National Health Insurance Grant projects; Department of Health and National Treasury on its expenditure & overall performance

NCOP Appropriations

09 June 2015
Chairperson: Mr S Mohai (ANC, Free State)
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Meeting Summary

The Select Committee on Appropriations was briefed by delegations from the National Treasury and the National Department of Health about the expenditure and performance of the National Health Insurance pilot programme, which was in its fourth year of a 15-year rollout.

The National Treasury presented expenditure trends of the National Health Insurance (NHI) programme’s direct and indirect conditional grants. The NHI grant had been severely under-spent, even though the budget allocation for the grants had increased. The Eastern Cape had the lowest spending, at 19.9%, with Limpopo the highest, at 93.1%. The overall spending of only 69% for 2014/15, including rollovers, was a disappointing return for the provinces. The bulk of the grants was to have been spent on contracted general practitioners working with clinics and other health facilities, but departments across the country had struggled to attract these specialists. In 2014/15, R367 million had been budgeted, and only R64 million had been spent in this area. Provinces had complained about supply chain management issues as obstacles to their spending of these funds, as well as a restrictive administrative environment.

The National Department of Health said that the NHI pilot programme had been going well, and donor funds had been used to improve primary healthcare levels in its pilot districts. It had struggled to use the conditional grants allocated to it by the National Treasury because they could be used only for specific activities, like contracting general practitioners (GPs). The National Treasury had indicated in a letter that the NDOH should use donor funding, and donor funds -- from the European Union (EU) in particular -- had been used to improve the administrative and healthcare capacities of clinics and other health entities around South Africa. The pilots would always perform badly when evaluated against their grant spending and grant target performance, because the grants were too restrictive, and also because the NDOH had been instructed to use donor funding where possible.

Members were concerned about the failure of the pilot programme to attract GPs, and emphasised that provinces needed to be more involved in these meetings, as their departments were responsible for much of the success of these programmes. Concerns were also raised about the need for more clarity on the successes and failures of donor-funded activities.

The Department agreed that there needed to be more discourse with the provinces concerning these pilot programmes and their implementation, because many of the failures were due to a lack of capacity at the district level. Treasury emphasised that the conditional grants were temporary, and that the pilot programme was still developing. There was a lot of room for debate and changes to the conditions of the grants, and the National Treasury would work with the NDOH to ensure that the grant conditions reflected the required activities of the Department.

Meeting report

National Treasury presentation
Dr Mark Blecher, Director: Health and Social Development, National Treasury, said that his presentation would be focused on spending trends. The National Health Insurance (NHI) programme was in its fourth year of a 15-year rollout system, and was currently focusing on health system strengthening. There were two NHI related conditional grants, one of which was the direct grant. The direct grant had been increased annually since 2012/13 from R150 million, to R350 million and R500 million, and was now in its fourth year of spending. The other NHI-related grant was the indirect grant, which had started in the 2013/14 financial year. Roughly two-thirds of the direct grant’s funds had been shifted to the indirect component. The NHI White Paper and NHI Financing Options Paper would both be released in 2015.

The direct NHI grant was a schedule five direct conditional grant, from which the national Department of Health (NDOH) allocates funds to provincial health departments. Grant funding in 2015/16 was planned to be used for strengthening district capacity for monitoring and evaluation, strengthening coordination and integration of selected municipal ward-based outreach teams within pilot districts, and to strengthen processes and supply chain management systems at the district level.

The indirect national health grant was a schedule 6A indirect grant, which was managed by the NDOH on behalf of provincial health departments. It had been introduced to deal with under-spending of the direct grant and to enable the NDOH to play a greater role in delivering services. The two parts of the direct grant were for the contracting of general practitioners (GPs) and developing diagnosis-related groups. R298 million had been allocated through the indirect national health grant in 2015/16.

The indirect grant funding would be used for developing and implementing innovative models for the contracting of health practitioners, supporting establishments of fully constituted and functional district clinical specialist terms, strengthening school health services, and implementing alternate chronic care dispensing and distribution models. This model had changed slightly over the three years it had been implemented.

The direct grant had experienced several rollovers, but in 2013/14 the indirect grant had been R288 million, which had improved to R395 million in 2014/15. However, spending in these two years had been only R9.4 million and R82 million respectively. Although the indirect grant had been created to improve spending, the direct grant had had better spending, and the indirect grant had not demonstrated that the NDOH had a better capacity to deliver than the provinces.

The two main areas of spending from the indirect grant were the consultants and the contractors. R140 million had been budgeted for spending on GPs (contractors) in 2013/14, but only R4.9 million had been spent. These numbers had risen to R367 million budgeted and R64 million spent in 2014/15, but there was still much under-spending.

The target of 900 contracted GPs for 2014/15 had not been reached, as 253 had been placed and 195 had signed contracts. Large amounts of money that were not being spent within this indirect grant.

The spending of the direct NHI grant was only 55% in 2012/13, but had increased to 82% when most of the funds were moved to indirect grants in 2013/14. The Eastern Cape had the lowest spending, at 19.9%, with Limpopo the highest, at 93.1%. The overall spending of only 69% for 2014/15, including rollovers, was a disappointing return for the provinces. Provinces spoke about the challenges they faced in their spending of the direct NHI grant. The following were all problems for the provinces:
- supply chain management delays;
- a restrictive administrative environment;
- staff challenges at the district level;
- no supplementary equitable share funding catered for by provinces;
- the Eastern Cape said it struggled with grant conditions and budget shortfalls for projects, and needed better coordination on NHI pilots

Changes were needed to improve performance and the spending of both grants. Systemic challenges had to be addressed, especially due to the failure of indirect conditional grant spending. Not much progress had been made in improving these issues within the four years of the pilot.

NDOH presentation
Dr Precious Matsoso, Director General, NDOH, began by distributing a letter to the Members of the Committee, written by the National Treasury and addressed to the NDOH, which she said showed that the National Treasury had advised the NDOH to use donor funding for some of their activities. Most of the activities of the NHI had been funded with by donors. The indirect grant was restrictive, as it could be used only for GP contracting, but the activities of the NHI went far beyond this. In contracting GPs, the NDOH had conducted national contracting. The service provider had been considered as well. The Western Cape had many options for GP contracting, which would be discussed in this presentation.

The number of GPs who had signed contracts was 287, and the number of GPs working was 256. These figures reflected only GPs contracted with the grant money as some provinces -- including Kwazulu-Natal -- had funded their own pilots, and there were now 12 pilot districts. The NDOH offers contracts to GPs for this pilot programme, but it does not approach GPs already working in hospitals to sign contracts. Many pilot districts had had clinics with doctor service before this programme due to NGO, provincial or national funding. These doctors had been taken into account when signing new doctors to contracts.

There was a concentration of doctors in some of the pilot areas, and the NDOH had requested an expansion of the pilot to other areas from the National Treasury. This request had been refused, but requests for other medical facilities like audiology, and speech therapy specialists for learners with disabilities, had been accepted.

It had been difficult for the Pixley ka Seme Municipality to attract GPs, and it had not contracted any yet. There were few rural doctors, and only 156 full time equivalent doctors could be contracted, compared to the target of 450 that had been set.

The Western Cape was not making use of this programme, because their Department of Health (DOH) was implementing a different framework. It did not contract GPs directly, but the Western Cape DOH contracted for its individual hospitals. The NDOH would support the use of its programme, wherein there was an individual service provider, over that of the Western Cape DOH. The NHI enabled the government to separate its actions as a purchaser and a provider in this sector.

Originally GPs in general had not been interested in the pilot, but assurances of the quality of facilities had caused a positive trend in the number of GPs available. Feedback had indicated that facilities had been at a serviceable level for GPs on the pilot.

There had not been much improvement in the building of capacity to manage the NHI through the strengthening of district management. The establishment of an NHI fund had also not taken place. Hospital reimbursement reform had taken place, with funds from provinces and donor funds. Many other activities, like school-based primary healthcare (PHC) services and municipal ward-based PHC outreach teams, had come from donor funding. Many activities related to the NHI pilot had been funded with donor funding and provincial appropriation.

The appointment of district clinical specialists for support had struggled greatly to equip provinces with anaesthetists, but 220 other specialists had been attracted. These specialists were vital to the success of the NDOH in the future and requests had been made to Treasury to take their activities beyond the NHI pilot.

In the NHI pilot districts, the municipal ward-based PHC outreach teams were focused on evaluating the need for PHC and other facilities in different districts. They would also work on preventing problems before they became untreatable. These teams used mobile technology to communicate with NDOH facilities if they required help immediately. There were also mobile primary healthcare trucks that operated within the schools in these pilot districts. There were 27 mobile trucks, 17 oral health mobiles and three eye care mobiles. These mobiles offered a chance for children to get treated by specialists they would otherwise not be exposed to.

Many GPs refused to work in facilities that had not been renovated recently, and many renovations had been done in preparation for the contracting of GPs. District doctors had been contacted and their needs for facilities had been respected when renovations were planned.

The NDOH had assessed its human resources and used a tool determined by the World Health Organization to determine how many health specialists were needed in an area. This tool also determined the ratio of skilled to administrative workers that were needed, and this had been used in the NHI pilots.

Investigations into clinic conditions had shown that many clinics were poorly staffed to deal with their administrative responsibilities, which made the records at each clinic less reliable. The rollout of the NHI had enabled the NDOH to investigate the functionality of clinics more closely than normal, and it had distributed more than 53 000 new registers to clinics across the country. Administrative staff members had also been educated on the new method of keeping records. These improvements had greatly improved the waiting time for patients at clinics, and had also led to other benefits for staff and patients.

The credibility of reports had improved, and the patient registration system had been implemented as a result. 370 computers had been bought for clinics to use these systems, and only 22 of 37 systems had been retained and built on in the new system. The new system would work universally. 397 456 patients had been registered on this new universal system, which would be vital for the treatment of many patients, especially those whose treatments needed to be monitored, like patients who had been prescribed anti-retrovirals. These systems needed to be rolled out to the rest of the country. All health providers had also been captured on a health provider registry. However, some practitioners were not practicing and needed to be differentiated from active health providers. This had been taken into account with the new registry.

The NDOH has spoken to service providers with the goal of reducing congestion in clinics, especially with the collection and dispensing of chronic medicine. Improvements had been made to systems that would make it easier for individual patients to get their medicine, as they would be centrally dispensed.

The NDOH had spent R27 million on school health services, R1 million on district clinical specialist teams, R3.9 million on PHC ward-based outreach teams, all the funding for which came from the EU funds. The EU funds also went into a host of other initiatives.

The National Treasury had indicated that the NDOH should use donor funding, and that the performance of its grants should be evaluated as such. The NDOH would always under-perform in evaluations of its success with the NHI grants, because the grants were inflexible and did not help the NDOH achieve its goals. The grant model needed to be changed, and was not appropriate for the change in the systems.

The Chairperson referred to the DG’s assertions that the conditions attached to conditional grants made them difficult for the NDOH to use. He asked what was so difficult about them, and whether they could be reformed through engagement with the National Treasury. What were the three frameworks for this system that the DG had mentioned, and what were the options for the NDOH going forward?

Mr C de Beer (ANC, Northern Cape) said that it would have been useful for provincial representatives to have attended this meeting. The key performance indicators of the NDOH were not at issue, but the need for warm bodies was clear. Young doctors were difficult to find in rural areas, as they could not be enticed from attractive urban living. Facility spending and grant spending should be read together. The capacity of provincial departments of health should also be evaluated, as they implemented the programmes of national departments. Provinces had not catered for equitable share funding, but what did this mean? Where did this funding need to come from?

Ms M Dunjwa (ANC), Chairperson of the Portfolio Committee on Health, asked why there were so few anaesthetists, as there had been more in recent years. There had been staff challenges across most districts -- how had this affected the actions of the NDOH? There needed to be more clarity on the success of the NDOH in finding warm bodies. How did the NDOH monitor whether areas were successful?

Mr F Essack (DA, Mpumalanga) asked why the NDOH was implementing its fourth year of a pilot programme while still deciding on legislation and policies which would only be done by December. Who was to blame regarding the failure to implement the grants? What support had been offered to the Eastern Cape as a struggling province? The focus areas of the NHI green paper had not been set against targets, and it was not clear whether the NDOH had achieved its targets.

Mr M Chetty (DA, KwaZulu-Natal) asked what plans were in place to improve supply chain management delays? Provinces had not budgeted for certain issues, which made it difficult for national departments to budget for them. Staff challenges at the district level needed to be prioritised.
Ms E van Lingen (DA, Eastern Cape) asked for more information about the evaluation of the spending of the NDOH, in terms of its funding from other sources.

NDOH response
Ms Matsoso agreed that the provinces should be present for these meetings. The six NHI project managers, with two more awaiting deployment, who had been appointed by the NDOH, should attend as well. The EU had not given money to the NDOH to implement the NHI -- those funds had been given to improve primary health care (PHC). The green paper of the NHI was heavily related to improving PHC. GP contracting funds had also been requested from the EU funds, and donor funds have been used for many kinds of activities. There was a convergence between the targets of grants from the EU and the NHI grants, so they were used interchangeably. The EU also funded the NHI project managers.

The key performance areas of the NDOH needed to be evaluated with the white paper and the financial paper, which needed to be released by the Minister of Health and the Minister of Finance respectively. These would guide what the source, and amount, of funding the NHI needed to find. The white paper would determine what the service platform for the NHI would be. The NDOH needed to find the best method to access healthcare workers in the private sector.

The National Health Act stated that there was a certificate of need that could allow the NDOH to allocate doctors to certain areas, but doctors had reacted badly to this and argued that there should be incentives for young doctors to work in rural areas.

The NDOH needed to protect its R350 billion of assets, and more funds should be directed to maintenance.

The NDOH had employed 400 unemployed graduates three years ago, trained them for one year and then employed them to collect revenue in hospitals, or work in information technology (IT) or in human resources. These employees had collected revenue worth R1.3 billion that would have otherwise been uncollected. This initiative had been implemented using EU funds. These employees had greatly improved the system of administration in clinics and hospitals around South Africa.

Anaesthetists were employed in NHI pilot districts, and were extremely rare. Doctors with diplomas were currently being considered for hire, as it was too difficult to find specialists in this field.

The Eastern Cape and Kwazulu-Natal had each decided to implement an additional pilot site in their provinces. The NDOH felt confident about the viability of its pilots, and if the initiative had been implemented earlier at a larger scale, an Australian model would have been proposed – it had been too expensive at the time. These activities had been planned and implemented with the collaboration of key stakeholders, so that policies would include the concerns of many groups. The NDOH had been testing the efficacy of its new policies and as such had not produced a white paper for this programme.

The NDOH had requested changes to the conditions of the NHI grant, but the National Treasury had not approved of these changes.

The patient registration systems would work with existing identity document (ID) systems used by Home Affairs, and this would enable clinics to track South Africans at all of their facilities.

The NDOH had invited Mr Kenneth Brown, the Chief Procurement Officer, to discuss a change in the systems of procurement of equipment, hospitals and other infrastructure.

Provinces needed to distribute their staff effectively, as the NDOH had found that some clinics were overstaffed, while others were understaffed. The NDOH used a normative approach to determine if a clinic was understaffed.

Some areas had not been sufficiently monitored to make an evaluation of their progress. Other areas had not been monitored against targets because they had used different approaches. Most areas had achieved over 75% of their targets on most projects. However, most areas had struggled to meet their infrastructure targets.

The NDOH conducted monitoring and evaluation by requesting monthly financial reports from clinics, and liaised closely with clinics when there were issues. There was also mandatory performance monitoring, and the NHI grant had made provision for a director to oversee performance monitoring and evaluation. Compliance reports were also supplied quarterly.

The NDOH needed an NHI fund that would contract GPs directly, because there was currently a concentration of doctors hired in many areas. The United Kingdom had a GP contracting model, and would send some of its doctors to SA for six months as part of a bilateral agreement. The NDOH was working to make attractive proposals for these doctors, capitalising on the attractive wildlife and nature of South Africa that international tourists enjoy so much.

The NDOH needed to improve its service provider registry, so that it could better evaluate the number of active health professionals who should be paying subscriptions. These professionals could also be contracted more easily if the registry improved.

The NDOH had held workshops with the National Treasury to discuss work streams between the two departments. Issues of contracting GPs needed to be discussed extensively, so that the NDOH could begin working.

Further discussion
Ms Dunjwa asked for more information about the state of clinical staff across the country. It was difficult for SA to use European models, and other African programmes should be evaluated.

Mr de Beer said that the Standing Committee would make recommendations regarding the funding of these programmes to the National Assembly and the Minister of Finance in July. The Northern Cape Provinicial Department of Health had been given an additional R30 million to create a new nursing school, and he thanked the National Treasury for this provision.

Another Member (from the Portfolio Committee on Health) asked why domestic private clinics were not consulted for their models, as opposed to other countries like the UK.

National Treasury’ response
Mr Edgar Sishi, Chief Director: Provincial Budget Analysis, National Treasury, said that there were currently five projects that the CPO was working on, one of which was focused on the procurement of medical equipment. There were internal management challenges within each province, which were struggling to run the business of procuring goods and services. A customer service unit had been created which helped provincial departments and treasuries to meet their requirements. This would help with supply chain management problems.

Supplementary budgets were not available for people to be hired because the provinces did not have sufficient capacity or money to spend. National budget benchmarking had been ongoing in an attempt to address this problem. The provinces used their own discretion for the distribution of many funds.

Other funding was needed for non-health infrastructure that would enable the success of health programmes, and these initiatives needed to be better discussed and organised within the provinces. The provincial departments should work with other non-health entities to ensure the success of pilots like the NHI. Projects related to this were ongoing, and the Committee would be presented with more information about this later in the year.

The National Treasury had not dismissed the NDOH’s desire to innovate with these grants, but instead had emphasised that departments needed to do more monitoring and evaluation before grant conditions and plans were changed. It should be expected of a treasury to hold departments to an original plan, and to be rigid on certain terms.

Dr Blecher said that these grants should be seen as temporary, and should be innovated in the next financial year. The National Treasury would commit itself to working with the NDOH to change the funding and grants.

Ms Matsoso said that the NDOH was working with the Nursing Council of the UK and other structures to try to get more health specialists into the country. There were agreements being drawn up to address the issue of health specialists from developing countries like SA being headhunted by developed countries. An MOU was being drawn up with the UK to structure this initiative.

Ms Dunjwa said that the MOU with the UK was a step in the right direction, because South Africa was so good at training health specialists as a developing country. The NDOH needed to discuss how non-health infrastructure obstacles to health initiatives could be addressed with provincial departments.

The Chairperson acknowledged that more provincial input was needed at these meetings, and that their absence was an oversight by the Committee. The Committee would be visiting clinics and other entities in Kwazulu-Natal, the Western Cape and Limpopo to discuss the effects of conditional grants.

Consideration of Outstanding Minutes
The Committee approved draft minutes for the following meetings - 28 April, 12 May, 13 May and 2 June 2015.

The meeting was adjourned.


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