Delivery of Health Services: National Department of Health; Auditor-General of SA; Provincial Departments of Health: Free State, North West, and Eastern Cape

Standing Committee on Appropriations

22 March 2017
Chairperson: Ms Y Phosa (ANC)(Appropriations) and Ms M Dunjwa (ANC)(Health)
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Meeting Summary

The joint meeting was held to consider the effective coordination and alignment of national and provincial spheres of government in the delivery of health services, so as to ensure value for money, efficient planning and resource allocation. The National Department of Health, the Office of the Auditor General, National Treasury, the Eastern Cape Provincial Department of Health, the Free State Provincial Department of Health and the North-West Provincial Department of Health made presentations but questions stood over to be answered in writing due to shortage of time. The Members of the Committee expressed unhappiness that the Minister and Deputy Minister of Health as well as provincial Health and Treasury MECs, other than the Eastern Cape, were not present, as the Committees wanted the political heads to take accountability for the failings in the health sector.

The National Department of Health (NDoH) presented a report on the situation in critical areas of health from a national perspective. The alignment between the National Health budget processes and Provincial Health budget processes was a key focus, as the national budget was driven by key goals of government and health policies. Some effort was being made to ensure alignment in health information systems between the provinces and other national ICT systems for effective coordination in the health sector but lack of integration of systems and the practicalities in provinces made the work challenging. Critical functions such as procurement, human resources and financial management were reviewed together with the effective management of personnel expenditure in the health sector. Particular emphasis was placed on improving infrastructure budget expenditure. The National Health Insurance (NHI) Bill would soon be presented to the Portfolio Committee.

The Auditor-General South Africa presented the findings on a survey of medicines and medical equipment at 19 hospitals, citing specific instances of lack of maintenance and non-use of equipment. A sample of 72 health care facilities showed poor quality work in seven provinces. AGSA identified the most prevalent root causes as a lack of adherence to technical specifications, planning, supervision and monitoring. Outdated IT infrastructure existed in most provinces. The management of health care waste was also addressed. Health care waste regulations were in process but needed to be finalised and implemented as soon as possible. Audit outcomes showed that most provincial health departments had qualified audits with findings. Problems included a lack of compliance with legislation and reliability of reports. Irregular expenditure was very high. Root causes for poor performance were the slow response by political and senior management in addressing the causes of poor audit outcomes; a lack of consequences for poor performance and transgressions, and instabilities and vacancies in key positions.

National Treasury's presentation focussed on budgeting trends in the health sector with the focus on personnel, infrastructure and ICT systems. The presentation also included a detailed analysis of budget spending in the provinces. The Health Sector was seeking to improve procurement and reduce personnel expenditure while protecting key posts, despite slowing budgets and rising costs.

The Eastern Cape Department of Health noted a number of challenges but indicated a particular concern about the growing trend of medical litigation.  This was a country-wide problem. The Minister of Health was aware of this, but the province was of the view that legislation was needed to curb the problem as the lawyers involved had the same modus operandi as those who had bankrupted the Road Accident Fund. The claims were an additional burden to a budget that already did not meet the needs of health services in the province.

The Free State Department of Health had made progress but the province faced many challenges. The Department had appropriate IT systems but these were not integrated with national systems and the State Information and Technology Agency was experiencing problems with WAN bandwidth so 3G cards were being used.  Attracting qualified staff was a cross-cutting problem from medical staff to engineers for infrastructure projects. The Free State delegation believed that academic/tertiary and specialised hospitals needed to be taken over by the national Department. Malpractice had been an issue but doctors from other places who were not qualified had been flushed out in an audit.

As a largely rural province, the North-West Department of Health was experiencing difficulty in the lack of province-wide network infrastructure. Challenges included competing and conflicting priorities and insufficiency of budget allocation to satisfy all priorities. The province contended that the current basis of budget allocation was skewed in favour of big provinces. Budgetary constraints and a shortfall of R500m had led to serious inadequacies in the system where ICT, nursing training, the replacement of ageing equipment and the need to provide Emergency Medical and Rescue Services had become unaffordable.

Members expressed their disquiet about issues such as the ongoing problems with audits, what steps had been put in place to identify and take transgressors to task, and to correct the problems, how the vacancies were identified and the priorities for filling vacancies. They questioned the provision of ambulance services, responsibility for roads to hospitals, the upgrading of facilities, where budgets for litigation were being sourced and whether the virements that had been done were in line with the National Treasury requirements. They felt that some of the presentations were not focused enough on the challenges and how the national Department was monitoring the provinces or identifying exactly where the problems lay. Some Members were quite  forceful in emphasising responsibilities of the accounting officers, the need to identify if there was collusion, whether the heads of departments were delegating correctly and keeping a strong enough oversight, and questions were posed whether provincial and district devolutions and control were necessary, whether centralising was the ideal solution and whether budgets were adequate. Members were concerned at the cost and extent of litigation and wondered what was to be done about it, asked for an indication of the main reasons and areas in which it occurred, noted that the lawyers spearheading some actions were the same ones as had brought action against the Road Accident Fund. Questions were asked about the state of mortuaries, cleanliness, adequacy of staff training, the position of Community Health Workers, what had happened to the Cuban-Trained doctor programme, the staff ratios and fruitless and wasteful spending. Overall, the Committee urged the national Department to pick up on points for greater oversight and indicated that it would need to visit some of the facilities. 

Meeting report

Chairperson's opening remarks
Chairperson Y Phosa (ANC) outlined the programme and said that the interests of the Committee, in discussing the effective coordination and alignment of national and provincial spheres of government in the delivery of health services, was aimed at meeting national goals for health livelihoods for all in the country, including the rural areas, and to ensure a balance between preventive health and health services. The particular interest of the Appropriations Committee additionally was value for money, effectiveness and efficiencies in the health service, planning and resource allocation.

Health was a concurrent responsibility between national and provincial departments. The national department was responsible for policy and monitoring, whilst provincial departments were responsible for operations. Monitoring of grants was key. Public health budgets remained under pressure as the economy remained static while employee costs grew, and health costs grew by 1.3%, largely in relation to anti-retroviral and other medicines as the currency depreciation had put pressure on the costs of medicine and medical equipment. Through their engagements over the years, the Committees had discovered weaknesses in inter-governmental planning, coordination and budgeting. Financial management and ICT remained a challenge in many provincial departments, and so did collation of data to aid correct decisions.  Not withstanding the challenges, progress was being made and mortality rates were declining. Of the 300 000 personnel in the health service, 60 % were health practitioners.

She noted the apologies of the Minister of Health, who was attending a Cabinet presentation, Deputy Minister, who was at a National Planning Committee meeting and the MECs for Health and Finance of the North West and Free State, who had to attend meetings in their legislatures. Member apologies were also noted.

Members of the Committees, Ms S Shope-Sithole (ANC) and Mr A McLaughlin (DA)  expressed unhappiness that the Ministers and MECs were not present. The Co-Chairpersons asked who was representing the Minister and the MECs and agreed that letters would be written to them, although the Committee did note the apologies.

The Co-Chairperson M Dunjwa (ANC) said that the country needed a health sector that was effective and well performing but also responsive to the needs of the country. The Committees were looking at the value chain of infrastructure, appointed and capacitated human resources, working equipment, medicine, medical products, medical care, clinical service delivery and support.  During constituency work and site visits, many complaints and concerns had been received. There was a need to ensure that everyone could lead a healthy life. There is pressure on the budget but it was important to find ways of effectively using the money. This led to the two Committees deciding to have hearings. The Provincial Departments of Health (PDoH) were important to the meeting as the National Department of Health (DoH) often claimed that PDoH s were responsible for the problems that arose in implementation of policies and on the operational level. It was an opportunity for PDoH s to give their position. The Committees would look into national policies and whether the DoH was monitoring the policies.  The National Development Plan had goals for health , which the Committees would consider against the DoH policies. She noted that whilst provincial departments are autonomous, the principle of  cooperative governance meant that although DoH could give guidance.

National Department of Health briefing
Ms Malebona Matsoso , Director-General, National Department of Health, outlined the content of her presentation, stressing that the following were important:
-the alignment between the National Health budget processes and Provincial Health budget processes, including challenges and measures to strengthen alignment
-efforts to ensure alignment in health information systems between the province and other national ICT systems
- critical functions such as procurement, human resources and financial management
-the effective management of personnel expenditure in the health sector
-the alignment of national and provincial health infrastructure priorities and improving infrastructure budget expenditure.

Funding allocations were discussed. The point was made that the only muscle that the Department had in respect of ensuring PDoHs carried out national policy was the Conditional Grant. Looking at allocations of funding, Ms Matsoso made the point that health spending had risen faster than economic growth and would become unaffordable without reform. The health allocation should be a minimum of 30% of the provincial budget but North West and the Northern Cape had only26% of the budget, whilst only Gauteng, KwaZulu-Natal and the Western Cape had above 30% of the provincial budget. There had been very low increases in budget for most PDoHs. The Eastern Cape was very underfunded.

The personnel budgets were of concern as these budgets were too low to pay for sufficient doctors and nurses and to fill the huge vacancy rates. The professional cost of employment was high in health as specialised employees whose skills were scarce were needed.  There was a lack of health technologists in some provinces to perform important work on health equipment. Administrative posts were being reduced but this put pressure on procurement management and infrastructure units. School health services were underfunded.

Goods and Services funds included conditional grants for special programmes, both medical and infrastructural. Because funds allocated for goods and services had been utilised to pay for personnel, especially contract staff, the Minister of Health had declared Non-Negotiables in the arena of goods and services, being food supplies, medical supplies, medicines and laboratory services. To ensure greater value for money and spending efficacy, DoH had plans for more use of transversal contracts and using economies of scale and efficiency gains. The National Procurement Office would be responsible for transversal tenders.

Ms Matsoso noted that the health sector budget is declining in real terms and that there is misalignment between the increase in burden of disease and budget growth. If the current trend continues the health sector would have to reduce its services, especially as more citizens became uninsured due to the economic environment. There was a consistent risk of possible medico-legal claims.

ICT would play an increased role in managing and promoting health care. This would require the DoH to ensure alignment in health information systems (including revenue and billing, patient, pharmaceutical application, network infrastructure, etc.) between the province and other national ICT systems for effective coordination in the health sector. Currently, many systems were in use in individual provinces. |

Key to the national ICT strategy were:
-the National Patient Registry
-MomConnect to give moms and caregivers information about immunisations, breast feeding, healthy diets for infants
-B-wise, a young person’s interactive cell phone health platform
-the Pharmaceutical National Surveillance Centre
-Stock Management Systems
-District Health Information System
-Rapid Internal Data Audit (RIPDA) tool

Revenue collection was being monitored by DoH and systems were in place to assist with the collection.

Ms Matsoso addressed critical functions such as procurement, human resources and financial management and how these functions were appropriately devolved to designated levels for service delivery efficiencies and better performance. She presented a provincial analysis of the spending on non-negotiables per province so that the Committees could query the issues with provincial representatives.

Ensuring the effective management of personnel expenditure in the health sector was a challenge, especially in respect of managing the cost of employment. The alignment of national and provincial health infrastructure priorities and improving infrastructure budget expenditure was addressed and an indication of budgeting and expenditure of infrastructure conditional grants and performance of the provinces in respect of the Health Facility Revitalisation Grant.

In conclusion, Ms Matsoso noted that frameworks and mechanisms were being implemented to ensure alignment between National Health and Provincial Health budget processes. Huge investments were being made to ensure integrated health information systems in preparation for the National Health Insurance (NHI) implementation, which was close to being finalised and a Bill could be expected fairly soon. The central procurement of drugs had made enormous savings in the cost of drugs. DoH would continue to work on mechanisms to ensure the effective management of personnel expenditure in the health sector, and to ensure that the health facility infrastructure maintenance and development was driven by the provincial needs and priorities.

The Co-Chairperson noted that much of the information provided by Ms Matsoso would be relevant when the Members put questions to the provincial departments.

Dr W James (DA) said Ms Matsoso had mastered a complicated portfolio. He made the point that in light of population growth rates and the burgeoning rate of disease, there is an inadequate budget for health, across all provinces. As a result, the health needs of the nation would not be able to be served and it would get worse over time. Efforts must be made to save, achieve greater efficiencies, curb corruption, but the bottom line was the need to increase the revenue – and he said that some of the options might be to increase taxes, or to negotiate with the private sector – although there was no sign of engagement with the private sector, as had been done in the 1990s. The DoH had to engage with the private sector and not see them as an adversary.  Health insurance is to be eliminated over a period of one year, and that had to be flagged as a problem. He asked why did the country not have a single tender for private health companies to manage hospitals? What was the quantum amount of money short for the next three years?

Mr A Shaik Emam (DA) said the presentation looked fantastic but the Committee heard so many concerns and complaints, and saw the problems when doing site visits. The media reports on problems in the health sector are even more sad. Clearly all the monitoring was not working to achieve more on the ground. The employment problem was not just about finding employees, with considerably more problems than merely money. Clinical associates were ignored in rural areas and they were being poached by the United Kingdom. It seemed that everyone was working in silos and DoH had no way of controlling provinces. He asked who was checking that resources reach districts and people on the ground.  The amount of money being set aside just for compensation of employees was enormous. The health sector had to better manage its money. In relation to the provincial departments’ revitalisation programme, it was confusing that some PDoHs were still in designing phase, but they had spent the money in 2015/16 and he asked for an explanation on that.

Dr C Madlopha (ANC) said that the  Standing Committee on Appropriations had been told that most of the challenges come from the provinces, even though DoH benchmarked and held meetings for discussions. The wage bill seemed to be a common problem and she asked if there had been discussion on that, and what had been the tangible outcomes of interactions between individual provinces.  Most of the money went to districts but she asked if DoH and the PDoHs did have the mechanisms to monitor and ensure that allocations are spent according to plan, and yielded value for money?

Ms D Senokoanyane (ANC) agreed that Health was underfunded but asked what would inform the request for additional funds, particularly given the substantial under-spending.  She asked what exactly were the challenges to spending. Non-negotiables had been established, but she asked why there was underspending on food supplies? Compensation of personnel is a challenge but departments must prioritise critical posts. Increases set aside to be spent on goods and services were used on personnel, and she wondered about the implications of that, and whether the PDoHs were not able to fill their critical posts.

Ms S Shope-Sithole (ANC)  was worried about the big problem of working in silos and asked how cost effective was it to use outdated systems? She suggested that nurse, who were mostly women, had to be protected, and not required to fill out so many forms. She asked what exactly the districts were doing, and whether government should not do away with them, and asked Ms Matsoso to give the Committee a short memorandum on their status and performance, and what each of the provinces was doing wrongly.

Mr H Khosa (ANC) asked what plans were in place for the provinces that showed below 6% growth and could not even fill vacant positions. Only Mpumalanga and North-West have increased their budget and he would want to know why the other provinces have not done so. Provinces that were not at the meeting that day would also be required to respond to his question.

Dr S Thembekwayo (EFF) noted that DoH wrote letters but there was no response and subsequently no honesty in reporting on the situations in the provinces, and she asked what was to be done to get a response. She had a report that Abraham Esau hospital in Calvinia would be left with only two doctors from 1 April 2017, and asked what would happen to the patients. Perhaps the Committee should arrange a site visit. 

Co-Chairperson Dunjwa)asked Ms Matsoso to respond specifically to these questions. She also asked whether there was a follow up to the challenges, and asked for the names of provinces not complying.  For the Revitalisation programmes, she asked if DoH did have a monitoring system to check how long a project remained in the design phase, whether construction was being conducted according to specification, as during its oversight, the Committees saw a different picture to what was reported now. She stressed again that this was why it was unacceptable for political heads not to be in the meeting as the Committees wanted answers to what was seen during the visits.

Chairperson Phosa noted that there was a reference to project management, but nothing was said about contract management. There seemed to be a problem of hospitals not having equipment, or old equipment, or equipment that staff did not know how to use? She asked if there were any outstanding policies still to be developed by DoH, and how long development and implementation would take? The situation regarding accruals was not acceptable, as that was against national policy and the Public Finance Management Act (PFMA).  Budgets must be used for what was planned, with no over-expenditure and under-expenditure, and she asked if this was being monitored.

Ms Matsoso indicated that a decision had to be made about whether health was to be delivered in the country or not. She agreed that there was an increase in the burden of disease and colliding epidemics of HIV/AIDS, TB and hypertension, diabetes, cancer and others.  HIV/AIDS and TB is not decreasing, and diabetes, hypertension and cancer are increasing. This must be funded .  A well-performing health system was needed to respond to people who were living longer, since even HIV/AIDS patients were living longer and need extended care.

Migration problems, with people crossing the borders to seek healthcare in South Africa, were  reality. StatisticsSA provided figures that did not include migrants. The reality was that there was a crisis in health and it needed to be dealt with. Two approaches were possible: the way health was financed and way the services were provided. There was no system in the world without private health care - even in Cuba, foreigners had to pay for private care. It was a question of how to configure both the private and the public systems to get the best health care possible. The only outstanding policy was the National Health Insurance Act (NHI). If,in implementing the NHI, it was possible to configure both public and private in the manner in which services are financed and delivered, then DoH would have achieved its goals.

The quantum underfunding was R11.4 billion (b) underfunding for 2017-2020; R3.2b for 2017/18;  R29b for 2018/19; and R5.2b for 2019/20. Departments could not increase HR spending because then there would be no money for services. Even the 66.6% spending on employees provided scarcely enough to provide services. The National Tender for the Private Sector Bill in 1995/96 allowed the private sector to buy through the public system but it was withdrawn because of backlash from United States and other countries. Ms Matsoso was not sure whether it would work in the current era but it would require collaboration from all stakeholders. It would improve costs in private sector and would make good sense.

In answer to the question of who should be solving problems in provinces, she said that DoH came up with tools and undertook monitoring but it did not help. The question should be whether the government has the right model for delivering health in South Africa. Training middle level health workers should not occur before there are positions for those people. Clinical associates should be appointed in districts. Cuban-trained doctors should be employed in primary health care. Intergovernmental relations were difficult as concurrent functions limited what the National Department could do. Districts were badly run; they were integral to delivering the health system but they ran like postal services so the model needed to be changed.  The NHI would only work if districts were real delivery models.

Benchmarking and the wage bill is managed in so far as every province had a planning tool, indicating budget and vacant posts, trainees, Cuban-trained doctors, bursaries, interns and so on in a matrix format so that posts and budgets could be followed up on an ongoing basis. Therefore, provinces should not, for example, be paying for bursaries where there were no jobs. Districts needed to be empowered with authority.

Ms Matsoso was showing the crisis that health is facing. Two state of the art buildings in the Free State cannot be opened because there are no health workers. The provincial departments should stop building facilities and use the money to maintain infrastructure. There is a R400 billion health estate that needs to be maintained, so the country needed to look after the estate that exists. Under-expenditure figures were intended to show where provinces were underspending. Provinces were not buying the correct type of food for patients, giving, for instance, pap and wors for diabetic patients. A guideline was developed to show the correct food that should be served to different patients in hospitals, as well as to school children.

She highlighted the provincial challenge around prioritisation of critical posts. Some provinces employed contract people through agencies, which allowed them to pay for the services, thereby by-passing the HR budget. Gauteng had used BAS to name employees as vendors. The DoH had tried to integrate and align in order to protect women. Every province had to cut down on the number of registers to be filled in by nurses, and pay for filing cabinets to simplify record keeping and prevent theft of files. Ms Matsoso agreed that even a 6% growth would not fill the gap. Conversations with provinces and National and Provincial Treasury were needed. DoH wanted to see a breakdown in HR expenditure between professional posts and administrative posts. Most provincial offices were top heavy and employees should be sent to work in the districts. Provincial departments would have to respond the lack of increases in health budgets.

Ms Matsoso informed Dr Tembekwayo that letters were just to inform provinces about certain situations. HoDs still had to do their work. Abraham Esau might not be the only hospital without doctors and the Minister had appointed a task team to interrogate the issue of shortages of doctors, since six provinces had showed huge shortages of doctors. The oversight recommendations are analysed and areas relevant to each province are identified and put into a systematic report which DoH would share with the Committees.  The Revitalisation monitoring system is detailed, and inspectors visited each project to verify the information during a site inspection; this could also be shared with the Committees. Contract management was a weakness but Chief Financial Officers would be asked to share what they had done. There is a national essential equipment list but Ms Matsoso did not know to what extent provinces complied. The non-negotiables would be driven by the Office of the Chief Procurement Officer that would manage tenders that would result in huge savings. Health was oversubscribed with policies so there was no need for more but the NHI was key. Accruals were highlighted for the Committees so that the Committees could engage and interrogate Provinces on the matter.

The Chairperson asked that follow-up questions only be put and other questions should be reduced to writing, in view of the shortage of time.

Dr P Maesela (ANC) pointed out that the Committees wanted to fix the health system. There was a public and a private health system, national and provincial departments. Concurrent systems did not work for health and education. Poverty was greatest cause of ill health but no one had mentioned that. NHI was the right route to go. Training should be needs-based only. Government needed to reconfigure, not just fix.

Dr Madlopha asked about the tangible outcomes of the engagement with provinces and whether the situation was improving.  What impact would centralised tenders have on SCM units in the provinces as their work would be taken away?

Mr Shaik Emam reminded Ms Matsoso of his question around payments made while infrastructure was still in the planning stage. The funding model was problematic. Hospitals were making money, not just the private doctors. Together with NHI, should there not be a Public Private Partnership (PPP) with medical professionals to set up private institutions, but not those where monopolies were making money.

Ms M Manana (ANC) noted that during public participation during the passing of the Division of Revenue the previous week, the Rural Health Advocacy Projects had wanted to know whether there was any form of monitoring of the consequences of cost containment in respect of delivery of services, and wanted comment on that point.

Ms Senokoanyane asked why accruals happened, and how big this problem was.

Mr A McLaughlin sought clarity regarding the importation of vaccines, asking if this could not be changed and whether there was no development in the local manufacture of vaccines. He pointed out that Gauteng was projected to overspend overall, but to underspend on non-negotiables, and he wanted clarity on that. He asked if percentages cited represented money spent, or not spent. He asked if acquisition of ambulances was a district municipality function, or funded by DoH, and asked too whether DoH or Department of Public Works was responsible for owning and maintaining the health estate.

Dr James noted that concurrent authority was supposed to be responsive to differing regional and local situations, but he wondered if it was now time to review it and to have another reflexive and responsive system – although this would require a two thirds majority. The most difficult provinces were those with old homelands that had local autonomy. He asked if the new Cuban doctors were trained in the burden of disease management, and  in HIV and TB? Although the DA was opposed to the NHI Bill, he wanted to know when it might be expected to be before Parliament.

Chairperson Phosa requested that Committee Members should not express party views when asking questions.

Co-Chairperson Dunjwa asked whether it was not time to undertake an audit of the impact of the homelands system, which had created problems for the Eastern Cape as nurses came from three different systems. Radical transformation was only possible if a different approach were taken. She asked what National Treasury views were on saving money from health. At least one province had been told that money could be saved by decreasing the Health budget. She pointed out that there were bloated structures in district offices, and that more “warm bodies” were required in key health positions to keep pace with an increase in the population. Planning was essential to revitalisation, and she was sorry to see that other provinces were not present to hear these remarks.

The Chairperson asked if any NGOs present in the meeting wanted to ask questions.

Mr Russell Rensburg, Rural Health Advocacy Project ,asked about the provincial equitable allocations for heath, and whether the conditional grant was included in single budget. He was of the view that districts were needed, but questioned whether provincial departments were necessary.

Ms Shope-Sithole said that with effect from 1 April, the Committees did not want excuses, but to see matter corrected. There was no excuse for poor nutrition of patients, which was tantamount to criminal neglect, and  registers and files could not be neglected.

The Chairperson explained that the reference to criminal action should be a warning.

Ms Matsoso explained that DoH had detailed breakdowns per province in respect of infrastructure projects. The Auditor-General audited only completed projects but DOH worked from a detailed breakdown which linked milestones achieved per project, although she could not actually display this today.  The SCM offices were very small and did not work with specifications daily, so that going to the Procurement Office was a better option. DoH intended investigating Public/Private Partnerships (PPP) but at affordable costs. Chief Albert Luthuli Hospital was based on PPP lines but there had been cost escalation and so there was some way to go. The Rural Health Advocacy Project had attended DoH meetings and raised concerns about community service allocations, but personnel do not want to go to rural areas. The Rural Health Advocacy Project wrote a scathing report on rural health. Accruals were a matter for the provinces. However, since the performance agreement of DOH included the outcome of provincial audits, it tried to achieve success in the provinces.

South Africa had had a PPP with Biovac because a health system cannot produce its own vaccines. According to the UN, South Africa was the only country in Africa that could produce vaccines. The PPP with Biovac fell under the Ministry of Science and Technology because BioVac faced restrictions from suppliers if they worked with the Health Department. Skills transfer was important to the process. The Minister of Health had .introduced the Non-Negotiables because, apart from personnel, these were the basic requirements for a health system, and although DoH would follow up on the individual items, the percentages did not relate to the total budget of a provincial department. ,Norms and standards have been developed for ambulance requirements and provinces had to work with municipalities to provide vehicles. There was a problem where municipal boundaries meant that the nearest ambulance was not necessarily allowed to collect patients. The intention was for ambulances to become a provincial competency.

Returning Cuban-trained doctors would do the last leg of training - local training and examinations in South Africa - before they qualified. South African academic hospitals and universities were involved in the final leg of the training. The NHI Bill was “on its way”. She noted the comments about the former Homelands and said the SA Law Reform Commission had analysed all the laws and had come up with a plan to resolve multiple legal problems but such a large audit may be beyond DoH, and could perhaps be incorporated in the NHI work.

Mr Ian Van der Merwe, Chief Financial Officer, NDoH, explained that infrastructure belonged to the Department of Public Works, who had an obligation to undertake maintenance, but the work was paid for by the national or provincial DoH.

Dr Yogan Pillay, Deputy Director General, National Department of Health,  told the Committees about certain products had been presented as though they were medical aid products but, in fact, they were only short term insurance products. Those products would be regulated by the Council for Medical Schemes. Since the customers could not afford proper medical aid, the Council of Medical Schemes have agreed on a two year exemption period during which the companies must restructure and realign their offerings.

The Co-Chairperson said that she was not entirely comfortable with the Rural Health Advocacy Project asking questions, as this was not a public hearing.

The Chairperson conceded that this was perhaps not strictly correct and apologised.

The Chairperson thanked DoH for a fruitful engagement that would help to make an impact as the Committees interacted with provinces, because it helped to clarify alignment with strategic goals. Failure of provinces could be said to be linked to failure of committees to fulfil their oversight functions, although closer monitoring was required by NDoH. National Treasury provided money and impact must be seen from that.

Office of Auditor General : Health Sector Report for Health 
Mr Andries Sekgetho, Business Executive in the Office of the Auditor General, noted that health was a key deliverable in the world and in the country. The Office of the Auditor General (AGSA) had taken the health care value chain as a starting point for the report. The Audit report was retrospective and did not necessarily reflect on the current status, and although it had been presented by province and by national department, the AGSA thought it useful to consolidate information to report as the Sector Report for Health. The performance audit report focused on finance, and the Sector Report looked at projects, so that delivery of services (as opposed to service delivery) could be monitored.

Mr Jacques Boshoff, Manager: Performance Audit, AGSA,  presented the findings of a survey of medicines and medical equipment at 19 hospitals, citing instances of lack of maintenance and non-use of equipment.  

Mr Sammy Dibate, Senior Manager: Infrastructure, AGSA, presented the findings on a sample of 72 health care facilities.  Poor quality work was found in seven provinces. Incorrect identification of projects or lack of prioritising was another common problem.  The most prevalent root causes were  non-adherence to technical specifications, planning, supervision and monitoring.

Ms Maud Madondo, Senior Manager: IT Audit, AGSA, presented on the e-Health Strategy, noting that there was no alignment by provinces to national strategy. Outdated infrastructure in most provinces added to the challenges. Systems were slow and information completed manually was not put on to the system with no interface between the revenue system and BAS in all provinces. 

Ms Jolene Pillay, Senior Manager, AGSA, addressed the management of Health Care Waste, and said that there were internal control weaknesses in most provinces. Procurement and contract management was generally better managed. Health care waste regulations were in process but needed to be finalised and implemented as soon as possible. Industry experts were needed to assess risks.

Audit Outcomes showed an improvement in the Eastern Cape and Gauteng,  but Limpopo and North West had slipped back to having qualified audits with findings. Problems included compliance with legislation and reliability of reports. Irregular expenditure was very high. The three root cause for poor performance included the slow response by political and senior management in addressing causes of poor audit outcomes; lack of consequences for poor performance and transgressions, and instabilities and vacancies in key positions.

Mr Shaik Emam noted that the audit reports indicated repeat failures, showing that the problem lies at the provincial level. He shared the Auditor General’s concern about the lack of consequences for failure to perform. The Committee was aware of the lack of service delivery. Was it correct for the Auditor General to recommend that DoH put in place extra mechanisms to help the provinces? He wondered rather if the Committee should not be getting the names of those who had neglected their duties. He expressed horror at the fact that TB patients did not have ventilation.

Dr Figg also noted issues that had occurred previously, asking what had happened on recommendations previously made but not followed up? Many people should no longer be in their jobs; under-performing officials had been identified but the question was whether those people had received the necessary training and help in professional development or if nothing was done to correct the situation. He also commented on controls on computers such as firewalls, but questioned what was done to protect assets. Had under performance ever resulted in loss of life, or adverse effects on the life of human beings?

Ms Madlopha requested the names of the hospitals noted by the Auditor General as problematic so that the Committee could check up when visiting provinces.  She asked if there were  performance contracts where lack of performance was identified, and whether these included norms and standards.

Mr Khosa expressed concern about people not doing their job, asking if the personnel were incompetent or unqualified. Lack of leadership and management seemed to be the root cause of problems. He was waiting to hear how the provinces would address the questions.

Co-Chairperson Dunjwa informed the meeting that the Portfolio Committee for Health had previously engaged with the Auditor General’s report.

Mr Sekgetho said the Auditor General’s Office had previously engaged the Minister, Ms Matsoso, all HoDs, provinces and the Portfolio Committee. All provinces were therefore aware of the contents of the report. The AGSA had merely to report and provide information to oversight committees. The Auditor General could not take responsibility for the consequences or lack of consequences for repeat performance. NDoH made commitments to the Auditor General because they had concurrent responsibility as lead role players , and it was trying to take the lead.

Mr Boshoff informed the Committees that the hospitals visited were listed on page 16 of the AGSA report.  He could not refer to specific loss of life but in the absence of the air cooling machines, nurses had used ice packs instead of the machines when caring for babies. The broken fluoroscopy machine in Kimberley meant that patients had to be ferried to Bloemfontein. At Frere hospital where the mammography machine was broken, there was a backlog of 218 patients after nine weeks. At Rob Ferreira Hospital, the CPAP systems were broken and nurses had to use manual resuscitators. In all of these cases, the health of the patients, and in particular babies, could have been compromised. At the Livingstone Hospital, the shortage of radiologists had led to appointments being scheduled up to one year and three months in advance and CT-scan appointments had been scheduled up to June 2018.

Ms Madondo said the control of IT assets was covered and was contained in the reports presented to the provinces. The HoDs’ performance contracts were not reviewed, but only the IT strategy plan. The sample of hospitals reviewed for IT systems would be provided but other hospitals should also be monitored. The Auditor General did not check whether staff had fulfilled their training requirements as their brief was limited to checking compliance with the PFMA and HR management. Repeat findings are highlighted so that oversight committees could be alerted to the issue.

National Treasury: Budgeting trends in the health sector
Ms Aparna Kollipara, Director:Health Financing, National Treasury presented on budgeting trends in the health sector with the focus on personnel, infrastructure and ICT systems. Her colleague Mr Marumo Maake, Director: Provincial Budget Analysis, National Treasury presented an analysis of budget spending.

Ms Kollipara said that the sector was seeking to improve procurement and reduce personnel expenditure while protecting key posts, despite slowing budgets and rising costs. She noted that:
- health budgets were under pressure due to low national economic growth and rising input costs
-excluding conditional grants, small real declines had been noted in some provinces in  2017/18 
-the object was to achieve efficiencies through better medicine procurement, reduced building costs, improving information; focussing on outcomes, and containing administration spending
-the immediate aim was to contain personnel spending, while protecting critical and clinical posts
-provincial infrastructure spending, especially in Limpopo, had been reduced
-the slow growth in health budgets since 2012/13 would likely continue at least until 2019/20
-instabilities within the sector over the years were partially due to the constant change in management
-the sector had already responded through implementing efficiencies, budget constraints, and proposed NHI reforms.

Cost containment/efficiency measures would include limiting personnel numbers, centralised medicines procurement, identification of non-negotiables, reducing capital spending on buildings and medical equipment, provincial infrastructure spending and implementation of NHI.

The issue of instability of management posts such as HoDs and CFOs had had a major impact on financial management of the Health Sector. The biggest threat was the issue of medical legal claims which had increased by billions of rand. Over-expenditure was unlikely in 2016/2017 budget. There was slow progress in filling posts in infrastructure units, which was a major concern, and caused delays in the procurement process and approval of projects. Putting new facilities into operation was a major challenge. Closing off of completed projects had delayed the transferring of projects to the assets register. Projected expenditure showed that budget increases were inadequate to maintain level of service. Personnel compensation was a high cost. The ICT improvements would reap significant efficiencies.
Dr James asked why medical litigation in the Eastern Cape had increased by nearly 50%, and wanted to know if this was due to a failure of services, an increase in ambulance chasers or collusion?

Mr H Khosa (ANC) queried the comment on stability in management, asking how long CFO posts had been vacant. He asked if the autonomy of provinces meant that Treasury could not assist the provinces in the matter. Were there valid reasons for provinces to under-spend on capital expenditure but overspend on maintenance although so many facilities needed care. How was the money being spent, since the Auditor General’s report showed neglect?

Mr Figg asked about unqualified audits, and why the fact that a permanent CFO was not in place should affect this, as surely any accounting official should know his or her job. .Since the percentage of the budget spent on compensation of personnel varied from province to province, he asked if there was a . benchmark for personnel expenditure or whether this was the result of the large number of vacancies.

Ms Madlopha asked whether, if provinces were spending budgets efficiently and effectively, they be in a position to deliver services.

Ms Dunjwa expressed concern about the Eastern Cape legal claims, asking how much had been paid out against claims, and whether they were to be defended.  She asked when the cost of employment had started to escalate. She pointed out that at one point, voluntary severance was offered and resignations took place because people were worried that government would take their pensions. She wondered if National Treasury was not being alarmist about Limpopo?

The National Treasury representative replied that the  increase in medical claims started in Gauteng. One province picked up a trend that lawyers from Gauteng were targeting the health sector in other provinces, similar to the run of claims against the Road Accident Fund. The sector should be tracking who was making the claims, to see how other provinces had fought the cases. The number of claims versus the amount paid out was much lower in Gauteng than in other provinces. Collusion was a real possibility. Slide 7 indicated the claims laid against the provinces. R5.2 billion claimed against the Eastern Province was unrealistic as the amount paid out was far lower than the amount claimed in Gauteng. Claims had been made to the tune of R13.4b, but onlyR3.8m was paid out.
Stability in management was one of the issues presented in various forums but sometimes it was political and National Treasury did not have the power to prevent provinces from getting rid of HoDs or to insist on the fulfilment of job conditions. Instability was not the only reason for an unqualified report but it was one reason for stability. Consistency in leadership helped since permanent CFOs got to know what was needed to be done in order not to repeat mistakes, or to maintain unqualified audits. It became easier because they had more time and staff did not have to adjust to styles of leadership

The lack of capital expenditure had been an ongoing problem, largely owing to capacity. Provinces struggled to spend the Revitalisation Grant money because there was no capacity to implement the projects. Conditional grants provided money for technical staff but provinces had been unable to attract qualified staff. The private sector took engineers and then they became consultants. The procurement processes took so long that in the interim, companies closed and provinces had to go to court to conclude the matter.

There was no benchmark in terms of spending on personnel. The percentage spent on the cost of employment (CoE) was not an issue, as long as there were sufficient funds for the non-negotiables.  CoE was not a problem but how the entire budget and service was managed was important. Benchmarking was the job of the health sector, not National Treasury.

Dr James stated that he did not believe that the Committees should leave the matter of legal claims there.

Co-Chairperson Dunjwa advised him that the matter would be taken up when questioning of provinces. She requested that the provincial presenters respond to some of the issues raised by the previous presentations.

Eastern Cape (EC) Provincial Department of  Health briefing
Dr Pumza Dyantyi, MEC for Health, Eastern Cape and Mr Sakhumzi Somyo, MEC: Finance, Eastern Cape, led the team from the Eastern Cape.

Dr Dyantyi advised that medical legal claims were being followed up but the biggest litigator stayed in Gauteng. The Minister of Health had expressed his concern about medical legal claims. The R260 million paid to date had not been budgeted for, therefore came from the service delivery budget. Claims dated back ten years. There was definitely collusion by the lawyers. The lawyers advertised for people to attend workshops where they were told how easy it would be to get money from the Department of Health, particularly in respect of disabled children.  Lawyers did not charge fees upfront but took a portion of the fees on success.

Dr Tobile Mbengashe, HoD, Eastern Cape PDOH,  said this department aligned its budget processes with those of the National and Provincial Treasury. Compliance with the budget process deadline dates remained a challenge due to the highly-decentralised nature of the EC PDoH with over 1 000 cost centres that require consolidation. It  was an active participant in the piloting of the Electronic Primary Health Care programme in hospitals. There was also collaboration between the provincial Department, the NDoH and Centre for Scientific and Industrial Research (CSIR) on the development of the architecture for an electronic hospital health record system, electronic patient records, health patient registration system and patient billing systems; and these would be rolled out within the province. The PDoH had clearly defined and approved delegations for procurement, HR, and Financial Management which devolved responsibilities to Programme, Sub-programme and Facility Managers. Personnel expenditure remained the key cost driver of the EC DOH budget
Health infrastructure priorities include the following:
-revitalisation of health facilities
-provision of suitable accommodation for health professionals 
-availability of appropriate medical equipment
-eradication of mud and inappropriate structures
-maintenance of plant, equipment and machinery
-provision of infrastructure support services
-capacitation of the Infrastructure Unit

The province was confronted with significant infrastructure backlogs, especially in the former Transkei. The cost of infrastructure was very high due to the lack of appropriate skills and the rural nature of the province. The state of roads leading to health facilities affected accessibility of health facilities and led to the continuous breakdown of ambulances. The impact of medical inflation (drugs and medical equipment) placed pressure on the department’s budget. General underfunding of health services in the province was evidenced by the continuous levels of accruals carried by the PDoH, which, at the end of January 2017 amounted to R1.4 billion.

The Eastern Cape was an active participant in IT programmes but there was no ICT connectivity in 80% of the province, which put aside large amount of money to install broadband connectivity across the province. 

Litigation was primarily a clinical problem. Most litigation arose from late presentation in pregnancy problems and distance from full services, caesarean sections and resuscitation of babies. A strong protocol for managing high risk pregnancies had been developed but the Department had not been able to defend cases that were actually defendable, so it was working with top legal services to address collusion and had approached the ombudsperson.

The MEC for Treasury addressed some of the finance problems faced by the province.  He noted that the same lawyers who had attacked the Road Accident Fund were bringing many claims, and legal processes were needed to defend provinces. The province spent 60% of its budget on health and education.

Mr McLaughlin noted that the PDoH seemed to be busy with much, but actually achieving little. He asked how the MEC knew that lawyers stole files, and if so, this was suggesting they were committing crimes in order to sue the Department, and asked what was being done, and what it was being sued for? He asked if these were negligence claims and if they were well-founded, and how much was being paid out.  Was the Department billing for services rendered or to reach a target? Why was an organogram being developed only in 2017 and what was the percentage split of the personnel budget between administrative and technical staff and professional staff? He asked when rollout of plans would happen, how much was the Department owing the Department of Public Works for rent, and how much was owed to municipalities.

Mr Mahlalela asked for clarification regarding expenditure on roads and who paid for them.

Mr Figg also asked why a new organogram was needed. He commented that underfunding was problematic and the province could not continue with unauthorised expenditure, so where was the money coming from? He was unhappy about the implications of paying legal settlements from personnel funds. The too asked if negligence was the main driver of legal settlements. He commented that in Eastern Cape some facilities, such as Livingstone Hospital, were in a disastrous state and felt that surely better results could be achieved from the money available?

Dr James enquired how many obstetricians were employed in the Eastern Cape, and how many midwives, and what plan was made for ambulances?

Ms Senokoanyane asked whether the medical litigation was recent, whether defence was provided by State or private lawyers. An integrated rural strategy was needed to deal with the issues of roads. She asked why mention was made of health technology and technical specifications and evaluations, and how these impacted on their ability to spend? If the province did not have any expertise in that area, then she wondered if the national department could help.

Mr Khosa asked about the plans for managing litigation in future. He agreed that people may be frustrated by the processes but they had to be managed, and complaints also managed, so that help should be sought from national departments.

Mr Shaik Emam conceded that challenges had been inherited from the oppression of many years but he wondered if the PDoH had a different view from the AGSA. He wondered how underfunding and incomplete staff were linked, and what people in the Department were actually doing. He asked what was being done for the clinical associates, and if health care workers were being moved from temporary positions into permanent status with benefits. What was the Department doing about the poor state of the morgues, which were resulting in spread of disease, and how was the maintenance problem being addressed.  IT overspending was clearly a case of staff incompetence as the issues cannot be tracked as to who has been paid. Why did the Department pay people who could not perform, and have no consequences for under-performance.

Ms Madlopha reminded the presenters that the Committee needed to “follow the money” and check whether there was value for money out of health services. She too wanted to know the consequences for defaulters? What practical steps had been planned by the province to deal with accruals and unauthorised funds? What mechanisms had been put in place to prevent recurrence of litigation? What actions had been taken to address poor performance such as the poor construction and had those been rectified. She pointed out that the  accounting officer was responsible for fruitless expenditure. She asked if the HoD and CFO had performance contracts.

Mr Maesela noted the talk about mud clinics, and cwondered if administration centralisation could not be avoided to avoid use of these facilities, and to ensure that water and sewage were not duplicated. He asked how modern equipment could be used in a mud hut.

Ms Shope-Sithole asked whether the 76 maternity clinics were accessible to all women. It was always necessary to look at the history of Eastern Cape, but she suggested extra support was then needed. In any instances of suspicions of collusion, the Department should contact the Hawks and the Competition Commission.

Co-Chairperson Dunjwa noted that the presenters had not spoken about a community programme. Staff accommodation was problematic and nurses stayed in conditions that were unacceptable, and she asked if the province had a Health Economics advisor.

Chairperson Phosa pointed out that the PFMA describes the HoD as an accounting officer., and thus cwondered why compliance issues remained a challenge. The Department had used the CoE budget for medical legal settlements and then needed more money for the creation of more posts. The NDoH and Auditor General presentations spoke of a well-performing health sector but for that , it would need adequately trained staff, yet the personnel head count had been reduced. She asked for explanation on the point that  payment of services were centralised. She asked if the organogram had been finalised and sent to Department of Public Service and Administration. She asked what was to be done about equipment, infrastructure, and turning around the situation.

Dr Mbengashe responded that the written presentation covered some points and National Treasury had covered details of amounts relating to medical legal expenses and how much was being claimed. He had stated clearly that the Department of Roads and Public Works was responsible for the roads. The challenges around litigation were not peculiar to the Eastern Cape. He had made reference to the clinical issues to be addressed, but the legal challenges needed  the ombudsman's intervention to prevent everything going to court – for instance a young boy did not obtain a certificate from an initiation school to say that he was consenting, and then tried to sue the Department. The Road Accident Fund was bankrupted by one case, until caps were put on amounts, but the problem remained that some lawyers were making money and leaving claimants no better off. The problem of litigation was country-wide which was why the Minister for Health had been involved.

The MEC for Health stated that she could also supply written responses to questions that she could not answer immediately.  She did not say lawyers were stealing files, but in at least one case a crucial piece of paper had gone missing from the file and the lawyers had had access to it, so somewhere there had been collusion. .A doctor in Port Elizabeth had been arrested but had committed suicide during the process of investigation. If negligence was found, the individuals could be fired and / or prosecuted. It must be understood that health was a high-risk business. The administrative staff accounted for 61% of the staffing budget.

She confirmed that some nurses did have accommodation, while others did not. She said that although the AGSA had raised some problems, the PDoH in Eastern Cape had obtained an unqualified audit after 12 years. The 2007 organogram no longer served its purpose. Various drafts of the organogram had been sent to DPSA but were not approved, due to insufficient funds. In 2014 an organogram sent for costing had come back with a R23 billion budget. The organogram referred to in the presentation had been reviewed now and there were a few areas needing a response; the PDoH had hoped to implement it by 1 April, but may have to put it on hold till May. As far as the Emergency Medical Service (EMS) was concerned, following  the outcry from the SA Human Rights Commission, there had been improvements to the number of emergency first responder vehicles and the number of ambulances.  Most litigation was linked to EMS. The Province had 141 EMS vehicles, many of which needed repairs, but ideally needed 680 ambulances in operation. The nature of the road network was damaging to ambulances so the EC took a decision to prioritise roads leading to health facilities. There was a problem of doctors not wanting to serve in rural areas. Clinical associates would go there but they needed supervision, although in fact they could train their supervisors. Refurbishment was one of the priorities.

Maternity facilities are accessible to women, especially after the improvements that had been made. The Province had specific maternity ambulances. The EC did not have a health economist.

Dr Mbengashe responded that he would would provide a breakdown of figures relating to midwives in writing. He did indeed understand his job, and knew what he was required to do.  The AGSA was well placed to judge him and had given an unqualified report. New employees are being employed in terms of the infrastructure grant and worked with infrastructure matters. As accounting officer, he could move money, which was done within the framework of the PFMA, and it must be remembered that this was being done to pay in terms of court orders. 

The Department had spent a lot of time on clinical improvements and the results would be seen. The legal cases were old ones recently brought to court. All doctors in gynaecology and obstetrics were paying R1 million for insurance cover,so doctors would not practice in those fields, making it difficult to provide obstetricians or gynaecologists in deep rural areas, and he noted that anyone practising in Theatres would know the complexity of the situations. However, PDoH had a strong system of enquiry should there be failings in practice. Litigation would inevitably continue until the legislation introduced caps, and it must be remembered that medical work was always high risk. Community Health Workers were introduced to cope with the HIV/AIDS epidemic and did not have qualifications; most were too old to re-qualify now, but could work up to .six hours a day for six days a week.  The Department had kept them on, but paid only a stipend.

In order to empower communities, the Province had added R403 million to the budget which is indicative of the Province’s seriousness to meet the challenge of health. This additional budget was addressing underfunding and paying for litigation. Part of the additional money would go directly to communities next year.

Mr Shaik Imam reminded the PDoH of his question on morgues, saying that there was also a problem with undertakers. According to his understanding of what the Minister had said, community health workers who had worked for more than 20 years with no benefit would be made permanent and be trained if possible. He repeated his question on the consequences for people who are not doing their job, particularly in infrastructure

Chairperson Phosa requested the Department to forward its infrastructure plan, including new projects and maintenance, as well as the plan for medicine and medical supplies. The Committee received so many complaints about dirty hospitals and so on. She had wanted to know why the HoD had admitted to non-compliance, which was the basis for her question on his job understanding.

The MEC pointed out that some of the infrastructural problems were beyond the control of the infrastructure unit. For example, a clinic might not open because the municipality had no  electricity supply owing to non-payment. NDoH wanted to devolve functions to clinic or hospital level. The Department advertised the fact that people could go to the Ombudsman when they had problems. There were a number of cases with the Ombudsman.

Free State (FS) Provincial Department of Health briefing
Dr David Motau, HoD: Free State Department of Health, began his presentation by making one correction to the Auditor General’s report. The hospital in Ladybrand was open and functional. The Albert Luthuli Hospital was to open on 5 June 2017. The Department had received an unqualified audit with a reduced number of findings. The Department was working with NDoH to deal with those findings. Medical legal claims were cross-cutting issues and were being dealt with. The Department had 240 cases of negligence. Accruals had been reduced.

Mr Molefi Motsie, Chief Financial Officer, Free State PDoH, said budget processes were aligned. Interactions between all role players ensured full alignments via meetings, written communications, visits and CFO meetings on non-negotiables. National priorities were integrated and allocated. Challenges included tight time frames, while adequate measures such as processes related to target setting, allocation of budgets and time schedules had been put in place.

As far as the health information system was concerned, the main challenge was with connectivity. There was alignment in pharmaceutical systems and the Department had appropriate IT systems such as MEDSAS which interfaced with BAS and the Patient Management System (PADS) and Sourced System but these were not integrated with national systems. The State Information and Technology Agency (SITA) was experiencing problems with bandwidth so 3G cards were being used. 

The Provincial Health Department had been operating under Section 36(3) of PFMA since 2014. The Accounting Officer had been appointed by the Free State Treasury. Since 2015 the HoD and CFO had been working closely with the province. Delegations had been made to district and facility levels. They were limited powers but devolved to the lowest level of managers. Problems were experienced in getting qualified engineers into the province but the infrastructure plans were aligned with the national plan and aligned to priorities. Challenges included planning and emergencies that had to be addressed.

The Free State believed that academic/tertiary and specialised hospitals, such as psychiatric hospitals, needed to be taken over by NDoH.  Infrastructure problems led to litigation. Malpractice had been an issue but doctors from other places who were not qualified had been flushed out in an audit.

North West Provincial Department of Health briefing
Dr Andrew Lekalakala, Head of Department, North West PDoH, noted apologies from the MEC for Health in the province. He said that the cost of employment in North-West was 63% of the total budget. The administration staffing budget had been reduced by 2.2%. Accruals were a problem for the Department. Because of the cash-based accounting system, it could not take accruals into the next financial year. As a largely rural province, the difficulty was in the lack of province-wide network infrastructure. The more rural the facilities, the more challenges faced in broadband connectivity. All ICT systems for the purposes of managing health services in the North-West were national DoH IT systems. The difficulty was that the systems were largely stand-alone systems.

The presentation provided the statistics for all NDP and SDG goals and the progress made in achieving the goals. The North-West provincial government had identified five pillars which were supported by the Department of Health in the province. The departmental budget was prepared in line with the guidelines issued by the Provincial Treasury which, in turn, was based on the budget guidelines issued by the National Treasury.

Challenges experienced in the process included competing and sometimes conflicting priorities and insufficiency of budget allocation to satisfy all priorities. The current basis of budget allocation was skewed in favour of big provinces. There was an intention to stop fresh intake into the Cuban Medical Students programme, leading to a reduction of 5.5% in the budget. The objective was to cap personnel expenditure at below 65% of the total budget.

The Department had started the current financial year with accruals amounting to R656.993 million.
This was an improvement on the prior year, when the level of accruals was R937.004. This had led to serious inadequacies in the system where ICT, nursing training and replacement of ageing equipment had become unaffordable. Failure to recapitalise the EMS fleet had led to an inability to reach national norms and standards on response times while EMS personnel were on constant overtime due to an inability to recruit the full complement.

Ms Madlopha asked North-West PDoH about the Auditor General’s report which showed failures to address the skills gap and also referred to the non-performance by key officials. She asked if there had been consequences for this.  AGSA had referred to a specific hospital and the Mbatho Nursing College, which were health hazards. She asked if hospitals in North-West were also a health hazard? She asked both provinces whether they were implementing norms and standards. The Free State had not implemented legislation and that meant increased unauthorised expenditure as well as overspending. The accounting officer was responsible for implementing PFMA and regulations. She asked what had been done to prevent such irregularities and what had happened to those who were responsible for the expenditure. Noting that one hospital needed a generator, the question was why this had not been repaired or seen to; the problem lay clearly with planning. Government had borrowed money but the state was paying for debt that was not being fully utilised because of the under-expenditure.

Dr Thembekwayo noted that the presentation seemed to suggest there was no problem with pharmaceuticals but the Auditor General’s report showed that systems were not integrated across hospitals, depots and pharmacies. Correlation was also needed with the NDoH report, as the two reports contradicted each other. She queried whether approved standard operating procedures had been followed.

Mr Figg addressed the decline in the number of Cuban doctors and the decline in the number of nurses in North-West and asked about the consequences of this policy. He asked if it was correct that no student nurses were being trained. He asked if North-West needed help to fight fraud and corruption? He asked what future plans were now envisaged, since the Treasury had been unable to bail out the Department?

Mr Masilela asked how the province ended up with accruals. He suggested that this was linked to adequate training and development and asked if the supply chain officials were trained. He wondered how the provinces intended to improve maintenance in the health sector.

Mr Shaik Emam was of the opinion that monitoring and evaluation mechanisms did not work, and could not link spending of money to value for money; he saw considerable spending and no service. He asked why North-West had terminated some employees and then employed new ones. He asked about health care workers, and whether they were being put into permanent positions as required, and the same about clinical associates. He also wanted to know about morgues. He pointed out that AGSA  reported that everything had regressed in the provinces. Much emphasis was put on finance but he wanted to see that the money was spent on the people and that service was delivered. Finally, he asked what the provinces proposed to do differently?

Dr James agreed that this was not a good report from the Auditor General but if medical equipment was not procured, maintained and repaired, people would die. He asked what management actions would be taken to fix that problem? He commented on the need for protocols for medical waste removal, saying people could fall ill if the correct procedure was not followed .

Mr Khosa asked the Free State whether the reason for delegating powers was to balance service delivery? He suggested that the delegations in the Free State, as indicated by the red markings on the AGSA report, did clearly need assistance, and he asked who needed assistance, the accounting officer or lower levels. He wondered why there was no report on the challenges.

Mr Khosa asked North-West about the response time for ambulances, which he remembered as 14 minutes in urban areas. Were health services available within 5 km of everyone?

Mr McLaughlin asked what the debt recovery rate was on billed services When had the HoD last conducted a personal site visit?

Mr Khosa referred to the 240 cases of negligence in the Free State, and asked how they were to be dealt with. He was concerned with ageing infrastructure and what was being done about it.

Ms Senokoanyane noted that powers had been removed from the Free State accounting officer, and asked what that meant in practical terms. She asked if the alternative funding for infrastructure in Free State was already happening. She asked why the North West had such a large amount in accruals, and asked for more clarity on the assertion that the allocation favoured the large provinces.

Ms Shope-Sithole noted that she had served three terms  in the provincial legislature and sympathised with provinces. However, when the PFMA was developed, the intention was that the letter and spirit of the law should allow managers to manage and to hold them to account, so Free State HoD had a right to delegate but was still accountable. Both provinces should read the report of AGSA; they needed to specifically address the recommendations in that report. She finally commented on the lack of women in the provincial teams.

Mr Masilela asked about the vacancy rate in the Free State, asking if the vacancies had released funds for other projects, although that was not something to be encouraged long-term. He noted the Free State assertion that infrastructure plans were sometimes changed to accommodate pressures and asked what they had cost. He referred to the lowered intake of Cuban-trained doctors in North West and wondered if this would not negatively affect the availability of doctors in the near future. He wondered how the amounts for interest on land had been reduced – had the rental property been purchased or was it not being used.

Chairperson Phosa also commented that management teams should comprise 50% women. Infrastructure development was problematic as project management ignores contract management, and only at inspection stage were mistakes identified. The Committee wanted to see an improvement and wanted to see value for money. She asked how soon would the provinces have the necessary policies, whether there were vacancies in infrastructure units, and whether anyone had been capacitated here, and also agreed that waste not properly managed was a health hazard, and wanted to know how the provinces were managing. She commented that they seemed to be putting out fires rather than settling down and addressing issues in the longer term.

Co-Chairperson Dunjwa observed that contracts were not administered according to the provisions of the contracts and National Treasury standards, and the ratios of ambulance: customers was incorrect.
The Free State HoD responded to as many questions as he could, promising that some answers would be sent to the members in writing. He pointed out that the budget allocation was problematic but the Department  had shifted funds to deal with maintenance. The Auditor General’s report regarding infrastructure development had been noted.  An audit action plan was being implemented. The vacancy rate was 19.5%. Changing projects was a matter of concern but there was pressure in terms of expansion of communities, although he did take note, and said that this was a concern to management as well. He explained that delegations had been taken from the HoD at a point, but subsequently given back. There were problems regarding the appointment time but by the end of May, delegations would have been returned. Negligence had occurred in 240 cases but these were very old cases; nonetheless claimants were encouraged at workshops run by lawyers to lay claims of negligence. There was a need to deal with the litigation problem collectively. The recovery rate on payments was a challenge. The Free State was collecting money from  the RAF, the Lesotho government and patients. RAF payments were low but the Accounting Officer had had engagements with RAF and payment had improved. Patients came across the border from Lesotho and so Lesotho owed R70 million in medical costs. He had engaged with the Lesotho government but so far only R37 million had been paid. It was particularly difficult to manage, as Lesotho was a country and Free State was a province. The patient IT system had crashed and a lot of information regarding patient payments had been lost. Work had been done on the ICT systems and it would be in line with DoH.

The terms of reference given to him for this meeting had not required provinces to give challenges but the Free State had challenges and would present them in writing. As far as the medical waste system was concerned, a valid contract had been in place since the previous financial year.

The CFO addressed questions on irregular expenditure. The Department had got qualified audit reports over a number of years. AGSA had raised the issue of an irregular expenditure register. There was a lack of capability in terms of the volume of investigations. He had looked at irregular spending from 2009 and those attempts to complete the irregular expenditure register had now shown up in the 2015/16 Auditor General report.  The Provincial Treasury had allowed the Department to bring in consultants to assist. The work was ready for presentation and Provincial Treasury would check the work and clear the matter. The second issue was over-expenditure which had increased from the previous year. Pressures had come under Programme 3 which provided EMS services. The provincial legislature had approved R10m of the over-expenditure but R20m still needed further investigation and the internal auditors had not yet finalised the report. Spending levels for the past few years were good and last year was 99.6%.  Shifting of funds from one programme to another was limited to 8%, which explained why 100% was not attained.

The problem with the pharmaceutical IT system was that it interfaced but was not integrated as required by the Auditor General.  Interfacing requires extensive work and the Auditor-General wanted provinces to move to integrated systems.

The HoD agreed that fact that the Ultrasound was not in use was unacceptable, but it was not a budget issue. The PDoH had not appointed health technologists as there had been a moratorium on staff other than doctors and nurses. However, in health, even the cleaner was critical as hygiene was an essential criterion. The situation had since been corrected as regards appointments. The North-West shared services would establish hubs so that staff from hubs could assist other facilities. Doctors resigned for many reasons, one being that the Department had clamped down on outside work, but new doctors had appointed. The figure for student nurses was incorrect as the Department did have student nurses. Monitoring and evaluation was not effective enough. Community health care workers would be absorbed on stipend as they were mostly over 60 years of age.  Younger community workers would be empowered. The Department had advertised for 30 clinical associates and only 15 had applied. All had been appointed but there were still vacancies.

The HoD of North West Department of Health then addressed specific areas. The Department was about to appoint four chief directors, of whom three would be women. There were women senior managers but they had had to go to the provincial legislature to deal with the APP. He extended his apologies for the lack of representivity in today's team. He noted that the unqualified audit was a surprise as there had been overtime issues. The audit action plan would address that matter and other issues in the Auditor-General’s report.

He agreed with the findings of the AGSA and it was “an embarrassment”. A medical waste contract was about to be awarded in 2015 but the specifications had not included criteria required by the Auditor-General so the tender was re-issued. Once awarded, it would take care of all the Auditor-General’s concerns. The policy on waste management was almost ready for sign off. Health technology staff were a big problem because the government could not meet private sector salaries. A number of doctors were trained in Cuba and had had to work on contract, but that period was over and they had left the Department. There are lots of problems with machines and some machines had to be replaced because they had completed their functional lifetime.  Maintenance assessment was being undertaken. Occupational health and safety officials had been appointed to deal with the separating of waste. ICT systems were good but not integrated. A business solution team had been appointed to do integration.  The HoD himself was at Brett’s Hospital on 13 March 2017 so that he could see the problems there and one week later, all problems had been solved. Regional services were being provided at Brett’s hospital which had stopped the flow of patients going into Gauteng for obstetricians and gynaecologists. He had paid a number of visits to hospitals, especially those on platinum mines, which were obliged to spend money on hospitals and other social services. One mine was offering its poorly ventilated hospital to the provincial department. The PDoH would then move patients to properly ventilated hospitals.  That space would be used for ICU beds, of which there was a shortage.  The Infrastructure unit was as good as the Department having a public works unit within the Health Department. The HoD was personally responsible for public works, hence expenditure was doing well.

One year previously a manager had been suspended for non-performance.  Plans for EMS included one ambulance per 10 000 population. The current ratio was one per 65 000 people.  Meeting the time requirements for arriving on the scene had been very difficult.  The pressure had been eased as the province had 117 ambulances. However, 57 ambulances needed replacement and to date 37 had been replaced. 20 must still be replaced. Trauma unit equipment was also needed and was being acquired.  The long waiting time was being addressed. Electronic vehicle dispatching and tracking was being addressed.  Ultimately the intervention had allowed the PDoH to meet 3 out of 4 indicators, but it was work in progress.

The CFO informed the Committees that the Department was doing restructuring and implementing cost cutting measures to improve on efficiency but the budget remained a challenge. Accruals would not help the budget. Cutting costs to the level of budget was the only answer. A snapshot of personnel showed that the last 2 000 plus staff left through attrition but that had affected performance in all areas, especially in the supply chain management. North-West Department of Health did not engage in fiscal dumping. The collection of debt rate was very high but there were outstanding debts where people did not even have permanent addresses. The Department had appointed private debt collectors to collect the debts.  Small provinces were disadvantaged because the principal allocation criteria are based largely on population size. However certain costs are fixed, regardless of the size of the population, for example the position and payment of an HoD. After meeting fixed costs, North-West had very little left. North-West did not get more than 25% of provincial budget, which was less than other provincial departments. Accruals were diminishing. Two years previously the accruals were R1 billion but it had been reduced in the previous year and there was a further reduction in the current year. The CFO had hoped to bring it down to acceptable levels by the end of the METF. That might mean telling the principals that the Department would not be able to offer all services.

He noted that government departments did not rent land, but it was a standard item in the budget for recording interest. In the North-West budget, it showed interest on accruals by ESKOM. Managing accruals would manage that interest as well.  The Department had been talking about needing assistance because of irregular expenditure, especially because mandated institutions, such as North-West Department of Public Works could not provide documents regarding old tenders from the time before the Tender Board had been disbanded. According to policy, that irregular expenditure was not the responsibility or fault of the PDoH and should not be reflected in its budget, but no one had been able to assist. The Department simply had no way to manage the situation and required assistance.

The meeting was adjourned.

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