ATC141031: Budgetary Review and Recommendations Report of the Portfolio Committee on Health for the 2013/14 financial year, dated 22 October 2014
Health
The
Budgetary Review and Recommendations Report of the Portfolio Committee on
Health for the 2013/14 financial year, dated 22 October 2014
The Portfolio Committee on Health (the
Committee), having considered the performance and submissions to the National
Treasury for the medium-term period of the Department of Health (the
Department) and its entities, reports as follows:
1.
INTRODUCTION
Over the past 20 years, major transformation
has taken place in South Africa in health legislation, policy and the delivery
of services to all South Africa.
Governments
initiatives to ensure that all South Africans have access to good quality
healthcare, irrespective of their financial status, include the proposed implementation
of the National Health Insurance (NHI). NHI is aimed at addressing the
countrys health burden and ensure that South Africans become a healthy and
productive nation. As part of the first phase,10 pilot districts(KwaZulu Natal
added one moredistrict) were identified to test the feasibility of the NHI system.
Although
government has improved the health status of South Africans, more work remains
in order to meet the health objectives by 2030, as set out in the National
Development Plan (NDP). The NDPs goals include raising the life expectancy of
South Africans to at least 70 years, progressively improve TB prevention and
cure, reduce maternal, infant and child mortality and significantly reduce
prevalence of non-communicable chronic diseases (NCDs).The goals also include
universal healthcare coverage,establishing primary healthcare (PHC) teams to
provide care to families and communities, and filling vacancies in the
healthcare sector with skilled, committed and competent individuals.
Importantly, the NDP recognises the social determinants of health as having a
significant impact on health outcomes.
According
to the TwentyYear Review, issued by the Presidency in 2014, the life expectancy
in the country has improved from 52.7 years in 2002 to 60 years in 2013.More
recently, on its annual report presentation the Department reported thattheMRC
Rapid Mortality Surveillance indicates that life expectancy has increased to 61
years in 2014. The infant mortality rate has decreased from 63.5 deaths per 1
000 live births in 2002, to 41.7 deaths per live births in 2013.The under-five
mortality rate has also decreased from 92.9 deaths per 1 000 live births in
2002, to 56.6 deaths per 1 000 live births in 2013.As a result of the impact of
HIV and AIDS, South Africas maternal mortality ratio (MMR) worsened,
increasing from 150 per 100 000 in 1998 to 310 per 100 000 in 2008. However,
MMR began decreasing steadily to 269 per 100 000 in 2010.
1.1.
Mandate of
the Committee
Parliament conducts its constitutional
obligations through the work of Committees. The Portfolio Committee on Health
derives its mandate from the Constitution and guided by the Rules of Parliament
to play an oversight role over the Department of Health and its entities; facilitate
the passing of legislation; and approve annual departmental budgets.
Section 77 (3) of the Constitution of South
Africa provides for an Act of Parliament which will provide for a procedure to
amend the Money Bills before it. The Money Bills Amendment Procedure and
Related Matters Act, 2009 (Act 9 of 2009) thus enables Parliament to amend
aspects related to tabled Money Bills. The objectives of this Bill are twofold:
·
To establish a procedure to
amend Money Bills before Parliament within the context of oversight findings
and the adoption of the fiscal framework; and
·
To establish a Parliamentary
Budget Office to provide research support to Parliament and its Committees
pursuant to maintaining oversight of the budget process and the possible
amendment to Money Bills.
Parliament conducts its constitutional
obligations through the work of Committees.
Committees of Parliament facilitate the passing of legislation, approve
annual departmental budgets and conduct oversight over departments falling
within their perimeters.Section 5 (1) of the Money Bills Amendment Procedure
and Related Matters Bill provides for the National Assembly (NA), through its
committees, to annually assess the performance of each national department,
with reference to the following:
-
Medium Term
estimates of expenditure, its strategic priorities and measurable
objectives;
-
Prevailing
strategic plans;
-
Expenditure
reports relating to such department published by National Treasury in
terms of Section 32 of the Public Finance Management Act;
-
Financial
statements and annual reports of such departments;
-
Reports of the
Committee on Public Accounts relating to the department; and
-
Any other
information requested by or presented to a House or Parliament.
The
Committee must table theBudgetary Review and Recommendations Report(BRRR) after
the adoption of the budget and before the adoption of the reports on the Medium
Term Budget Policy Statement (MTBPS) by the respective Houses in November of
each year.
1.2.
Core
functionsof the Department of Health
The major strategic framework for the mandate of the Department during
the 2013/14 was the
Health Sector Negotiated Service Delivery Agreement
(NSDA) 2010 to 2014, which provides key strategies for accelerating progress
towards the vision of A long and Healthy Life for all South Africans.
The four
outputs required from the health sector in terms of the NSDA are:
-
Increasing
life expectancy;
-
Decreasing
child and maternal mortality rates;
-
Combating
HIV and AIDS and STIs, and decreasing the burden of disease from
Tuberculosis (TB); and
-
Enhancing
health systems effectiveness.
The NSDA is reinforcedby the National
Development Plan (NDP) Vision 2030 which articulates nine goals that broadly
endorse a health system which raises life expectancy, reduces infant mortality
and the occurrence of HIV and AIDS, and significantly lowers the burden of
disease. The plan highlights demographics and disease burden, health systems
and the social and environmental determinants of health as being key areas in
the countrys health system that need to be addressed. Achieving the plans
objectives for the health sector will require a fundamental reform in the
countrys health system. To this end, the department will focus on priority
areas that include: infrastructure; human resources and management capacity,
and norms and standards for staffing; accountability in planning and budgeting;
capacity and systems in financial management; health financing; and key
strategic institutions.
The Departments 10 point plan for 2009-2014
serves as an important overarching and macro framework for overhauling the
health system, to enhance its capacity to improve health outcomes, and to harness
focused interventions towards the NDP vision.The priorities comprising the 10
Point Plan are as follows:
·
Provision of strategic leadership and
creation of social compact for better health outcomes;
·
Implementation of the National Health
Insurance (NHI);
·
Improving the quality of health services;
·
Overhauling the healthcare system and
improving its management;
·
Improved human resources planning development
and management;
·
Revitalization of infrastructure;
·
Accelerated implementation of HIV and AIDS,
STI and TB strategic plan;
·
Mass mobilization for better health for the
population;
·
Review the Drug Policy; and
·
Strengthening Research and Development.
The activities of the department are organised in six programmes,
comprising Programme 1: Administration; Programme 2: National Health Insurance,
Health Planning and Systems Enablement; Programme 3: HIV and AIDS,
Tuberculosis, Maternal and Child Health; Programme 4: Primary Health Care
Services; Programme 5: Hospitals, Tertiary Health services and Human Resource
Development, and; Programme 6: Health Regulation and Compliance Management.
The Department is also responsible for five
entities that report to the Minister of Health as the executive authority.
These entities are:
1.
South African Medical
Research Council (MRC)
2.
Council for Medical
Schemes (CMS)
3.
National Health
Laboratory Services (NHLS)
4.
Compensation
Commissioner for Occupational Diseases (CCOD)
5.
Office of Health
Standards Compliance (OHSC)
1.3.
Purpose of
the Budget Review and Recommendations Report
The Money
Bills Procedures and Related Matters Amendment Act (Act 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. In October of each year,
portfolio committees must compile Budgetary Review and Recommendation Reports
(BRRR) that assess service delivery performance given available resources;
evaluate the effective and efficient use and forward allocation of resources;
and may make recommendations on forward use of resources. The BRRR also sources
documents for the Standing/Select Committees on Appropriations/Finance when
they make recommendations to the Houses of Parliament on the Medium-Term Budget
Policy Statement (MTBPS). The comprehensive review and analysis of the previous
financial years performance, as well as performance to date, form part of this
process.
1.4
Method
In order to enable the Committee to take an
informed decision on the performance of the Department of Health for the
financial year 2013/14, the Committee consulted the following reports and/or
documents:
-
Annual
Performance Plan (2013/14);
-
Annual Report of
the Department of Health (2013/14);
-
Report of the
Auditor-General (2013/14);
-
2013/14 State of
theNation Address;
-
First Quarter
Expenditure Report (2014/15);
-
2014 Estimates
of National Expenditure;
-
The National
Development Plan 2030;
-
2012/13 BRRR
report; and
-
Report of the Financial
and Fiscal Commission.
2.
OVERVIEW OF THE KEY RELEVANT POLICY FOCUS
AREAS
The 2013
State of the Nation Address (SONA) placed emphasis on a few points for the
health sector in the 2013/14 financial year:
·
The National Health Insurance (NHI) Fund
would be established in the year 2014.
·
Accelerate the progress made in the selected
NHI pilot districts around the country, with the first group of about 600
private medical practitioners to be contracted to provide medical services in
10 of the pilot districts.
The February 2014 SONA recognised that Health
remains one of the five priorities of government which also includes education,
fighting crime, creating decent work as well as rural development and land
reform. On issues of health, the following were highlighted:
·
Three hundred new health facilities were
built over the past five year, which includes 160 new clinics.
·
Ten new hospitals were refurbished or built.
·
2.4
million People were initiated on antiretrovirals (ARVs) by 2013. The target is
to increase this number to 4.6 million people.
·
More than
20 million citizens have presented for HIV testing since the launch of the
campaign in 2011.
·
Increased life expectancy.
·
Declining mother-to-child transmission (MTCT)
of HIV.
·
The South African National Aids Council
(SANAC) was commended for its work.
·
The National Health Insurance programme will
extend healthcare to the poor.
Areas of priority that were highlighted in
the June 2014 SONA included:
-
Improved
access to primary health care.
-
Increasing
life expectancy at birth from 60 years in 2012 to 63 years in 2019.
-
Continue
to invest in education and skills development including doctors. By
January next year, the first intake of medical students will be enrolled
at the new medical university in Limpopo.
-
Reducing
child and maternal mortality ratios.
-
Implementation
of the National Health Insurance.
-
Improve
the quality of care in the public sector.
-
HIV
and AIDS treatment and support programme by expanding mass HIV prevention
communication campaigns.
During the
period under review (2013/14), the Department of Health continued to focus on
the key areas outlined in the 10 Point Plan and the signed NSDA. The
Departments strategic goals over the MTSF 2009 2014 are to:
·
Increase average male and female life
expectancy at birth to 70 years by 2030.
·
Decrease maternal mortality ratio from
estimated 310 per 100 000 to 270 (or less) per 100 000 live births by 2014.
·
Decrease child mortality ratio from current
42 deaths per 1 000 live births to 38 deaths (or less) per 1000 live births by
2014.
·
Combat HIV and AIDS and decrease the burden
of disease from tuberculosis.
·
Strengthen the health systems effectiveness
by focusing on reengineering primary health care (PHC) and improving patient
care and satisfaction, health infrastructure, human resources for health, and
healthcare financing through the implementation of the National Health
Insurance and strengthening health information systems.
3.
Summary of previous key financial and performance recommendations of
Committee
3.1.
2012/13
BRRR recommendations
3.1.1
Financial
and non-financial performance recommendations made by Committee
For the
financial year 2012/13, the Department spent its budget 99.4% of its budget in
the previous financial year.Despite this achievement, the Department achieved
only 39 (46%) of its 85 targets. Most of the programmes (3 of 6) performed
below the 50% mark.
In view of
these observations, the Committee recommended that the Minister of Health
addresses the following key issues:
·
Ensure that there are
adequate norms and standards which are properly implemented to improveservice
delivery in provincial departments. It should also ensure that the Office of
Health Standards Compliance (OHSC), as established by the National Health
Amendment Act No.12 of 2013 is fully operational.
·
Ensure that personnel who
manage hospitals or health institutions are skilled professionals with medical
or health background.
·
Increase budget allocations
towards mental health care services.
·
Ensure that the cancer
registry is up to date.
·
Devise strategies for
recruiting and retaining health professionals in peri-urban areas, particularly
in rural areas.
·
Monitor the provincial
spending of the NHI grant and quarterly financial performance reports should be
submitted to the Committee.
·
Strengthen the
implementation of the re-engineered PHC system, including maternal health as a
priority.
·
Closely monitor the burden
of tuberculosis in the mining sector through surveillance of miners and their
families.
·
Expand the nationwide
roll-out of the GeneXpert technology in strengthening the national TB
programme.
·
Ensure that the Compensation
Commissioner for Occupational Diseases (CCOD) submits quarterly reports to the
Committee.
·
Ensure improved patient
referral systems from primary health care services to higher levels of care.
This will facilitate effective and efficient spending of the National Tertiary
Services grant.
·
Consider amending the
National Health Laboratory Services Act so as to ensure that the entity is able
to deliver on its mandate.
On progress made on
the 2012/13 recommendations, the following were noted based on the Departments
Annual Report for 2013/14:
·
The OHSC Board was appointed
and it was registered as a Section 3A Public Entity in 2014. The Office is not
fully established as it is still in the transition process (shifting the
Compliance Inspection and Complaints functions from the national Department of
Health to the OHSC).
·
The CCOD still has not tabled
an annual report.
·
The Department had developed
an HRH (Human Resources for Health) plan to monitor vacancy rates in the health
sector.
·
The Department has secured
funding from the Global Fund which will in partbe used to strengthen TB
services in peri-mining communities.
·
There is no progress made by
the Department with regard to updating the cancer registry.
·
In relation to strengthening
the implementation of the re-engineered PHC system,the Department continues to
increase the number of functional ward-based PHC outreach teams (1063 established,
target 750).
3.1.2
Evaluation
of response by the Department and Minister of Finance
In 2012/13 the Committee recommended that the
Department ensures the operation of the Office of Health Standards Compliance
(OHSC), National Treasury ensured its full supporttowards the establishment of
the OHSC and will make funds available (R10 million in 2015/16 and R10 million
in 2016/17) to support the full establishment of the OHSC over the 2014 MTEF
period.
With regards to increasing the budget
allocation for mental health services, National Treasury noted that the budget
for this sub-programme is not growing strongly. The preliminary allocation for
psychiatric hospitals (which is a sub-programme in provincial budgets) over the
2013 MTEF period was R4 billion, R4.3 billion and R4.4 billion per year
respectively. The national Department of Health did not submit a specific
budget bid for mental health care services in the 2014 MTEF process.
On the recommendation to monitor provincial
spending of the
National Health Grant and the
National Health Insurance Grant
, National Treasury advised that
improvements need to be focused on GPs contracting and thus agreement with GPs
on the terms of the contractual arrangements as well as revise the 2014/15 NHI
and national health grants frameworks to ensure that these are better targeted,
with measurable outputs and outcomes.
On expanding the roll-out of the GeneXpert
technology in strengthening the national TB programme, National Treasury
allocated R338 million to provinces over the 2013 MTEF to roll out the
technology. National Treasury is awaiting cost-effectiveness data on the
implementation of GeneXpert to evaluate the intervention.
National Treasury
noted the concern raised related to the CCOD not submitting annual reports or
financial statements since 2009/10 and recommended that the department must put
in place a set of interventions to improve the situation.
On
amending the National Health Laboratory Services Act, National Treasury
recommended that gatekeeping measures are required to limit unnecessary
testing, for example through the use of a unique patient identifier. Although
the creation of a new entity, the National Public Health Institutes of South
Africa, will help create a more focused diagnostic entity, the costs of its
establishment are significant.
4.
Overview and
assessment of financial performance
4.1
Financial performance 2013/14
For
2013/14, the Department (Vote 16) received a final appropriation of R30.5
billion,
of which it spent R29.8 billion, which is 97.7 % of the available budget.
The Department under-spent a total amount of R703 million, resulting in
under-expenditure of 2.3%. This is a significant decrease compared to the
previous financial year. Under-spending was mainly concentrated in Goods and
Services and Capital. Goods and services were mainly underspent due to late
commitments and deliveries whilst capital was underspent due to construction
projects not completed by the 31 March 2014.
4.2
Programme expenditure 2013/14
Programme 1: Administration
this
programme was allocated R405.5 million and spent R363. 9 million (89.6% of
expenditure). This shows an under-expenditure of R41.5 million (10.37%). The
majority of which was spent on Goods and Services (43.7 per cent) and
Compensation of Employees (40.8%), and (15.6%) was on payment of capital
assets. Under-expenditure in this programme has grown from R11.9 million in
2012/13 to R41.5 million in 2013/14. The under-expenditure in 2013/14 is
reported to be due to lower spending on goods and services.
Programme 2: National Health Insurance,
Health Planning and Systems Enablement
this programme was
allocated R492.9 million with an actual expenditure of R197.9 million. This
shows a massive under-expenditure of R295 million or 40.1%. In 2012/13, the
Department was allocated R303.7 million and spent R293.2 million (96.5%
expenditure) with an under expenditure of R10.5 million. Therefore, the under
expenditure in this programme has increased dramatically compared to previous
financial year. Reasons for the under expenditure is reported to be due to the
slow take-off of the National Health Insurance (NHI) Indirect Grant.
Programme 3: HIV and AIDS, Tuberculosis,
Maternal and Child Health
this programme consists of three
sub-programmes that relate directly to the Millennium Development Goals (MDGs)
4, 5 and 6 which are critical indicators for the Department. This programme was
allocated R11.035 billion and spent R10.9 billion (which translate to 99.3%
expenditure) with an under-expenditure of R77.7 million in 2013/14. In the
previous financial year the Department spent R9.1 billion of the allocated R9.2
billion (which translate to 99.3% expenditure) with an under expenditure of
R64.8 million.
Programme 4: Primary Health Care (PHC)
Services
this
programme also houses a number of programmes identified as key policy
interventions by the Department in improving the health service and reducing
the quadruple burden of disease. These programmes include Primary Health Care
(PHC)/ District Health Services, Non-communicable diseases (NCDs), and Violence
and Trauma and EMS. However, the budget allocation for this programme declined
from R761 million in 2011/12 to R113.8 million in 2012/13. It further declined
to R100.9 million in 2013/14. This decline in budget is despite the fact that
the Violence, trauma and EMS sub-programme was added.
The
programme shows 87.4% expenditure outcome of R88.199 million (2012/13: R105 362
million or 92.6%), with under-expenditure of R12.761 million. The
under-expenditure is mainly related to the District Services and Environmental
health sub-programme which underspent by R8.550 million. No clear reason for
this underspending is provided.
Programme 5: Hospitals, Tertiary Health
Services and Human Resource Development
this programme deals
with the development of policies, delivery models and clinical protocols for
hospital and emergency medical services. It also ensures that Academic Medical
Centres (AMCs) and health workforce development programmes are aligned. This
programme has spent 98.6% (R17.483 billion) of its R17.728 billion allocated
funds, resulting in under-expenditure of R244.842 million (1.4%). Only 5 of 12
targets set (41.6%) were achieved. No reason for the under-expenditure is
given. Significant (in terms of amount) under-expenditure of R245.1 million was
recorded in the Health Facilities Infrastructure Management sub-programme.
Programme 6: Health Regulation and Compliance
Management
The aim of this programme is to regulate procurement of
medicines and pharmaceutical supplies, including food control and trade in
health products and health technology. It also promotes accountability and compliance
by regulatory bodies for effective governance and quality of health care.This
programme has spent 95.9% of its allocated funds, amounting to R732.27 million
(up from R545.52 million 2012/13), with under-expenditure of R31.14 million. 15
of the 20 targets (75%) were achieved. R18.5 million was underspent by the
Compensation Commissioner for Occupational Diseases (CCOD).
4.3
Virements
The
following virementswere affected by the Department during the 2013/14 financial
year:
-
R56 484 million from Goods and Services toHouseholds(R1 522
million)
-
Machinery and equipment (R3 517 million)
-
Compensation of Employees (R18 713 million)
4.4
Report of the Auditor-General 2013/14
The AG has
expressed an
unqualified audit opinion
of the Departments 2013/14 Annual Report. This means that the financial
statement of the Department present fairly the financial position of the
Department. The Department of Health has for the last three consecutive years
obtained an unqualified audit opinion from the AG. However, the AG expressed
its opinion with emphasis of matters. The matters includes, restatement of
corresponding figures for 2013 financial year after an error was discovered in
2014; material underspending on conditional grants to the amount of R257
million on the Health Infrastructure Grant (Indirect) and R279 million on the
NHI Grant.
The
Compensation Commission (CCOD) was not audited again this financial year, the
entity did not submit annual financial statements for audit purposes.
Reliability of information
predetermined
objectives remains a challenge for the Department. The AG again found that
there were issues in relation to the reliability of performance information on
those indicators tested. The validity, accuracy and completeness of the
performance information and deviations from planned targets could thus not be
tested.Reliability of reported performance information at provincial facilities
was again identified.
The reliability of information is primarily impacted by inadequate
information systems for the collection of data as well as manual internal
control processes at facilities (clinics and hospitals) at provincial
departments.
The
AG noted inadequate monitoring processes for the Division of Revenue Act (DoRA)
framework and non-compliance with the PFMA as material misstatements were
identified in the annual financial statements submitted for audit.
Conditional
grants
the AG raised a concern regarding the under
spending on the Health Infrastructure Grant (Indirect) amounting to R257
million (55%) and the NHI Grant (Indirect) amounting to R279 million (75%). The
under spending on the NHI Grant (Indirect) contributed to the under spending on
programme 2: Health Planning and System Enablement to the amount of R295
million. Expenditure and non-financial information were not adequately
monitored for the programmes funded by the National Tertiary Services Grant and
the Health Professional Training and Development Grant in accordance with the
frameworks for the allocation.Internal control not adequately implemented to
effectively monitor conditional grants.
Internal Controls
Financial
and Performance Management
Management
did not adequately implement controls over the daily and monthly processing of
transactions that led to the financial statements being corrected. Also,
management did not adequately implement internal controls designed to monitor
conditional grants.
Unauthorised,
irregular and fruitless and wasteful expenditure
the
Department and entities did not incur any unauthorised expenditure during the
2013/14 financial year, however notedan improvement in irregular, fruitless and
wasteful expenditure. Irregular expenditure has decreased from R2.3 million in
2012/13 to R188 000in the current financial year. Fruitless and wasteful
expenditure has also decreased from R660 million to R43 000.
Performance audits
A pilot
audit is currently underway in the Eastern Cape on the management and logistics
around medicines and is envisaged to be rolled out to the National Department
and selected provincial departments.
Health Sector audit outcomes
All ten
departments had findings on compliance.
The majority of these related to
material misstatements in annual financial statements submitted for audit,
expenditure management and procurement management.
Only the national
department, North West and Western Cape received an unqualified opinion.
A
n improvement was
noted: Limpopo has moved from a disclaimer to a qualified opinion.
The AG
noted that here has been a downward trend in unauthorised expenditure from
R855
million in 2012/13 to R460 million in 2013/14 resulting from improved budgeting
and budgetary controls by the department. Irregular expenditure remains a
concern for the sector at R7.1 billion. Fruitless and wasteful expenditure
decreased from R605 million to R289 million in 2013/14.
One of the
risk areas of the health sector that is concerning is the financial health of
the sector. Out of the 10 health departments, the financial health of the nine
is of concern with Free State requiring intervention.
Public Entities Reporting to the Department
Public Entity
|
Approved budget (2013/14)
|
2014/15 Estimates
|
Achievements (2013/14)
|
Medical
Research Council (MRC)
|
R715 mil
|
R808 mil
|
The MRC once
gained received a clean audit from the AG for the 2013/14 financial year. The
AG only noted inadequate information technology systems controls.
|
Council
Medical Scheme (CMS)
|
R110 mil
|
R123.1
mil
|
CMS
received an unqualified audit opinion. Control weaknesses around supply chain
management processes persists in this financial year.
|
National
Health Laboratory Services (NHLS)
|
R4 630
mil
|
R5 057
mil
|
The NHLS
received an unqualified audit opinion. Findings were related to
non-compliance with the NHLS Act, material misstatements were identified in
the annual financial statements. The concern for the NHLS relates to the
collection of outstanding debts from Gauteng and KZN provincial departments
of health.
|
Compensation
Commissioner for Occupational Diseases (CCOD)
|
R221 mil
|
R255 mil
|
CCOD has
not submitted financial statements or annual reports since 2010/11 to date.
|
Office
of Health Standards Compliance (OHSC)
|
R77 mil
|
R97 mil
|
Newly
established entity, established in April 2014
|
4.5
Report of the Financial and Fiscal Commission
(FFC) 2013/14
The FFC
noted that South Africas health outcomes are poor and not in line with the
Millennium Development Goals (MDG) targets.
Spending on the six programmes has been fairly good although there is a
slight decrease by 1.5% in the 2012/13 financial year.
Spending on conditional grants remains a
concern, particularly spending on theNHI and infrastructure grants. Compared to
other government sectors, infrastructure spending on health on average is one
of the lowest.
There are discrepancies
in provincial spending which translate into disparities in district funding.
The FFC
raised concerns related to the national department taking over port health
functions from provincial health departments. It contends that this move has no
legal status as the FFC was not consulted with regard to moving functions from
one sphere of government to another, as required by Section 2A(a) of the
Financial and Fiscal Commission Act 99 of 1997.
The FFC recommended
introduction of block grantsbut there was no consensus between the FFC and government.
National Treasury viewed the block grant as potentially unconstitutional.
The FFC
also observed the challenge of wastage of financial resources in the health
sector,particularly with regards to irregular, fruitless and wasteful
expenditure. This presents difficulty in determining whether health is budgeted
for appropriately.
In
addition, the FFC observed the lack of coordination between the three spheres
of government in the health sector, and recommended that the system must be improved
to ensure proper coordination between the three spheres of government.
4.6
Quarterly
spending trends 2013/14
The expenditure performance could only be
based on the first quarterly report while the second quarter is still being
processed by the Department. By the end of June 2014, theDepartment spent R7.9
billion, or 23.3 %, the majority of which has been used on goods and services
and payments for capital assets. Expenditure was slow under Goods and Services
in which only R160.3 million or 11.6 percent was spent against a budget of R1.4
billion. Compensation of employees performed relatively better as R146 million
or 24.4 percent was spent against an allocation of R597.2 million. The
department transferred R7.6 billion or 24.6 percent against a total allocation
of R30.9 billion
5.
2014/15
MTEF ALLOCATION
The
Department receives an appropriation of R34 billion in the 2014/15 MTEF. An
amount of R200 million has been added through the newly formed component of the
national health grant to provide for the rollout of the Human Papilloma Virus
(HPV) vaccine. An additional R30 million was approved for the national health
demographic survey. Programme 5 receives an additional allocation of R70
million over the MTEF period for capital assets for the forensic chemistry
laboratories and for commissioning the new laboratory in Durban. Allocations to
the health facilities revitalisation component on the National Health Grant
were reduced due to slow spending.
5.1.
Overview
of Vote allocation and spending (2012/13 - 2015/16)
Programme
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
||
Main
|
Adjusted
|
Outcomes
|
Estimates
|
Estimates
|
Estimates
|
|
Administration
|
357.9
|
403.3
|
390.5
|
411.0
|
399.7
|
426.4
|
National Health Insurance, Health Planning and
Systems Enablement
|
315.5
|
315.1
|
298.3
|
491.9
|
621.3
|
620.0
|
HIV and AIDS, TB, Maternal and Child Health
|
9 292.5
|
9 264.6
|
9 165.5
|
11 029.1
|
13 049.9
|
14 728.6
|
Primary Health Care Services
|
87.4
|
125.8
|
106.4
|
109.4
|
93.5
|
98.1
|
Hospitals, Tertiary Health Services and Human
Resource Development
|
16 927.9
|
17 351.0
|
17 398.8
|
17 911.2
|
18 925.8
|
19 693.3
|
Health Regulation and Compliance Management
|
575.8
|
597.4
|
545.5
|
754.1
|
865.3
|
1 064.8
|
Total
|
27 557.0
|
28 057.2
|
27 898.9
|
30 706.7
|
33 955.5
|
36 631.1
|
6.
Overview and assessment
of service delivery AND PROGRAMME PERFORMANCE 2013/14
6.1
Service delivery performance for 2013/14
For the
financial year 2013/14, the department achieved only 65 (54%) of its 120
targets (Table 3). Most of the programmes (3 of 6) performed below the 50%
mark. The Department appears to do better in relation to Programmes 1, 2 and 6.
Only 33% of the targets for Programme 3 were fully achieved, and for Programmes
4 and 5, less than 50% of the targets were achieved.
Table 3:
Programme Performance Overview
Programme
|
Number of targets
|
Achieved
|
Not fully achieved
|
Percentage
Achieved
|
1.
Administration
|
9
|
7
|
2
|
78%
|
2.
Health planning and system enablement
|
19
|
14
|
5
|
74%
|
3.
HIV and AIDS, TB and Maternal, Child and womens
health
|
24
|
8
|
16
|
33%
|
4.
Primary Health Care Services
|
29
|
14
|
15
|
48%
|
5.
Hospitals, Tertiary Services and Workforce
Development
|
15
|
7
|
8
|
47%
|
6.
Health Regulation and Compliance
|
24
|
15
|
9
|
63%
|
Total
|
120
|
65
|
55
|
54%
|
Programme Performance
This section provides
an analysis of the performance of the Department under each of its six main
programmes. The analysis focuses particularly on the overarching targets and
achievements under each programme and highlights some of the challenges that
prevented the Department from achieving these target.
Programme 1: Administration
Seven out
of nine targets (78%) are reported achieved in 2013/14 compared to only 50% of
targets achieved in 2012/13. It should be noted that the Departments targets
increased from 6 in 2012/13. The targets that were not achieved under this
programme include 6 managers who did not sign performance agreement as planned.
The total number of managers signed the performance agreement is 103 of 109.
Another deviation from the planned targets includes delays in the development
of the department-wide Business Continuity Plan.
Programme 2: National Health Insurance,
Health Planning and Systems Enablement
Fourteen (14) of 19
targets (74%) are reported achieved. The Department reported experiencing
difficulty in contracting with private GPs to work in public health facilities
in National Health Insurance (NHI) pilot sites. It was only able to contract
119 GPs from a 600 target for 2013/14. This component makes up approximately 95
per cent of the total grant value.
Another
deviation from the planned targets under this programme is the envisaged
implementation of the Monitoring and Evaluation (M&E) Plan for Health. The
Department did not implement the M&E plan and only managed to review and
revise it.
Programme 3: HIV and AIDS, Tuberculosis,
Maternal and Child Health
Under this programme, the Department fully
achieved only 8 of 24 planned targets. This means that the Department spent
99.3 per cent of its allocated budget under this programme and only achieved
approximately 33.3% of its targets. Nearly 70 percent of the planned targets
were not fully achieved despite spending nearly the entire budget.
The
under-expenditure in this programme is due to delays in the procurement of
condoms; initially the Department tendered local suppliers, after it became
evident that these suppliers could not deliver the required quantities orders
were placed with the United Nation Population Fund (UNPFA). A roll-over request
was received because condoms were procured but not delivered by end of
2013/14.
The
Auditor General (AG), as in previous years raised issues on the reliability of
the data in this programme. Performance information provided may thus not be
accurate.
In terms
of HIV and AIDS, 662 312 new clients were put on antiretroviral treatment
(ART) exceeding the target set of 500 000. South Africa has the largest
ARV programme in the world. The PMTCT programme is also doing very well (see
below). However,the targets related to Medical Male Circumcision (MMC) and HIV
testing were not achieved.
Only two
of the eight targets for TB were achieved. These include the number of tests
conducted with GeneXpert, which was 2.1 million, exceeding the target of
800 000 by over 1.3 million, as well as an increased number of confirmed
MDR TB clients initiated on treatment. The latter could also be looked at as a
failure as it could mean that earlier TB treatment was ineffective or not
completed. Only 88.7% of TB clients were tested for HIV despite the Department
highlighting the high co-infection rate of TB and HIV.
The
Department seems to be doing poorly with regards to maternal health issues. The
targets relating to delivery in facility, mother postnatal visit within 6 days
and antenatal 1
st
visit before 20 weeks were all not reached. This
is of concern.
The PMTCT
rate has improved from 2.5% to 2% which is a significant improvement, and it
appears the Department is on its way to getting it down to zero. However, other
measures related to infant and child health have not been fully achieved. Those
not achieved include the measles second dose coverage as well as those
indicators related to the Integrated School Health Programme.
Programme 4: Primary Health Care (PHC)
Services
In terms of performance only 14 of the 29 targets (48.3%)
were fully achieved. Seven of the twelve new indicators were achieved.
This potentially represents poor performance
and poor budget expenditure.
The
Department achieved 5 out of the 8 targets related to Primary Health Care
(PHC), including surpassing the target for number of ward based PHC outreach
teams (1063 established, target 750). However, the critical indicator related
to PHC utilisation was not achieved. The Department is considering changing the
targets given the (new) census data. With regards to Malaria, the Department
reports having achieved its targets in percentage format. However, it is of
concern that the number of casesof malaria appears to have increased from 1404
cases in 2012/13 to 4247 cases from local and unknown origin in 2013/14
For
non-communicable diseases (NCD) a number of targets were not fully reached
including the establishment of the National Health Commission, developing a
5-year strategic plan for NCDs, and passing regulations on Graphic Health
Warnings (GHWs) on tobacco products and warning labels on alcohol containers.
Programme 5: Hospitals, Tertiary Health
Services and Human Resource Development
only 5 of 12 targets
set (41.6%) were achieved. No reason for the under-expenditure is given.
Significant (in terms of amount) under-expenditure of R245.1 million was
recorded in the Health Facilities Infrastructure Management sub-programme. The
Department reports that 91 projects were cancelled, 842 projects were in
various stages of construction, 587 projects were in different stages of
planning, 39 projects were handed over, and 409 were in retention stage.
Programme 6: Health Regulation and Compliance
Management
Zero of the 2 targets related to the registration of
medicines were achieved. There is no significant improvement in relation to
Benefit Medical Examination (BME) Services to mineworkers. In fact there is a
decline as in the previous year 12 242 examinations were conducted against a
target of 18000. The target wasreduced significantly from 18000 to 7500 in
2013/14 and the performance has also declined from 12 242 to 10601 medical
examinations conducted.
7.
COMMITTEES
Observations and responseS
7.1
Key sector achievements
·
The introduction of the Human Papilloma
Vaccine (HPV) vaccination in schoolsis a significant public health milestone
and is expected to reduce cervical cancer and reduce associated morbidity and mortality.
·
Launch of a new contraception, the sub-dermal
implant, which will increase the choice of contraceptives already available to South
African women.
·
In reducing mother-to-child transmission of
HIV, the Department has introduced the Fixed Dose Combination (FDC)
antiretroviral drug to all women who tested HIV positive regardless of CD4
count.
·
The Department has secured funding from the
Global Fund for HIV, TB and malaria, which will be used to strengthen TB
services in Correctional Services,peri-mining communities, and to further
decentralise multi-drug-resistant TB services.
·
In order to prevent drug stock-outs at
facility level, the Department has introduced an early warning system as well
as a toll free line to report low stock levels.
·
There are improvements in health outcomes:
the overall life expectancy hasincreased from 60 years in 2012 to 61 years in
2014; child mortality from 56 to 41 per 1000 live births; and infant mortality
from 39 to 27 per 1000 live births.
·
The Departments vacancy rate is at 4.3%
which is below the DPSAs target of 10%.
7.2
Key sector challenges
·
Contracting of General Practitioners (GPs)
for NHI remains a challenge, including the slow uptake from potential GPs attributed
to contractual concerns.
·
Scaling up of HIV prevention interventions
through HIV Counselling and Testing (HCT), Medical Male Circumcision(MMC), integration
of HIV and AIDS and TB and prevention of mother to child transmission (PMTCT)
needs to be strengthened.
·
The CCOD has not submitted annual financial
statements for auditing purposes since 2010/11 and annual reports have not been
submitted to Parliament since 2009/10. This remains a concern asit is a
contravention of the Public Finance Management Act (PFMA) No.1 of 1999.
·
The slow spending of allocated funds for
infrastructure projects and for the National Health Insurance remains a
challenge.
·
The country is facing a dire shortage of health
professionals particularly specialists, GPs and nurses.
·
Training of Emergency Medical Services (EMS)
personnel, improved response time and the shortage of emergency response vehicles
remains a challenge.
·
Neonatal and maternal mortality remains high
in South Africa.
·
There is lack of data on community health
care workers and their coordination thereof.
·
The financial health of the health sector is
of great concern.
·
Wastage of financial resources remains a significant
challenge.
7.3
Technical issues
-
The Committee noted thatthe Departments Annual Performance Plan (APP)has
several indicators with annual targets as opposed to quarterly targets as
required. Thispresents a challenge for the Committee to actually assess
quarterly performance of the Department.
7.4
Governance
and operational issues
·
The Department has again achieved an
unqualified audit report. However, on-going concerns raised with regards to the
lack of reliability of performance data should be acted on as a priority.
·
As in previous years, monitoring of
conditional grants spending should also be prioritised, as well as dealing with
under-expenditure.
·
The continuous non-submission of the Compensation
Commissioner for Occupational Disease (CCODs)annual report and financial
statements remains a concern and urgent intervention must be made in this
regard.
·
Lack of the coordination between the three
spheres of government needs urgent intervention.
·
The movement of port health functions from
provincial departments of health to the national department, without following
legal processeswith regard to consulting the FFC is a concern.
7.5
Financial performance
·
Overall, the department is performing well
with regards to spending on their allocated budget.The Department spent 97.7%
of its adjusted budget.
However, there
are pockets of under-spending.
·
Programme spending levels ranged from 40.1%
to 99.3%. Some programmes under-spent their budget significantly. For example, Programme
2: National Health Insurance, Health Planning and System Enablement under-spent
by 40.1%. In general, under expenditure has decreased compared to the previous
financial year.
·
The Department again performed poorly with
regards spending on conditional grants. Under expenditure of the infrastructure
and national health insurance remains a concern.
·
Expenditure and non-financial information
were not properly monitored for the programmes funded by the various
grants.
-
The AG noted a decline in sector
unauthorised expenditure and fruitless and wasteful expenditure from R855
million to R460 million and R507 million to R289 million respectively.
Noting this improvement the Committee is still concerned about the high
level of irregular, fruitless and wasteful expenditure.
-
In terms of the equitable share of
revenue, 92% of the Departments budget goes to transfers and subsidies,
of which provincial health departments receives the bulk of the share and
yet performance remains poor.
7.6
Service delivery performance
·
The Department reported high
budget expenditure but poor performance against set targets in some programmes.
This is a concern in terms of value for money.
·
The AG noted that one of the root causes of
poor performance in the health sector is attributed to the lack of consequences
for poor performance and transgressions.
·
Performance related to maternal mortality
needs urgent intervention as the maternal mortality rate remains high.
·
In terms of percentage of targets fully met,
overall performance was at 54%. The worst performing programme is programme 3. In
relation to targets set in the APP,programme 3 achieved 33.3% of its targets. Programme
5 which also receives a large budget, only achieved 47% of its targets.
·
Most targets pertaining to infant and child
health were not fully achieved. Those not achieved include the measles second
dose coverage as well as those indicators related to the Integrated School
Health Programmecoverage of Quintile 1 and Quintile 2 schools.
·
The PMTCT rate has
improved from 2.5% to 2% which is a significant improvement, and it appears the
Department is on its way to getting it down to zero.
8.
Recommendations
Having
made the above-mentioned observations, the Committee recommends the following to
the Minister of Health:
8.1
Financial performance
recommendations
-
Ensure that the Department adopts
strategies to ensure improved spending of the infrastructure and National Health
Insurance grant.
-
That the Department improves on
monitoring processes for the Division of Revenue Act framework.
-
The Department should indicate in
detail by way of report, how it is assisting in improving (financial) management
in struggling provinces such as Mpumalanga, Free State, Eastern Cape,
Gauteng and Limpopo.
-
The PHC re-engineering will require
more funding to make it viable.
8.2
Non-financial
recommendations
·
That the Department increases
training and retention of GPs, specialists, nurses, allied health professionals
and administration staff.
·
The Department should ensure
increased funding to train more medical professionals.
·
More health professionals
and non-professionals should be trained in programmes focusingon HIV and AIDS,
STIs, TB and chronic disease management.
·
That the Department ensures
improved managementof multidrug resistant tuberculosis (MDR-TB)through full
implementation of the National Strategic Plan on HIV, STIs and TB 2012-2016.
·
The Department should ensure
that tertiary hospitals are refurbished, equipped and staffed.
·
All health facilities must
be refurbished to comply with norms and standards in order to achieve the
desired ideal facility status.
·
There is an urgentneed to
significantly increase the capacity of nursing colleges. The Department should
ensure that the12 nursing education institutions arealso urgently upgraded.
·
All health facilities must
be migrated to digital and broadband in a timely and cost effective manner.
·
Present a turnaround plan to
address the recurring issue related to quality of data as reported by the
Auditor-General for the past three years.
·
Provide a progress report to
the Committee with regard to the White Paper on NHI and the NHI funding model.
·
Ensure that the Office of
Health Standards Compliance is fully operational in terms of staffing and financial
resources to ensure that it carries out its mandate of enforcing quality of
health care.
·
That the Department develops
a Community Health Care Workers (CHWs) Policy and a plan to integrate
services rendered by CHWs.
·
That the Department reports
to the Committee on the steps taken to address the CCODs non-compliance to the
PFMA.
·
That the Department places
greater emphasis on improving on health outcomes, especially those related to
infant and maternal health.
·
The Department should ensure
that capacity for public health facilities to collect revenue is accelerated.
·
The Department must put
measures and system to minimise irregular, fruitless and wasteful expenditure in
the health sector and there must be consequences for officials responsible for
transgressions.
·
Underspending and simultaneously
asking for money should be discouraged (e.g. Programme 5).
·
That the Department
facilitate and develop the capacity to manufacture condoms in the country.
·
That the capacity to
manufacture medicines must be boosted in order to,amongst other things, bring
down the prices of medicines and make them more accessible. Special emphasis
should be placed on the manufacturing of ARVs in the country.
·
The Department should develop systems and
measures to address challenges related to Emergency Medical Services.
·
In the next financial year, the Department
should ensure that the APPreflects quarterly targets as opposed to annual
targets to enable the Committee to performeffective oversight.
·
The Department should develop systems to
ensure coordination beyond provincial government;that is to include local government.
·
The Department should engage the Financial
and Fiscal Commission as a matter of urgency on the transfer of port health
functions from provincial government and provide the Committee with a progress
report in this regard.
·
The Department should
further consider the recommendations which were not realizedarising from the
previous BRR Report (2012/13),such asincreasing the budget allocation for mental
health services,updating the cancer register etc.
APPRECIATION
The Committee would also like to commend the
good work that is being done by the Department of Health and its entities, in
implementing government policies and in ensuring that health care service
delivery improves in South Africa.
The Department should be commended for
launching the momConnect project which is aimed at reducing maternal mortality using
messaging services to create awarenessamong pregnant womenon available health
services.
Report to
be considered.
Documents
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