Annual Report and Financial Statements: Department briefing

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12 October 2004
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

12 October 2004

: Mr L Ngculu (ANC)

Documents handed out
National Department of Health Annual Report
Department of Health Annual Report Section1
Department of Health Annual Report Section3
National Department of Health Financial Statements

The Committee met to receive a briefing from the Department on its Annual Report and financial statements. An overview of the Department's strategy was provided and reasons given for particular expenditures. Members raised numerous issues, including problems of accountability with affiliated NGOs, the current status of AIDS treatments, clarity on debts incurred, overall responses to general health challenges, and future interactions with the Department to ensure oversight.


Department Annual Report briefing
Dr Pillay: Chief Director, apologised for the late tabling of the Report. Numerous interactions had taken place between the Department and the Committee during the course of the year and key issues such as maternal/child health, human resource development and social health insurance had been discussed. An overview of the Report was provided and salient points emphasised. The Department's activities had revolved around the 'Ten-Point Plan'. The Report did not focus on activities within the provinces as these were executed by provincial governments.

The Department sought to expand infant and child health care. Currently approximately two health care workers per clinic were stationed at the 4 000 clinics. No child had died of measles in the last three years and an 82% immunisation rate had been achieved. Polio targets were 'on track' in accordance with the World Health Organisation's specified targets. The latest infant mortality rates would be made known in December following an extensive survey. The Report listed policies relating to women's health and maternal care. Baby-friendly facilities were being established with improved levels of nutrition. A campaign had been initiated to increase awareness of malaria and ensure earlier detection. Cholera was being approached on an inter-sectoral basis, including various departments and provinces. Tuberculosis and AIDS were discussed in detail and the nature of home-based care was specified. The Department engaged in a number of awareness campaigns during the year and health promotion was a priority. A hospital revitalisation programme was introduced and human resource advancement stressed.

Mr G Muller (Department Chief Financial Officer) then provided an overview with reference to the Auditor-General's report. The expenditures of the Department during the year were relayed and explanations were provided as to incidents of overspending and underspending. The distinction between conditional grants and equitable share grants as a source of funding to provinces was highlighted. The financing mechanism required co-ordination, planning and continuous monitoring in order to be effective. Each grant made during the course of the year was discussed, including the nature of the grant and the level of spending. Problems experienced with certain grants were considered, such as hospital revitalisation in Kwazulu-Natal where contractors went bankrupt and delivery was halted.

The Auditor-General's Report indicated inadequate monitoring of compliance with business plans by grant recipients such as NGOs. In certain cases, transfers of money should have been halted due to a lack of audited financial statements. Many NGOs had poor internal financial control and a strengthening of staff components and skills levels needed to occur. The Department needed to improve co-ordination with provinces and to enhance the system of financial expenditure and monitoring.

Ms M Madumise (ANC) asked about the current status of nevirapine, following recent announcements by the Medicines Control Council. The accounting procedures of various bodies affiliated to the Department were questioned and clarity was sought on the quality of the female condom.

Mr R Coetzee (DA) inquired about the process of appointing a new Director-General, and whether interviews had been held. Postponement of certain meetings within the Audit Committee was questioned, and the nature of certain losses needed further clarity.

Dr Pillay replied that research had not been completed on the status of nevirapine and the policy would be reconsidered once a finding had been obtained.

The Chairperson asked for further clarity on the issue of nevirapine as unfortunate statements had been issued after a recent conference in Thailand and some confusion existed.

Dr Pillay stated that the controversy revolved around the use of nevirapine as a monotherapy which should not be occurring as appropriate registration had not been secured. The drug should be used in conjunction with other remedies. Female condoms were more expensive than male versions, but the policy was being reconsidered as women expressed preference for the female type. Regarding the Director-General's post, interviews had been held and a decision was being awaited from Cabinet.

Mr Muller stated that an audit on the National Association of People Living with HIV and AIDS (NAPWA) was being conducted and a decision would be taken in the near future. Meetings of the Audit Committee had been affected by the absence of executive members on certain occasions as the Director-General position was vacant. The loss of R770 000 as recorded in the financial statements, was due to negotiated voucher fraud and a subsequent court case had been dropped on the advice of the State Law Advisors.

Ms B Ngcobo (ANC) referred to work done in the rural nodes but inquired about similar actions in the urban areas. Clarity was sought on how the Department envisaged improving the levels of internal control within associated NGOs regarding financial matters.

Ms P Tshwete (ANC) asked whether the Department would assist provinces in better financial management of financial systems and what monitoring mechanisms were being considered.

Dr A Luthuli (ANC) stated that maternal deaths were a good indicator of the general state of the health system in a country, and much concern remained over the level of maternal deaths. Did hospitals have an adequate monitoring system to detect the amount or frequency of deaths occurring on an annual basis as the figure remained too high? The status of rural areas with regard to national days such as World AIDS Day was questioned. The recent increases in the cases of malaria were a cause for concern as improvements had been recorded previously and clarity was requested. The low expenditure level within the KZN province was a worrying factor (26.5%). What steps could be taken to address this?

Dr Pillay replied that an audit of service delivery had occurred within urban nodes and a report of the findings forwarded to the provincial governments with suggested remedial actions. The Department would monitor implementation of the recommendations. Confidential inquiries had been launched into the level of maternal deaths and hospital reports had been scrutinised to develop appropriate responses. Guidelines had been drawn up including the improvement of referral mechanisms and the improvement of anaesthetics administration. The whole system of antenatal care needed to be improved including access to patient transport within rural areas and the response time of emergency services. The recently completed national survey would provide a sound indication of success in meeting challenges. The Department intended to increase the exposure of rural areas to major campaigns and health focus days, and some work had been conducted in Mpumalanga recently. Malaria success rates were adversely affected by the movement of skilled personnel away from high-incidence regions and improved skills training would be instituted to meet the challenges.

Mr Muller stated that provinces reported monthly to the Department and the national manager responsible for conditional grants acts accordingly. In the case of the Hospital Revitalisation Programme in KZN, the stopping of funds could cause uncertainty and create problems for provinces in the implementation of plans. The Department was devising an appropriate mechanism to respond in similar circumstances in the future. Many NGOs were operating in a sound manner and it should not be assumed that all were inefficient.

Ms A Marshall (Co-ordinator of the National Integrated Plan) claimed that provincial governments were part of the decision-making process in determining funds for NGOs. The Department had to play a monitoring role in how funds were spent. For example, in the case of NAPWA, transfers were withheld due to a lack of reporting.

The Chairperson raised concern over the situation in KZN where only 26% of the allocation had been spent. How could NGOs continue to receive funding when inadequate reporting procedures were in place? An early warning system was in place but was not being properly utilised.

Dr R Rabinowitz (IFP) declared that much confusion reigned regarding the distinction between conditional grants and equitable funding. Overall, the system in operation was too complicated and bureaucratic to be effective. Accountability for how finance was spent had been taken away from the recipients and the skills level of staff was inadequate. Co-ordination could not be improved within such a ponderous system. Political interference was occurring in the allocation of funding and NGOs needed assistance in capacity-building. The current position over treatments for AIDS was highly confusing and an objective analysis of statistics was needed to create clear and unambiguous statements.

Mr I Cachalia (ANC) acknowledged an improvement in service delivery at primary health care clinics but indicated shortcomings in psychiatric treatment services due to staff shortages and inadequate skills.

Dr Pillay stated that conditional grants had been introduced to accelerate service delivery in certain sectors but problems existed in implementation. An improvement in project management was required to address the concerns. The Hospital Revitalisation Programme had been complicated due to the involvement of different entities within the public and private sectors but each province now had a project manager dedicated to the programme. Human resources within psychiatric services were a concern but remedial steps were underway.

Mr Coetzee questioned the role of the designated trustees in ensuring financial probity of conditional grants as much wasteful expenditure had occurred in certain cases. Concern was also raised over the spending of health funds in promoting the ANC government prior to the April general elections during a Department publicity campaign. This was not in accordance with democratic practices. Rural clinics - particularly within the Eastern Cape - were in a bad state. What steps could be suggested to improve the situation? Could a list of NGOs funded by the Department be forwarded to the Members? Clarity was sought regarding debts written off by the Department.

Dr Pillay responded that the Department was allowed to engage in promotional activities. Clinics within rural areas remained a concern and a two-year timeframe was being implemented to address the backlogs. A list of NGOs would be provided by the end of the week.

Mr Muller provided clarity on the debts incurred due to the fraudulent voucher and the formation of the National Health Laboratory Service.

The Chairperson reminded Members that the activities of government were not suspended during an election, and therefore the Departmental publicity campaign could not be criticised. The issue of the South African National AIDS Trust remained of great concern.

Mr Coetzee proposed that the Committee request an explanation from the trustees about the problems experienced.

The Chairperson agreed with the suggestion and asked what mechanism was most appropriate to deal with the issue. As the Department of Health was the lead Department, it was logical that the Director-General or the political head be instructed to attend a meeting.

Mr Muller stated that provinces receive funding from two sources, i.e. conditional grants and equitable shares. These sources tended to merge at the provincial level which made auditing extremely difficult. The Auditor-General had proposed that a distinction be made in financial reporting between the two streams to facilitate higher standards.

Dr Rabinowitz asked what steps were proposed to reduce contractor problems in the future and how the President and Deputy-President were included in the AIDS campaign. Clarity was sought on AIDS testing and whether the new national laboratory service was effective. Was the certificate of needs requirement included in the issuing of licences, and how could increasing medicine costs be addressed?

Mr S Njikelana (ANC) asked whether the goals of freedom and democracy expressed in 1994 had been achieved within the framework of the Health Department. The Department had the right to indicate positive developments and success stories. The reporting procedure tended to provide a snapshot of Department achievements and much success had been attained.

Ms Marshall stated that a new strategy of mentorship was being proposed to deal with problems of limited capacity within NGOs, and skills transfer would be included.

Mr Muller asserted that conditional grants required better control; business plans should include greater detail. The tender process would involve better guarantees of services to be provided. In terms of hospital revitalisation, transfers would now occur on a monthly basis in order to improve monitoring. The Department would halt transfers if necessary.

Dr Pillay responded that figures put forward by the Actuarial Society had been used in devising plans around antiretrovirals; drugs approved by the MCC was not the responsibility of the Department. A policy decision about nevirapine was imminent following research findings. Licenses issued were for retailers and not for dispensing. The Certificate of Need process would be incorporated following the promulgation of the National Health Act. Rising medicine costs would be monitored and all Chief Directors would be present at a future meeting with the Department. The Department envisaged carrying out a continuous review of policy implementation but resources were not increasing to meet rising demands. An early warning system was in place and the performances of provinces would be monitored. Improving governance programmes and management systems was the overall objective of the '10-point Plan'. New impetus would be placed on community participation within provincial activities and partnerships with municipalities would be encouraged. District AIDS Councils were currently being reinvigorated, particularly within rural nodes.

Ms R Mashigo (ANC) noted an increase in TB cases and referred to the previous support system that had had some success. Could the new home-based care system be improved? The figure of 135 complaints received appeared unrealistic.

Mr Cachalia referred to the problem of pharmacists charging administration fees.

Dr Luthuli enquired about medical research being conducted into traditional practices.

Ms Ngcobo complained that emergency response times in both rural and urban regions were inadequate.

Ms Madumise asked about traditional healers. In terms of new legislation, practitioners could no longer dispense medicines. What proposals did the Department have to address the theft of medicines by pharmacists?

Mr Coetzee claimed that the figure of 300 000 people receiving voluntary counseling seemed insignificant considering the vast numbers involved. More widespread testing was needed to address the scope of the epidemic. Concern was raised over money spent during a recent state visit to Haiti and clarity sought on the cancellation of some MinMec meetings. Questions were raised regarding unauthorised expenditure of R274 000 and the removal of furniture in Geneva.

Mr Muller replied that the MinMec cancellations were due to executive members being called away to other engagements. The R274 000 expense was for an advertisement detailing the President's speech and the Health Attaché in Geneva had removed the furniture.

Dr Pillay responded that the intention of the Department was to train generalist community health workers to deal with all major health challenges. The 135 complaints mentioned only related to the national Department. The merits of traditional treatments were being investigated. Emergency timeframes were receiving attention and an improvement in response time was planned. A campaign was underway to improve the control of state drugs and the medicine authorities were working with the police. The voluntary counselling figure should be improved. Medical device regulations would be developed in accordance with local requirements and be published soon.

The Chairperson stated that the Committee desired a close working relationship with the Department that involved regular briefings on the latest developments and proposed policy amendments. The Department needed to keep the Committee informed regularly as a matter of practice and not on an ad hoc basis. Another meeting was needed to deal with the vast array of issues including remedial steps and guidelines for NGOs. The problem regarding weak accountability on the part of NGOs was serious and further discussion was most important.

The issue regarding pharmacists charging administration fees needed further discussion. The reference to Haiti was seen as a politicisation of the facts that did not consider historical connections and relevance. The question of the SANAT Trust was serious and demanded a special Committee meeting with all specific directorates present.

The meeting was adjourned.


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