Health 2019BRRR
1. The Budgetary Review and Recommendations Report (BRRR) of the Portfolio Committee on Health, dated 18 October 2019
The Portfolio Committee on Health (the Committee), having assessed the performance of the Department of Health (the Department) and its Entities, against its mandate and allocated resources, reports as follows:
- INTRODUCTION
The Money Bills Procedures and Related Matters Amendment Act (No. 9 of 2009) sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national Department. The Portfolio Committee compiles a Budgetary Review and Recommendation Report (BRRR) which is a performance assessment of how the public health sector has used allocated resources. Based on the assessment, recommendations are made to inform effective, efficient and economic use of allocated resources. The BRRR takes into account the following:
- Medium-term estimates of expenditure;
- Sector strategic priorities and measurable objectives;
- Prevailing strategic plans;
- Expenditure reports relating to the Department published by National Treasury in terms of Section 32 of the Public Finance Management Act (PFMA) (No.1 of 1999);
- Financial statements and annual reports of the Department;
- Reports of the Committee on Public Accounts relating to the Department; and
- Any other information requested by or presented to a House or Parliament.
In assessing the performance of the Department of Health and its Entities for the financial year 2018/19, the Committee reviewed and analysed the following reports and/or documents:
- 2018 Estimates of National Expenditure;
- Strategic Plan of the Department of Health (2015/16 – 2019/20);
- Annual Performance Plan of the Department of Health (2018/19);
- Annual Report of the Department of Health (2018/19);
- Annual Report of the South African Medical Research Council (2018/19);
- Annual Report of the National Health Laboratory Services (2018/19);
- Annual Report of the Office of Health Standards Compliance (2018/19);
- Annual Report of the Office of the Health Ombud (2018/19);
- Annual Report of the Council for Medical Schemes (2018/19);
- Annual Report of the South African Health Products Regulatory Authority (2018/19);
- Report of the Auditor General South Africa (2018/19); and
- Report of the Financial and Fiscal Commission (2018/19).
2.STRATEGIC OVERVIEW 2018/19
2.1.Sustainable Development Goals
The health sector is guided by the United Nations (UN) Sustainable Development Goals (SDGs). The SDGs recognise that the health system must ensure healthy lives and promote well-being for all, at all ages (by 2030). It is envisaged that this would be achieved through the following:
- Putting in place social protection systems and measures.
- Reducing maternal mortality to less than 70% per 100,000 live births.
- Ending preventable deaths of new-borns and children under-5 years of age; and epidemics such as AIDS, TB and malaria.
- Reducing one-third of premature mortality from non-communicable diseases.
- Strengthening the prevention and treatment of substance abuse, including the harmful use of alcohol.
- Improving road safety for all, and halve the number of deaths and injuries caused by road traffic accidents.
- Ensuring access to sexual and reproductive health care services, and rights.
- Attaining universal health coverage.
- Maintaining ecosystems, and reducing the number of death and illnesses caused by hazardous chemicals and pollution.
It is further noted that strong partnerships between sectors will be imperative to prevent disease, and improve the quality of life.
2.2.Strategic Priorities of Government
- National Development Plan
The National Development Plan (NDP) forms an integral part of policy plans within all government departments, including the Department of Health, charting a path to prosperity and improving the lives of all South Africans within various sectors. The NDP articulates nine health-related goals that broadly endorse a health system that raises life expectancy, reduces infant mortality and the occurrence of HIV and AIDS, and significantly lowers the burden of disease.
The NDP identifies demographics, burden of disease, health systems and the social and environmental determinants of health as the key areas for intervention required to improve the health system in the country. The nine health goals have been identified in the NDP are as follows:
- Increase life expectancy at birth to 70 years.
- Improve evidence-based preventative and therapeutic interventions for HIV.
- Progressively improve Tuberculosis (TB) prevention and treatment.
- Reduce maternal, infant and child mortality.
- Reduce the prevalence of non-communicable/chronic diseases by 28%.
- Reduce injury, accidents and violence by 50% (from the 2010 levels).
- Strengthen the district health system.
- Provide care to families and communities through primary health care teams.
- Fill health posts with skilled, committed and competent individuals.
- State of the Nation Address 2018
The 2018 State of the Nation Address (SONA) highlighted the following main health-related issues:
- A team will be set up to speed up implementation of new infrastructure projects, including health facilities. There will be increased focus on improving budget and monitoring systems, and improving the integration of projects, amongst other things.
- The HIV testing and treating campaign will be scaled up. A further 2 million people will be initiated on antiretroviral treatment by December 2020.
- In an attempt to address the growing epidemic of non-communicable diseases (NCDs), a major cancer campaign will be launched on a similar scale to the HIV testing and treating campaign, early in the 2018/19 financial year. This campaign will also involve the private sector in order to mobilise all resources in the country.
- The NHI will continue to be Government’s flagship project aimed at moving towards universal health coverage. The NHI Bill will be processed through government and submitted to Parliament. Certain NHI projects, targeting the most vulnerable people, will commence in April 2018.
2.3.Strategic Priorities of the Department of Health
The Department’s five-year strategic goals are in line with the SDG and NDP. They are to:
- Prevent disease and reduce its burden and promote health.
- Make progress towards universal health coverage through the development of NHI scheme, and improve the readiness of the health facilities for its implementation.
- Re-engineer primary healthcare by: increasing the number of ward-based outreach teams, contracting general practitioners, and district specialist teams; and expanding school health services.
- Improve health facility planning by implementing norms and standards.
- Improve financial management by improving capacity, contract management, revenue collection and supply chain management reforms.
- Develop an efficient health management information system for improved decision-making.
- Improve the quality of care by setting and monitoring national norms and standards, improving system for user feedback, increasing safety in health care, and by improving clinical governance.
- Improve human resources for health by ensuring adequate training and accountability measures.
- REPORT OF THE AUDITOR GENERAL OF SOUTH AFRICA (AGSA)
- Department and Entities
The Auditor General of South Africa (AGSA) reported that overall the public health portfolio received improved audit outcomes in 2018/19. This was attributed to an improvement of controls over financial reporting and compliance. The South African Medical Research Council (SAMRC) and the Office of Health Standards Compliance (OHSC) received clean audit outcomes due to having effective controls in place and oversight by the assurance providers. The OHSC has been consistent in this respect. The SAMRC (had) regressed in 2017/18 due to non-compliance with laws and regulations - goods had been procured from suppliers that did not meet the local content requirement (at the time).
The Department received an unqualified audit opinion with findings, as per the previous seven years. The National Health Laboratory Services (NHLS) and the Council for Medical Schemes (CMS) received unqualified audit opinions with findings. This is an improvement for the NHLS as it received a qualified audit opinion, due to a number of compliance findings particularly on procurement processes in 2017/18. The AGSA indicated that financial statement preparation remains a concern as material adjustments were effected to annual financial statements submitted for audit by the Department and CMS. The regression of the CMS from a clean audit in 2016/17, was due to the following:
- inadequate review of the annual financial statements by senior management prior to submission for audit;
- non-compliance with laws and regulations;
- ineffective and appropriate steps not taken to prevent irregular expenditure for the procurement of consultants.
The portfolio had an addition of a new entity, South African Health Products Regulatory Authority (SAHPRA), which received a qualified opinion with findings. This was due to lack of controls over proper record keeping to ensure that complete, relevant and accurate information is available to support financial and performance reporting as well a number of vacancies in the entity. The AGSA highlighted that there is an intervention required in terms of financial and performance management at SAHPRA.
It was reported that the Compensation Commissioner for Occupational Diseases (CCOD), which is also known as the Mines and Works Compensation Fund has outstanding audits since 2014/15.
Irregular expenditure incurred by entities increased from R2,65 billion in 2017/18 to R3,03 billion this financial year. The main (99%) contributor to the irregular expenditure was the NHLS, incurring almost R3 billion, followed by the Department (R16.8 million), CMS (R16 million), SAHPRA (R1.2 million), and MRC (R151,335). The nature of the irregular expenditure was due to:
- Procurement made on expired contracts by the NHLS, Department and CMS;
- Department and CMS procurement from panel not in line with Treasury Regulations;
- Procurement processes not followed by the NHLS, Department, CMS, SAHPRA); and
- NHLS overspending on contracts.
The AGSA found regression in supply chain management compliance. Most common findings on supply chain management were the following:
- Not able to audit SAHPRA and NHLS procurement due to missing or incomplete information;
- Uncompetitive and unfair procurement processes undertaken at the CMS, SAHPRA, and NHLS); and
- Interest not declared on some of the procurement contracts at SAHPRA and NHLS.
The AGSA recommends that all supply chain management findings be investigated. Further, the AGSA recommends that the Portfolio Committee request management to provide feedback on the implementation and progress, and of the action plans to address poor audit outcomes during quarterly reporting. AGSA recommends that the Portfolio Committee should conduct effective monitoring to ensure that officials are held accountable, and monitor the appointment of key vacancies at the NHLS. Further, the Portfolio Committee should request a list of actions taken against transgressors on a quarterly basis for all irregular expenditure incurred.
The AGSA evaluated the usefulness and reliability of the reported information for the HIV and AIDS Grant which has the core function of reducing the burden of HIV and AIDS. There are three key priorities of this Grant, namely: antiretroviral treatment (ART) related interventions; condom distribution and high transmission area (HTA) interventions; and prevention of mother to child transmission (PMTCT). Of the R20,4 billion allocated for the programme in the 2018/19 financial year, 98% of this allocation was transferred to the provinces through a conditional grant. AGSA found that the three priorities are funded as part of the conditional HIV/AIDS Grant for R14.9 billion. Actual expenditure incurred for the three priorities in the current year amounted to R14.6 billion. Overall in the sector, condoms distribution budget was significantly overspent by 14% and the budget for PMTCT was significantly underspent by 28%. Even though the selected priorities did not utilise the budgeted amount allocated to them, the overall grant was fully spent. This is due to the fact that any underspent portions on specific priorities are re-allocated to the other priorities. A number of provinces noted that, even though the budget was fully utilised, the provincial departments did not achieve their targets.
In addition, the AGSA audited radiology equipment, medical records, infrastructure and Information Technology (IT) of the Department of Health and presented numerous findings. With regards to radiology equipment, it was found that policies and procedures on the management of medical equipment was in place but not implemented (or adhered to) by staff members (in the Eastern Cape, Free State, Gauteng, Limpopo, Mpumalanga, Northern Cape, North West provinces); in most provinces radiology equipment on the approved annual procurement (or demand) plans were not procured in a timely manner and there was a general lack of key human resources (in Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West). With regards to medical records, the AGSA found a lack of allocation of roles and responsibilities for the management of medical records at facility level and within the districts (in Eastern Cape, Gauteng, Mpumalanga, North West, Northern Cape); shortages of staff involved in the management of medical records (Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, North West, Northern Cape); inadequate storage and retention of medical records and poor archiving and disposal of medical records. With regards to infrastructure, AGSA found poor work performed by contractors due to poor project management by the implementing agents/departments (in Eastern Cape, Free State, Limpopo, North West, Mpumalanga, Northern Cape and Gauteng); and inadequate maintenance, refurbishment and rehabilitation of health facilities (in Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West). With regards to IT, the AGSA findings included inadequate security management controls of the health patient registration system (HPRS), revenue management, and pharmaceutical systems.
- Provincial Departments
AGSA reported that the audit outcomes of the portfolio showed regression, with Eastern Cape (EC) and Free State (FS) moving from unqualified audit opinions to qualified. This was due to weak controls over financial reporting and compliance. The only province with improved audit outcomes was the Western Cape (WC) due to the department addressing material findings on performance information. Gauteng (GP) retained its unqualified audit outcome. The audit of North West (NW) provincial department had not been concluded due to protests that occurred in the province. The implementation of the Public Audit Act (PAA) amendments at the Northern Cape (NC) Department of Health had an impact in the finalisation of the reporting year’s audit hence there were no reporting outcomes for the province. The AGSA noted that financial statement preparation remains a concern as material adjustments were effected to annual financial statements that were submitted for audit for 80% of the provincial departments in the portfolio.
The AGSA noted that the portfolio incurred an increase in unauthorised and irregular expenditure. Unauthorised expenditure increased from R275 million in 2017/18 to R546 million in 2018/19. The contributors to unauthorised expenditure were EC (R510 million), NW (R22 million) and KwaZulu-Natal (KZN) (R14 million). Irregular expenditure increased from R5.5 billion in 2017/18 to R7.37 billion in 2018/19. The main contributors to irregular expenditure were KZN (R2.9 billion), Gauteng (GP) (R2.3 billion), and NW (R1.2 billion)
- REPORT OF THE FINANCIAL AND FISCAL COMMISSION (FFC)
The Financial and Fiscal Commission (FFC) reported that the portfolio shows mixed results in respect of meeting planned delivery targets. Where targets had been met it was partially attributed to proper planning and collaboration among the departments. Overall, where there were deviations, reasons varied from incomplete data, backlogs, lack of financial resource and processes not being followed.
The FFC reported that the health budget spending had been sustained at an average rate of 13.6% of the total budget and 3.8% of the gross domestic product (GDP) in 2018/19. Approximately 91% of the portfolio budget was absorbed by transfers and subsidies to provinces and municipalities with expenditure achieved at 100%.
The FFC noted that the budget composition of the Department was mainly driven by Programme 3 (HIV/AIDS, TB, and Maternal and Child Health) at 44%, and Programme 5 (Hospitals, Tertiary Services and Human Resources Development) at 47%, in the reporting year. An overview of spending performance shows that the Department achieved spending performance of 98% in 2018/19, which is a slight decrease compared to 99.5% in 2017/18. An assessment of spending performance by Programme shows under-expenditure in all programmes.
In Programme 1, expenditure was at 90% as a result of delays in the procurement processes, and late receipt of invoices. Programme 2, reported the worst expenditure at 70.5%. This was attributable to tender processes that were not done on time, procurement processes that were halted as suppliers could not deliver medicines, funds not spent for ideal clinics and orders placed in the last quarter. The expenditure in Programme 3 was at 99.7% mainly due to vacant posts.
Programme 4 reported expenditure of 88.7% due to delays on procurement processes on campaigns such as elimination of malaria and chronic diseases and in other instances other programme campaigns launched in the third quarter. The expenditure for Programme 5 was at 99.2% due to posts not being filled, funds could not flow on intended beneficiaries on time due to procurement processes not concluded on time, services procured but not delivered before year end and tenders awarded on the last week of financial year. Programme 6 reported expenditure at 98.8% due to procurement processes not finalised as well as funds to public entity received late to process payment on time.
The FFC noted that the overall the expenditure of health entities had greatly improved in the year 2018/19 compared to the previous year, recording 100% except for the OHSC over expenditure at 12% and the worst expenditure being CCOD at 28% respectively.
An assessment of conditional grants found that all the conditional direct grants achieved 100% expenditure in 2018/19 except for the indirect grants under the NHI. Some of the reasons were delays in the procurement processes, claims received on particular programmes less than expected, funds allocated not spent due to procurement processes, other provinces deciding not to expand the programme and orders placed during the last quarter.
The FFC recommended oversight on provincial budgets in relation to: balancing wage bill pressures and shortage of clinical staff; equitable distribution of health care professionals; improving financial governance and clinical efficiency to reduce medical legal claims; overcrowding at hospitals; and ageing health infrastructure.
All the conditional direct grants achieved 100% expenditure in 2018/19 except for the indirect grants under the NHI. Some of the reasons attributable to delays in the procurement processes, claims received on particular programmes less than expected, funds allocated not spent due to procurement processes, other province deciding not to expand the programme and order placed on last quarter. The Comprehensive HIV/AIDS Grant was allocated R19.9 billion. The Health Revitalisation Grant was allocated R6 billion. The Health Professions Training and Development Grant was allocated R2.7 billion. The National Health Insurance (NHI) Grant was allocated R200 million. The FFC raised concern around the continuous underspending of the NHI Grant given the imminent introduction of the NHI Fund as well as the constant iteration of the Grant which creates implementation uncertainties.
The FFC recommended that National and Provincial Treasuries develop a framework for determining major financial strain with clear measurable financial and non-financial factors that that can be monitored, reported and used to prompt automatic fiscal adjustments. The National Treasury and the Department of Health should allocate part of the 2018/19 MTEF health infrastructure allocations to gradually set-off expenditure accruals which have arisen from unavoidable demands for which allocated budgets were depleted. National Treasury should ensure that the framework for health infrastructure conditional grants accommodate flexibility during periods of protracted fiscal constraint so that provinces can be allowed to re-orientate their package of available capital allocations towards maintenance.
Noting that the health spending is consistently positive and exhausted but output and outcome performance shows mixed results, the FFC recommends that Parliament focus its oversight efforts on under achieved performance targets where there is 100% expenditure against the budget. Further, it recommends that the NHI Grant be focused specifically on reforms that advance implementation of the NHI Bill.
- PERFORMANCE (FINANCIAL AND NON-FINANCIAL) OF THE DEPARTMENT
This section provides an overview and assessment of the reported financial performance of the Department for 2018/19.
- Performance Information
The Department has six programmes, namely: Programme 1 - Administration; Programme 2 – National Health Insurance (NHI), Health Planning and Systems Enabling; Programme 3 – HIV/AIDS, TB and Maternal and Child Health; Programme 4 – Primary Health Care (PHC) Services; Programme 5 – Hospitals, Tertiary Health Services and Human Resources Development; and Programme 6 – Health Regulation and Compliance.
Programme 1: Administration – The purpose of this programme is to provide human resources development and management, labour relations, information communication technology, property management, security, legal, supply chain management and financial management services to the national Department.
Programme 1 partially achieved its two targets. It should be noted that the number of targets the Department set for the reporting year decreased compared to the seven targets in 2017/18. The Department had planned to attain a clean audit opinion but achieved an unqualified audit opinion. Further, it had planned to improve 5 provincial departments’ audit outcomes. Notably, four provinces (EC, FS, GP and WC) obtained unqualified opinions for 2017/18. In 2018/19, the WC Department of Health achieved a clean audit opinion, whilst GP maintained its unqualified audit opinion. The EC, FS, KZN, LP, MP and NW received qualified opinions in 2018/19. The NC audit was outstanding at the time of reporting.
Programme 2: NHI, Health Planning and Systems Enabling – The purpose if this programme is to improve access to quality health services through the development and implementation of policies to achieve universal health coverage, health financing reform, integrated health systems planning, monitoring and evaluation, and research.
Programme 2 achieved six of its twelve targets. It should be noted that in 2017/18, the programme had 27 targets and achieved 21 targets. In the reporting year, the NHI Bill was not submitted to Parliament. However, it has since been submitted. The NHI Phase 1 Evaluation was not published during the reporting period, as provinces were still providing final comment. The Centralised Chronic Medicine Dispensing and Distribution (CCMDD) System had nearly 2.6 million patients enrolled, surpassing the target of 2.5 million patients. This is despite the fact that the Department reported significant underspending due to the lack of expansion of the CCMDD in the EC and KZN provinces. A total of 1 586 PHC facilities conducted the annul Patient Experience of Care Survey against a target of 1 500, as the Department conducted more training on guidelines and provided more support. The cumulative target for the number of health facilities reporting stock availability at national surveillance centre was 3 625 and the Department achieved 3 598, meaning that the Department fell short by 27 health facilities.
Programme 3: HIV and AIDS, Tuberculosis, Maternal and Child Health – The purpose of this programme is to develop and monitor implementation of national policies, guidelines, norms and standards, and targets for the national responses needed to decrease the burden of disease associated with burden of HIV and TB epidemics; to minimise maternal and child mortality and morbidity; and to optimise good health for children, adolescents and women; and monitor and evaluate the outcomes and impact of these.
The Department fully achieved two, and partially achieved four of its six targets. In the previous year it had set 21 targets, achieved 15 and partially achieved 6 of those. In the reporting year, the Department conducted 595 006 medical male circumcisions (MMCs), although it had targeted to conduct 600 000 MMCs. It performed 14.9 million HIV tests even though it had targeted to perform 14 million, and it did not achieve the target related to the number of new undiagnosed TB infected persons found (actual achievement: 42 734; target: 80 000). Further, the Department did not achieve the target related to the total number of clients remaining on antiretroviral therapy (actual achievement: 4 629 831; target: 5 000 000).
Programme 4: PHC Services – The purpose of this programme is to develop and oversee the implementation of legislation, policies, systems, and norms and standards for a uniform well-functioning district health system, environmental health services, communicable disease control, non-communicable disease control as well as health promotion and nutrition programmes.
Programme 4 had eleven targets, of these, the Department achieved eight and partially achieved three. In the previous year, it had 25 targets set, achieved 20 and partially achieved 5. The Department reports it assessed 3 426 of the targeted 3400 PHC facility committees to determine functionality. A cumulative total of 1 920 PHC facilities in the 52 districts qualified as Ideal Clinics out of the targeted 1400 PHC facilities. However, the Department only determined the status of 6 district hospitals against the Ideal District Hospital Framework version 1.
Programme 5: Hospitals, Tertiary Health Services and Human Resource Development – The purpose of this programme is to develop policies, delivery models and clinical protocols for hospitals and emergency medical services (EMS). It is also to ensure alignment of academic medical centres with health workforce programmes, training of health professionals and to ensure the planning of health infrastructure meet the health needs of the country. This programme is meant to assist the government to achieve the population health goals of the country through nursing and midwifery, by the provision of expert policy and technical advice and recommendations on the role of nurses in attainment of desired health outputs.
The number of targets for this programme decreased from 29 in 2017/18 to 19 in 2018/19. Only eight of the nineteen targets were achieved. None of the three targets related to ensuring quality health care by improving compliance with National Core Standards at all Central, Tertiary, Regional and Specialised Hospitals were achieved. The oncology and obstetric service plans were not developed. With regards to compliance with the National Core Standards, only nine of the targeted ten Central Hospitals achieved an overall performance of 75% (or more).
In a turnaround for the Department, four of the five performance indicators related to improving quality of health infrastructure were 100% met. About 400 facilities were compliant with infrastructure norms and standards, two hospitals were constructed or revitalised, 125 facilities were maintained, repaired and/or refurbished in NHI Districts, and 100 facilities were maintained, repaired and/or refurbished outside NHI Districts. Only 17 of the 20 targeted clinics and community health centres were constructed or revitalised.
In terms of improving management of health facilities through the Health Leadership and Management Academy, as in the previous year neither of the two new performance indicators were achieved. Only 22 (of the targeted 150) hospital managers and 107 (of the targeted 900) PHC managers accessed the coaching and mentoring programme. Notably, the new basic nursing qualification programme course could not commence in 9 out of 17 remaining nursing colleges, as the courses were not yet accredited by the Council for Higher Education (CHE). Further, the drafting of the Human Resources for Health (HRH) Strategic Plan 2019-2024 was not completed.
Programme 6: Health Regulation and Compliance Management – The purpose of this programme is to regulate the sale of food and to ensure accountability and compliance by public entities and statutory health professional councils in accordance with applicable legislative prescripts. There are two sub-programmes: Compensation Commissioner for Occupational Diseases (CCOD) and Occupational Health, and Public Entities Management.
The number of targets for this programme decreased from five in 2017/18 to three in the reporting year. Of these, two achieved and one was partially achieved in 2018/19. The NAPHISA (National Public Health Institutes of South Africa) Bill was processed by Parliamentary Committees but not promulgated into law. Bio-annual governance reports of 4 health entities and 6 statutory health professional councils were produced. A handbook for Board members serving on public health entities and statutory professional council was developed.
Table 1: Programme Performance Overview
Programme |
Number of Targets |
Number of Achieved Targets |
Targets Partially Achieved |
Percentage of Achieved Targets |
Percentage Achieved Targets in 2017/18 |
Percentage of the Budget Spent |
|
2 |
0 |
0 |
0 |
57 |
89.9 |
|
12 |
6 |
6 |
50 |
78 |
70.5 |
|
6 |
2 |
4 |
33 |
71 |
99.7 |
|
11 |
8 |
3 |
73 |
80 |
88.7 |
|
19 |
8 |
11 |
42 |
31 |
99.2 |
|
3 |
2 |
1 |
67 |
80 |
98.8 |
Total |
53 |
26 |
27 |
49 |
64 |
98 |
Table 1 provides an overview of the number of targets achieved and not fully achieved in the reporting year. It also indicates the percentage of the budget spent per programme. Overall, the Department’s performance in the reporting year has declined compared to 2017/18. In the reporting year, the Department achieved 26 (49%) out of 53 targets, compared to the previous year when it achieved 73 (64%) of 114 targets.
- Financial Performance Overview
For 2018/19, the Department received a budget of R47.5 billion. It spent R46.6 billion, which is 98% of the total budget. The Department underspent a total amount of R914 million. The under-expenditure has increased significantly from R220.9 million (0.5%) in 2017/18. This represents a negative trend of increased under-expenditure. Please see Table 2.
Programme R’000 |
2017/18 |
2018/19 |
|||||
Final Appropriation |
Actual Expenditure |
Under-expenditure |
Final appropriation |
Actual expenditure |
Under-expenditure |
||
1 |
Administration |
500 541 |
478 160 |
22 381 |
524 146 |
471 684 |
52 462 |
2 |
NHI Health Planning and System Enablement |
924 954 |
841 540 |
83 414 |
1 892 199 |
1 333 990 |
558 209 |
3 |
HIV and AIDS, TB and Maternal, Child and Women’s Health |
18 295 310 |
18 279 941 |
15 369 |
20 699 057 |
20 626 454 |
72 603 |
4 |
Primary Health Care Services |
263 343 |
253 771 |
9 572 |
279 736 |
248 089 |
31 647 |
5 |
Hospitals, Tertiary Services and Workforce Development |
20 914 800 |
20 828 771 |
86 029 |
22 308 192 |
22 130 939 |
177 253 |
6 |
Health Regulation and Compliance |
1 746 609 |
1 742 508 |
4 102 |
1 805 044 |
1 783 058 |
21 986 |
|
TOTAL |
42 645 557 |
42 424 690 |
220 867 |
47 508 374 |
46 594 214 |
914 160 |
Table 2: Appropriation and Expenditure Statement as at 31 March 2019
As reflected in Table 2, the largest under-expenditure, is reported in Programme 2: NHI, Health Planning and Systems Enablement; which underspent by R558.2 million (29.5%) of the programme’s budget. Programme 5: Hospitals, Tertiary Services and Human Resources Development underspent by R177.3 million which is approximately 19.4% of the total under-expenditure, but less than 1% of the programme’s budget.
In terms of economic classification, expenditure on Compensation of Employees (CoE) amounted to R793.2 million (96.7%) of the CoE budget allocation of R828.8 million. This was due to vacancies not being filled. Approximately, 26% of the Goods and Services budget allocation was not spent. This amounted to R628 million of the R2.4 billion budget allocation not being spent. According to the Department, the reason for the under-expenditure on Goods and Services is attributed to funds which were allocated to the Limpopo Central Hospital for further planning (R76 million) and linen (R49 million). Spending on the CCMDD was lower than expected due to the EC not expanding the programme to all its districts, as well as KZN not including cold chain items in its programme. In addition, the cancer campaign was only launched in the third quarter. No amounts are provided for the latter two reasons.
Capital assets were allocated R1 billion, but only R765.6 million (76.2%) was spent. Reasons include the medicine stock system hardware specification being developed, and the order being placed in the last quarter, whilst the G-commerce system was halted due to software problems. In addition, funds allocated to the Limpopo Central Hospital for medical equipment and hospital beds (R100 million) were not spent timeously.
A total of R91.1 million was approved for virements including R6 million to the NHLS for the establishment of the National Cancer Registry, and R31 million to Limpopo Province for procuring vaccines. Funds were rolled over for the Limpopo Central Hospital to acquire medical equipment and commissioning (R89.6 million). The KZN Health Facility Revitalisation Conditional Grant was increased with nearly R200 million for post-disaster reconstruction and rehabilitation of 14 hospitals.
The Department provides various reasons for under-expenditure per programme including, amongst others:
- Programme 1: procurement processes to appoint medico-legal experts’ committees took longer than expected.
- Programme 2: tender processes were not concluded in time for mental health and other priority in-kind grants; slow take off and thus under expenditure on transitional NHI structures; funds allocated to Ideal Clinics during the adjustment budget was not spent; procurement process for the electronic medicine stock management system halted as the supplier could not deliver.
- Programme 3: less traveling to provinces, and the multi-pronged mass media communication campaign ended.
- Programme 4: communication programme on elimination of malaria and the Chronic Disease Prevention and Health Promotion campaign was delayed due to procurement processes.
- Programme 5: vacant posts were not filled. Laboratory supplies were procured but not delivered before year-end and the tender for procurement of servers for the four Forensic Chemistry Laboratories was only awarded in the last week of the financial year.
- Programme 6: the CCOD’s Annual Financial Statements for the last five years were not audited as expected, and the procurement of the X-Ray machine for the Medical Bureau of Occupational Diseases (MBOD) was not finalised.
The Department did not incur any unauthorised expenditure during the year under review. However, fruitless and wasteful expenditure increased, from R1.1 million in 2017/18 to R2.1 million in the reporting financial year. This is largely constituted by penalties and interest due to a late payment to suppliers, and South African Revenue Services penalties. The Department reported that it is investigating fruitless and wasteful expenditure from no-shows and penalties from motor vehicle licences, which were renewed late. The same issue was noted in the previous year.
Irregular expenditure (expenditure incurred in contravention of key legislation, prescribed processes not followed) amounting to R94.3 million was incurred due to procurement processes not being followed. R16.8 million relates to the financial year under review, and the remaining R77.5 million is from prior years.
There were currently no public-private partnerships (PPPs) as regulated by Regulation 16 of the National Treasury, registered at the Department of Health. With regard to supply chain management, there were 236 Requests for Quotation (valued from R200 to R500 000) worth R33.9 million; and 36 Tenders (valued above R500 000) worth R402.1 million.
- Financial Performance by Programme
This section provides an analysis of the expenditure performance of the Department. It may be read with Tables 1 and 2. The analysis focuses particularly on spending of the allocated budget in each of the six main programmes.
Programme 1: Administration – This programme was allocated R524.2 million and spent R471.7 million (89.9%, down from 95.5% in the previous year) with an under-expenditure of R52.5 million.
Programme 2: National Health Insurance, Health Planning and Systems Enablement – This programme was allocated R1.8 billion (up from R925 million in the previous year) with an actual expenditure of R1.3 billion (70.5%). This shows an under-expenditure of R558.2 million.
Programme 3: HIV and AIDS, Tuberculosis, Maternal and Child Health – This programme was allocated almost R20.7 billion (up from R18.3 billion in 2017/18) and spent R20.6 billion, which is a 99.7% expenditure rate. Under-expenditure amounted to approximately R72.2 million. About 98.5% of this programme’s budget was allocated to the HIV and AIDS sub-programme. The HIV and AIDS sub-programme received R20.4 billion and spent 99.94%.
Programme 4: Primary Health Care Services – The budget allocation for this programme increased from R263.3 million in 2017/18 to R279.7 million in the reporting year. Notably, this programme’s budget allocation is smaller than the Programme 1 (Administration) budget. The programme shows expenditure of R248.1 million, with an under-expenditure of R31.6 million (11.3%).
Programme 5: Hospitals, Tertiary Health Services and Human Resource Development – This programme spent nearly 100% (R22.1 billion) of the allocated R22.3 billion. This is in keeping with the previous financial year spending pattern. The largest portion of the fund for this programme goes to the Tertiary Health Care Planning and Policy sub-programme (R12.4 billion, 55.6%), followed by the Health Facilities Infrastructure Management sub-programme (R6.9 billion, 31.1%) and the Human Resources for Health sub-programme (R2.8 billion, 12.6%). The remaining sub-programmes make up less than 1% of the programme’s budget.
Programme 6: Health Regulation and Compliance Management – This programme spent 99.8% of its appropriated funds which amount to R1.7 billion. In the previous year, it spent 99.8% of its allocated fund.
- Conditional Grants
The total spending on conditional grants was at 97.9% or R40.9 billion against a total adjusted budget of R41.7 billion, compared to 98.1% or R38.9 billion spent in the previous year.
The major contributors to the under
The Department received an Unqualified Audit Opinion from the AGSA.
- PERFORMANCE OF ENTITIES
- Office of Health Standards Compliance (OHSC)
The Office of Health of Standards Compliance (OHSC) is established in terms of Section 77 of the National Health Act (NHA), to promote and protect the health and safety of the users of health services. It is listed as a Schedule 3A Public Entity in terms of the PFMA, and is governed by the Board and the Chief Executive Officer (CEO). The functions of the OHSC are to fulfil the following:
- Advise the Minister on matters relating to norms and standards for the national health system;
- Review national health norms and standards, or any other matter referred to it by the Minister;
- Inspect and certify compliance by health establishments with prescribed norms and standards, or where appropriate and necessary, withdraw such certification;
- Investigate complaints about the national health system;
- Monitor indicators of risk as an early-warning system about serious breaches of norms and standards and report any breaches to the Minister without delay;
- Identify areas and make recommendations for intervention by a national or provincial Department of Health or Municipal Health Department, where necessary, to ensure compliance with prescribed norms and standards;
- Recommend quality assurance and management systems for the national health system to the Minister for approval; and
- Keep records of all OHSC activities.
6.1.1 Performance Information
The OHSC has four programmes namely; Programme 1 – Administration; Programme 2 – Compliance Inspectorate, Certification and Enforcement; Programme 3 – Complaints Management and Ombud; and Programme 4 – Health Standards Design, Analysis and Support.
Programme 1: Administration – The purpose of this programme is to provide the leadership and administrative support necessary for the OHSC to deliver on its mandate and comply with all relevant legislative requirements. It comprises finance, supply chain management, human resource management, information technology, communication and stakeholder relations, governance and legal services.
Programme 1 achieved four of six targets. The reason for the non-achievement of the one target is that the training of Inspectors commenced in the last quarter of 2018/19. Accreditation of the Inspectors will then be completed following completion of the training. One target was partially achieved. The reason is that two out of the four targeted memoranda of understanding were signed in the financial year. The allocation for this programme was R50.5 million but exceeded the allocation by R7.5 million to R58.1 million.
Programme 2: Compliance Inspectorate, Certification and Enforcement – The purpose of this programme is to manage the inspection of health establishments in order to assess compliance with national health system’s norms and standards as prescribed by the Minister, certify health establishments as compliant or non-compliant with prescribed norms and standards and take enforcement action against non-compliant health establishments.
Three targets were achieved and two were not achieved. During the reporting period, this programme inspected 730 (19%) public sector health establishments. However, no private sector health establishments were inspected. This is because norms and standards were only promulgated in February 2018, for implementation from February 2019. With respect to publishing information about compliance of health establishments, the draft annual inspection report was developed but not disseminated to stakeholders. Programme 2 had a budget allocation of R49.2 million but exceeded the allocation by R12.3 million to R61.6 million.
Programme 3: Complaints Management and Ombud – The purpose of this programme is to consider, investigate and dispose of complaints relating to the non-compliance with prescribed norms and standards in a procedurally fair, economical and expeditious manner.
Three of five targets were achieved. The failure to achieve one of the targets is attributed to the shortage of human resources to deal with the rapidly increasing workload and complex cases, which include backlog cases. During the reporting period, the budget allocation for this programme was R17.6 million. By the end of the reporting period, the programme under-spent by R1.8 million.
Programme 4: Health Standards Design, Analysis and Support – The purpose of this programme is to provide high-level technical, analytical and educational support to the work of the OHSC in relation to research of norms and standards; guidance on compliance with norms and standards, analysis of data collected and the establishment of communication networks with other stakeholders.
Programme 4 achieved all five targets. This programme encountered challenges related to staff limitations due to unfunded posts including being unable to attract the relevant skills during the recruitment process. Shortage of human resources causes undesired outcomes which include existing personnel being over-stretched. Programme 4 was allocated R12.1 million but spent R9.8 million resulting in under-expenditure of R2.3 million due to this challenge. This programme repeats the similar trend of under-spending reported in the previous year.
6.1.2 Financial Information
The entity generated a revenue of R131 million compared to R136 million in 2017/18. It reported a deficit of R5.9 million compared to a surplus of R24.4 million in 2017/18. Notably, the deficit which was funded from the 2017/18 surplus was attributed to the following:
- Appointment of temporary staff members and interns;
- Inspection-related costs such as travelling and accommodation;
- Country-wide consultative sessions on the mandate;
- Increase in rental costs due to bigger office space; and
- Information technology infrastructure for new offices.
The OHSC obtained a Clean audit opinion.
- Office of the Health Ombud (OHO)
The Office of the Health Ombud (OHO) is located within the OHSC and is established by Section 81(3)(b) of the National Health Act (No.61 of 2003). The mandate of the OHO is to promote and protect the health and safety of health services users by ensuring that complaints about non-compliance with prescribed norms and standards are considered, investigated and disposed of in a procedurally fair, economical and expeditious manner.
During the reporting period, the Office of the Health Ombud (OHO) operated without adequate capacity and budget proved challenging in its fulfilment of its mandate. This is partly due to the vagueness and ambiguity of the South African legislative framework in the establishment of the OHO. Further, OHO lacks critical resources to fulfil its functions to improve quality of healthcare – is reliant on the staff of the OHSC to execute its role. Of these only two staff members are available to support the work of the OHO. The staffing levels for the Complaints Management Programme were found to be inadequate at a vacancy level of 56.4% due to funding limitations. Further, the OHSC Complaints Management staff was still not designated and seconded to the OHO to meet the legal requirement.
To date, the National Department of Health (NDoH) and Public Service and Administration (DPSA) approved the macro organisational structure, which is in line with international benchmarks and practice. The approved structure/organogram requires urgent allocation for the entity to effectively fulfil its mandate. The proposed number of staff complement in the approved structure/organogram is 113, which consists of the following components:
- Office of the Health Ombud: The purpose is to oversee investigations and disposal of complaints relating to non-compliance within health system. To further provide leadership, strategy and capacity in a much needed area and in accordance with best international benchmarks;
- Office of the Deputy Health Ombud: The purpose is to manage the provision of assistance to the health Ombudsperson in investigating non-compliance with any national health system matters:
- Legal Services (and Parliamentary Affairs): The purpose is to manage the provision of reliable and professional legal services to the OHO;
- Complaints Management: The purpose is to manage the receipt of complaints about the alleged acts, omissions, maladministration and systematic problems relating to health;
- Investigations Management: The purpose is to manage and monitor the investigations and report on recommendations made by the Ombud;
- Monitoring, Advocacy and Citizens Engagement: The purpose is to managed advocacy citizen engagement and provide monitoring and evaluation services; and
6.2.1 Performance Information
Key Concerns
The following are some of the key constraints that were reported:
- The Office has no appropriated budget in order to fulfil its mandate as per the approved structure;
- Attachment and reliance on the OHSC does not meet international best practice;
- The OHO has no mandate and realistic performance indicators distinct from the OHSC, and it continues to receive complex complaints that relate to legislation such as the National Health Act and the Constitution with inadequate human capital.
Key Achievements
In pursuit of implementing its mandate, the OHO achieved the following:
- Released an investigation report into allegations of patient mismanagement and patient rights violations at the Tower Psychiatric Hospital in Fort Beaufort, Eastern Cape (referred to as the “Tower Report”).
- The implementation of recommendations made from the Tower and Life Esidimeni reports, as well as other investigation reports, positively impacted the broader health system in the country.
- The OHSC continues to monitor the implementation of all recommendations from the Health Ombud reports.
- The Health Ombud received the Titanium Award for service excellence in creating access to healthcare at the 19th Board of Healthcare Funders (BHF) Conference.
- The Health Ombud successfully registered with the International Ombudsman Institute.
- The Health Ombud undertook an international benchmark exercise at the United Kingdom Parliamentary and Health Service Ombudsman (PHSO).
- The 2018 Presidential Health Summit Compact endorsed that the funding for OHO should increase from its current level of R8 million to R16 million in the next financial year and then to R32 million and R64 million in the following years to achieve its full funding level. The 2018 Presidential Health Summit Compact stated that: “The Office of the Health Ombud must be separated from the OHSC to ensure independence, transparency and good governance as presented in Section 4.6.9. The Minister of health is the only person who would be able to separate this function in collaboration with the Office of the Health Standards Compliance in particular. The OHO will work with National Treasury, the National Department of Health and the OHSC for realisation of resources and its statutory independence.
- National Health Laboratory Services (NHLS)
The NHLS is managed according to the provisions of the National Health Laboratory Service Act (No. 37 of 2000), the NHLS Rules which were gazetted in July 2007; and the PFMA. It is a Schedule 3A Public Entity, governed by the Board and the Chief Executive Officer (CEO). It has four institutes, namely: National Institute for Communicable Diseases (NICD); National Institute for Occupational Health (NIOH); South African Vaccine Producers (SAVP); and Diagnostic Media Products (DMP).
The NHLS has 268 laboratories across the country. In addition, it has 90 SANAS accredited pathology laboratories. In the reporting year, the total test volumes were: 94 404 922.
- Performance Information
The NHLS has five programmes namely; Programme 1 – Administration; Programme 2 – Surveillance of Communicable Diseases; Programme 3 – Occupational Health and Safety; Programme 4 – Academic Affairs, Research and Quality Assurance; and Programme 5 – Laboratory services.
Programme 1: Administration – This programme plays a significant role in the delivery of the NHLS services through the provision of a range of support services or sub-programmes. These are financial management, governance and compliance, information technology (IT) and human resources.
Programme 1 achieved twenty-one targets, and failed to achieve four planned targets. The NHLS improved internal operational efficiencies. This entailed strengthening IT system efficiency. This programme was allocated R1.2 billion but only spent R843 million (84%). The under-expenditure amounted to R365.5 million.
Programme 2: Surveillance of Communicable Diseases – The National Institute for Communicable Diseases (NICD) is a national public health institute for South Africa, which provides reference microbiology, virology, epidemiology, surveillance and public health research to support Government’s response to communicable disease threats. The NHLS services entail the National Cancer Registry and the only bio safety level 4 laboratory in Africa.
Programme 2 achieved six of its seven targets. The target that was not achieved related to diseases under surveillance. This programme had a budget allocation of R384.5 million for the reporting period. The programme over-spent by R20.4 million resulting to a total expenditure of R404.9 million.
Programme 3: Occupational Health and Safety – The National Institute for Occupational Health (NIOH) is a National Public Health Institute that provides occupational and environmental health and safety services across all sectors of the economy in order to improve and promote workers’ health and safety.
Programme 3 achieved five of its six targets. One unachieved target relates to the percentage of occupational and environmental health laboratory tests conducted within predefined turnaround time. The programme had a budget allocation of R142.4 million in the reporting year. However, it underspent by R15.6 million as its total expenditure was about R126.8 million.
Programme 4: Academic Affairs, Research and Quality Assurance – The main purpose of this programme is to strengthen the Academic Affairs, Teaching and Research mandate of the NHLS in addition to maintaining and providing quality assured and accredited laboratory medicine. It does this by among others ensuring that research is conducted to contribute to service delivery improvement and quality.
Programme 4 achieved nine of the fourteen targets for the reporting period. The targets that were not achieved were in relation to compliance by laboratories during annual quality compliance audits; SANAS accreditation of national central and provincial tertiary laboratories; admitting and training of medical scientists and medical technicians; and signing of bilateral agreements with universities and universities of technology. The budget allocation to this programme was R59.8 million, but the expenditure was R71.1 million. The over expenditure amounted to R11.2 million.
Programme 5: Laboratory Service – This is the core programme of the entity whose objective is to provide cost-effective and efficient health laboratory services to all public sector healthcare providers, any other government institution within or outside the Republic that may require any such services and any private healthcare provider that requests such services. This programme is also mandated to provide any private health care with its laboratory services as when requested at the cost.
Programme 5 achieved ten of eleven planned targets during this reporting period. The target that was not achieved is the percentage of HIV polymerase chain reaction tests performed within 96 hours. This programme had a budget allocation amount of R6.4 billion. By the end of the reporting period, the expenditure was R6.3 billion. The under-expenditure was about R173.1 million.
- Financial Performance
The entity generated a revenue of R8.5 billion compared to R7.9 billion in 2017/18, with provinces accounting for 87% of the total revenue generated. Notable is the increase in production costs, from R6.2 billion (in 2017/18) to R6.7 billion (in 2018/19); and labour costs which constituted 42% of the total revenue (compared to 40% in 2017/18. Collection from provincial departments amount to R7.5 billion compared to R6.4 billion in 2017/18. Notable is that in 2017/8 it showed a surplus of R1.4 billion. However, in the reporting year, the surplus amounted to R996 million.
The NHLS received an Unqualified Audit Opinion with findings from the independent auditors Sizwe Ntsaluba Gobodo Grant Thornton Inc. This was due to irregular expenditure from previous years and challenges in supply chain management system (such as expired contracts, contracts that exceed delegation of authority, and not following tender procedures). The amount of irregular expenditure was R2.7 billion. This is an improvement from the qualified audit outcome received in 2017/18.
In the reporting year, the NHLS finalised the disciplinary proceedings against the suspended CEO, Chief Financial Officer (CFO) and other officials by dismissing these officials. At the time of reporting it was in the process of appointing key personnel – the CEO, CFO and Chief Information Officer (CIO). Further, the NHLS has placed a new contract management system (i-Procure).
- South African Health Products Regulatory Authority (SAHPRA)
The South African Health Products Regulatory Authority (SAHPRA) was established in terms of the Medicines and Related Substances Act (No. 101 of 1965), as amended, to replace the Medicines Control Council (MCC). It is a schedule 3A public entity. The SAHPRA Board was appointed on 2 October 2017. SAHPRA became operational on the 1st of February 2018.
6.4.1.Performance Information
SAHPRA has five programmes namely; Programme 1 – Administration; Programme 2 – Authorisation Management; Programme 3 – Inspectorate and Regulatory Compliance; Programme 4 – Medicines Evaluation and Registration; and Programme 5 – Medical Devices, Diagnostics and Radiation Control.
Programme 1: Administration – The purpose of this programme is to provide the leadership and administrative support necessary for SAHPRA to deliver on its mandate and comply with the relevant legislative requirements.
Programme 1 achieved six out of eleven planned targets. The deviation is attributed to labour unrest during the reporting period, relocation of SAHPRA, and delays in the recruitment of a Human Resources Director.
Programme 2: Authorisation Management – The purpose of this programme is to provide necessary administration support for the Authority to deliver on its mandate and comply with the relevant legislative requirements.
Programme 2 achieved one of its two set targets. The target that was not achieved related to the issuing of licences, permits and certificates within predefined timelines on a quarterly basis. The programme did not meet the requirements in quarters 2 and 3.
Programme 3: Inspectorate and Regulatory Compliance – The purpose of this programme is to ensure public access to safe health products (include a disclaimer) through inspections and regulatory compliance. The focus of this programme includes assessment of site compliance, with good regulatory and vigilance practices, including Good Manufacturing Practice (GMP), Good Clinical Practice (GCP), Good Warehouse Practice (GWP), Good Distribution Practice (GDP), Good Laboratory Practice (GLP), Good Vigilance Practice (GVP).
Programme 3 did not achieve the two planned targets. One of the targets that was not achieved related to the inspection of establishments. Only 169 of 463 (37%) establishment inspections were conducted in the reporting year.
Programme 4: Medicines Evaluation and Registration – The purpose of this programme is to evaluate the safety, quality and therapeutic efficacy of medicines and register them for use as per delegated authority in terms of relevant legislation as listed in the legal mandate of part 1A of the annual performance plan.
Programme 4 achieved four of the planned eight targets. One of the unmet targets related to scientific evaluation of biological applications submitted for regulatory decision within 275 days was not met. The range time taken to register NCEs and biological applications was 395-3188 working days. Other targets related to the scientific evaluation of applications within 120 working days, generic/biosimilar application evaluations concluded within 180 working days, and generic/biosimilar amendment evaluations concluded within 120 working days.
Programme 5: Medical Devices, Diagnostics and Radiation Control – The purpose of this programme is to develop and maintain regulations and guidelines pertaining to the regulatory oversight of medical devices, ionizing and non-ionizing radiation emitting devices; and radioactive sources. There are two sub-programmes under this programme.
Programme 5 achieved all three of its set targets. These targets were related to finalising medical device establishment licence applications within predefined timelines; developing and implementing a system to register medical devices, and evaluating radiation emitting devices and radioactive nuclides for regulatory decision.
6.4.2.Financial Performance
The entity’s revenue for 2018/19 totalled R231 million. This amount includes a transfer payment of R125 million from the Department of Health, as well as a payment in-kind for goods and services to the value of R29 million. For the reporting period, SAHPRA managed a surplus of R31 million.
SAHPRA incurred irregular expenditure to the amount of R1.2 million. This was attributed to non-compliance with supply chain management (SCM) regulations. According to SAHPRA this emanated from a lack of capacity within the SCM unit and not having personnel with the required skills.
SAHPRA received a Qualified audit opinion. This was attributed to lack of, and limited internal controls.
- South African Medical Research Council (SAMRC)
The mandate of the South African Medical Research Council (SAMRC), in terms of the Medical Research Council Act (No.58 of 1991), is to improve the health and quality of life of South Africans. This needs to be realised through research, development and technology transfer.
The SAMRC reported that it has four strategic goals and eight strategic objectives that are linked to its budget and key instruments such as SDGs, NDP and the work of the Department. The execution of its annual performance plan is through relevant research projects conducted through intra-and extra-mural research units, centres and offices comprising of funding of self-initiated projects and request for applications (RFAs) including capacity development initiatives.
6.5.1.Performance Information
The four strategic goals of the MRC are to:
- Administer health research effectively and efficiently in South Africa;
- Lead the generation of new knowledge and facilitate its translation into policies and practices to improve health;
- Support innovation and technology development to improve health; and
- Build capacity for the long-term sustainability of the country’s health research.
The performance of the entity by strategic objectives follows.
- To ensure good governance, effective administration and compliance with government regulations, the SAMRC had two targets which it exceeded. This included obtaining a clean audit opinion when it had targeted to obtain an unqualified audit opinion; and spending less than 20% of its total budget on salaries and operations of all corporate administrative functions.
- To produce and disseminate new scientific findings and knowledge on health, the SAMRC had two targets which it exceeded. More (936 compared to the targeted 750) journal articles, book chapters and books by SAMRC researchers within intramural, extramural research units and collaborating centres at the SAMRC (Malaria, TB, HIV and Cancer), self-initiated research and flagship projects were published. Further, 251 (instead of the targeted 196) journal articles were published by SAMRC grant-holders with acknowledgement of SAMRC support during the reporting period.
- To promote scientific excellence and the reputation of South African health research, 787 indexed impact factor journal articles with a SAMRC-affiliated author were published. This exceeded the target of 700.
- To provide leadership in the generation of new knowledge in health, the SAMRC-affiliated researchers published in 538 journal articles as first and/or last author in the reporting period. This exceeded the target of 500.
- To facilitate the translation of the SAMRC research findings into health policies and practices, the SAMRC met its target of having 6 new policies and guidelines that reference its research.
- To provide funding for health research to be conducted, the SAMRC awarded 176 research grants during the reporting period as targeted.
- To provide funding for health research innovation and technology development, the SAMRC had two targets which it achieved. The first one was to fund innovation and technology projects to develop new diagnostics, devices, vaccines and therapeutics. The second target was to have two new diagnostics, devices, vaccines and therapeutics progress to the next stage of development during the reporting period.
- To enhance the long-term sustainability of health research in South Africa, the SAMRC had two targets. The SAMRC targeted providing 101 bursaries, scholarships and fellowships for postgraduate study at Masters, Doctoral and Postdoctoral levels. This target was achieved, as 141 postgraduate programmes were funded by the SAMRC.
Further, the SAMRC targeted to have 60 Masters and Doctoral students graduated during the reporting period. This target was partially achieved. A total of 77 Masters and Doctoral students completed their studies in the reporting period. However, only 47 graduated within the reporting period.
- Financial Performance
Economic viability for the entity remained strong as an allocation of R543 million was approved by government through the MTEF process. The SAMRC had a revenue of R1 billion. As in the previous year, the entity’s operating expenses exceeded its revenue, resulting in an operating deficit of R37.6 million in the reporting period. This is down compared to the R88 million deficit found in the previous financial year. Overall financial performance (taking into account revenue and other types of income), resulted in an overall deficit of R3 million for 2018/19. This is significantly lower than the R46.4 million deficit reported in the previous year.
Importantly, the statement of financial position shows that overall the entity has a healthy account. The accumulated surplus for 2018/19 is R286 million.
The SAMRC obtained a Clean audit opinion.
- Council for Medical Schemes (CMS)
The Council for Medical Schemes (CMS) was established in terms of the Medical Schemes Act (1998) as the regulatory authority responsible for overseeing the medical schemes industry in South Africa. As per Section 7 of the Act, the mandate of the CMS is to regulate the medical schemes industry in a fair and transparent manner and achieve this by:
- Protecting the public and informing them about their rights, obligations and other matters, in respect of medical schemes;
- Ensuring that complaints raised by members of the public are handled appropriately and speedily;
- Ensuring that all entities conducting the business of medical schemes, and other regulated entities, comply with the Medical Schemes Act;
- Ensuring the improved management and governance of medical schemes;
- Advising the Minister of Health of appropriate regulatory and policy interventions that will assist in attaining national health Policy objectives; and
- Ensuring collaboration with other entities in executing its regulatory mandate.
- Performance Information
The CMS has nine programmes namely; Programme 1 – Administration; Programme 2 – Strategy Office; Programme 3 – Accreditation; Programme 4 – Research and Monitoring; and Programme 5 – Stakeholder Relations; Programme 6 – Compliance and Investigations; Programme 7 – Benefit Management; Programme 8 – Financial Supervision; and Programme 9 – Complaints Adjudication.
Programme 1: Administration – Under this programme, the CMS has five sub-programmes. These include the Office of the CEO which achieved all three set targets. These were receiving an unqualified audit opinion; having annual performance information that is reliable, accurate and complete; and monitoring strategic risks during the year. The ICT and Knowledge Management unit achieved all four of its targets. The unit managed to maintain the network and server uptimes above the set target by 0.41%; the uptime of all application systems was maintained at 100%; and the response time for requested information was exceeded by 8.5%. The Human Resources unit achieved three and partially achieved two of its targets. These included maintaining a staff turnover rate at less than 10%; and exceeding on employment equity targets by 12%. The Legal Services unit achieved both of its targets.
Programme 2: Strategy Office - The unit formulates prescribed minimum benefits (PMB) definitions to ensure members are adequately protected. Further, it conducts research to inform appropriate national health policy interventions. The CMS achieved five, and partially achieved two its targets. The unit was able to provide three clinical opinions within the set timeframes, more efficiently. It dealt with enquiries within set timeframes and more efficiently. It received five additional requests for research and support projects. It submitted a service-based Preventative and PHC package and costing methodology report, to the Executive Authority, which serves as a milestone in the PMB review process.
Programme 3: Accreditation - One of the strategic objectives of this unit is to accredit brokers based on their compliance within the requirements for accreditation, in order to provide broker services. The CMS achieved all three of its targets. The unit received fifty more broker organisation applications than anticipated.
Programme 4: Research and Monitoring - The unit conduct research to inform appropriate policy interventions. Further it monitors trends to improve regulatory policy and practice. The CMS achieved both its targets. In the reporting year, there were requirements for additional projects. Due to this is completed six additional research projects.
Programme 5: Stakeholder Relations - The unit creates awareness and provides training to enhance the visibility and reputation of the CMS. Further it communicates and engages to inform and empower stakeholders The CMS achieved all four of its targets. In the reporting year, the unit conducted a survey to assess member awareness. The survey showed an increase in the awareness of CMS by members. Further, the CMS achieved a total of 89.7% neutral and positive coverage from media articles.
Programme 6: Compliance and Investigations - The unit assesses whether regulated entities comply with legislation. In addition, the unit strengthens and monitor governance systems. The CMS achieved one and partially achieved one of its targets. In the reporting year, there were three matters that could not be attended to before the end of the financial year. Further, the unit had to undertake more governance intervention matters than was initially estimated.
Programme 7: Benefit Management - The unit ensures the rules of the schemes are fair and compliant with the Medical Schemes Act. The CMS achieved both its targets. In the reporting year, the unit exceeded its target by managing processes more efficiently.
Programme 8, Financial Supervision - The unit monitors and promotes the financial soundness of medical schemes. The CMS achieved three and partially achieved one of its targets. It did not achieve one target. In the reporting year, there was one matter received at the end of the last quarter of the financial year that had to be carried over to the new financial year.
Programme 9: Complaints Adjudication – The unit resolves complaints with the aim of protecting beneficiaries of medical schemes. The CMS partially achieved its target of adjudicating complaints within 120 working days and in accordance with the complains procedure, per quarter.
- Financial Performance
The CMS had a budget of R174.3 million in 2019 (following adjustments). It utilised 98% of its budget. During the reporting period, the CMS had a revenue of R163.5 million in the reporting year. This was derived from revenue from exchanges and non-exchanges of goods and services such as accreditation fees, levies, registration and sundry income. The operating expenses for the reporting period amounted to R35 million, which is lower compared to the R43.7 million incurred in 2018. Considering all income received, the entity experienced an operating deficit of R10.8 million in 2019 compared to a R8.9 million operating surplus in 2018. Irregular expenditure amounted to R44.4 million. Fruitless and wasteful expenditure amounted to R37,000 for a venue that was booked but not utilised.
The CMS obtained an Unqualified audit opinion with emphasis of matter. The AGSA found internal control deficiencies, in terms of non-compliance with section 55(1)(a) and (b) of the PFMA; and non-compliance with Treasury regulation 16A6.1.
- COMMITTEE OBSERVATIONS AND FINDINGS
- Department of Health
The Committee noted and raised concern about the following:
- AGSA findings, and supported the recommendations made.
- The stagnation in audit outcomes of the Department and the regression provincial audit outcomes.
- The Department continuously spends almost its entire budget, however underperforms on its programmes even though the number of targets decreased from the previous years.
- Service-related challenges faced in public health establishments despite the work being towards the establishment of the NHI Fund.
- Irregular, wasteful and fruitless expenditure by provincial departments that continues to increase.
- The severe shortages of medical specialists and nurse, particularly in rural areas.
- The functionality (or lack thereof) of Clinic Committees and Hospital Boards.
- The inadequate IT systems of the Department.
- The role the Department is playing to support the CCOD to enhance its functionality and lessen its reliance on mining companies.
- The numerous cases of medical negligence in public hospitals, which in turn lead to an increase in medico-legal claims against provincial departments.
- The inadequate resources provided for mental health services.
- OHSC
- The Committee commended the OHSC for obtaining a clean audit opinion.
- The Committee noted with concern that Programme 3: Complaints Management and Ombud, is experiencing a high vacancy rate of 52% in the Complaints Centre and Assessment and 50% in the Investigation Unit due to unfunded posts; which has a direct impact on timelines for complaints and investigations.
- The Committee observed that the long awaited norms and standards were promulgated and are to be implemented in 2019/20.
- The Committee noted that with regard to the enforcement actions against persistently non-compliant health establishments, the OHSC indicated that it has not started to enforce the policy because the regulations are coming into effect in 2019.
- OHO
- The Committee welcomed the developments following the Presidential Summit. However, still noted with concern the capacity and financial constraints the OHO is operating under. The Committee observed that the Office has an inadequate budget allocation to fulfil its mandate as per approved structure.
- The Committee noted the need to review the legislative framework establishing the OHO so that it becomes an independent regulatory body with its budget appropriated accordingly. The Committee observed that the attachment and reliance of the OHO on the OHSC presents constraints in its operations.
- The Committee emphasized the need to educate communities on the mandate of the OHO.
- NHLS
- The Committee commended the NHLS for improving the audit outcome and the financial performance of the organisation by gradually addressing the irregular expenditure from prior years.
- The Committee raised concern that AGSA did not find the supply chain management challenges in the organisation prior the suspension of the previous CEO and CFO by the NHLS Board.
- The Committee noted that a new Head of Internal Audit has been appointed, and the recruitment process of a new CEO and CFO are underway.
- The Committee noted that the NHLS cannot deliver on its services efficiently without its own spectrum for e-health and e-governance.
- The Committee commended the NHLS for strides it has taken to appoint senior managers.
- With regards to the disputes on historical debt to the NHLS, the Committee noted that NHLS has reached settlement agreements and payment arrangements with KZN and Gauteng. However, the Committee wanted to know whether there are other avenues available to the NHLS to compel provinces to pay.
- The Committee was concerned about the prolonged nature of the (disciplinary and) labour court case process of senior managers that were dismissed and wanted to know how the NHLS will strengthen governance and internal audit controls.
- The Committees wanted to know what the NHLS envisages in terms of its transformation agenda.
- The Committee wanted to know the value of having SANAS accreditation.
- The Committee was concerned about repetitive and unnecessary tests undertaken on patients by health facilities, and wanted to know if the NHLS can oversee this.
- SAHPRA
The Committee noted the following:
- The Committee noted with concern the performance of the entity in the reporting year, as only one Programme met its planned targets.
- The Committee noted its disappoint with the audit outcome achieved by the entity.
- The Committee raised concern with the governance of the entity. This was further exacerbated by the request a roll-over from National Treasury when it does not show sound financial management.
- The Committee noted the challenges the entity functioned under, and commended the entity for reflecting on its challenges and proposing mechanisms of addressing them.
- The Committee noted with concern that the challenges the entity are similar to those faced by the Medicine Control Council (MCC).
- The Committee requested elaboration on the noted capacity challenges raised by the entity.
- The Committee required to know how the work of the entity would differ if the public health sector focused more on PHC.
- The Committee raised concern about the entity attributing variance from set targets to labour unrest and relocation of the entity.
- The Committee wanted detailed information on the procurement, customisation and testing of new digital systems.
- The Committee wanted to know how it intends to strengthen stakeholder awareness on the agenda of the entity.
- The Committee wanted to know how the labour unrest and relocation of the entity affected employee salaries (if at all).
- The Committee noted that SAHPRA developed a backlog elimination strategy which is based on three pillars: reducing the number of applications that require evaluation; segmentation and prioritising remaining applications; and designing and implementing new models for evaluation. However still has much to do to eliminate the backlogs.
- SAMRC
- The Committee commended the SAMRC for obtaining a clean audit outcome during the 2018/19 reporting period.
- The Committee noted that the SAMRC incurred irregular expenditure due to not following/meeting supply chain management prescripts in 2017/18.
- The Committee was concerned about the slow progress in transformation at senior management level.
- The Committee was concerned about the lack of visible activities of the SAMRC on the ground.
- CMS
The Committee commended the Council starting a review of prescribed medical benefits in line with the Health Market Inquiry. Further, the Committee noted the following with concern:
- The CMS regressed from clean audit outcomes for the past two financial years to an unqualified audit with findings in 2017/18 and 2018/19 respectively.
- The Council is leasing its head office building.
- AGSA’s findings on internal controls at the Council. SCM processes not being followed by the CMS.
- The escalating out-of-pocket payments by members which impede on the affordability of medical schemes, and the role of CMS can play in regulating the industry.
- The co-payment differences between regulated and open source medical schemes.
- The role the Council will play in relation to the NHI.
- Private hospitals are largely unregulated yet receive about 37% of the resources.
- The complexity with disaggregating reserves in medical schemes because there are contributions from different stakeholders, including the State and members.
- The need for the public to be better informed of medical scheme options and benefits, in line with the individual needs as the way medical schemes communicate is complex.
- Recommendations
- Department
The Portfolio Committee recommends that the Department of Health should do the following:
Improve audit outcomes -
- Institute measures to address the root causes identified by the AGSA in order to obtain a clean audit.
- Provide a detailed plan to the Committee demonstrating how it will assist provinces to improve audit outcomes. The detailed plan should be provided to the Committee on a quarterly basis.
- Provide systems to assist provincial departments to develop internal controls and instruments to monitor and eliminate irregular, wasteful and fruitless expenditure in reducing inefficiencies.
Strengthen financial management -
- The Department should provide the Committee with a quarterly report on consequence management arising from non-compliance with PFMA regulations, irregular, wasteful and fruitless expenditure.
- Increase funding for academic training to increase the pool of medical specialists, professional nurses and allied professionals.
Strengthen governance and monitoring in health establishments -
- Ensure that Clinic Committees and Hospital Boards are monitored and provided with training on their role and responsibility to render them effective in health establishments.
- The department should provide the Committee with infrastructure projects including health facilities as pronounced by the President during the 2018 State of the Nation Address.
Invest in electronic systems to improve efficiency in health establishments -
- Ensure greater investment in IT through intense training of personnel and infrastructure.
- In line with the Fourth Industrial Revolution, secure telecommunications or a dedicated spectrum for e-governance on the health care sector. This will enable applications of face recognition technology scan platforms towards smart, safe and secure health facilities; for patients and health care workers. Further, this will reduce long queues and pharmaceutical dispensing costs.
Strengthen support provided to the CCOD to enhance its functionality -
- Ensure that the CCOD improves on the submission of annual reports and financial statements to the AGSA.
- Ensure the CCOD submits update reports on AGSA process, with action plan, proposals and motivation thereof to the Portfolio Committee.
- Attend the meeting the Portfolio Committee will convene with the Portfolio Committees on Labour and Employment, Minerals and Energy and Public Works and Infrastructure.
- The Department should engage National Treasury to provide adequate mechanisms including human resources for the CCOD to meet its mandate.
Reduce the number of medico-legal cases and costs thereof -
- Improve on patient care experience.
- Ensure there is appropriate and adequate professional staffing in health establishments, and
- Ensure there is proper record keeping claims.
Address challenges experienced by the OHO –
- The Department should ensure that the Office of the Health Ombud is separated from the OHSC to ensure its independence.
- The Department and National Treasury should provide adequate funding to the Office in line with the recently approved structure for better reporting and functionality.
Ensure alignment of spending trends with performance –
- The Department should present an analysis of the cost-effectiveness of its performance, given that on many measures, nearly the entire budget is spent, but performance is poor. Targets should be designed with a clear idea of the most accurate data source for that measure. If the Department cannot accurately measure the impact of a particular programme, it will not know if it is having a positive impact on health in the country. Targets should be designed taking into account the method of data collection and its reliability.
- OHSC
The OHSC should address capacity issues of Programme 3: Complaints Management and Ombud in order to improve on timelines for complaints and investigations.
- OHO
The Portfolio Committee noted and recommended the following:
- The OHO organisational structure needs to be urgently funded to enable the Office to respond expeditiously to complaints of the citizens.
- The current legislative framework that located the OHO in the OHSC has proven to be a challenge and requires urgent intervention.
- The OHO should improve its public awareness and advocacy efforts, to inform health users of its mandate.
- NHLS
The Portfolio Committee recommends that the NHLS should do the following:
Strengthen internal systems -
- Strengthen the internal audit and IT systems.
- Strengthen “electronic gatekeeping” to reduce unnecessary tests.
- Develop internal controls to monitor and eliminate irregular expenditure and ensure that supply chain management policies are complied with in order to reduce inefficiencies.
Cultivate human resources for health -
- Conclude the long standing labour cases of the dismissed senior managers and provide the Committee with a progress report.
- Provide an update report on the appointment of Executive staff to the Portfolio Committee.
- Retain trained Registrars in the public health sector.
Improve stakeholder relations and conduct capacity building -
- Continue to engage, advocate and work collaboratively with the provincial departments regarding outstanding payments.
- Share best practices and lessons with the Department and other health entities.
- SAHPRA
The Portfolio Committee recommends that SAHPRA should do the following:
- Ensure the implementation of the backlog elimination strategy and provide the Portfolio Committee with a progress report quarterly.
- Provide the Portfolio Committee with a detailed recovery plan that has clear timelines. The plan should cover internal audit processes, governance, monitoring systems and target-setting.
- Implement consequence management for poor governance and performance.
- Fill critical vacancies.
- SAMRC
The Portfolio Committee recommends that the SAMRC should do the following:
- Continue monitoring compliance to supply chain management and procurement policies in order to circumvent audit findings on procurement processes.
- Address budget issues relating to the deficit as reported by the entity.
- Continue efforts of strengthening the transformation agenda at senior management at the SAMRC.
- Strengthen knowledge transfer and its public awareness and advocacy efforts to ensure improved visibility and awareness on the research programmes of the SAMRC.
- CMS
The Portfolio Committee recommends that the CMS should do the following:
- Develop an action plan to address findings of the AGSA, and provide the Portfolio Committee with a progress report on a quarterly basis.
- Ensure adequate capacity of the supply chain management (SCM) unit in order to ensure compliance to SCM and procurement policies.
- Strengthen its role in raising awareness to members in relation to its mandate. The work of the consumer protection forum should be broadened to reach more members. The Council may partner with other departments in this regard. The work the Council is doing to train brokers, funders, board of trustees should be strengthened.
- Provide the Committee with a detailed plan in ensuring that medical schemes are affordable as per the CMS’s vision.
- Provide the Portfolio Committee with a report of how the CMS will be responding to the Health Market Inquiry report.
The Department, NHLS, CMS, SAHPRA should provide the Portfolio Committee with a list of actions taken against transgressors for irregular expenditure incurred. Further, the Department and Entities to provide progress report on all of these recommendations to the Portfolio Committee on a quarterly basis.
Report to be considered.