Health Sector Report: briefing by Auditor-General

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01 March 2017
Chairperson: Ms M Dunjwa (ANC)
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Meeting Summary

The Office of the Auditor-General presented the Health Sector report to the Committee. It provided information which had the potential of empowering the Committee during its oversight functions by focusing on key areas of service delivery. The report was based on findings of audits conducted in selected hospitals from the nine provinces in South Africa. The focus of the 2015/16 financial year was on use and maintenance of medical equipment, planning and maintenance of infrastructure and the underlining Information Technology (IT) and Information System (IS) as well also addressing the management of medical waste. The chosen areas were those which had direct impact on service delivery.

The use of medical equipment was discussed under three broad topics: planning for the procurement of medical equipment, use of medical equipment and the maintenance and repairs of medical equipment. Infrastructure planning and maintenance were based on the planning and maintenance of health infrastructure projects. Information Technology was examined on the overall status of e-health strategy implementation at provincial level, network infrastructure and connectivity, the availability of billing and revenue systems and pharmaceutical systems. The management of healthcare waste was based on internal control of management of healthcare waste, compliance with National Environmental Management Act (NEMA), National Environmental Waste Management Act (NEMWA) and procurement and contract management.

The report identified a lack of standards and guidelines for procurement, lack of optimal use of equipment, delays in maintenance or repair of equipment and a shortage of essential equipment in medical workshops. It also identified contractors not producing quality work, health departments not having an approved policy to address routine maintenance of health facilities, weakness in internal control processes and lack of e-health strategy findings in most of the provinces.

Recommendations on how to improve service delivery in the sector included that the National Department should complete the regulations and conduct a performance audit on the management of healthcare waste. Other recommendations included the need for leadership to take ownership of the findings and address them accordingly and strong performance management at all levels with a consequence for transgressors.  

During the presentation the Committee asked questions which included why the previous sector reports were not tabled before the Committee and to state the purpose of the presentation. They also wanted to know if it were possible for the Auditor General (AG) to provide the sector report before the tabling of the Budgetary Review and Recommendations Report (BRRR) report and how maintenance and repair could be enforced. Members asked if it was possible to have a standardized contract for procurement of medical equipment and the role of the South Africa State Information Agency (SITA) in ensuring interconnection among the Provinces. They also asked about the possibility of provinces using a unified system for health and what motivated the management of hospitals to procure equipment without a needs analysis.

Meeting report

The Chairperson opened the meeting by encouraging members to be calm and unemotional in addressing issues so that the Committee could get the needed information for the execution of its responsibilities. She asked the delegates to start the presentation after the members and visitors had introduced themselves.

Mr Andries Sekgetho, Business Executive, AGSA, thanked the Committee for the continuous engagement. He said the office of the AG looked at the financial management of all the organs of government. He stated that the BRRR report might not sufficiently empower the Committee. The sector report looked at the sectors focus areas and identified common findings on how the sector fared in each of the nine provinces and the national Department. The focus areas were linked to service delivery and other important aspects in the sector. The sector report was important because health was a crucial objective in the sustainable development goal (SDG) and the achievement of the priorities of the National Development Plan (NDP) by 2030 and the need to align the sector to these goals. In other words, to be effective as a sector there was a need to know what South Africa was dealing with in the environment of the country.
The health sector was dealing with four key challenges which included the complex burden of diseases, the quality of healthcare, efficiency and effectiveness of the healthcare sector and the spiraling cost of healthcare, in addition to some physical constraints. The report was the second sector report that was tabled. The first sector report was presented in the 2013/14 financial year. Over the past three years the focus was on infrastructure, HIV/AIDS grants, emergency medical services, medical waste and IT/IS system. For the 2015/16 financial year, new focus areas were adopted so as to become more effective. Focus for the 2015/16 financial year was on use and maintenance of medical equipment, planning and maintenance of infrastructure and underlining IT/IS systems. Though medicine played a pivotal role in healthcare, this was dealt with in the Pharmaceutical Performance Audit Report. The report was discussed with various stakeholders; the Minister, HOD, at the national health council and all stakeholders made their inputs before tabling. Beyond the key focus areas, the sector was also faced with structural challenges, with regards to the three tiers of government. This was in relation to who did what and how they were done which all had a role in the effectiveness and success of the sector.

Ms Maryke Schneigans, Senior Manager, AGSA, said with regards to medical equipment, during the 2015/16 financial year, 19 hospitals were visited across the nine provinces. Two hospitals per province were chosen and three were chosen in Gauteng on specific request. The neonatal ward, radiology and clinical engineering departments were visited; the team examined the planning, use and maintenance of medical equipment. Eight of the provinces reported limited budget with the exception of the Western Cape. The detail of the specific budget showed that most hospitals did not overspend on the budget because there were delays in procurement processes. An example was a hospital where the head cooling machine was procured for the neonatal ward. It was ordered in 2015 and re-ordered in December 2015 and during the auditors visit to the facilities in March 2016, the machine was not yet supplied because the procurement document was lost.

Ms Schneigans said that there was another hospital in Northern Cape that procured a mammography machine in 2014 which was not delivered as at June 2016. Patients were sent to private hospitals and had to pay more for services. On the use of medical equipment, there was a check for equipment which was not optimally used and three reasons were identified why equipment was not optimally used; equipment was not optimally used due to infrastructure deficiencies, due to lack of staff and due to maintenance or repairs deficiencies.  Seven provinces recorded that equipment was not optimally used due to infrastructure deficiencies, five due to lack of staff and seven due to maintenance or repair deficiency. There was a mammography machine in Frere hospital that was faulty and was not repaired due to budget constraints. As at April 2016, there were 104 patients who could not be attended to and another 218 patient on the waiting list. This machine was worth R4.4 million, but needed only R56 000 to be fixed.

Ms Schneigans added that a CT Scanner was standing in Pietersburg because of a small part that was not working on the machine.  Most of the SiPAP systems, a resuscitator and an ultrasound machine at the Rob Ferreira Hospital in Mpumalanga was faulty since 2015 and were still faulty until 2016 when the facility was audited; this brought about using manual resuscitation for babies. An X-ray machine at King Dinuzulu in KwaZulu-Natal hospital was never used because the building was not commissioned; its maintenance contract lapsed while it was never used. Some of the problems identified were: lack of sufficient number of clinical engineers, poor record keeping for maintenance and repairs of equipment, condemned and written-off equipment not removed from functional or clinical areas and shortage of space in the medical workshop.

Mr Sammy Dibate, Senior Manager, AGSA, said the audit focused on infrastructure planning and maintenance and also touched the element of project management. He said 72 projects in nine provinces were sampled with eight projects per province in the 2015/16 financial year. The audit looked into planning protocol, policy around maintenance and if routine and plant maintenance was well planned. The findings addressed some of the deficiencies identified. Seven of the nine provinces recorded instances of poor quality workmanship; this was as a result of poor site supervision, and not following the recommended project management protocol. There were un-utilized equipment in six of the nine provinces, needs were not correctly identified and project briefs were not developed to address the needs in three provinces. In three different provinces feasibility studies were not carried out and detailed designs of the projects were not well developed and documented. There were five provinces that did not administer the contract in accordance with the provision of the contract and treasury standard and important project documentation was not retained and filed so that it could be made available when needed respectively.

Mr Dibate said that the findings on maintenance of infrastructure showed that five of the nine provinces did not have policies in place to address routine maintenance of health facility infrastructure, four did not have routine maintenance planned, three did not have budget for routine maintenance and three did not achieve the targets and timeframes for routine maintenance of health facilities. The prevalent root causes of the some of the deficiencies in the systems included the contractors not ensuring proper adherence to technical specifications, issue of poor project planning, lack of monitoring of project personnel and implementing agent and poor or insufficient guidance by the national Department with regards to how to go about the need-determination. The Department needed to step up to make sure it guided the process of need-determination. Some facilities were not following the accepted treasury adopted methodology. Other issues identified were lack of proper documentation which happened because the project management information system which was the information repository was not effectively utilized. Some of the departments that submitted the User Asset Management Plan (U-AMP) did not follow the prescript of the Act and did not follow regulations as specified by the National Department of Public works.

He further gave examples of maintenance problems in the hospital across the provinces. The first was the Multi Drug Resistance (MDR) Tuberculosis ward at the JST hospital in the North West which was not in operation for 18 months at the time of the audit because of a faulty mechanical ventilation system. There was also an example with the pictures taken from the Mmabatho College of Nursing building which had grass growing on its rooftop and a damaged wash hand basin in the ablution facility. He said it was surprising to know that maintenance personnel was employed by the Department but they did not take care of these facilities.

Ms Maud Madondo, IT Audit Senior Manager, AGSA, said on the Information Technology (IT) perspective, the audit covered e-health strategies at the provincial level as well as pharmaceutical systems, billing and revenue systems and network infrastructures. The e-health perceptive was an avenue for the Department to get back to basics by automating the health sector which was done by making sure that there was adequate IT infrastructure and ensuring interconnection among the facilities in provincial and National Departments. Four provinces showed a complete lack of alignment but most of these provinces had challenges with network infrastructure and these provinces cold not prioritize e-health initiatives because they were not initiated. Four had structures and Committees established for E-health strategy while others required interventions, because some provinces lacked skill or awareness. Five provinces did not implement monitoring and reporting of e-health strategy.

The national Department was working on the implementation of the Health Patient Record System (HPRS) and piloted 50 sites last year and planned to increase the sites to 1200. Overall, very little progress was made in the area of e-health. On network infrastructure, there were outdated infrastructures that could not support the health information systems in seven provinces. Northern Cape and Western Cape upgraded their infrastructure in the last two years. There were inadequate firewalls, patch and antivirus management in all the provinces with exception to Western Cape; this implied that there was no security against intruders from accessing the systems. Environmental controls such as air conditioners and UPS were not adequately managed in six provinces and six provinces decentralized network resulting in adequate connectivity.

There were different types of billing and revenue systems used in different provinces and down time was often recorded. This made clerks to resort to manual capturing which was not always computerized when the system was available. There was no adequate validation control to ensure that input in the system was accurate and complete in five provinces. All the provinces had no interface between the revenue system and the BAS systems which implied that update was done manually and may not be done on the 1 April 2017 as expected; as such patients were charged on old tariffs which amounted to loss of revenue. There were no integration of pharmaceutical systems among all pharmacies, the depot and the hospitals in all the provinces and not all the modules of the pharmaceutical system were used. The systems were not able to assist in trend analysis of pharmaceutical products to order the quantity required. The Pharmaceutical Systems were not often used due to poor connectivity and slow response time which caused reversion to manual processes.

Ms Jolene Pillay, Senior Manager: Health Portfolio, AGSA, said that healthcare waste was re-instated as a focus area because of the significant attention that was given to it by the media and a complaint that was received by the Auditor-General’s office. In evaluating healthcare waste, the focus was on compliance with the NEWMA. The key area that was considered was the internal control environment which related to policies and procedures and how facilities and their staff went about managing medical waste from the point of generation to the point of disposal. The auditors identified that two provinces did not have appropriate policies and procedures; the North West Department did not have an overall approved policy which resulted in inconsistency in how waste was managed and the Northern Cape Department had a general policy concerning how waste should be managed but did not have specific procedure on how it should be managed. Procurement was a new area that was considered, contracts of healthcare waste were considered to know if proper procedures had irregularities and there were irregularities in KZN and NW in the awarding of the contracts.

In contract management, the service provider and the department did not adhere to the contracts, collections times that were agreed upon were not adhered to and sometimes the Department did not adhere to the clauses of the contract. The question of whether general waste should be separated from medical waste to avoid increased cost, only the Eastern Cape had challenges on separation of waste. The national Department was in the process of developing regulations around healthcare waste which was in a draft form for a number of years and it was recommended it should conclude work it. Also, it was recommended that the national Department should further conduct a performance audit on healthcare waste so as to have a better understanding of the challenges, because the auditor did not have the necessary expertise required for this.

The overall root cause for healthcare waste challenges was slow response by management because some of the problems identified were not new to the Department. The leadership needed to take ownership of these findings and address them as quickly as possible. Also, lack of consequences for transgressors was identified as one of the root causes. There was a recommendation for strong performance management system at all levels and people should be held accountable for transgression through the performance management processes and competent people needed to be in place to be able to address these findings. The national Department committed to greater involvement with key infrastructure of projects, to strengthen the monitoring and evaluation of implementation of e-health strategy, continue to engage with CFOs at the CFO forum which was important to get a consistent understanding on financial and service delivery and the National Health Council would track progress against the sector audit and service delivery outcomes at the National Health Council meetings.

The Chairperson invited Members to ask questions or ask for clarifications where they deemed necessary.

Dr W James (DA) appreciated the AG for the rigor and attention paid to details as reflected in the report. He said the Committee noted the complaint received by AG on waste management which was mentioned during the presentation. He commended the effort of the AG in tackling this problem but noted that compliance was slow and encouraged them to put more fire at increasing the pace of progress on the issue. He said a uniform Information Technology (IT) system was needed for a universal healthcare; despite the billions of Rands spent on achieving a common IT platform since 1998 the situation remained in a shocking state. He said achieving success in this area was not a party or political issue because the National Health Insurance (NHI) (though not supported by Democratic Alliance Party) and some other models required a common IT platform. He called on members of Parliament, head of constituencies and the National Ministers to work together to ensure there was interconnectivity across all provinces.

Ms L James (DA) asked if it was possible for the AG to provide the sector report before the tabling of the BRRR report, so that the Committee could balance the sector report with the annual report. She further asked on how maintenance and repair could be enforced or how the facilities that were found not to carry out proper maintenance be penalized, so that equipment could work because it affected the citizens by causing long waits and transfers from the facilities.

Ms D Senokoanyane (ANC) commented on the maintenance of infrastructure in the health sector which was highly rated by the report. She said that some of the facilities visited during their oversight were in a terrible state and the reason given for this was lack of budget. She asked to know where the Multi Drug Resistance (MDR) Tuberculosis ward patients were moved to since the last 18 months that the ventilator was not working. She also noted that it was up to a decade since the Department was trying to setup the Health Information Systems, even before the concept of electronic health and asked if it was an issue of bad leadership or poor capacity. Also, she said another historical issue was the issue of waste management. She noticed that strengthening monitoring and evaluation was one of the recommendations, meanwhile she identified that there had was not any form of monitoring and evaluation. She pointed-out that the management of healthcare waste was one of the most critical areas that had to be monitored closely.

Mr D Khosa (ANC) asked if it were possible for provinces to use a uniform system as this would make monitoring easy. He also asked if all provinces had an internal audit unit and if they had, were they effective? If there were no internal audits, it should be considered because the level of improvement was not encouraging.

Dr S Thembekwayo (EFF) asked what informed the needs of hospitals in the absence of a need analysis and how commitment to needs analysis could be instilled. She added that needs analysis would help to address the issues of limited budget and curb wasteful investment, releasing funds for prioritized need related projects to be implemented. She explained that pharmaceutical systems that were not integrated among pharmacies and the depots and the hospitals may be related to IT connection problems. She said on the issue of maintenance, the maintenance department of the facilities which were poorly maintained had personnel that were employed to do their jobs and management was not carrying out monitoring activities.

Dr P Maesela (ANC) asked to know what the possible motivations for carrying out projects without the required needs analysis was. 

Mr A Mahlalela ANC) asked what the AG wanted the Committee to do about the Public Financial Management Act (PFMA) report presented since the previous report (2014/15) was not shared with the Committee. He also highlighted that it was impossible for the Committee to compare the 2014/15 report to the current report so that it could identify improvements or otherwise recurring issues. He asked how limited budget allocation, delays in allocation of procurement and lack of optimal utilization of equipment complimented one another. He also asked the AG to specify the provinces that were using implementing agents for infrastructure and the roles of the implementing agents. How was the system working between the implementing agents and the Department of Health?

He said sometimes the infrastructure grant was not spent because of the slow process of the supply chain which was with the Public Service, and sometimes the public service appointing incompetent contractors that did not consider time and quality to deliver services that must be used by the health department. State who was responsible for what and who must take responsibility for what. He further asked about the relationship of South Africa State Information Agency (SITA) with the establishment of ICT systems in health and what was responsible for lack of a unified system in the country and how did provinces link with the BAS system in the National Treasury so Members could understand the weaknesses and the challenges related to inter-connection.

Dr W James on the service and procurement of medical equipment said the contracts that were signed in some provinces, for instance (KZN) did not include extended service agreement and asked if standardized contract was possible?

The Chairperson said that since the issues was tabled since November 2016, she expected the report would cover movement in the last three months which indicated that not much was done since the last meeting. She also asked the AG to present examples of good hospitals the same way that it presented the bad ones so as to have a balanced report.

Mr A Solgetino said it would be better to direct some of the questions to the Departments and the AG would not be prescriptive but provide information to empower the Committee. The sector report was not a standalone report but based on the PFMA report. It required further engagement; the normal audit process and the tabling of other reports happened within a regulated timeframe and all these made it impossible to present the report before the presentation of the BRRR report. Concerning Mr Mahlalala’s question on the 2013/14 report, the report was tabled in a meeting with the Committee in September 2015. Last year there was no standalone report for 2014/15 financial year; it was presented as a part of the general report and the findings were consolidated as part of the AR. It was separated this year to make sure that the report received the required attention.

On the presentation, the issues that were recurring were highlighted in a red color to show that there was a comparison to previous years. On the focus areas selected, focus was not on the NHI. The focus was on key issues that impacted the priorities of government, for example having a problem on IT systems significantly impacted the capability for implementing NHI. Interconnectivity across the provinces was fundamental for NHI, pharmaceutical and billing systems and hoped that the report would help the Department to focus on IT. Looking at it few years ago, in analyzing the internal unit across the country, results showed that some provinces did not have adequate capacity because they were using internal audit from the Provincial Treasuries. Internal audit was not included because the fundamental issues raised related to leadership and what leadership could do to address such problems as internal audit. The Department indicated that performance audit would be carried out concerning medical waste and the AG would track it down with the National Health Council and improve monitoring and evaluation of the implementation of medical waste.

Ms Schenaganse said with regards to medical equipment, each hospital had a committee responsible for equipment which had to discuss and plan for how the hospital would use the equipment to procure and maintain the equipment. It was crucial that financial, HR, Supply Chain management, Procurement and Clinical Engineers were available to cover aspects of the budget, staffing, procurement and specification and maintenance of the equipment. Then there was a need to compile a procurement and maintenance plan to make sure that all equipment was procured and maintained, which was followed by monitoring and evaluation to keep people accountable to specific jobs they needed to do in the process. In the case of the lack of a standard contract, some provinces like Gauteng now had standardized contracts which saved time in terms of the procurement process.

Mr Dibate said that the AG did not know the facilities that the patients in the MDR hospital were relocated to. They were probably located to other facilities within the province.  The audit focused on infrastructure. With regards to the maintenance of equipment and the needs analysis, all the facilities had to do an Asset Maintenance Plan, the details included the maintenance expenditures, and experience showed that most of the expenditures presented were thumb sucked figures which were not realistic. The reason given for this was that they did not have technical personnel that could do a needs assessment. They could not back up all the needs that were presented in the Asset Management plan. This was what was referred to as lack of needs analysis in the report.

On the role of the implementing agent and the Department, the Department often thought they divorced themselves from the oversight role by delegating to people with adequate skill. One of the issues discovered with the implementing agents was that there were no proper reporting mechanisms to make sure that necessary information went back from the implementing agents to the Department. The Department did not get regular and necessary reports to monitor the progress and quality, so that provincial departments could know the interventions that were needed. In answering the question of what happened at completion stage and who was responsible was responsible for what, legislative constitution was clear on the role of the user department and the custodian department. The problem was that Departments did not work together to make sure that at completion of the project there was no seamless handover and the handover of responsibilities. Unfortunately, there was no answer to why this was so, but this issue was identified.

Ms Madondo said there was a need to make sure there was IT infrastructure that was working and upgraded as this would make it possible for systems to interconnect. The major challenge identified by the department was the budget. SITA service delivery was for transversal systems; it did not concern systems that were used at facilities. The national Department started a Pilot of 50 sites and had a goal of ensuring a common patient record across provinces.

Mr Solgetino said the comment by the Chairperson on positive reporting was noted and would be considered in the future.

The Chairperson said it was not only about making a presentation but to take hold of the information and use it to balance what was presented and what would be seen during oversight visits, so that comparison could be made with previous reports. She said the AG had to take questions that were asked seriously by picking up all the essential points and subsequently addressing them. She said the goal of the Committee was that the populace was assisted by AG. She commended the AG for putting together a reader friendly report. She apologized for asking the team questions that should have been for the Department.

The meeting was adjourned.

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