Health Sector 2018/19 Annual Reports, with AGSA, SAMRC, and FFC input

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Health

10 October 2019
Chairperson: Dr S Dhlomo (ANC)
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Meeting Summary

Annual Reports 2018/2019

Four entities of the Department of Health – the South African Medical Research Council (SAMRC), the Office of the Health Ombudsman (OHO), the Office of Health Standards Compliance (OHSC) and the Council for Medical Schemes (CMS) -- presented their annual reports to the Committee.

The SAMRC provided details of its financial and human resources, with particular emphasis on its efforts to enhance transformation within the organisation. The Committee was also briefed on the prevalence of the main diseases influencing the communities’ health, and life expectancy statistics in the country. The Committee was generally impressed with the work done by the SAMRC, and most of Members’ questions were related to transformation and funding issues.

The Ombudsman said that when he came into office, his vision was to build a fully functioning organisation for future Ombudsmen. The Ombud was now a member of the International Ombudsman Institute, and there were lessons to be learnt from the UK Ombud structures, as they were independent and were operating with a full staff capacity. The UK had a population of 67 million, 10 million more than South Africa, but the office of the UK Ombudsman had 450 staff members, whereas in South Africa there were only two. This was an impossible challenge that the OHO faced. The OHO was complimented on the work that it had been doing, but Members raised concerns around the need for funding and capacitating entity in order to it fulfil its function efficiently.

The OHSC presented their performance plan, and under-funding was also noted as a critical challenge for the enforcement of health standards and compliance. Members questioned the entity’s employment equity situation, whether there was any conflict over the sharing of personnel with the OHO, and the effect of under-funding on their operations.

The CMS presented a detailed review of the South African medical scheme landscape. There had been a significant drop in the number of schemes operating in the country, and four companies were dominant in the sector. The CMS and Members shared concerns over the unaffordable increases in rates, the high costs of co-payments, as well as over servicing, which was driven by the profit motive. Considering that most of the CMS’s income was derived from medical aid contributions, with the introduction of the NHI -- which still had an unclear role for medical schemes -- what would be the role of the CMS? Other challenges included the complexity of medical scheme benefits and the difficulty of educating members on how to make the right plan choices, and the backlog in dealing with complaints.

Meeting report

South African Medical Research Council: Annual Report

Mr Nick Buick, Chief Financial Officer (CFO): South African Medical Research Council (SAMRC), took the Committee through the financial performance of the entity. He highlighted that between 2017/18 and 2018/19, SAMRC’s revenue had increased slightly by 5.2%, while other income had a significant increase of 141.2%, mainly due to the foreign gains of the entity. Mr Buick explained that with the rand weakening, much of SAMRC’s contract income was being received in foreign currency, which had led to the increase in income.

Operating expenses of the entity went up by 1.2%, and the operating deficit was reduced from R88 million to R38 million. The decrease in the operating deficit was mainly funded by SAMRC’s reserves, which were substantial. SAMRC’s investment income decreased slightly, from R42 million to R35 million due to a lower level in investments because of investments in capital expenditure and research projects.

The revenue increase of 5.36% to R1.1 billion was mainly due to two components. One was SAMRC’s baseline grant from government increasing very slightly by 0.72%, to R443 million. The other was because it had been able to increase its contract income by 10.5%, to R510 million.
Investment income decreased by 18.3% to R34 million, while the value of new research contracts signed was close to R300 million. He expressed the hope that SAMRC would be able to convert those research contracts into revenue in the new financial year.

SAMRC had managed to keep its expenses in line with its revenues. The entity’s expenses had increased by 1.2%, to R1.1 billion. Money given to fund research externally, to universities etc, had increased by 0.5%, to R515 million, and was the highest cost to the organisation. Travel costs had increased by 9.8%, and were mostly funded by contract income. Measures had been put in place to help decrease staff costs and these had worked, since staff costs increased only by 3.8%, to R370 million. Laboratory operating costs increased by 14.9% to R52 million as a result of SAMRC ramping up their clinical trials in Kwa-Zulu Natal.

Mr Buick said that the SAMRC’s baseline grant had started to flatline, and commented that it was predicted it was going to grow at less than the inflation rate and continue to be under pressure. However, the entity’s research contract income was growing steeply and at the rate at which both were growing, the two incomes would cross. He added that SAMRC’s other non-tax income, which included interest and leasing revenues from the entity’s buildings across the country, were showing a healthy increase.

SAMRC’s total expenditure for 2018/19 had flattened out and was in line with the entity’s baseline grant. Collaborative (research) costs also had to be kept lower than the baseline grants, and staff costs had also flattened out, as they had been managed within the lower grant.

Explaining the expenditure per strategic objective, Mr Buick explained the target was to spend 60% of its budget on intramural and extramural research, 19% on Innovation, 4% on capacity development and 17% on innovation, corporate and support. The organisation had managed to spend 58% on research, 21% on innovation, 5% on capacity development, and 16% on corporate and support, which showed that the SAMRC was managing its support side as efficiently as possible.

The SAMRC was a little bit over budget for the budgeted R1.079 billion total revenue, achieving R1.080 billion. Budgeted expenditure was R1.161 billion compared to the actual expenditure of R1.111 billion.

Mr Buick said that as the organisation reached major milestones in its contracts, it recorded the revenue and due to the fact that it reached its milestones more quickly, it could show more revenue.
Interest was very much in line with the budget.

Mr Buick highlighted that collaborative research was very slightly under budget, and explained that the organisation released money to institutions only when it was comfortable that there would be research outputs. Personnel costs were under control and below budget at R370 million, and consulting costs were only R8 million -- a R3 million difference to the budget. Infrastructure costs were over budget, as they had spent a significant amount of money on renovations of buildings across the country to ensure that they were modernised. Repairs and maintenance was R6 million under budget, while laboratory operating expenses were over budget by R4 million due to the ramping up of clinical trials.

SAMRC had healthy reserves of R286 million in the bank, which it had received permission from National Treasury to retain. It would reinvest those reserves into the business. Total asserts had increased by 6% to R770 million as a result of the capital expenditure on the buildings. Cash and cash equivalents had been reduced slightly, but were still healthy at R463 million, It should be borne in mind that a lot of that money -- approximately R310 million -- was money given to the organisation by funders to fund research.

He said the pension fund and medical aid liability had decreased by R13 million, to R8 million, as a result of the organisation putting in a lot of effort into reducing that liability.

SAMRC had managed to generate cash of R1.1 billion, with a positive operating cash balance of R18 million, which had allowed it to fund capital expenditure of R46 million. This had resulted in a slight decrease in capital reserves to R27.8 million, which was still healthy.

Human Resources

Mr Brinton Spies, Executive Director: Human Resources, said the SAMRC had a number of initiatives within the HR division, including the Transformation Forum, the Deputy Director Programme, and a five-year renewable appointment for unit directors, diversity awareness training, as well as a disability awareness programme.

He explained that appointments were being presented in terms of race, and not looking at other demographic factors in the organisation, due to the fact that employment appointments was the main thing being tracked to see that it was staying on track with its programmes. Currently the organisation’s employee profile was very much in line with the country’s demographics. It was on target with its employment equity targets, which had been submitted to the Department of Labour.

For the 2018/19 appointments, there were slight deviations in terms of appointments, as the white figure had increased slightly, but the percentages on the graphs were very raw figures. The 6% of white appointments represented only four appointments in the organisation. However, it was trying very hard to monitor these appointments and ensure that the organisation was driving its mandate to transform.

The entity’s target was to continue appointing females, and over a three-year period it had been very consistent in working towards that. It had also been consistent in its strategies to try and transform in senior management. There were challenges which they faced in trying to transform at senior management level, as the people who occupied these positions usually stayed in them for long periods, and opportunities arose only when they exited.

Transformation

Dr Mongezi Mdhluli, Chief Operating Officer: SAMRC, took the Committee through some of the organisation’s efforts to influence transformation amongst its stakeholders, which he explained included universities as well as other science councils. It worked with extramural research units, which were units based at universities and were led by unit directors, which were appointed by SAMRC for a maximum period of 15 years. When the current SAMRC executive committee had started, they had inherited 17 of these units which were based at various institutions. Since 2014, the executive had been able to grow the number of these units to 25, and of the 17 units which the executive committee had inherited, eight were still in existence, as the other nine had reached the end of their lifespan. Over the next three years, the organisation would be closing down two other units which were based at the University of Cape Town (UCT), because they had also reached the end of their lifespan.

SAMRC was also in the process of completing the introduction of two new units which were going to be dealing with violence and injury, and would complement the already existing intramural research unit. The unit would be led by a black unit director who was based at the University of South Africa (UNISA).

Dr Mdhluli said that in September. SAMRC had launched seven new extramural research units and this was an achievement, because six of them were led by female researchers. This had been done with the intention of achieving gender parity in science leadership within research institutions in the country. Four of the female leaders came from previously disadvantaged groups.

The scientific leadership of SAMRC’s units consisted of 25 leaders, and five of the units were based at historically disadvantaged institutions. The challenge in historically disadvantaged institutions was that there were pockets of excellence which were weakened as leading researchers moved to research-intensive institutions. However, it was still important for the organisation to invest in these research units and help to capacitate research capacity in the country.

Dr Mdhluli said that the historically disadvantaged institutions which were helping to capacitate research in the country included the University of the Western Cape (UWC), Tshwane University of Technology (TUT), the University of Fort Hare (UFH) and the Cape Peninsula University of Technology (CPUT).
 
SAMRC had a funding instrument called the Self-Initiated Research Grant under which a lot of transformation had taken place. In 2013/14, most of the funding (73%) was going towards white researchers, and in 2018/19 there had been some transformation where most of the beneficiaries of the grants were coming from designated groups.

The organisation also had a division which dealt with capacity development, where the mandate of was not only to fund postgraduate students with bursaries and scholarships, but also to also identify potential within institutions and allow these researchers to become independent. As a part of this fund, 45 PhD students and eight MScs were funded in 2018/19.

The second mandate of the division was to identify potential through different programmes. There was a programme which focused on historically disadvantaged institutions, where a total of 14 principal investigators were funded in eight institutions. In each of these institutions, a maximum of R1 million per annum was being reserved to capacitate research. There was a programme of intramural post-doctoral fellowships which were hosted by SAMRC’s own intramural research units. There were also career development awards that were hosted by SAMRC’s intramural research units, as well as mid-career scientists.
The profile of the mid-career scientists consisted mainly of scientists from historically disadvantaged institutions.

Health research priorities and their impact on policies

Dr Alfred Thutloa, Head: Corporate & Marketing Communications, explained to the Committee how SAMRC’s research impacted on different policies, processes and procedures, including some of the Sustainable Development Goal (SDGs) as well as how it impacts the National Service Delivery Agreement (NSDA) in terms of the different research units in both the intramural as well as the intramural spaces.

On the strategic goal of administering health research effectively and efficiently, the first indicator was on a clean audit, and the second indicator was on money spent on corporate support. The goal was to spend no more than 20% on corporate support and have the remaining 80% go towards research. The organisation had been able to spend 16%, which was less than the target of 20%, which meant that more money could go towards research.

The second strategic goal was leading the generation of new knowledge and facilitating its transition into policies and practices to improve health, which dealt with a lot of matters such as publications and influencing policies. For this strategic goal, the organisation was able to achieve all of its targets that were set and, in most instances, even over-achieve these targets.

Dr Thutloa said that strategic goal three was supporting innovation and technology development to improve health, and the organisation had overachieved in the goals which it had set

Strategic goal four was building capacity for the long-term sustainability of the country’s health research, was mainly concerned with capacity development. The organisation had some challenges with the Auditor General over this goal due to the fact it referred to the number of graduates in the period, whereas in some instances students managed to complete their degrees but did not graduate due to institutions moving the graduation into the new financial year and therefore, SAMRC could not account for these students in the reporting period.

Scientific Impact

Prof Glenda Gray, President and Chief Executive Officer (CEO), started off by telling the Committee that South Africa currently found itself stuck in an epidemiological transition where there were four colliding epidemics -- one of communicable diseases, one of non-communicable diseases, another of child and maternal death, as well as an epidemic of violence and injury. All of this impacted heavily on the country’s health system.

The South African demographic and health survey conducted by the SAMRC in 2016 had helped guide the Department of Health (DoH) on changing their priorities as well as show how the country was doing on issues such as maternal and child health, vaccination and immunisation, the obesity profile, as well as show what the hypertension prevalence looked like in order for the Department to be able to respond to the needs of the population.

The SAMRC also did this survey in order to help guide DoH’s allocation of resources, as well as to track what people were dying from, and to understand how the life expectancy of the South African population was changing over time. Increasing life expectancy was a difficult thing to do, but for every year that life expectancy in the country was increased, more money was added to the country’s gross domestic product (GDP).
 
The survey had also looked at the under five mortality rate, and the most recent statistics showed that the mortality for this category had come down. The reason this rate could not decrease further was because the country’s neonatal rate had stagnated.

Prof Gray explained that the indicators spoke to what deaths could be prevented in South Africa, pointing out that in the first 28 days of life, there had been 674 cases of preventable deaths involving diseases such as diarrhoea, HIV/AIDS, road injuries, fires/hot substances and violence.

In the age range of 1- 59 months, there had been 22 198 cases of preventable deaths, causes of which were attributed to HIV/AIDS, diarrhoea, lower respiratory infections and protein-energy malnutrition. She stressed that the Department should ensure that children were not dying from nutritional related diseases in the country.
 
In the category of children between 5 and 14, children were dying of HIV/AIDS, road injuries, drowning and violence, which were all preventable. In the age category 5 to 24, people were dying mostly from HIV/AIDS, road injuries, diarrhoeal diseases, drowning and interpersonal violence. However, as people got older, they died mostly due to issues which were not the Department of Health’s problems -- causes such as road injuries and drowning. In the 25+ category, people were still dying from HIV/AIDS, interpersonal violence, cerebrovascular disease and diabetes.

Prof Gray told the Committee that hopefully in the following week, the Minister would announce the country’s first tuberculosis prevalence survey that would be coming out, and predicted that it would show that there was more TB in the country than the Department thought. This would mean that the Department would have to work harder. Since TB and HIV were obviously related, if TB could not be properly managed, the same applied for HIV.

She announced that as a legacy project, SAMRC hopes to be able to establish the first whole genome sequencing platform in Africa. The importance of this was that it would allow South Africa to interact in the 4th Industrial Revolution, but also allow scientists to understand the genetic background of its citizens, which would in turn help to prevent diseases and improve health.

One of SAMRC’s concerns was childhood obesity, and to try and address this issue SAMRC had a conducted a study along with Canada, China and India. This initiative had looked at ways to prevent obesity and adiposity to try and prevent cardiovascular diseases as children grew older. In this collaborative study, the involved countries used the same interventions, methods and protocols on children and pregnant women. This allowed them to see how genetics, countries and pathogenic exposures in the respective countries contributed to childhood obesity. This was a very important study which would have global impacts in terms of childhood health. The South African programme was currently taking place in Soweto.

Something else that was important to South Africa in the study was anti-microbial resistance, as this was something that was coming down the pipelines globally. SAMRC was currently working with neonatal units, running surveys to see what type of infections were emerging, as well as working with international agencies to look at new drugs in neonatal facilities.

Prof Gray said SAMRC was committed to developing programmes within Southern Africa with the BRICS group – Britain, Russia, India, China and SA -- as well as with other countries. Some of these programmes focused on information exchange and capacity development on a bilateral scale. SAMRC was also working with other programmes in an effort to improve science among the countries. The work it was doing with BRICS was mostly centred on TB and childhood obesity. She also announced that SAMRC had a big programme with the US National Institute of Health (NIH), where both countries had invested around R40 million each to a programme around kidney transplants and HIV in South Africa.

Oone of the other things that SAMRC had tried to influence was knowledge translation, which meant trying to disseminate the work that it had been doing to the rest of the South African population and showing people the importance of science.

Discussion
 

The Chairperson commended the SAMRC for the meaningful work that they had been doing and expressed his hopes that more people would have the opportunity to hear about it and understand its impact.

Dr K Jacobs (ANC) asked SAMRC about the regression in the 2017/18 audit, from an unqualified audit with no findings to an unqualified audit with findings. The audit finding had been due to non-compliance with laws and regulations. It had been proposed that the Committee ask the SAMRC to report to the Committee on a quarterly basis for the 2018/19 financial year. He suggested that SAMRC should take a look at the variations in the life-expectancies between the provinces as they were presented by the Department of Planning, Monitoring and Evaluation (DPME) in the Presidency. He found it shocking to see that life expectancy in Gauteng had increased to 64 years, while in the Free State it stood at 55.

Ms N Chirwa (EFF) asked for clarification about the transformation in the scientific cohort. What was the quantitative goal for transformation, as well as its final goal? What were the organisation’s intentional strategies to absorb black women into top and senior management positions? Which programmes had been rolled out for mainstreaming gender? Regarding public engagement programmes, which programmes had already been rolled out, had they been accessible, and what type of results was the organisation seeing? She asked about rape statistics which had been mentioned during the previous meeting, and wanted to know if those statistics were based on the number of rape convictions, or on the organisation’s own research. She also wanted details of the findings that they had made on the research which SAMRC had carried out in 13 countries in Asia on strategies for gender-based violence (GBV) and sexual violence.

Dr P Dyantyi (ANC) asked the SAMRC to explain what the causes for variations in life expectancy across South Africa were. She said she had not seen anything in the presentation that addressed the number of people with disabilities currently employed by SAMRC. She also noted that in the presentation, Walter Sisulu University (WSU) had not been mentioned at all in the section regarding Masters and PhD candidates of previously disadvantaged institutions. She asked if this meant that there were no people in WSU who were interested in improving themselves.

Mr T Munyai (ANC) complimented the SAMRC on their efficiency, capacity and transformational agenda, and said this was encouraging work. He asked if the financial position that the delegation had presented was the same as what had been shared with AGSA. He commented that the SAMRC should allow the Members to see the entity’s research work in action.

Mr P van Staden (FF+) also complimented SAMRC on its good performance and asked that they uphold this standard. He advised the delegation to watch that the organisation’s deficits did not rise too high, and also take note of their decreasing investments and their traveling costs. The slide referring to femicide and murder rates were from 2009, and he asked SAMRC to provide the Committee with the latest figures, considering that the rates of murder and femicide were very high in the country currently. Apart from politicians educating citizens about the murder and femicide rates, what else could the Committee do to try and help to remedy this problem?

The Chairperson commented on how impressed the Members were with the presentation. He referred to the entity’s baseline funding, and asked who gave support for this funding. It was impressive to see that the research agenda of the organisation was influenced by the problems which were prevalent in the country. However, what more could be done to address the problems contributing to the mortality rate of pregnant women in the country in order to be able to achieve the SDG goal that referred to the mortality of pregnant women. He asked Prof Gray to shed light on what had been the major contributing factor for diarrhoea, and how the issue could be addressed, as it had been existing for a long time.
  
SAMRC’s response

Prof Gray said she would send the Committee a slide that spoke to the variations in life expectancy, and also to the variations in the causes of deaths across South Africa. People in the Western Cape tended to die mostly from diabetes and cardiovascular diseases, and in the Free State people tended to die more from HIV and other communicable diseases. Prof Since Gauteng was the economic hub of the country, it was expected that people living there would have a higher life expectancy. Each province, and sometimes even districts, should be approached differently when trying to address health issues due to the fact that causes of death were different and thus required different strategies.

Moving on to the causes of death in pregnant women, Prof Gray highlighted that there were three “Hs” responsible for deaths amongst women -- Hypertension, Haemorrhage and HIV. The issue with hypertension was both management as well as understanding the pathogenesis, as the pathogenesis and the understanding of the mechanisms have lagged behind in management. Things had reached the point where hypertension was being managed without really understanding the causes. The SAMRC had invested a lot of research in trying to understand the mechanisms of hypertension, since South Africa had one of the highest rates of pre-eclampsia pregnancy-induced hypertension in the world. She also expressed her hope that with the genome sequencing facility, scientists would start to understand some of the genetic susceptibilities to pregnancy induced hypertension.

For haemorrhage, SAMRC had tried to work on two approaches. Thee was the intramuscular drug that stopped haemorrhage, and for the past four years SAMRC had been working on formulating a sublingual oxytocin. There was also an affordable device which the organisation had been testing which would allow midwives to deal with haemorrhaging and could be inserted instead of having a glove with ice being put up the vagina.

Prof Gray said her experiences as a paediatrician at Baragwanath Hospital have shown her that diarrhoea cases had gone done because of the improvements in the quality of water that people had in their homes, way before the introduction of rotavirus vaccines. She explained that to combat diarrhoea both clean water and a vaccine were required.

At SAMRC, they do not dream about transformation, but rather enact it and work very hard to make sure it happens. She herself had a succession plan and people who would replace her had already been identified. This was aimed at addressing the issue of transformation in top management positions. Besides the succession plans, the organisation had also introduced things such as deputy directors in an effort to expose younger people to leadership, five-year renewable plans in senior management, where contracts were reviewed after five-year period, and “step-aside” initiatives where white males at executive positions were being asked to step aside to allow transformation to occur.
Overall, the SAMRC was underrepresented in black and white people, while being over-represented in coloured and Indian people, but at management level it was overrepresented by whites, which was something the organisation would be addressing over the next three to four years.

She reminded Members that the transformation issues present in the organisation currently were things which the current management had inherited, and which they had been working very hard to try and address.

The SAMRC valued public engagement very much, so much so that in the next strategic plan of the organisation, public engagement was going to be the fifth objective, with indicators to measure how the organisation was faring when it came to translating the work that the organisation does to the public which funds it.

Dr Lungi Kwitshana, SAMRC Board Member, told the Committee that she would answer the question on transformation from her position of being a black scientist within the board of the MRC, because unfortunately the history of the country had dictated what one would see at the top level of the Council. She said that the MRC had not been able to find black women who fitted the criteria of being a world class research scientist with an MBChB qualification. She had been associated with the MRC since she was a Masters student in 1996, and not many black women ventured into research science due to the way things had been historically.

The MRC had come from an era where the executive was all white and in the following era, it had been all male with a few designated groups. It was only now that the MRC had managed to have its first female president on its board and the executive had changed over in a short space of time. When the MRC was trying to find a black female president for the board, it had advertised so many times that they had even resorted to headhunting, but the black females who almost fitted the criteria were reluctant to leave their current jobs because they worked so hard to get to where they were, and did not want to leave it all for a five-year contract. However, the MRC had currently identified three eligible black females to replace Dr Gray in the next five years.

Dr Kwitshana emphasised that the MRC’s transformational agenda was not just a dream. There were concrete steps in place and active measures to ensure that it happened. The new trend at the MRC was that there were more females within the organisation compared to males, which would at a point need to be addressed.

Mr Buick returned to address the financial questions, and first addressed the question about the unqualified audit with findings from the last financial year. He said that in the last seven years, the Council had received six clean audits and in the last financial year, it had received an unqualified audit with findings. The reason for this audit outcome was that the Treasury regulations required the MRC to get a certain amount of local content, and this time the MRC had bought local furniture worth R200 000 and had been supposed to put in a form from the supplier noting that the organisation was in compliance with the regulation. The MRC had not put the required form through, so they had received an unqualified audit with findings, despite the fact that they had gone back to the auditors and they confirmed that the content was indeed correct.

Dr Trish Hanekom, SAMRC Board Member, referred to the 2010/11 financial statement to try and give some context to the Committee. She explained that around that time, the medium term expenditure framework (MTEF) allocation had been R237 million, and now it had doubled. The irregular expenditure in the books had been at R275 million, nd this year there was a total of R151 000 which was a procedural issue and not something that was fruitless and wasteful. She explained that the organisation’s total fruitless and wasteful expenditure this year was R92, which was related to interest payments, hereas it was R110 million in 2011. She said the context she wanted to give was that the MRC had gone from being a dysfunctional organisation to one which was really functioning above its weight and bringing in money from donors so that the budget was in excess of a billion. She added that the organisation had got to where it was now because of really paying attention to detail and ensuring that it was in compliance with the PMFA and good governance.

Dr Hanekom also highlighted that the AG had been extremely helpful. The only concern that the audit committee had had was that because the MRC had been doing so well, it could get a bit complacent. She also commented that the AG had been helpful with regard to highlighting that the issue of furniture and delayed graduations were good problems to have, as they were so insignificant.

Asked to comment on whether or nor SAMRC had to keep an eye on its deficits, she said that sitting with R237 million in reserves in 2011, there was no justifying why money was sitting in the bank accumulating interest for nothing. It was a conscious decision that reserves should never be in excess of an amount needed for contingency. During a time when the organisation was experiencing government fiscal constraints, it was indefensible to be sitting with huge reserves. She told the Committee that there was nothing to worry about.

Mr Buick referred to the question on whether or not the financials were in line with the audit, and told the Committee that it was.
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On the question on reserves, he said that SAMRC had been using its reserves to fund the deficit and noted that this was not sustainable, however. He also observed that as the MRC’s funding contracts came to an end, the organisation would not be able to renew them. One of the benefits of a higher baseline grant from the National Department was that the organisation was able to attract leverage funders -- foreign funders such as the NRH or the Bill and Melinda Gates Foundation -- who were able and willing to match the organisation’s investments in initiatives.

Mr Spies referred to the question that had been asked about the number of persons with disabilities within the organisation. At the moment the organisation employed four people with disabilities. The reason that this was the case was that people were reluctant to declare disabilities despite the education programmes that the organisation was doing.

Dr Mongezi Mdhluli. Chief Research Operations Officer, acknowledged that the organisation had seen an impact on the number of diarrhoea cases since the introduction of the rotavirus vaccine in 2009. Clean water, sanitation and hygiene had also made a tremendous impact. Unfortunately, the rotavirus was not the only cause of diarrhoea.

He said that in the extramural research unit, the ultimate goal of the MRC was to transform the next cohort of researchers because historically most of the researchers were white. To address this issue, when the organisation gives out scholarships, the organisation balances that with the transformation agenda when research leaders were selected for programmes. The ultimate goal in transformation was to transform the next cohort of researchers in the organisation.

Prof Rachel Jewkes, Executive Scientist for Research Strategy, said that the organisation had received the statistics on the murder of women from the police, but to find out who the perpetrators of these murders were, research had to be done. The organisation had done two national surveys, with the last one being a 2009 survey, but for the most recent survey the organisation had started data collection last month. The hope was that in 12 months’ time the organisation would be able to come up with estimations on the most recent figures. She expressed the hope that the government would in future invest in double data collection for crime statistics in order to have routine sources for these statistics.

She said child murder was an incredibly important problem. Half of the murders were child-abuse murders, which raised another problem of the lack of child protection due to the lack of social work services. Child protection services really required major changes in resources as well as operations.

Other murders were gender-related and were related to the way the different genders were socialised, where violence amongst boys was encouraged. There tended to be a silence around violence by men among women. The organisation hoped that the MRC interventions would address the way that boys came to see themselves as behaving appropriately in regard to the use of violence.

When it came to working around gender, the Gender & Health Research Unit had been working on a number of pieces of work over 25 years, looking at different aspects of GBV, as well as gender and how it impacted on health. The type of work that the unit had been working on included looking at how gender impacted on health, gender and equality, women’s subordination and how that created risks of HIV etc.

SAMRC had looked at violence in the education, health and criminal justice sectors. It had conducted a big national study that looked at what happened to the cases that get reported until there were convictions. The study showed that there was a very low conviction rate. This study had shown the areas in which a lot of work needed to be done in order to address the issue of rape in the country. There was an opportunity for national departments to work together in order to deliver protection for children and have justice as well as met the health needs of people who were experiencing violence.

Prof Jewkes said that the other side of this issue was the need for putting in place programmes that were aimed at preventing violence within communities. It was important that the MRC put in place a programme of action with different interventions. She referred to the research that the MRC had been doing between Africa and Asia, which had looked at interventions to prevent violence amongst children, interventions that combined economic empowerment for women and families with gender transformation, as well as the research that looked at interventions that used community activism strategies to change social norms on gender and violence within communities. The organisation had show that if there well-designed and implemented interventions in all of these areas, violence could be reduced. However, it was important to have the proper interventions in place and these interventions needed to be well-funded because when they were not, corners got cut and interventions became ineffective.

Prof Jewkes said it had been shown that health across populations could be changed, and to illustrate the point she referred to a study that was done in Nicaragua that showed that nearly 50% of violence across the population had been reduced over 20 years as a result of a range of interventions --especially the mobilisation of women within communities, and changing the ways communities thought about gender.

The Chairperson thanked the SAMRC delegation for the work that they were doing and urged them to keep the good work up.


Office of the Health Ombudsman: Annual Performance Report

Mr Monnatau Tlholoe, Director: Complaints Centre and Assessment, Office of the Health Ombudsman (OHO), said that the annual performance report should be read in conjunction with the APR of the Office of Health Standard Compliance (OHSC) because the OHO was located within the OHSC’s Programme Three, which also details the indicators related to complaints and management, and these would be reported by the OHSC. The OHO had continued to fulfil its legal mandate despite the limitations which posed by the current legislation, as was presented at the previous meeting with the Committee.

Currently, the OHO lacked the critical resources needed to execute its role. The staff complement of the compliance management programme had been severely inadequate, as it had been running at a vacancy rate of 56.4%, because out of the 39 existing posts, only 19 were funded. The organisational structure had been approved by the Department of Public Service and Administration (DPSA) and needed funding to be able to operate efficiently. When comparing the organisational structure of the OHO as approved by the DPSA with that current situation of the OHSC, the proposed structure of OHO by DPSA indicated that there should be 113 posts against the 39 that were currently in the organisational structure of the OHSC. The Presidential Health Summit Compact had endorsed a number of commitments to see that the OHO was funded.

Mr Tlholoe commented on the promulgation of the norms and standards applicable to different categories of health establishments, saying it would strengthen the role of the OHO as it would be in a position to investigate complaints related to these breaches.

He said one of the reports released in 2018/19 was the investigation report into the allegations of patient mismanagement and patient rights violations at the Tower Psychiatric Hospital and Rehabilitation Centre in the Eastern Cape. There were recommendations made at three levels -- for the national Department of Health, the provincial Department of Health as well as the institution. One of the recommendations at national level was that should be an administrator who would be responsible for looking at mental health services within the province with the aim of ensuring that they were able to create a fully functional system, where mental health services would be rendered from a quality perspective with the developed policies which would be able to assist this type of service to function properly. At the moment, the budget allocated to mental health services was not adequate to render the necessary services. At a provincial level, the recommendation was that government should develop a policy on mental health as well as develop a mental health information management system that would be integrated into the district health system. At an institutional level, one of the key recommendations was that the current seclusion rooms were not in line with the guidance on seclusion rooms, and therefore they had to be revamped to ensure that they maintained the quality of safety necessary.

The Committee heard that the OHO had continued to monitor the implementation of the Life Esidimeni recommendations, and that the work of the OHO had been recognised by various sectors and received various awards for its work. Life Esidimeni had had a very huge impact within the mental health environment, and even at the Africa Health Conference of 2018, two presentations on public health had been centred on the lessons learnt at Life Esidimeni. The Life Esidimeni incident had raised the importance of looking into the mental health system.

In addition to this, Prof Malegapuru Makgoba, the Health Ombud, had become a member of the International Ombudsman Institute.

Mr Tlholoe said that stakeholder relations remained one of the priorities of the OHO. It now also wanted to draw on the programme complaints management within the OHSC, but this would not be reported in the same way as the data would have been reported in the OHSC. Theat OHO had tried to look at the trends in complaints during the three years in which the Ombud had been in office, and these showed that within this particular programme there had been an increase in the number of complaints and requests that came in.

For the 2018/19financial year, 1 904 complaints had been received and of those, 1 697 were accepted for further processing, while 207 were rejected due to lack of mandate. The assessment unit of the OHO had reviewed 1 125 of the 1 477 complaints.

The investigation unit in the year under review had received 56 investigations that were referred to them for further onsite processing. Gauteng was the leading province with cases for investigation that had been referred to the investigation unit. The reason for this would be that Gauteng was in close proximity to the OHSC, and the complaints received from Gauteng were mostly via electronic means, which showed the literacy levels in the people of the province. Of the 56 cases, 10 were exposed to onsite investigation and the investigators had participated actively to assist with the investigation of the Health Ombud report.

Although investigations were supposed to be completed within six months, trying to conduct quality work as well as the time spent investigating a complaint meant the six-month period was not a feasible time to resolve complaints, especially considering that the OHO had inadequate staffing levels.

Mr Tlholoe pointed out that the gaps in the legislation, as presented at the previous Committee meeting, created challenges which required urgent intervention, as the Ombud’s office needed to maintain its independence in order to fulfil its role. He added that the designation and secondment of staff required in terms of Section 81.3c had not occurred.

Within the complaints management programme, one of the strategic challenges was that the programme was now entering its fifth year of operation, but it did not have an executive manager, which created challenges around strategic leadership, guidance and support. This resulted in a fundamental gap, and impacted negatively on the attainment of the strategic imperatives of the programme.

He also reiterated that the approved organogram which had not been funded created a challenge for the organisation, so the OHO had put in place a short-term strategy to use surplus funds from the previous year so six contract staff members could be appointed.

The Ombud was now a member of the International Ombudsman Institute following the visit that the Ombud had with the UK Health and Parliamentary Services Ombud. There were lessons to be learnt from the UK Ombud structures, as they were independent and were operating with a full staff capacity. The OHO had noted that the Health Services Ombud’s team had stringent processes for accepting complaints, so that if complaints had not been raised at the National Health Service, they would signpost it according to the relevant facility to manage it. In the Health Services Ombud’s office, the legal unit was involved at every phase of the complaints management programme to ensure that there were no legal gaps. The value of legal services being involved from the onset was that it limited the challenges.

Prof Makgoba told the Committee that the UK had a population of 67 million, 10 million more than South Africa. He pointed out that in the office of the Ombudsman in the UK, there were 450 staff members whereas in South Africa there were only two members. This was an impossible challenge that the OHO faced.

He said that the country was in the beginning stages of the National Health Insurance (NHI), something which everyone accepted must happen, and reminded the Committee that the OHO was one of the entities that were going to play an important role within the NHI. He also reminded the Members that one of the pillars of the NHI was quality, and quality could not be implemented without the proper capacity. In order to maximize the change in the system, everyone should look for quality over quantity, especially when there were systematic constraints.

The Office of the Ombud was supposed to investigate complaints in an economical and mediating way, but once lawyers were involved there was no way to be economical. What had happened was that the legal fraternity had realised that there was information that it could not obtain from hospitals for confidentiality purposes, and since the Ombuds’ office had the ability to attain this information, complainants instructed their lawyers to go through the Ombud’s office to get the information. This resulted in the office of the OHO being used as a licence for people to sue each other. This increased the litigiousness of the society and eroded trust in the Ombud and the establishment, because when the establishment gives information over to the Ombud’s office, they hand it over to the legal fraternity.

Prof Makgoba said that this month was Mental Health month, and Members should be reminded of what had happened at Life Esidimeni. When he took the job, he was told that he would be in this office for seven years, and his goal had been to set up an office of the Ombud that would be among the best in the world. That was why he took the time to try and understand many aspects of the influences and challenges faced by the OHO. His intention was not to be an Ombud, but rather the person who sets up the office for the future Ombudsmen. The reason he was alerting the Committee to the challenges of the OHO was so that they were addressed and the office of the Ombud would be well equipped for upcoming challenges, because if these challenges were not addressed now, every Ombud coming into office in the future was destined to fail and this would result in the country failing as well.

Mr Tlholoe concluded by saying that the Ombud intended that there should be a facilitation of legislative reform for the OHO in order to allow this office to be an autonomous entity. It also intended to lobby for funding for the OHO office structure, expediting the concurrence of the designation and secondment of staff, and also to engage with the National Health Council to lobby support on responses to complaints and requests, particularly from the public health sector. It would also facilitate the combination of the assessment and investigation units to maximise their capacity and performance, and also ensure that complaints received in OHO would be managed with the expediency that they required.

Discussion

The Chairperson said that Prof Makgoba’s analysis of South Africa and the UK with regard to staffing, he had left out the part about the alignment of the OHO and OHSC that he was motivating. He wanted to bring in someone from the DoH in order to have this matter reconfigured. He told the Committee that Members cannot sit in meetings and not hear the contributions of the Committee. He asked how the separation of the two entities was supposed to be reconfigured.

Prof Makgoba replied that the Presidency had started to draw up two bills, one for the OHSC and another for the OHO. The first drafts of the bills were supposed to be submitted on 10 October 2019 to see how this matter could be reconfigured in line with what came out of the Health Summit of the Presidency. As much as things were starting to move, he did not want to write a bill for himself -- he wanted the bill to be for the country and for the office of the Ombud.

Ms Mihloti Mushwana, Director: Public Entities Governance, DoH, confirmed that there was currently a draft Health Ombud’s Bill which seeks to establish the OHO as a separate entity from the OHSC, and said there were currently discussions taking place between the Department of Health, the OHO and the Department of Planning in the Presidency.

The Chairperson asked Ms Mushwana when she thought the draft bill would be brought into the Parliamentary processes.

Ms Mushwana replied that she could not confirm the time line currently, as the Department was still trying to finalise the socio-economic impact analysis along with the Department of Planning in the Presidency.

The Chairperson requested that the Committee secretary write to the relevant persons within the Department to request the timeline.

Ms Mushwana clarified that the OHSC was established in terms of the Health Act, and the idea was to separate the OHSC and OHO and allow each entity to have their own pieces of legislation.

Office of Health Standards Compliance: Annual Report

Mr Julius Maphata, Chief Financial Officer (CFO) and Executive Manager: Corporate Services, OHSC, told the Committee that the OHSC would be reporting performance in respect of its four programmes. The Office had adopted four strategic goals which were aligned to these programmes.

Programme 1: Administration

The administration programme was comprised of finance, supply chain, human resources management, Information Technology (IT), communication, stakeholder relations, governance and legal. The purpose of all these elements was to provide leadership and the necessary support needed for the OHSC to deliver on its mandate and comply with all relevant legislation.
 
Mr Maphata told the Committee that for this programme, there were indicators that the OHSC needed to deliver on in 2018/19.

Indicator 1 had to do with the percentage of funded staff appointed. The emphasis for this indicator was “funded staff”. The OHSC had unfunded staff positions which could not be filled.

Indicator 2 had to do with the certification of inspectors. Inspectors of the OHSC were qualified and trained but with the promulgation of the new norms and standards in 2018, they had had to go through an updated training programme. At the end of the financial year the target was not met because inspectors completed the programme only a month after the financial year was over.
 
The OHSC had received at clean audit from the AG.

It had met its targets for information technology (IT) systems, and for holding stakeholder engagement sessions. However, it had had a mandate to conclude four cooperative agreements, and only two had been achieved -- one with the South African Nursing Council and the other with the Council for Medical Schemes. During the course of the financial year, the OHSC had concluded office space lease agreements.

Mr Maphata said that the inadequacy of funding remained one of the major challenges for the OHSC, because with the promulgation of the new norms and standards, a higher volume of work was anticipated in terms of inspections and complaints. Therefore there was a need for corresponding funding to keep up with increased volume of complaints and investigations. A highly developed information system would also be required that would be able to keep up with the pace of the increased activities.

The OHSC was also looking at the generation of revenue from services rendered, because in the Act it was stated that the OHSC may raise revenue by charging fees for services rendered.

Programme 2: Inspections, Certification & Enforcement

During the course of the year, the OHSC had a target of 725 health establishments to be inspected, which was 19% of the total number of public sector establishments, and it had been able to inspect 750. Most of these inspections were conducted in the Eastern Cape, KZN and Limpopo.
 
Indicator 2 was to do the same number of inspections in the private sector, but due to the lack of promulgated norms and standards during the course of the financial year, the OHSC could not go to the private sector.

Indicator 3 had to do with the development of certification procedures which the OHSC had since completed. The issue of certification was very important in the NHI because the draft NHI Bill required that certification be done by the OHSC before accreditation could take place.

Indicator 4 had to do with the enforcement procedures which were published during the course of the financial year. Currently the OHSC was working on the comments that they had received from the public.

Indicator 5 had to do with the report of inspections. The report had been completed only after the financial year was concluded, and was ready to be presented to the Committee.

Mr Maphata informed the Committee that the OHSC had also conducted healthcare risk management audits as per the request of the Committee. A total of 252 audits had been done, and the reports of these audits would also be presented to the Committee during the meeting.

Challenges included the limited number of health inspectors to conduct inspections due to funding constraints. On average, these inspections cost about R114 000 per week.

Programme 3: Health Standards Design Analysis and Support

Mr Maphata said that in this indicator, the OHSC had a number of indicators.

Indicator 1 referred to the percentage of annual returns finalised within 60 days. The target had been 80%, and the OHSC had achieved 100%,

Indicator 2 had to do with the final norms and standards recommended to the Minister. The OHSC had recommended one dealing with emergency medical services, which met the target.

Indicator 3 had to do with the number of relevant authorities responsible for supporting health establishments that received guidance for compliance to norms and standards. The target was 12, and the OHSC had achieved 15.
 
Indicator 4 had to do with systems control, data collection and surveillance as part of the early warning system. This indicator was achieved.

The challenge in this programme had been the limited expertise in terms of the development of norms and standards as a result of funding inadequacies.

Financial Information

Mr Maphata said that compared to the previous financial year, the OHSC’s revenue had declined by 4%. Although the OHSC had received an extra 3% from government grants, expenses had increased by 23%.

The OHSC had received a clean audit from the AG and a 3% increase in allocations from the National Treasury. Some interest had been earned through short-term investments.

Regarding expenditure, there was an increase in staff salaries, which included interns and temporary staff members -- the OHSC had almost 20 temporary staff members on 12-month contracts. There was an increase in board fees and an increase in asset breaks in the OHSC, as well as an increase in the volume of activities. One of those activities had been the move to the new offices, which had resulted in a higher cost base for the OHSC, as new infrastructure had to be set up.

Mr Maphata said that the division with the highest expenditure was the Compliance Inspectorate Division, which amounted to R61 million, followed by Corporate Services at R43 million, most of which had to do with support services such as the rental of offices etc.


Discussion

Mr Van Staden asked Mr Maphata to indicate the number of inspectors that the OHSC currently had in each province. Directing his comment to the Ombudsman, he said he would like to see more teeth in the legislation so it could do its work to the full. What he meant was that when the entity made recommendations, he would like to see them being implemented. He said that the way to achieve this was to be more connected with the Special Investigating Unit (SIU) and the National Prosecuting Authority (NPA). Mr Van Staden also highlighted that he saw the lack of resources, both financial and human resources, as a huge problem that needed to be addressed urgently in order to allow the OHO to do its work efficiently. He emphasised that the OHO must not be seen as a money-making business, but rather as an entity that was able to fulfil its function.

Mr Jacobs referred to the OHSC and asked if they were to summarize, what would they say was the quality of care experienced by the receiver at the point of care since the OHSC’s inception. He also asked how the OHSC, after discovering that there was non-compliance in a health facility, ensured that health facilities complied with the guidelines issued by the OHSC and also what recourse there was if facilities did not comply with the OHSC’s guidelines.
 
To the OHO, Mr Jacobs expressed that he was very happy to hear that there was a bill on the way that was in line with the bill of the OHSC, as this would strengthen the office of the Ombudsman. He also congratulated Prof Makgoba on the work he did on the Life Esidimeni project, as it had portrayed the country as a success story. He commented that it was important that the Committee considered the issues which the OHO faced in terms of funding -- it was an issue which should be put into the new bill. He also expressed the hope that the OHO’s accounting line would also be put into the new bill.

Ms Dyantyi commented that nothing had changed in the presentation of the OHO from the first time the OHO had presented to the Committee. She hoped the DOH would work faster to resolve the challenges faced by the Ombudsman, as it was not fair to have an office doing good work not have adequate human resources.
 
To the OHSC, she commented that in the presentation they had written “staff complements,” but had not provided an organogram representing that in order to understand the funding. She also did not see the OHSC’s staff reforms, such as appointments by gender, race and disability. She would have been interested in seeing what equity was like within the board as well. She asked the OHSC what the impact of their inspections were in the different facilities.

Ms M Hlengwa (IFP) complimented the OHO on the good work that they have been doing despite having only two staff members, and said she she sees the impact of the shortage of staff within the office.

She asked the OHSC what certificate it was issuing in relation to the NHI. She would also like to see the visibility of OHSC inspectors in public clinics as well, because clinics and hospitals in the rural areas were outdated and also faced staff shortages, while other staff members were simply lazy. She commented that if inspectors were what brought quality to hospitals and clinics, they should also be visible in the rural areas.

Ms Chirwa asked for a detailed indication of the number of cases which had been launched per year, as well as what the backlog looked like, and what had happened to the previous years’ cases that were not resolved, as this was not covered in the presentation. How had the conflict between the OHO and the OHSC been resolved, since there was some personnel sharing and overlap? What did the systems for enforcing recommendations look like, and how successful had they been over the years. When they were not successful, what did the entities revert to? She asked the OHSC if a certificate of compliance could be revoked before the four years, and whether or not there was a system to monitor how the health facilities were doing after they had received the certificate. Were there perhaps mobile offices of the OHSC for people to be able to interact with it? The fact that Gauteng had the most complaints was concerning, as there were other provinces that were worse off than Gauteng. She asked the OHSC if they had statistics on who reported to the OHSC in terms of race and gender and other intersecting demographics. The importance of having access to this information was that it made it easier to come up with preventative measures for the problems that people faced. She also asked for clarity on what the OHSC’s jurisdiction in the private sector was, as well as what measures were put into place for people who were reporting on issues which were outside the scope of the OHSC’s mandate.

Ms H Ismail (DA) asked the OHSC for clarification on how the entity’s norms and standards, which they had submitted to address certain health issues, had been implemented thus far. After the investigations, what remedial actions had been implemented, besides those of Life Esidimeni, by other hospitals? She referred to a report that had been presented to the Committee which detailed dirty and dilapidated health facilities and non-compliance over the filing of medical reports, and asked the OHSC to explain how they were ensuring that these facilities were doing what was necessary.
The lack of critical resources in such an important office was very concerning to her, as it could not be expected that the office could run efficiently and ensure quality health without the necessary resources. She asked about the ratio of inspections in relation to health facilities, and also expressed concern over the shortage of staff in the OHO. She was concerned that the Committee had not received any reports on calls being dropped at all the call centres. She asked whether or not the contact details of the OHSC and OHO were clearly visible in all public healthcare facilities such as hospitals and clinics so that patients experiencing issues at these facilities know how to get in touch with the entities. She also commented that the Office of the Presidency had told the Committee that when they conducted site visits, they sometimes came into contact with staff members who had no idea about the details of the hospitals that they were working in, so she wanted to know how the OHSC and OHO would deal with this issue.

Mr M Sokatsha (ANC) asked where the OHO get involved in instances of mistreatment of patients -- for example, when mental health patients were kept in jail. Should the OHO be called in to come and investigate, or not?

The Chairperson said the Department of Health would be requested to come back and report on the oncology programme, as well as the mental health programme in the country. It might be important to have Prof Makgoba present on that day too, since the mental health programme had been prompted by the Life Esidimeni incident, as well as the increase in mental health awareness programmes in the rest of the world. He asked why the OHSC had accredited only health facilities that were operating at an exceptional level in their report from the previous year. He also told the OHSC that in the AG’s previous report they had commended the OHSC on their consistently clean audit, but the AG had reported that there were 70 or so clinics that had regressed since the last audit. He asked the OHSC to explain some of the reasons for regression in those facilities.

OHO response

Prof Makgoba responded to some of the questions and issues raised by the members.

Addressing the question on mental health in the world, he said he believed that South Africa was sitting on a time bomb and in a state of denial. The symptoms of this were that there were extremely high rates of GBV and crime and other issues which seemed to indicate mental health issues. He had spoken to the previous Minister of Health and suggested that a structure like the SA National Aids Council (SANAC) be established to deal with mental health. He also commented that in the UK and Canada, the prime ministers have taken it upon themselves to deal with mental health issues.

Referring to the issues of incident complaints, Prof Makgoba said that his office was supposed to deals with complaints, and when his office saw that an issue was going to have a great impact on the health system, they would refer it to him without waiting for someone to come and complain.

He admitted that the OHO had not done very well in making itself accessible to the public This because the OHO was still trying to organise how its offices and system were going to be discharging their responsibilities. He commented, however, that the call centre of the OHO had been well advertised.

Referring to the issue of recommendations and enforcement, Prof Makgoba assured the Committee that the recommendations of the OHO were being enforced. Giving an example of the Life Esidimeni case, he said that those recommendations had been handled by the CEO, and after the report was released to the public the SAPS, SIU and NPA were involved so that they could follow up. The Human Rights Commission had been asked to investigate, and they had discovered that the provinces without a mental health directorate were the worst performing in terms of mental health in the country.
 
Speaking to the issue of measuring impact, Prof Makgoba said that maybe they had to admit that resolving all the issues which were brought before the OHO was going to be a generational long challenge but at the moment, the impact in the country was very low.

He assured the Committee that the OHO and OHSC worked very well together, and there was not conflict between the two.

OHSC response

Regarding general complaints about the state of hospitals, an official from the OHSC said everyone in the room was responsible for ensuring that appointments made at a higher level were of a high quality so that people on the ground could receive the necessary resources to do their job well.

Mr Maphata answered some questions, predominantly those relating to finance.

Referring to the composition of the board, he said that currently the board had eight members and the gender balance was 50/50. He commented that the presentation was supposed to be a summary of the annual report that had been distributed to the Members, and the details of the demographics of the entity were covered in the full report.

Regarding the possibility of mobile offices, he said that currently the OHSC operated from Pretoria, but there had been conversations about decentralising to provinces. However, the challenge around decentralisng was the issue of resources.
 
The increase in salaries was driven largely by two factors. One was the annual salary increases, where the scale of salary increases of the OHO were the same as that of the DPSA. The other factor was the number of temporary staff members to alleviate the staff shortages. These temporary staff members were funded by the surplus that the Treasury had allowed the OHO to retain.

Adv Makhwedi answered the questions raised around certification.

Regarding the certificate that the OHSC would be issuing, she said that in terms of the Act one of the entity’s functions was to inspect and certify healthcare facilities to ensure they were compliant with norms and standards. The certificate that would be issued by the OHSC was the certificate of compliance, and it was linked to the NHI.

Referring to the question as to whether or not the certificate could be revoked, she told Members that it could be revoked. The revocation was also linked to a recommendation to the Minister to either close up the whole facility, or a part of the facility.

She explained how compliance was monitored at healthcare facilities. There were annual returns that health establishments were supposed to submit to the OHSC, as well as self-assessments that health establishments could conduct in order to report to the OHSC on an annual basis. The OHSC had also established an early warning system with indicators that health establishments could report on, which were on a 24 and 72 hourly basis, as well as on a monthly basis, which would alert inspectors to go in and look at the facilities. Complaints through call centres were another mechanism used to monitor healthcare facilities.

Regarding the jurisdiction of the OHSC, Adv Makhwedi told Members that in terms of the Act, the OHSC mandate extended to both the public and private health establishments, as well as non-governmental organisations (NGOs),
.
Addressing the concern raised by the Chairperson on the interpretation of inspection results, she said there was a compliance status framework which guided compliance in health establishments. The OHSC had categorised the different levels of compliance, and these were indicated during inspection and noted in the compliance certificates handed out to healthcare facilities. In the past these categories did not exist, and therefore compliance was open to interpretation.
 
On the question of recourse where there was non-compliance, Adv Makhwedi told Members that the Act gave the OHSC powers to enforce compliance, and in instances where there was non-compliance, the entity could enforce it either through revoking a facility’s certificate or by issuing a warning to the person in charge. If the person in charge did not know what was happening in the health facility they were in charge of, the OHSC had the power to recommend that a warning be issued to that person.

Ms Matshidiso Montsho, Director: Compliance Inspectorate – Routine, OHSC, responded to the questions centred on the entity’s inspectors.

She said there were 44 inspectors, and all were trained and certified.
 
Responding to the question of the visibility of inspectors in the rural areas and the ratio of inspections, she told the Committee that the OHSC went to all the provinces and inspected in all the rural areas, given the resource limitations.

Ms Moleko addressed the questions relating to impact.

She said that the OHSC existed to ensure quality and safety in healthcare. The inspections were a means to an end. So far, the OHSC had not been able to measure impact.

The issue of resource shortages meant that the scope of what the OHSC could do was very broad, and if the OHSC was going to focus on inspections alone it would not be able to fulfil the rest of its duties, which would result in a decline in the quality of healthcare in the country.

Speaking about the sustainability of heath standards, Ms Moleko highlighted that it was important for the OHSC to make quality a culture in the healthcare sector. The OHSC needed to be able to follow up on its findings, which was something currently not possible due to the limitations of the entity’s resources.

Regarding ideal clinic frameworks, the OHSC had tried to work with the same framework, but at the same time the national Department framework would be addressing it and mandating the OHSC to focus on quality assurance, at the same time ensuring that there was an improvement in the national health facilities.

Ms Moleko also emphasised that the focus should not only be on the quantity of the inspections done, but also on the quality and impact that those inspections have.

An official from the OHSC added that the reason the OHSC focused on the quality of inspections and not the quantity was that there had been a long-term development, where the information system was only able to give an overview of the facilities because of how it had been developed. The OHSC had not yet developed the capacity to get the facilities needed to get their results via the internet. Through this system, the quality process would be improved because even provinces would be able to see where the common challenges were that health facilities were facing. However, to make this a possibility, additional funding would be required.

Prof Ethelwynn Stellenberg, OHSC Board Member, said it was important to make sure that support was given from the level of primary healthcare. Primary healthcare facilities were understaffed, under stocked and bombarded with many patients, and operational managers of these facilities were not managing. Before everything could be implemented from the top, it was important that the primary healthcare facilities received support.

She told the Committee that from next year, there would no longer be any training of specialised nurses because the regulations had not been signed, This was going to put the country into trouble for a couple of years from next year, and it was going to impact on the NHI and patients’ quality care. She illustrated this point by telling the Committee about what a study had revealed in a South African midwifery department, where 143 cases went to the labour ward and 135 resulted in cerebral palsy cases due to the fact that the midwife had been bombarded with so many labour cases. Obstetricians did not want to do obstetrics anymore because of this problem, and if it was not addressed at the primary healthcare level, it would continue to perpetuate itself.

Mr Van Staden said that the information that Prof Stellenberg had presented was very important, and suggested that it be relayed to the Minister on an urgent basis.


Council for Medical Schemes: Annual Report

Dr Sipho Kabane, Registrar and CEO, Council for Medical Schemes (CMS), said that the overall performance of the organisation sat at 80%, but this excluded the 18% of partial achievements. There were areas where there was negative performance, such as in sub-programme 1.4, which was the HR sub-programme, programme 2 of the strategies of this year, as well as programmes 6 and 9 which dealt with compliance and investigations and the complaints adjudication. There was also an indicator which accounted for 2% which, through discussions with the AG, was deemed non-applicable.

The entity received an unqualified overall audit outcome due to the performance information, as well as the financials. Four material findings were raised and nine material misstatements had to be corrected through the audit process.

The CMS maintained its record of maintaining its ICT systems on time at over 99%, and its research output was increased in order to address industry challenges and to contribute to policy development. The entity increased its stakeholder interactions and the offering of training and empowering to key stakeholders. The appeals process was also streamlined and there was an improvement in the reduction of complaints.

The organisation had held a conference on Industry Waste, Fraud and Abuse in February/March of 2019, during which industry players were brought in to set down the rules of the game.

Referring to areas of under-performance, Dr Kabane said that in HR, there were 16 vacancies within this period and 12 of those were filled within the 120-day turnaround period. However, the CMS experienced challenges around the filling of the other posts, hence the partial achievements. This issue was corrected by resolving disputes on appointments and also by ensuring that appointments were fast tracked. The Strategies Office also had a problem of a backlog of clinical opinions, but this was corrected through the appointment of clinical analysts who were able to deal with it.

The area of partial achievements involved the compliance and investigative unit and was more of a technical issue where, in the setting of targets, the CMS did not account for cases that would come at the very end of the financial year and had to be dealt with outside of the financial year. The CMS was working on correcting that formula.

The complaints and adjudication section was the only area where the CMS was struggling. This was due to high staff turnover and capacity issues. To address the problem, the CMS would have to improve its ICT systems, because it had accumulated a bit of a backlog which had led to it failing to meet its targets.

Dr Kabane moved on to describe the CMS’s performance by programme, indicating those that had been achieved or partially achieved. The only non-achieved target had been deemed non-applicable.

An official from the CMS presented the annual financial statement and went through the AG’s report, highlighting that it had received an unqualified audit and that it had managed to correct the mistakes noted in the AG’s report. The AG had reported non-compliance with section 55(1A) and 55(1B) of the Public Finance Management Act (PFMA) and with Treasury regulations. The AG had also noted 26 of the financial statements that were dealing with investigations currently in progress on possible cover quoting, and the CMS was currently busy with an investigation of that issue.

The entity’s financial position indicated a reduction in total assets, liabilities and accumulated total funds. Total asserts had declined by R14.5 million, from R61 million, total liabilities had dropped by R3.7 million, and accumulated funds had fallen by R10.8 million from R19.2 million. Despite the reduction in total assets, the liquidity of the CMS was still healthy as cash and cash equivalents contributed to 57% of total assets. Payables from exchange transactions made up 63% of its total liabilities and the buildings from which it operates were leased, and the operating lease of the building made up 25% of its total liabilities. The conditional grant received from the Department of Health which was not yet spent made up 7% of the liabilities, and provisions 5%.

The CMS incurred a deficit of R10.8 million at the end of March 2019. The main reason for this was the implementation of National Treasury’s instruction note 6 of 2017/18, which stated that public entities listed in the PFMA may not incur surpluses realised in the previous financial year without prior written approval from Treasury.

Total revenue of R168 million was received by the CMS in the 2018/19 financial year. It had funded 86% of the total revenue through levies on principal members of medical schemes. The total fees it received from the entities it regulates amounted to 7% of its total revenue. Government transfers from the Department of Health constituted only 4% of its revenues.

Total expenditure of R170 million was incurred, of which 63% was for the compensation of employees, 20% for operating expenses and 13% for administration. Operating expenditure was responsible for 27% of the organisation’s total expenditure. The main cost categories were inspection costs, which were 20%, legal fees at 17%, consultation fees at 15% and travel and subsistence at 11%. The main administrative expenditure was the building the CMS occupied. 98% of its total budget was utilized in the financial year.

Irregular expenditure increased by R16.1 million, to R44.4 million. Of the R14.9 million in irregular expenditure recovered in the 2018/19 period, 93% was expenditure recovered from previous financial years, and was related to the panel of inspectors and legal advisors not established according to the prescribed processes. Three transactions which totalled at R1.1 million were reported as irregular and were still under investigation to determine whether they constituted as irregular expenditure. The CMS also incurred an amount of R31 000 in fruitless and wasteful expenditure.

Mr Michael Wille, General Manager: Research and Monitoring, CMS, told the Committee that what the CMS was seeing was that there were now fewer medical schemes in comparison to the previous years. At one point there used to be around 140 medical schemes, but now there were only 79 existing schemes. Smaller schemes tended to be absorbed by the bigger ones, and the CMS expected that some consolidation would take place over the next couple of years.

He said there were two type of medical aid schemes -- open and closed schemes. The open schemes admit anyone who can afford to pay the premiums, and the employer-based schemes were those offered by employers. Across the two types of schemes there was a range of about 23 medical aid options.

What the CMS had noted was that medical schemes had not grown over time. The only time there was significant growth in the industry was when the Government Employees Medical Scheme (GEMS) was introduced. The CMS saw significant growth between the period 2005-2011, there being 80% growth in the closed scheme sector and close to 40% in the open scheme sector.

Many of the medical scheme beneficiaries reside in Gauteng, KwaZulu-Natal and the Western Cape, while other provinces have smaller ratios of medical scheme coverage. Much of the growth was located in the North West, Limpopo and Northern Cape provinces. The CMS had seen an ageing population of medical scheme members increase, with more people in their 70s being covered by medical schemes, while fewer younger people were being covered.

Looking at the benefits paid for health facilities, medical schemes had paid R173 billion in 2018 compared to R116.5 billion in 2017. This was because healthcare had become more expensive over the 2017-2018 period for ordinary beneficiaries. The average amount spent per person by medical schemes had increased by 6.63%, which was still higher than the inflationary increase.

Mr Willie gave the Committee a detailed description of the make-up of sector funds, and the set of benefits offered by the medical aid schemes. He also gave a breakdown of where money paid to medical aids goes. He explained that if a beneficiary paid R100 to the medical aid, R37 went to private hospitals, R16 to medicine, and R25 to specialist costs. He also observed there was a rising trend of out of pocket payments by medical aid beneficiaries. The concerning issue about these payments was that between 2014 and 2019, the payments had increased by over 40%.

Medical aids usually had two types of payments, one being for in-hospital payments and the other being for general practitioners at hospitals or private practices. He said that because of the benefits from the medical aids, GPs who operated from a hospital were almost three times more expensive than those operating in their own practices. The medical scheme design had become more hospital-centric, and there were higher expenditures in the hospital setting than outside of it.

Referring to hospital admissions, Mr Willie said 19% were medical cases, 9% surgical cases and 3% maternity cases. The CMS had noticed that the majority of people admitted to hospitals were pneumonia and knee replacement cases. For surgical cases, Caesarean sections were very high. For medical cases, the average stay was five days, for surgical cases the average stay was three days, and for maternity cases the average stay was 2.9 days. HIV had become one of the most prevalent cases in the medical scheme, but there was a positive side to it as data had shown that more people have access to anti-retrovirals (ARVs).

One of the challenges that medical schemes were facing was the increasing burden of disease among members of medical schemes. The increasing costs of healthcare for the ageing population of medical aid members was concerning. The increasing out of pocket expenditure either by beneficiaries or from the savings pool, was also a matter of concern for the CMS. There needed to be a change in the medical schemes’ benefits design, with the focus more on primary healthcare and trying to prevent people from ending up in hospitals, because it was more expensive to pay for treatment in the hospitals.

Ms Figueiredo gave a snapshot of the industry, and said the solvency of the medical schemes was just above 34%, which was above the minimum required risk solvency of 25% for all schemes. The medical schemes had a gross contribution of R192.3 billion for all schemes, and a risk contribution of R174 billion. The difference between gross and risk contributions was that there were savings contributions as well. For risk contributions the pay-out for each member per month was R1 633.91. There had been a general upward trend for risk contributions, based on the 2018 figures, which had been adjusted to account for inflation.

Gross claims were R174 billion and risk claims R156.9 billion. On a per life basis, claims were R1 474 per average beneficiary per month, and per average beneficiary per month claims accounted for 90% of all claims being received. Looking at the distribution of risk contributions, Ms Figueiredo said that for every R1 paid out, 91c would have been paid out to claims and 9c to non-healthcare expenditure.
In terms of the relationship between claims and contributions, in 2017/18 there was an increase in the claims ratio due to high utilization and increasing prices.

Administration took up the bulk of non-health expenditure, and other non-health expenses included broker fees and distribution costs. There was a general downward trend in non-health expenditure.

There were a number of schemes with high principle offer (PO) fees, but there was no real correlation between the size of the scheme and the amount of principle offers they pay. Regarding schemes with the highest trustee remuneration, there was no correlation between the size of the scheme and how many trustees there were. However, in terms of the Amendment Bill, she explained that there was something added in which would provide for the determination of the parameters to be applied to the determination of remuneration for POs and trustees of those schemes.

Ms Figueiredo told the Committee that medical schemes rely heavily on investment income in order to generate profit for the schemes as a whole. The net surplus in 2018 had decreased in comparison to where it was in 2017, and this was mainly due to claims and lower investment incomes experienced in 2018 industry-wide. In 2017, there had been six schemes below the prescribed solvency level of 25%, and in 2018 there were seven. This was what the CMS was constantly monitoring strictly.

The majority of the scheme investments were in cash and bonds. This was due to the short-term nature of having to pay out claims, and assisted with the liquidity requirements that all medical schemes needed. There were other investments in assets such as property, and the purpose of this was to diversify investments.

There were four dominant players -- Discovery Health, Medscheme Holdings, Metropolitan and MMI Health.

Ms Mamsi Mashilo told the Committee that her unit had been experiencing capacity issues, but they had been working really hard to address the backlog of incoming complaints. In 2018, 4 758 complaints were resolved out of 6 650 received, which had been a combination of what was carried over from the previous year as well as what was lodged in 2018. The reason complaints were carried over was due to the ageing of complaints which would still be open because of issues relating to capacity constraints. Measures had been put in place to address this, included the hiring of temporary paralegals to assist the administrative staff and allow adjudicators to attend to cases.

She said that 1 146 rulings were issued in favour of complainants, while 1 187 were issued in favour of regulated entities. There had also been a split of rulings issued in favour of both complainants and the regulated entities. Whenever rulings were issued in favour of regulated entities it was still within the CMS’s mandate to protect the interest of beneficiaries, and this also referred to the membership collective as well. 55% of overall complaints resolved were in respect of the broader administrative complaints, which were things relating to incorrect claims processing and benefit increases. There was a need for more member-focused interventions, where members need to be educated.

The second largest group of complaints related to clinical matters, where the 1 430 complaints resolved in 2014 related to clinical issues such as short payments of prescribed minimum benefits (PMBs) due to protocols not being resolved.

Ms Mashilo referred to the key observations on the resolutions of complaints, and said the CMS noted that there was insufficient benefit communication, and interventions could be made there to ensure that members of schemes were adequately protected. There was also a lack of member education at scheme level. The CMS undertakes interventions regularly to ensure that schemes increase their communication and education of members.

The complexity of scheme design was another issue that the CMS had highlighted. Because there was so much information, members tended to not understand their benefits and how best to utilise them. There was also member apathy, where members -- due to not understanding the complexity of the schemes -- dismiss the whole thing. There was non-compliance in terms of PMB regulations, and members do not understand designated service provider (DSP) regulations which when used would result in them not incurring co-payment. There was therefore a need for members to be educated in that regard, but also for service providers to take the initiative and ensure that they were widespread and accessible to members.

Current interventions implemented in the CMS to deal with the backlog of complaints include the hiring of paralegals to deal with backlog, and the filling of an adjudicator position. Although there was a high staff turnover, there was an emphasis in the unit to address the backlog. Other interventions would include a new IT system which would reduce the administrative interventions which had to be made manually, as well as the realignment of processes to ensure that they were not administratively cumbersome. Another intervention would be to do an audit to keep track of the backlog to ensure that it did not get out of control.

Discussion

Ms M Sukers (ACDP) asked if there was a reason why the CMS was leasing and not acquiring its own assets. Regarding the number of complaints recorded, were South Africans making adequate use of the available channels to voice their complaints with medical schemes? She also asked for clarity about the R10.8 million deficit that went to Treasury.

Ms Chirwa asked about an amount of R4 million that was going to be released to the SIU for an investigation involving patient profiling, wanting to know if the money was indeed released and if it was, how far along the investigation was. What would happen to the reserves in the CMS once the NHI had been rolled out, and what would the role of the CMS be in the implementation of the NHI? She made the point that for members of open schemes, out of pocket payments were too high. She asked the CMS if they had any programmes for public engagement and if there were, she asked the CMS to explain what their impact had been.

Ms Hlengwa asked who the stakeholders were that the CMS holds training for. Why would the GEMS’ benefits be cut off before June? Were members were aware that they could receive medical scheme benefits, even when they had resigned?

Ms Dyantyi asked why regulated schemes were benefiting in the complaints area more than the members of the public. Were there no benefits in medical schemes for people who had retired? Why was the scheme that Members of Parliament use not mentioned?

Mr Jacobs asked the CMS to explain what they had done to try and curb the proposed 9.8% increase that medical schemes had proposed. He said the CMS had not identified who had complaints -- whether they were individuals, members, healthcare practitioners etc. He also commented that the CMS had not stated the cumulative number of complaints from the previous years until 2018. He had noted that there was an increase in the financial needs of the CMS in order for them to be able to do their work properly. He suggested that to address this issue, perhaps the CMS should increase the amount that they deduct from levies on medical schemes, or else increase the deduction from the principle members of the medical aids. He also asked if the reserves of medical schemes could not be used to address the needs of the CMS. What would happen to these reserves in the future as the NHI got implemented?

Mr Van Staden asked from what date the backlog in complaints to the CMS had been running. What would happen to the reserves of the medical schemes when the NHI cames into place? He also asked the CMS to clarify the rumours of what had happened within the CMS regarding the member of its council who had been suspended.

Ms S Gwarube (DA) asked how the CMS had fulfilled the regulatory part of its mandate by regulating the private sector when it came to the high costs of co-payments, as well as over servicing. What measures did it have in place to look into issues such as over servicing, which was driven by the profit motive? Considering that most of the CMS’s income was derived from medical aid contributions, with the introduction of the NHI -- which still had an unclear role for medical schemes -- what would be the role of the CMS? Had they received any clarity from the DoH on whether or not there was any viability for the CMS under the NHI? She asked whether any work was being done to update the PMBs to ensure that medical schemes covered more people, as there were still schemes who were excluding people on arbitrary bases, basing it on legislation that was passed in 1997.

The Chairperson asked for clarity on issues related to the increase in out of pocket payments, and why healthcare was more expensive when seeking it in hospitals.

CMS’s response

Dr Kabane referred to the question regarding the cost of the SIU investigation, which was estimated to be about R4.6 million. He said the SIU investigation had nothing to do with the allegation of racial profiling. That particular investigation was being carried out by an independent panel, led by Adv Tembeka Ngcukaitobi, and its estimated cost was around R10 million. The additional investigations which were going to be carried out on the basis that certain CMS employees had been placed on suspension were going to cost the organisation some money. The estimates were not yet known, but it would certainly add to the R14 million.

Referring to the question of reserves, he said this was one of the areas that still needed to be revisited by all key stakeholders under the national Minister. What the NHI Bill was saying currently was that the schemes would be providing complementary cover to what the NHI would be excluding from its benefits basket. The detail of how they were going to migrate to the full implementation of the NHI had still to be worked out. The transition needed to address the issue of what would happen to the current reserves which accumulate on an annual basis. Many people believed that they were entitled to that money, including members of schemes, while some employers also believed that they were entitled to the money. There were also others who believed that the government should receive a stake too, for their contribution.

Regarding the role of the schemes and the CMS under NHI, Dr Kabane said that at this point the Minister had only instructed the CMS to deal with the draft NHI bill, and at a later stage there would be a parallel meeting for all the affected stakeholders, where the process of making the transition to the NHI would be negotiated. From CMS’s point of view, it would be regulating in terms of any bill put before it. Currently it was faced with the task of repackaging the Medical Schemes Amendment Bill to address regulatory shortfalls. The NHI Bill already suggested amendments that needed to be effected into the Medical Schemes Amendment Bill, as it says in the NHI Bill that the CMS did not have to wait until the NHI was fully implemented before it spoke about the complementary cover.

Dr Kabane said there were anticipated recommendations from the Section 59 investigation into racial profiling. The CMS believed that it would change the way section 59 was written and understood. All of these bills were going to be incorporated into the Amendment Bill, which he hoped would be looked at after the disposal of the NHI Bill.

The CMS had already started with the process of reviewing the PMBs. They were already moving away from the current list of diseases and diagnostic pairs, as no rigorous methodologies were followed in including or excluding certain conditions from the PMB basket. Currently the priority was in line with what the NHI was recommending, which was a standardised option that would cut across all schemes. With the primary healthcare list added to this, it looked like a comprehensive package that may form the basis of what the NHI package may look like.

Dr Kabane said the reason people run out of funds was due to a variety of factors. For instance, because there were so many benefit options in the industry, making appropriate choices as a beneficiary meant that people were sometimes buying benefit options not aligned to their state of health, and as a result their funds were exhausted. Another cause was that members used their medical aids as a grudge purchase without actually taking into consideration how much of the funds could be remaining. There was an element of fraud and abuse, where people used their cards for family members, as well as a lack of understanding of the rules of the schemes.

Referring to CMS’s work around co-payments, over servicing and overpricing, he acknowledged that there was a gap in the regulatory environment of health. The CMS was only mandated to regulate schemes, brokers, managed care organisations and administrators. The regulation of professionals sits with the Health Council of South Africa, and private hospitals were largely unregulated, yet a huge percentage of the money paid out by schemes went to the hospitals. The new regulations that the health inquiry proposes were aimed at addressing these exact issues around the regulation of hospitals.

The role of the CMS was in fraud, waste and abuse, and with regard to this issue, there was no agreement between service providers, beneficiaries and the CMS on how to behave. However, the organisation had had a summit with the industry where a charter had been developed to address and reach a common understanding. At the next summit in the new year, the CMS and industry would be looking at how patients should conduct themselves as members of schemes. The CMS would also talk to service providers and administrators, and the recommendations of the section 59 case on racial profiling would also be included.

Dr Kabane corrected a point, and said that the funding that CMS received was mainly from levies, which accounted for 87% of its funding.

He said the suspensions were the result of allegations about a couple of members of the CMS involving unethical behaviour, corrupt relations or supply chain irregularities. In all of these allegations, the CMS had followed the necessary procedures and placed the individuals on cautionary suspension. Investigations by the SIU would begin soon, and while some of these allegations were new to the CMS, they were not new to the SIU.

An official from the CMS responded to the financial questions. With regard to the leasing of buildings, National Treasury had issued recommendations on where cost-savings could be made, and the issue of leasing compared to purchasing buildings was one of the matters that came up. The Health Portfolio Committee of 2016 had also raised this issue and after an independent evaluation, a mortgage price was agreed upon, but the landlord would not accept it. This was an issue that had not gone away, because it was noted as a strategic risk, as the CMS lease was ending in four years. A facilities committee had been established and they were tasked with coming up with solutions to the problem.

Regarding the R10.8 million deficit, every year entities had to write to Treasury and apply to retain surplus funds, and Treasury then decides on whether it would allow them to keep the funds. In the application the entity must motivate what they would do with the funds, and CMS had indicated that they would put it into the waste management, fraud and abuse summit, which was a success, the interns in the complaints unit as well as NHI-related consulting fees. Treasury had allowed the CMS to keep the funds and use them. Because the issues that were funded by the money from Treasury were not in the original budget, the organisation had incurred the deficit.

Mr Willie responded to the question of payments for benefits and said that GPs located in hospitals cost more than private GPs, and it seemed to benefit hospitals more to have GPs situated in the hospitals, because the GP would see the patient and likely recommend that they sleep over at the hospital. He commented there was an element of fraud and waste around services generated in hospitals.

On the issue of co-payments being higher in open schemes, he said that this was due to the benefits’ design, and the range of benefits in open schemes made it very difficult for members to compare. There were a number of interventions which could be put into play to address this issue, the first being the education of members by medical schemes, while the second could be delivered by brokers, as they could communicate to members what they were covered for.

Ms Mashilo addressed the questions about the volume of complaints. She commented that members were becoming more aware of their rights and of the availability of a third-party adjudicator. In the CMS’s regulations, they try to encourage mechanisms of dispute resolutions within medical schemes to lessen the volume of complaints to the CMS. However, members no longer trusted their schemes and were reluctant to engage with them directly. Because the mandate of the CMS was to protect the interests of members, they could not turn them away once they had come to the CMS.

Regarding the high number of rulings in favour of medical schemes, she said a large part of this question had already been explained around the issue of members understanding their benefits and scheme designs etc. She pointed out that the CMS was restricted by statutes, so whatever rulings it made needed to promote the provisions of the Medical Schemes Act and the rules of the schemes, because once the rules of schemes were registered they were binding to the medical schemes themselves and their members, as well as the CMS. Regarding legislative shortcomings, when legislation restricts certain interventions only, a medical scheme cannot be directed to fund that intervention when the legislation excludes it completely.

Regarding membership of schemes by employees who were retiring, Ms Mashilo said that a member who continued to be on a scheme after retiring was entitled to the same benefits that were covered in that benefit plan.

The slide that had been presented on the backlog explained how the CMS came to be in the position it was in. Every complaint had a life of its own, and the CMS turnaround time was 120 days. With each working day that passes, the complaint ages and as it ages it might fall outside of the turnaround time. It was important to address both new and old complaints concurrently, to ensure that new complaints did not age. The CMS had dealt with the majority of the backlog cases through the interventions that had been mentioned.

Ms Khoza acknowledged that a big part of why the CMS existed was for the benefit of the ordinary members, and a major chunk of its work was to educate members of the public. The CMS had had great challenges around educating the public, and was working on creating platforms with the regulated entities to ensure that the message goes through.

In the past year, the CMS had had opportunities to participate on national platforms such as the National Consumer Protection Forum, which allowed it to reach more members than they could have on their own. It was important for the CMS to have synergy around the decisions they made about their own regulatory body and the impact on ordinary citizens. Because the way the rules of medical schemes were packaged could be difficult for members to understand, the CMS had engaged with the schemes’ marketers and communicators to try and ask for more simplified language. The CMS had also translated its communication material into six languages, and hoped to further translate it into all the official languages of the country. For the first time, it had been able to reach out to all provinces in partnership with other national departments by utilizing local media channels such as newspapers and radio stations.
 
Ms Khoza said another sector that the CMS trained was the boards of trustees, principal officers and fund managers and brokers. It was important that all of those were informed of the CMS’s rules and regulations, and for the first time the CMS had had two primary platforms for advancing the training of boards of trustees. The primary one was when a member was appointed to be on the board of trustees, they would come to the CMS for preliminary training to be a trustee. CMS had now partnered with GIBS business school to enhance and elevate the level of training. In the CMS’s second partnership with GIBS, they want to emphasise ethical leadership and financial prudence. She explained that it was important to do this because even in the health market inquiry (HMI) report what came out was that medical schemes were not held accountable by their board of trustee members. It was therefore important that members appointed to the boards of trustees were empowered with the knowledge necessary to do their work.

The relevance of brokers was still being debated, but despite this the CMS was ensuring that they were empowered, because the public needed to receive quality services and while they were relevant it was the CMS’s responsibility to empower them.

Going forward, the CMS was hoping that Council would approve the CMS’s objective of ensuring that all medical aid cards had the contact details of the CMS call centre. She added that it wanted to communicate the board’s resolutions, as these resolutions could empower members to understand their medical schemes better.

A CMS official addressed the question of increases in membership contributions each year.
He said the increases were concerning to the CMS as well, as they were based on inflation which made medical schemes unaffordable. The balancing item for the CMS was that because medical schemes were required to pay claims for their members and they were not for profit, they needed to ensure that whatever they collected would be able to cover the claims. Most medical scheme increases were made up of two parts, one being the tariffs that schemes negotiate with hospitals, which were around the same rate as the CPI, and the other was when benefits got abused, which resulted in the yearly increases in claims.

On the issue of benefits running out, the official suggested that this could be highlighting the need for medical schemes to reduce the number of its plans and instead provide comprehensive plans that were not just based on a member’s ability to pay.

Responding to a question about reserves and profit, he said that because medical schemes were not for profit, every rand paid by members to medical schemes had to go towards the running of the scheme and healthcare. Over 90% of the money paid goes to healthcare and the rest to administration and the running of the scheme. A problem that the CMS faced was around educating members on the separation between the schemes and the administrators. Educating members on this issue was an ongoing process.

Dr Kabane addressed the question of the CMS’s contribution to the NHI. He said that even in the current Act, the CMS’s mandate was to regulate entities in a manner that was complementary to national health policy. If national health policy was directing the healthcare system in the direction of the NHI dispensation, the CMS was automatically placed in that space. He referred to the NHI white paper and explained that it stipulated what needed to happen to the healthcare industry prior to the implementation of the NHI. The CMS was providing the technical support required to determined how to reduce medical schemes’ options to comprehensive ones.

The meeting was adjourned.

 

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