting. It talked to the unavailability of medicines, status of pharmacists, EMS and infrastructure.
The Chairperson then asked that he summarise it to the main points.
Dr Motau said the inadequate budget directly spoke to non-availability of medicines, the inadequate funding of pharmaceuticals and delay in arranging of contracts., because of the changing responsibility, between the National Treasury and NDOH. Stock levels in depots was far less than the demand in facilities. The pharmacists per district were far less than required by the WHO, and in total the province needed around 705 pharmacists, but the PDOH did not have the money to meet this requirement. There were about 275 pharmacist assistants who were really assisting the province, and only 20 pharmacists. The Department would have to spend another R84 million to correct this, and did not have the money
In relation to the EMS, Free State had an ageing fleet. One ambulance was required per 10 000 population. In Free State there would need to be about 270 rostered ambulances, but it had only about 136. This leads to fleets accumulating high mileage and ambulances travelling longer distances. The Department did an exercise to see how much it would cost to lease ambulances. It had outsourced to a service provider and managed to save around R37 million, as shown on page 14.
The province experienced serious challenges with infrastructure, on which the National Minister was quite vocal. Last year, the Free State had been in the news because of problems with boilers that meant patients were washing in cold water. For 2014/15 there was funding for boilers of about R36 million, but the Department actually needed R251 million. For autoclaves and current conversion, the total shortfall was about R852 million, again being money that the Department simply did not have.
There was also a shortfall in ensuring Primary Healthcare engineering, as the province required about 36 new clinics at a cost of R666 million. There was ageing healthcare infrastructure. A lot of the budget goes to maintenance and the Department was unable to meet certain demands. Information and Communication technology was further on. It also had problems with the medical-legal issues, and a committee was appointed at a recent medico-legal summit, but there was a problem in the province overall.
Limpopo PDOH briefing
Mr Ishmael Kgetjepe, MEC of the Limpopo Department of Health began by saying that Limpopo was under a s100(1)(b) intervention, so the Committee would be familiar with the Province’s problems.
The Chairperson stated that she merely hoped to hear whether there had been any progress. Now that the Limpopo Province had come out of administration, the Committee was looking to check that it was moving towards a fully clean audit.
Dr Sipho Kabane, HOD, Limpopo Provincial Department of Health, stated that the presentation would be based on the six building blocks. For each challenge, the Department created a detailed set of interventions.
The Department does not currently have a CFO, he was dismissed in 2011, and the Department was currently dealing with the disciplinary hearing. That post would be filled as soon as possible.
The Department had improved its financial position, and although in 2013/14 there was a qualified audit, the Department was hoping that it would achieve an unqualified one this financial year. The Department improved on set targets this year, having achieved 68% of the set targets.
The main audit issues were mainly to do with revenue. Other issues such as assets had been cleared. In revenue, one of the key issues was the ageing ICT infrastructure. The Department was working with National Treasury to improve all these challenges.
Page 5 spoke to the major challenges. In terms of service delivery, looking at the previous three years, Limpopo had struggled to provide quality service delivery, around provision of food, security and other issues. There were a number of adverse reported and unreported events which led to high litigation costs and the medical legal claims attached to that. The Department also had poor access, long waiting times, and rude, uncaring, unethical and unprofessional staff. There were high peri-natal deaths in facilities, despite the national picture which showed marginal improvement. The EMS response had not been satisfactory. In terms of the work force, there had been a shortage of key clinical support personnel because of budgetary and other constraints, and the Department struggled in recruiting and maintaining highly skilled personnel. Limpopo had a high turnover of academics and clinical staff. Many teachers and nurses had just been waiting to take out their retirement packages.
The Department was also sitting with ageing personnel – 70% were older than 50 years.The Department needed to ensure there were people to replace them. There was also inequitable distribution of staff. There were vast difference between institutions, some having 100% of vacancies filled, while others had as low as 24% of vacancies filled. The Department was aware of poor staff attitude and feelings of entitlement and basically some of the corrupt practices had been picked up.
At a leadership and governance level, positions had been filled by unqualified persons, making decision making and progress slow. There were also a group of obstructive and ageing persons in key posts, merely waiting to get their pension pay checks. There were government structures that were dysfunctional and people had not been appointed in line with the National Health Act. There were also institutions where there was confusion about labour and management structures. There were hospital boards that believed they were running the hospital. Sometimes unions believed they should be the ones managing institutions.
Infrastructure for ICT had been poorly maintained over the years and was ageing. There was clear infrastructure backlog. Many hospitals were old infrastructures inherited from missionaries, that were unable to deliver modern healthcare services. Projects that were started in 2012 were still not finished because of lack of funding. The infrastructure budget was declining.
The province's laundries, generators and autoclaves were found to be problematic. Some of this was due to poor planning and construction. The Department was also sitting with high cost, high maintenance, low value ICT systems– but there was an initiative to rationalise the approach at national level.
There were key vacancies at provincial and district level, and where there was personnel, they were not appropriately skilled. A lot of librarians were hired when different skills were actually needed. Data Capturers were also a problem. Information systems lacked credibility. Storage and protection of this key patient care information was a problem. When the Auditor-General looked at how well the Department was complying with the targets, these issues had all been raised.
The other area of challenge was medicines, technology and equipment. In the past year, there had been long wait times between ordering and delivering, backlog of clinical and non-clinical equipment and lack of basic equipment at primary health care facilities, where it was found that there was poor planning, maintenance and procurement of equipment. There was also obsolete and dysfunctional equipment.
In terms of financial management, there had been budgetary shortfalls, but demand increased. Between 2010, 2011 and 2012, the province had disclaimers as an audit opinion. The problem here was the scope of limitations, where officials were not providing the correct information to do a decent audit, but this had been corrected.
There was poor compliance with supply chain prescripts, and revenue management remained an issue, as well as irregular, unauthorised, wasteful and fruitless expenditure. There had been fraudulent activities (which have been addressed) and there were ongoing cases. Record Management remained a problem.
The province had made good progress in life expectancy and maternal and child healthcare.
Mr Kabane stated that if there was improvement over the last three years - particularly in financial management and internal controls, which was proved by the improved audit outcome. The Department expected to maintain and improve on that. However, the areas that remained a challenge were the declining infrastructure funding, the inability to attract, retain and appoint specialists, especially since Limpopo was establishing a medical school, and the constant supply of medicine that needed to be maintained. The other problematic area was the response times to emergencies. Limpopo bought 50 ambulances which improved times but another 100 needed to be bought because Limpopo was far below the national standard. Lives would be changed if this could be achieved. The Department was also looking at the system that would be used to deploy these ambulances better.
The ICTS structure that was not in place was also posing challenge. Considerable investment had been made into this, but most of the modules that were supposed to be used were being charged for, but not being used. The Department had tried to reduce these modules to a minimum. A lot of backlogs needed to be improved, moving forward. A key aspect that was highlighted as particularly important was hiring the right person for the right job. If people did not perform, they were letting the system down
Ms P Mququ (ANC; Eastern Cape) commented in isiXhosa.
Mr M Khawula (IFP, KZN) pointed out that the Free State presentation stated something different than what the Minister said regarding stockpiles. The Minister said there was no problem and yet the presentation of the Free State said there was a problem. He then said that it saddened him to know there were these problems and issues. There was a way the members may be able to assist if they all came together and took a bold step as the legislature, irrespective of political backgrounds, and did not pass the budget, in order to obtain more money. Otherwise, this House would merely be rubber-stamping what departments had presented.
Ms L Zwane (ANC, KZN) was happy to hear the Free State had a summit regarding medical legal claims since this was accounting for so much money. She was concerned that only the Eastern Cape mentioned that it had these challenges. She called for integrated government- working together with the Free State, and see how it had reached resolutions, instead of losing millions on litigation. She wanted to know what was causing these big medical legal hazards that led to litigation and cost such a lot, and pointed out that more patients were aware of their rights.
Ms Zwane said that as far as money was concerned, the Departments would usually be told to operate within what they had. She wanted to hear from the Eastern Cape in particular about the infrastructure; she noted the infrastructure history but wondered how the imbalance between hospitals and clinics would be corrected. ,This was a critical aspect.
Addressing the Free State, Ms Zwane noted that the media had painted a difficult picture and said that the media was not patriotic, but the Department should take active steps to go to the largest national stations, and speak to the people, through the media, about the positives of health. Merely remaining quiet when challenged would not help. She suggested that the Free State must highlight its achievements. Even Limpopo, in its very difficult situation, had been able to achieve some good.
Ms T Mpambo-Sibhukwana (DA, Western Cape) stated that in order to transform and change, there had to be a step away from denial, and that step was taken at this meeting ,because the provinces had picked up on their challenges. It was a universal problem, so in the name of cooperative governance, she hoped that all departments and people would set aside their political differences, and exchange the successful models. She agreed that those merely waiting for pensions would affect service delivery, and this was in part due to cadre deployment. In order to In order to change and transform, introspection was necessary.
The Chairperson asked the Members to deal squarely with issues and not politicise them.
Ms T Mampuru(ANC, Limpopo) showed appreciation for the MEC and HOD from Limpopo and HOD, saying that there had been many changes in the administration during the last Parliament. However, she said that this PDOH was still faced with serious problems, and it would be in a better position if it could improve on financial management, data capture and infrastructure.
She noted that the Committee visited hospitals last year, and at one, Members were told that once the handover took place, construction would start. Two weeks ago, she got a call from members asking how far she was in improving Silom Hospital, for which the Department had got a mandate. She wanted to know what was happening when Parliament reconvened in July. Improvements should ideally have been shown in numbers, and percentages, to show exactly what had happened.
Ms Mampuru stressed that departments must not feel threatened or afraid. The government wanted to move South Africa forward, understood the problems about shortfalls and understood that the only reason for not passing a budget would be a political one.
The Chairperson repeated that there was no need for political debate here, but the departments were trying to be honest about their challenges. This Committee's support would be individualised, it would not follow a one-size-fits-all approach. She fully acknowledged the financial restraints. She suggested that all the provinces follow the example of Limpopo, and be completely open.
She stated that the Committee did not have enough time to consider all the responses. After meeting with the other provinces, the Committee would write up a Report and there might be a need to come to the provinces to see how best to assist.
Most of the problems were within the province’s jurisdiction, and there were very few that needed support or attention from the Committee's side. Everything that the departments did should result in good service delivery. If service delivering was lacking, the Department had not started doing its job, and she pleaded with all to concentrate on service delivery. The Committee would communicate the way forward. She commented that it was disturbing that only two provinces in the country got unqualified audits, not completely clean either. There would need to be strengthened oversight.
The meeting was adjourned.
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