ATC161025: Budgetary Review and Recommendations Report of the Portfolio Committee on Health, dated 25 October 2016

Health

THE BUDGETARY REVIEW AND RECOMMENDATIONS REPORT OF THE PORTFOLIO COMMITTEE ON HEALTH, DATED 25 OCTOBER 2016

The Portfolio Committee on Health (the Committee), having assessed the service delivery performance of the Department of Health (the Department) and its Entities, against its mandate and allocated resources, reports as follows:

INTRODUCTION

Section 5 (1) of the Money Bills Amendment Procedures and Related Matters Amendment Act (Act 9 of 2009) 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 (PFMA) (No.1 of 1999);
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.

In October of each year, the Committee must compile a Budgetary Review and Recommendation Report (BRRR) that assesses service delivery performance of the Department and its Entities given available resources; evaluate the effective and efficient use and allocation of resources; and make recommendations.

In order to enable the Committee to take an informed decision on the performance of the Department of Health and its Entities for the financial year 2015/16, the Committee reviewed and analysed the following reports and/or documents:

Annual Performance Plan of the Department of Health (2015/16);
Strategic Plan of the Department of Health (2015 - 2020);
Annual Report of the Department of Health (2015/16);
Annual Report of the South African Medical Research Council (2015/16);
Annual Report of the National Health Laboratory Services (2015/16);
Annual Report of the Council for Medical Schemes (2015/16);
Annual Report of the Office of Health Standards Compliance (2015/16);
2015 Estimates of National Expenditure;
Report of the Auditor General South Africa (2015/16); and
Report of the Financial and Fiscal Commission (2015/16).

1. STRATEGIC OVERVIEW 2015/16

1.1. Strategic Priorities of Government

National Development Plan (Vision-2030)

In executing its mandate, the Department is guided by the National Development Plan (NDP) which forms an integral part of policy plans within all government departments to chart a path to prosperity and improving the lives of all South Africans within various sectors. The NDP highlights the demographics, disease burden, health systems and the social and environmental determinants of health as key areas in the country’s health system that need to be addressed. This would require cross-sector cooperation amongst the various government departments. The priority areas are:

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.

1.1.2 State of the Nation Address 2015

In the February 2015 State of the Nation Address, the President highlighted the following health-related issues:

Operation Phakisa: Scaling Up the Ideal Clinic Initiative is aimed at promoting efficiency, effectiveness and professionalism in clinics and community health centres. The Integrated Clinical Services Management (ICSM), a health systems strengthening model will be a key feature of the Ideal Clinic.
TB campaigns will be conducted at or near strategic areas that have been identified as key drivers of the disease. Correctional centres and communities around mines will be included.
Ketlaphela is a pharmaceutical company that will be established to supply antiretrovirals and other medicines. This will increase local employment, capacity and serve as a cost-saving measure.

1.2 Strategic Priorities of the Department of Health

The Department is committed to improving the health status of South Africans through the prevention of illness, disease and the promotion of healthy lifestyles; and to consistently improve the health care delivery system by focusing on access, equity, efficiency and sustainability.

1.3 Department of Health Annual Performance Plan (APP)

The Department’s five year strategic goals are to:

Prevent disease and reduce its burden and promote health;
Make progress towards universal health coverage through the development of the National Health Insurance (NHI), 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; and
Improve human resources for health by ensuring adequate training and accountability measures.

The key policy priorities of the Department:

Implementation of the National Health Insurance: The White Paper on NHI was published for public comment in December 2015. As part of Phase 1 of the NHI preparatory stage to improve health system performance, interventions to improve service delivery and provision continued during 2015/16 in the NHI pilot districts.

Implementation of Operation Phakisa Ideal Clinic Initiative: In 2015/16 clinics and community health centres were assessed to determine their progress towards being Ideal Clinics. A total of 322 health facilities qualified as Ideal Clinics.

Establishment of the South African Health Products Regulatory Authority (SAHPRA): Legislation establishing SAHPRA has been passed by Parliament and approved by the President. SAHPRA will be established as a Section 3A Public Entity. The establishment of SAHPRA will facilitate effective registration of medicines, as well as regulation and registration of medical equipment and devices.

REPORT OF THE AUDITOR GENERAL OF SOUTH AFRICA

The Department has received an unqualified audit opinion for the past four years. However, the Auditor General (AG) expressed its opinion with emphasis of matter relating to material underspending on the Human Papilloma Virus (HPV) Vaccine Grant to the amount of R41.3 million. Irregular expenditure dropped dramatically from R398.3 million in 2014/15 to R2.9 million in 2015/16. This is largely related to the R394 million paid directly to the National Health Laboratory Services (NHLS). This was in contravention of the Division of Revenue Act, and was subsequently recovered from the NHLS within the same financial year. The AG found zero unauthorised expenditure and zero fruitless and wasteful expenditure for this financial year (R188 000 in 2014/15). The AG also found that there were material issues in relation to the reliability of performance information on selected performance indicators.

Provincial departments – Gauteng, Eastern Cape and Western Cape received unqualified audit opinions. The most notable movements are the regression in audit outcomes for Limpopo and North-West, moving from unqualified to qualified opinions. Irregular expenditure amounted R7.7 billion in the current financial year, up from R6 billion in 2014/15. The main contributors (71%) to irregular expenditure were Mpumalanga (R1.9 million), KwaZulu-Natal (R2.5 billion) and Northern Cape (R1 billion).

All provinces had findings on the reliability of performance information. The reliability of information is primarily caused by information systems used for data collection, as well as manual internal control processes at health facilities. The AG reported that the District Health Information System (DHIS) was found to be inadequate in its current form to deal with the volume of information and necessitated manual registers to be uploaded on a daily and monthly basis, which is inadequate. In addition, poor filing systems and inadequate space at a number of health facilities resulted in the documentation not being available for auditing.

In order to improve audit outcomes, the AG recommends that Department develop and implement a suitable system and related internal controls to report reliable information. This system will be more comprehensive and will support reliable performance reporting under the proposed National Health Insurance (NHI).

Entities – Four of the five entities (South African Medical Research Council, Council Medical Scheme, National Health Laboratory Services and Office of Health Standards Compliance) received unqualified opinions. The Compensation Commissioner for Occupational Diseases did not submit financial statements for the current financial year. All the entities have incurred irregular expenditure. The AG recommends that management needs to strengthen controls over the review and monitoring of compliance with legislation, especially in the area of supply chain management.

REPORT OF THE FINANCIAL AND FISCAL COMMISSION (FFC)

The FFC reported that South Africa has consistently improved against all the key Millennium Development Goals (MDGs) health indicators at the end of 2015, however speed of improvement was not fast enough to meet the MDG goals for infant mortality, child mortality, under-5 and life expectancy. The FFC noted that the NDP targets acknowledge the huge health challenges facing the country and that achieving the key health indicators will take longer than initially predicted.

In a recent study on the efficiency of primary health care provision, the FFC identified the following main challenges in the health sector:

Suboptimal quality of care;
Heavy disease burden;
Input cost pressures;
Growing uninsured population;
The private sector only serves 17% of the population and imbalances in spending have skewed the distribution of health services; and
Wasteful expenditure and inefficiencies in the system such as long waiting times.

The FFC further reported that the Department through its programmes has taken steps to address many of these challenges, although uneven implementation at a provincial level is a key area that requires further attention. The FFC welcomes the Department’s active oversight role over provincial planning by reviewing provincial Annual Performance Plans (APPs) to ensure alignment with national health system priorities. The FFC further welcomes the roll-out of an electronic early detection system at hospitals and primary health care facilities for medicine stock outs.

Access to TB treatment has improved (overachieved by 7%). Fatality rates of children under-5 from malnutrition, pneumonia and diarrhoea declined from 11.6% in 2014/15 to 8.9% in 2015/16. The FFC welcomes attempts to strengthen inter-sectoral coordination such as the Memorandum of Understanding (MOU) with the Department of Agriculture, Forestry and Fisheries.

On challenges facing the sector, the FCC noted that recruitment time was not achieved and still too long at five months. Even though the target was within the Department of Public Service and Administration benchmark, health service provision is a critical health service and any vacancy that remains unfilled over an extended period, compromises adequate health care provision.

The TB treatment success rate is still a concern especially MDR death rates that are at 37% in the Eastern Cape Province and 30% in Mpumalanga Province. Neonatal mortality rate remains an ongoing challenge, increasing from 12.8 per live 1 000 live births in 2014/15 to 13.1 in 2015/16. The FFC expressed concern that the Department had not adequately explained the reasons for this trend.

Many primary health care facilities have not reached ideal status. 322 out of 500 clinics achieved the Ideal Clinic status. Reasons cited include challenges with procuring infrastructure and lack of personnel. The sector is experiencing challenges with maintenance and refurbishment of facilities as only 70% of targets facilities are revamped.

The FFC noted that the spending performance on all health grants have improved in 2015/16 compared to the average spending in the previous three years. Most of the health grants achieved close to 100% spending, with the exception of the NHI Grant (79%) and the new HPV Vaccine Grant (96%). Reasons for the underspending on conditional grants include: delays in the execution of planned projects; procurement challenges; and challenges in appointing specialists in underserved provinces.

On provincial departments, the FFC noted that health audit outcomes have improved since 2008/09, with three provinces receiving unqualified outcomes in 2015/16 while none received a disclaimer or an adverse opinion. Most provinces spent on average close to 100% of their total budget over the period, although some uneven spending is noticeable. KwaZulu-Natal has overspent its budget allocation while Gauteng managed to spend 97% of its allocation. The major cost pressures on provincial health budgets are personnel expenditure in the main, which accounts for nearly two thirds of the total health budget.

According to the FFC, the sector’s allocation of resources is targeting key areas of intervention in line with the NDP. A major concern is addressing the financial and implementation performance of provinces given the significant service delivery role they play in the sector.

PERFORMANCE (FINANCIAL AND SERVICE DELIVERY) OF THE DEPARTMENT 2015/16

This section provides an overview and assessment of reported financial performance of the Department for 2015/16.

Financial performance (2015/16)

For 2015/16, the Department received a budget of R36.3 billion, of which it spent R36.0 billion, which is 99.4% of the available budget, up from 97.8% in 2014/15 financial year. The Department under-spent a total amount of R214.9 million, resulting in under-expenditure of 0.6%. This continues a positive trend of reducing under-expenditure. Table 1, below, provides an overview of expenditure performance in 2015/16 in comparison to 2014/15.

Table1: Programme expenditure 2015/16

Programme

R’000

2015/16

2014/15

Final Appropriation

Actual Expenditure

Over/under expenditure

Final appropriation

Actual expenditure

Over/under expenditure

Administration

443 416

438 501

4 915

397 731

386 476

11 255

National Health Insurance, Health Planning and System Enablement

611 213

553 053

58 160

663 901

325 329

338 572

HIV and AIDS, TB and Maternal, Child and Women’s Health

14 324 860

14 179 001

145 859

13 046 659

13 027 910

18 749

Primary Health Care Services

215 239

212 571

2 668

107 155

102 355

4800

Hospitals, Tertiary Services and Workforce Development

19 057 465

19 056 279

1 021

18 808 853

18 482 048

326 805

Health Regulation and Compliance

1 601 732

1 599 420

2 312

876 271

830 537

45 734

TOTAL

36 253 925

36 038 825

214 935

33 900 570

33 154 655

745 915

During the financial year, a total of R128.8 million was approved for virements. This includes R20.1 million from Compensation of Employees to Capital Expenditure; R18.7 million adjustment in budget allocation within Goods and Services; and R19.1 million in adjustment in budget allocation from Compensation of Employees to Capital Expenditure. No rollovers, unauthorised expenditure, nor fruitless and wasteful expenditure were reported by the Department.

Programme Performance

Programme 1: Administration – The aim of this programme is to provide overall management of the Department and centralised support services. This programme was allocated R443.4 million and spent R438.5 million (98.9%, up from 97.2%, in 2014/15) with an under-expenditure of R4.9 million (2.8 %).

The majority of this programme’s budget was spent on Goods and Services (55.4 up from 43.3%) and Compensation of Employees (43.3%). In terms of payments for capital goods, only R2.3 million from a budget allocation of R5.9 million was spent, representing an under-expenditure of 60.6%. Under-expenditure in this programme has declined in this financial year compared to 2014/15 financial year.

Programme 2: National Health Insurance, Health Planning and Systems Enablement – This programme is aimed at improving access through the development and implementation of policies to achieve universal coverage through integrated health systems planning, improving access to quality health services, reporting, monitoring, evaluation and research. This programme was allocated R611.2 million (down from R663.9 million in 2014/15) with an actual expenditure of R553.1 million. This shows an under-expenditure of R58.2 million or 9.5% which is an improvement from the previous year when there was significant underspending of over 50%.

Programme 3: HIV and AIDS, Tuberculosis, Maternal and Child Health – This programme was allocated R14.3 billion (up from R13.0 billion) and spent R14.2 billion, which is a 98.9% expenditure rate. Under-expenditure amounted to R145.9 million. 98% of this programme’s budget (R14.1 billion) goes to the HIV/AIDS sub-programme.

Spending on other sub-programmes which include TB, as well as maternal mortality, there is high under-expenditure, despite its significantly smaller budget, in comparison to the HIV and AIDS sub-programme.

Programme 4: Primary Health Care (PHC) Services – The budget allocation for this programme declined from R761 million in 2011/12 to R107.2 million in 2014/15, increasing to R215.2 million in 2015/16. The programme shows expenditure of R212.6 million, with under-expenditure of R2.7 million (1.2%).

Programme 5: Hospitals, Tertiary Health Services and Human Resource Development – This programme has spent nearly 100% (R19.0 billion) of its R19.0 billion allocated funds. This is a significant improvement, compared to the 2014/15 financial year when it underspent R326 million or 1.7%.

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. It also aims to diagnose mineworkers affected by occupation related cardio-pulmonary disease. This programme has spent 99.9 % of its appropriated funds, amounting to R1.6 billion which is up from R830.5 million (94.7%) expenditure.

Conditional grants

The Department has improved spending performance on all the health grants in 2015/16. All the health grants achieved 100% with overspending on the Health Facility Revitalisation and the NHI Grants. For Schedule 6 grants, there was underspending on the NHI-Indirect (79%) and HPV Vaccine (96%) Grants.

Service delivery performance (2015/16)

This section provides an overview and assessment of the performance of the Department under each of its six programmes. The assessment focuses particularly on the overarching targets and achievements under each programme and highlights some of the challenges that prevented the Department from achieving these targets.

In terms of service delivery performance, for the financial year 2015/16, the Department achieved 109 (64%) of its 171 targets (Table 2). The Department appears to do better in relation to Programmes 1, and 4 in terms of percentage of targets met, achieving 82% and 73% of the targets set, respectively. For Programmes 2, 3 and 6, more than 60% of targets were achieved. However, of concern is that for Programme 5 only 45% of the targets were fully achieved, down from 71% in the previous financial year

Table 2: Programme Performance Overview

Programme	Number of targets	Achieved	Not fully achieved	Percentage Achieved
Administration	11	9	2	82%
National Health Insurance, Health Planning and System Enablement	30	19	11	63%
HIV and AIDS, TB and Maternal, Child and Women’s Health	57	37	20	65%
Primary Health Care Services	26	19	7	73%
Hospitals, Tertiary Services and Workforce Development	29	13	16	45%
Health Regulation and Compliance	18	12	6	72%
Total	171	109	62	64%

Programme Performance

Programme 1: Administration

Nine (9) out of 11 targets (82% up from 80%) were achieved in the financial year under review. It should be noted that the Department’s targets increased from 6 in 2012/13 to 11 in 2015/16. There were three new targets which included the National Litigation Strategy which was adopted from the Medico Litigation Summit Declaration, as well as keeping vacancy rate below 5% (achieved 3.5%).

The Department maintained its targets of achieving an unqualified audit opinion from the AG, as well as having three provinces achieving the same. This financial year, the Eastern Cape and Gauteng provincial departments improved its audit outcomes moving from qualified to unqualified opinion. Limpopo and North West provinces regressed to qualified audits.

The target that was again not achieved under this programme included turnaround time for recruitment processes.

Programme 2: National Health Insurance, Health Planning and Systems Enablement

Nineteen (19) of the 30 targets (74%) were achieved. Whilst last year, 12 of the indicators were new indicators, this year 14 of the indicators are new. This reflects the dynamic nature of implementing the NHI programme. The post of Registrar of the Council for Traditional Practitioners Council is vacant and will only be filled in 2016/17 financial year.

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

The Department fully achieved 37 out of 57 targets (last financial year 15 out of 31 targets) which represents 65% of planned targets.

The Department is improving with regard to maternal health issues. There is a significant improvement related to reducing maternal mortality ratio having achieved 119.1 per 100 000 (target 120 per 100 000 live births). In addition, 61.2% of pregnant women visited health facilities before 20 weeks, exceeding the target of 60%.

In terms of HIV and AIDS, 464 731 medical male circumcisions (MMC) were conducted, compared to 508 404 in 2014/15 (against a target of 1.6 million). The target of 10 million HIV tests done, was achieved, with 11.9 million HIV tests conducted, up from 9.6 million in the 2014/15 financial year. South Africa is reported to have the largest ARV programme in the world, with 3.4 million people on ARVs though the target of 3.8 million was not reached. Prevention of mother to child transmission (PMTCT) rate remains at 1.5%.

There has also been improvement in measles eradication with regard to 1st dose drop-out rate (-11.8%, target of 2.1%) and measles 2nd dose coverage (84.8%, target of 82.8%). However, the HPV 2nd dose coverage target was not reached (63.8%, target of 80%).

With regard to TB, only four of the 10 consolidated targets have been achieved. This includes the TB death rate which is at 4.4%, an improvement on 2014/15 (4.8%). However, MDR TB client death rate was at 22.3% (target of 15%). In terms of the direct targets; screening of inmates is at +140%, and the percentage of mines providing routine TB screening was at 97.3%. However, the target relating to peri-mining districts screening for TB was not met (183 631 screenings against a target of 462 000)

Programme 4: Primary Health Care (PHC) Services

Nineteen (19) out of 26 targets or 73% (an improvement on 2014/15 financial year when 15 of the 23 targets or 65%) were fully achieved.

The Department achieved 1 588 health care facilities with functional clinic committees (target of 1000). Only 322 Ideal Clinics against a target of 500 was achieved. On expansion of municipal ward-based outreach team programme, 2 590 ward-based outreach teams were reported functional (target of 2000). With regard to malaria, the Department achieved 0.15 cases per 1000 population at risk (target of 0.2 malaria cases per 1000).

For NCDs, the Department reports conducting a National guide for healthy meal provision in the workplace. . Whilst a target of 8 million people screened for high blood pressure was set, more than 19 million people were screened. 12.2 million clients were screened for high blood glucose levels (target of 8 million). The Tobacco Act was not amended as planned. The testing of salt content in foods was not done due to not having the requisite chemicals.

All the mental health indicators were achieved. This includes screening (57%, target 28%), treatment for mental health (31%, target of 28%) and percentage of mental health inpatient units attached to a designated district and regional hospitals (16%, target of 16%).The Framework and Model for Rehabilitation and Disability Services was not resourced. Only 1 064 cataract operations were conducted (target of 1 500).

Programme 5: Hospitals, Tertiary Health Services and Human Resource Development

The number of targets for this programme has been increased from seven to 29. Only 13 of the 29 targets or 41% have been achieved (in 2014/15 only 5 of 7 targets set or 71%).

None of the central hospitals have been granted full delegated authority (target of10). None of the 4 tertiary hospitals could provide the full package of Tertiary 1 services. None of the targeted 13 hospitals obtained full compliance with the National Core Standards.

As planned, 198 facilities were maintained, repaired and/or refurbished in the NHI districts. However, only 217 of the 310 facilities were maintained, repaired and /or refurbished outside the NHI districts. 49 Clinics, and Community Health Centres (CHCs) were constructed or revitalised which is 14 more than the target of 35. 78 doctor consulting rooms were constructed and comply with the gazetted infrastructure Norms and Standards, against a target of 37.

A National Policy for Nursing Education and Training was developed and presented to the National Health Council, however the draft provincial Nursing structures were not tabled as planned.

There was a delay in publishing the Emergency Medical Service (EMS) Regulations in Mass gatherings. A monitoring system was developed to measure turnaround time of tests conducted at Forensic Chemistry Laboratories. However, the regulations and scope of practice guidelines for the rendering of Forensic Pathology Services were not published for comment nor finalised. 38 additional health facilities (target 60) were designated to render services for the management of sexual and related offences.

Programme 6: Health Regulation and Compliance Management

The number of targets has increased from 12 to 18, of which 12 targets were achieved, or 67% (in 2014/15, seven of the 12 targets or 58% were achieved).

Parliament passed the South African Health Product Regulatory Authority (SAHPRA) Bill [B6 – 2014] which was assented to by the President on 24 December 2015, and gazetted on 7 January 2016. The transitional plan to migrate the Medicines Control Council (MCC) to SAHPRA was developed.

The Department held consultations and facilitated policy inputs on integration of the Medical Bureau for Occupational Diseases (MBOD), Compensation Commissioner for Occupational Diseases (CCOD) and National Institute for Occupational Health (NIOH). The targeted number of applications certified at the Medical Bureau for Occupational Diseases (MBOD), and CCOD were not reached due to labour stoppages.

The one-stop service centres were not functional in two districts of the Northern Cape and Limpopo. National Public Health Institutes of South Africa (NAPHISA) was gazetted. The regulations on complementary medicines (CAMS) were not finalised. The Memorandum of Understanding (MOU) with the Department of Agriculture, Forestry and Fisheries was not finalised.

PERFORMANCE (FINANCIAL AND SERVICE DELIVERY) OF ENTITIES

SOUTH AFRICAN MEDICAL RESEARCH COUNCIL (SAMRC)

The South African Medical Research Council Act, No. 58 of 1991(as amended) mandates the South African Medical Research Council (SAMRC) to amongst others conduct ‘research, development and technology transfer, to promote the improvement of the health and quality of life of the population of the Republic.’

The section below, highlights the actual performance against the planned objectives. Importantly, during this reporting period, SAMRC reported on eight (8) strategic objectives and 10 targets which eight of them have been achieved. Table 3 below shows the performance for 2015/16.

Table 3: Performance on four objectives

STRATEGIC OBJECTIVE	PERFORMANCE TARGET 2015/16	ACTUAL PERFORMANCE 2015/16
To ensure good governance, effective administration and compliance with government regulations	Compliance with legislative prescripts	Clean audit
	Percentage of the 2015/16 government allocated budget spent on administration	Target was 25%, achieved 19%. Target not achieved
To produce and disseminate new scientific findings and knowledge on health	Number of published journal articles, book chapters and books by the SAMRC/MRC/MRCSA researchers within intramural research units	680 journal articles, book chapters and books were published, exceeding the 450 target
	Number of published journal articles, book chapters and books by the SAMRC/MRC/MRCSA grant holders	Target was 115, achieved 101. Target not achieved
To promote scientific excellence and the reputation of South African health research	Number of published indexed high-impact factor journal articles with an SAMRC/MRC/MRCSA affiliated author	Target was 12, significant over-achievement of 602
To provide leadership in the generation of new knowledge in health	Number of journal articles where the first author and/or the last author is affiliated to the SAMRC/MRC/MRCSA	Target was 165, instead 417 journal articles were published
To facilitate the translation of the SAMRC research findings into health policies and practices	Number of new local/international policies and guidelines that reference SAMRC research	The target of 4 was met
To provide funding for conducting health research	Number of research grants awarded by the SAMRC	112 grants were awarded exceeding the target of 110
To provide funding for health research innovation and technology development	Number of innovation and technology projects funded by the SAMRC to develop new diagnostics, devices, vaccines and therapeutics	34 projects were funded by the SAMRC. Exceeding the target of 30 projects
To enhance the long- term sustainability of health research in South Africa by providing funding for the next generation of health researchers	Number of SAMRC bursaries/scholarships/ Fellowships provided for post-graduate study	Target of 65 bursaries/ scholarships to be issued. By end of the reporting period, 66 were issued

Financial Performance

Table 4: Statement of financial performance

	2015	2016
	R	R
Revenue	667 406 256	849 722 349
Other income	8 177 642	10 700 648
Operating expenses	(697 751 306)	(823 070 915)
Operating deficit	(22 167 408)	(37 352 082)
Investment income	19 137 560	25 947 888
Fair value adjustments	651 514	1 266 456
Finance costs	(1 370 197)	(1 294 175)
(Deficit) Surplus for the year	(3 748 531)	60 739 339

Total revenue increased by 27.3% from R667.4 million in 2014/15 to R849.7 million in 2015/16. This trend was mainly due to an increase in government grants of 39.8% (R547.3 million) and an increase in contract income of 9.6% (R302.4 million).

Taken into account all income received for 2015/16, the entity experienced an operational surplus of R37.4 million compared to R22.2 million in 2014/15.

Operating expenses for 2015/16 increased by 18.0% totalled R823 million in line with the increase in income.

The entity’s accumulated surplus of R245.9 million assisted with off-setting the final surplus for the year of R60.7 million. By the end the financial year, the entity had accumulated reserves of R303.9 million.

Auditor General’s opinion

The SAMRC obtained a clean audit for four consecutive years, covering 2010/11 to 2015/16.

The AG did not identify any material findings on the usefulness and reliability of reported performance information for selected objectives.

The AG did not identify any significant deficiencies in internal control.

NATIONAL HEALTH LABORATORY SERVICES (NHLS)

The National Health Laboratory Service (NHLS) is established through the National Health Laboratory Service Act, 2000 (Act No. 37 of 2000). This Act mandates the NHLS to provide cost- effective and efficient health laboratory services to all public healthcare providers and any private healthcare provider that requests such services. The NHLS is also mandated to support health research and provide training for health science education. Over the years, the NHLS gradually became the main partner of clinical services to the national and provincial departments of health through its strategically located offices.

Since its establishment in 2001, the NHLS has grown to become the largest diagnostic pathology service in South Africa. To date, it has a physical presence in all provinces, comprising of about 288 laboratories with over 6 700 staff members serving approximately 80% of the South Africa’s population.

Key Performance Indicators (KPIs)

Table 5 below shows the performance for 2015/16.

Table 5: Performance on Strategic Objectives

Performance Indicator	Annual Target for 2015/16	Actual Target for 2015/16	Comments
Strategic Objective: Ensure effective financial management and accountability through improved audit outcomes.
Audit opinion from the Auditor-General	Unqualified audit opinion	Achieved	Unqualified
Ensure efficient and responsive resource services through efficient recruitment processes	Average turnaround times for recruitment	Reduce recruitment turnaround to 4–5 months	Not achieved
Enhance support for communicable disease prevention, surveillance and control for national and provincial government	Establishment of NICD provincial epidemiologist who will work with provincial communicable Diseases Directorates	Presence of NICD epidemiologist in five provinces	Not achieved
Strategic objective: To provide specialised Occupational Health and Safety (OHS) services to prevent occupational disease and injury and promote worker health
Number of OHS assessments conducted	31	24	Not Achieved
Number of laboratory tests performed	13 000	10 135	Not achieved
Strategic objective: To strengthen human resources for OHS by contributing to the teaching and training of doctors, nurses, scientists, hygienists and occupational health practitioners
Number of medical scientists who completed training	6	1	Not achieved
Coding training courses per year for specialist coders	One introductory and one advanced training course per year for coders	Not achieved	Not achieved
To improve total turnaround time (TAT) for TB Microscopy TAT – TB Microscopy	95%	91%	Not achieved
Strategic Objective: To increase the number of NHLS laboratories that are accredited
No. of laboratories accredited (academic)	88%	84%	Not achieved
Strategic Objective: To develop and implement software systems
Enterprise Architecture (EA) developed and implemented	Architecture principles and Guidelines developed and approved.	Project was put on hold	Not achieved

Financial Performance

Table 6: Statement of financial performance

	2015/16	2014/15
	R’000	R’000
Revenue	6 422 137	5 691 436
Cost of Sales	(4 824 775)	(4 219 638)
Gross surplus	1 597 362	1 471 798
Other income	329 963	266 489
Operating expenses	(1 840 922)	(1 725 943)
Operating surplus	86 403	12 344
Investment revenue	193 172	166 223
Finance costs	(147)	(1 655)
Surplus for the year	279 428	176 912

During this reporting period (2015/16), the NHLS generated a surplus for the year amounting to R279 million compared to R176 million in 2014/15 reporting period. The revenue grew from R5.6 billion to R6.4 billion. More specifically, its revenue from provincial departments amounted to 13% of total revenue generated during the reporting period. The production costs including direct labour and material grew from R4.2 billion to R4.8 billion. This equated to a 14% increase, largely as a result of increases in volume, price increase and fluctuation in the exchange rate. Importantly, the NHLS reports that a bad debt provision for KwaZulu-Natal of R738 million has contributed largely to the R734 million net variance between actual and budget due to the continued payment of a monthly flat rate.

Table 7 below shows the financial position comprising assets, non-current assets, current liabilities and non-current liabilities as at the end of the reporting period.

Table 7: Statement of Financial Position

	2015/16	2014/15
	R’000	R’000
Current Assets	3 989 490	3 594 114
Non-current Assets	551 801	519 357
Total Assets	4 541 291	4 113 471
Current Liabilities	1 626 136	1 625 721
Non-Current Liabilities	100 116	854140
Total Liabilities	2 628 252	2 479 861
Net assets	1 913 039	1 633 610
On cash flow, the NHLS received R5.9 billion in income. Of the R5.9 billion, R2.5 billion was utilised for personnel costs and R3.2 billion spent on goods and services.

Report of independent auditors on the NHLS

The independent auditors gave the NHLS an unqualified audit opinion.

The focus was on determining the usefulness and reliability of the reported performance information of Programme 3: National Institute for Occupational Health and Programme 4: Laboratory Service. The following were highlighted on the two programmes:

The auditing of the performance information found that 43% and 45% of the target indicators for Programme 3 and 4, respectively, were not well defined as required by the Framework for Managing Programme Performance Information.

The Independent auditors reported that the NHLS incurred irregular expenditure amounting to R28.9 million.

COUNCIL FOR MEDICAL SCHEMES (CMS)

The Council for Medical Schemes (CMS) is established in terms of the Medical Schemes Act (131 of 1998) as a public entity mandated to regulate the medical schemes industry in South Africa. The main objective is to safeguard the interests of members, thereby, promoting fair and equitable access to private health financing. The CMS’ governance structure is through the board, appointed by the Minister of Health. The board consists of 10 members comprising, amongst others, a Non-Executive Chairperson, and Deputy Chairperson.

Its mission is to regulate the medical schemes industry in a fair and transparent manner including:

Advising the Minister of Health on appropriate regulatory and policy interventions.
Resolving complaints by members of the public.
Ensuring compliance with the Medical Schemes Act (No.131 of 1998).
Informing the public about their rights, obligations and other matters with regard to medical schemes.
Ensuring improved management and governance of medical schemes.

The CMS, as an organ of the state and a regulatory authority is expected to discharge its legislative mandate in a coherent manner.

The CMS reported a significant decline in the number of open schemes, from 41 in 2006 and 2007 to 23 in 2015. Another decline is observed in restricted schemes from 83 in 2006 to 60 in 2015. There has been a stronger decline in open schemes than restricted schemes. Though in 2014/15 and 2015/16 financial years, the numbers in both open and restricted schemes remained stable, at 23 and 60 respectively.

Table 9 highlights performance of the CMS in 2015/16.

Table 9: Highlights of some of the CMS Performance Indicators

Performance Indicator

Target set in 2015/16

Target reported in 2015/16

Variation/inconsistencies

Strategic Objective: Provision of strategic leadership to the organisation and effective regulation of the industry

Ensure that 100% of all quarterly performance indicators are met or exceeded by the units, per year

100%

85%

Not achieved

(CMS reports partial achievement of this target)

Strategic Objective: Recruitment and talent management

Minimise staff turnover rate and

maintain a turnover rate of 5% or less, annually

Not Achieved

(CMS reports that this was due to terminations,

non-renewal of contract, and non-performance)

Turnaround time to fill a vacancy

(the period of 90 days is required to fill a vacancy that exists during the year)

90 days

There are about 9 posts are reported to be vacant and have taken more than 90 days to fill

Strategic Objective: Performance is maximised

Percentage of employees undergoing training in accordance with a personal development plan, annually

70%

67%

Not Achieved

(CMS attributed the failure to resignations)

Strategic Objective: Support universal access through recommendations made to the National Health Insurance MAC committee

Number of National Health Insurance (NHI) reports submitted to Ministerial Advisory Committee (MAC), per year

Not achieved

Industry Performance Information

By the end of the 2015/16 financial year, the CMS had an estimated 83 registered medical aid schemes with approximately 8.8 million beneficiaries. By end of March 2016, the medical schemes had a total annual contribution of R151.6 billion, up from R124.1 billion the previous year.

During this reporting period, the payments to specialists such as anaesthetists, medical specialists, pathology services, radiology services and surgical specialists amounted to R32.5 billion. This translated into 23.5% of total private healthcare benefits paid in 2015. This amount shows an increase by 10.90% from R29.3 billion paid the previous year. The benefits paid to anaesthetists averaged R2 682.18 per visit. This cost is an increase of 7.12% from 2014 figures (which was R2 503.97), and represents the highest average paid per incident in the industry. A total of R9.1 billion (equal to 6.6% of the total healthcare benefits) was paid for medical specialists during the same reporting period.

Complaints adjudicated

During the reporting period, the CMS received 5 089 new complaints compared to the 3 876 received in 2014/15. This represents an increase of 1 213 (12%).The total number of complaints resolved in 2015, including those carried forward from the previous year, was 7 251. The table below shows the service delivery areas from which complaints originated.

Table 10: Complaints adjudicated

Complaint received from	Number of Complaints received
Open medical schemes	3 527
Restricted medical schemes	2 261
Brokers	6
TOTAL	5 794

Of all the complaints received and resolved, the significant number of valid complaints of about 1 771 were related to administrative issues, while 1 524 were valid complaints and related to clinical aspects. About 348 valid complainants were related to legal and or non-compliance matter. The total complaints considered to be invalid were 2 151.

Financial Performance

Table 11: Statement of financial performance

	2015/16	2014/15
	R’000	R’000
Revenue	129 952	120 095
Administrative expenses	(20 448)	(17 389)
Audit fees	(1 952)	(1 897)
Operating expenses	(15 862)	(17 931)
Staff costs	(80 689)	(77 108)
Depreciation and amortisation	(4 019)	(3 772)
Forensic investigation	-	(7 257)
Loss on disposal of assets	(254)	(25)
Operating (deficit)/surplus	6 728	(5 284)
Investment revenue	2 836	2 209
(Deficit)/surplus for the year	564	(3 075)

During this reporting period, the CMS had a total revenue of R129.9 million derived from goods and services such as Accreditation fees, levies, registration and sundry income.

The operating expenses for the reporting period, amounted to R15.8 million, which is slightly less compared to the total R17.9 million incurred in 2014/15 financial year. Considering all income received, the entity experienced an operational surplus of R6.7 million compare to R5.2 million operational deficit experienced in 2014/15 reporting period.

Auditor General’s Opinion

The CMS obtained an unqualified report with no findings.
In 2015/16, the irregular expenditure amounted to R983 000 from R8.4 million in 2014/15. The application for condonation of R983 000has been submitted to National Treasury. The CMS incurred this irregular expenditure from not following the proper legislative procurement processes as prescribed by National Treasury.

OFFICE OF HEALTH STANDARDS COMPLIANCE (OHSC)

The National Health Amendment Act, 2013 (Act No. 12 of 2013) establishes the Office of Health Standards Compliance (OHSC). This entity is under the oversight and leadership of a Board appointed by the Minister of Health under the same Act. Furthermore, the entity is also listed by the Minister of Finance as a public entity under Schedule 3A and is governed through the Public Finance Management Act No.1 of 1999) to ensure safe-keeping and proper management of public funds.

The mandate of the entity emanates from the Act which is to protect and promote the health and safety of users of health services in South Africa. In line with the South African Constitution and Batho Pele Principles, its mandate implies that the entity should:

Act as the champion of the public and of healthcare users so as to restore credibility and trust;
Respect healthcare users and their families as well as healthcare personnel;
Push for effectiveness in achieving health system change and social impact;
Strive for excellence, innovation and efficiency in its operations;
Be truthful, fair and committed to intellectual honesty;
Practice transparency, but respect confidentiality;
Achieve the highest standards of ethical behaviour, teamwork and collaboration; and
Promote professionalism, compassion, diversity and social responsibility.

Organisational Environment

The OHSC is anticipating the promulgation of the norms and standards and the procedural regulations which will clarify the obligations on the entity. The proposed norms and standards and procedural regulations were refined to include public comments and submitted for final promulgation by the Minister.

Key strengths and successes of the OHSC as an independent regulator, is that the work of the entity is documented and more objective and focused. Recruitment of skilled staff for its compliance inspectorate and complaints management divisions.

Challenges include creating new structures and systems and meeting public expectations for immediate impact as well as vacancies of key senior management positions including the CEO position.

Performance Information

In terms of performance, for the financial year 2015/16, the OHSC fully achieved 9 (45%) of its 20 targets (Table 1) in its first year of operation. The OHSC appears to do well in relation to Programmes 3 in terms of percentage of targets met achieving 100% of the targets set. All targets for Programme 4 were not achieved.

Table 12: Programme Performance Overview

Programme	Number of targets	Fully achieved	% Fully achieved	Partially achieved
Office of the CEO	6	3	50	-
Corporate Services	3	2	67	1
Compliance Inspectorate	3	3	100	-
Complaints Management (and Ombud)	4	-	0	2
Health Standards Design, Analysis and Support	4	1	25	1
Total	20	9	45	4

Office of the CEO – This programme exceeded its planned target of creating public awareness about the OHSC. Targets achieved are in relation to media and communication events and campaigns; signed two Memoranda of Agreement (MoAs) to second staff to assist the OHSC during its development stage; and issued two inspection reports.

The three targets that were not achieved under this programme include setting up systems for: certification of compliant establishments; timely enforcement action; and communication and monitoring of Ombud recommendations.

Corporate Services – In ensuring that the Office is functional and suitably staffed, 92% of funded posts were filled, 32% higher than the set target of 60%. The OHSC has obtained an unqualified audit opinion for the financial year under review.

Compliance Inspectorate – All targets under this programme were achieved. These pertained to rate of health establishments (HEs) inspected annually by the OHSC; non-compliant HEs subjected to re-inspection or review within six months; and approval of procedures for accreditation of inspections.

Complaints Management (and Ombud) – Two of the four targets were partially achieved and two were fully achieved. Targets not achieved relates to delays in setting up the Call Centre and ensuring that 50% of complaints lodged are managed and resolved within six months (instead 45% complaints were resolved within six months). Targets partially achieved were related to putting systems in place for receiving and managing complaints as well as investigation of complaints.

Health Standards Design, Analysis and Support – Only one of the four targets under this programme was achieved. Eight provincial departments of health received guidance on compliance with norms and standards. Targets on setting up systems for reporting on indicators of risks to compliance and selection development or periodic review of norms and standards for different types of health establishments were not achieved.

Financial Performance

The OHSC received the full transfer of its government grant for 2015/16 amounting to R88.9 million and managed to spend 75% (R67.4 million) of its allocation (Table 2). The OHSC under-spent a total amount of R21.5 million, resulting in under-expenditure of 25%. Underspending was mainly concentrated in Programme 4 (Complaints Management (and Ombud).

Table 13: Programme expenditure 2015/16

Programme	Final Appropriation	Actual Expenditure	Over/Under Expenditure	% Spent
R’000	Final Appropriation	Actual Expenditure	Over/Under Expenditure	% Spent
Office of the CEO	11 048	5 874	5 174	53.2
Corporate Services	25 611	23 380	2 230	91.3
Compliance Inspectorate	35 501	30 492	4 008	85.9
Complaints Management (and Ombud)	9 568	3 498	6 069	36.6
Health Standards Design, Analysis and Support	8 177	4 154	4 022	50.8
Total	89 906	67 400	21 505	75.0

Auditor General’s Opinion

The OHSC obtained an unqualified audit opinion for the financial year under review.

The AG did not identify any material findings on the usefulness and reliability of the performance information for selected programmes.

On procurement processes, the AG made a finding on one contract with a transaction value above R500 000 which was procured without inviting competitive bids as required by Treasury Regulations 16A6.1.

COMPENSATION COMMISSIONER FOR OCCUPATIONAL DISEASES (CCOD)

The CCOD did not submit annual financial statements for the 2015/16. The position for the Commissioner was filled, however, the position of Chief Financial Officer (CFO) remained vacant throughout the financial year.

OBSERVATIONS ON Provincial health departments

This section provides an overview of observations made by the Committee following briefings held with the nine provincial departments on the 16th-18th August 2016. The purpose of these engagements was to enable discussions with provincial departments and establish the state of health services in the country. Matters that were carefully considered included the following:

Human resources with emphasis on Community Health Workers (CHWs);
Infrastructure projects;
Supply Chain and financial management including issues raised by the Auditor General; and
Implementation of the ideal clinic initiative.

6.1. Human resources with emphasis on Community Health Workers

Key issues highlighted:

In almost all the provincial departments, with the exception of North West, KwaZulu-Natal and Eastern Cape, CHWs are employed through non-profit organisations (NPOs). The NPOs receive funding from provincial departments to manage the CHWs in terms of payments of stipends and provision of tools of trade;
Payment of stipends is not standard (ranging from R1200 to R2 500 per month) across the nine provincial departments and not in line with the Ministerial Determination: Expanded Public Works Programmes;
The total budget allocation to CHWs is not clear in some provincial departments;
Some of the appointed NPOs fail to deliver on their mandate and misuse the funds (Limpopo) leading to late payments of CHWs;
The categorization of CHWs differ by province;
Not all provincial departments have the actual number of CHWs. Most provincial departments have not conducted an audit to determine the actual number of CHWs;
Only two provincial departments (North West and Northern Cape) have reported to have registered CHWs for Unemployment Insurance Fund (UIF) with the Department of Labour;
With regards to permanent employment of CHWs, most provincial departments are not in a position to absorb the CHWs on a permanent basis pending clarity with the national department of health;
Accredited training of CHWs is lacking in most provincial departments;
Some provincial departments (Northern Cape and KZN) have integrated CHWs into the Ward-Based Primary Health Care Outreach Teams; and
Monitoring the work of CHWs differs by province. Only Gauteng reported to be in a process of procuring specific gadgets that will assist them in monitoring the work of CHWs.

Infrastructure projects

Key challenges outlined on infrastructure projects were as follows:

Delays in the awarding of contracts was prevalent in most provincial departments;
Contractor-attributed delays, leading to extension of projects;
Poor performance of contractors;
Lack of proper contract management;
Difficulty in attracting necessary skills e.g. built environment professionals;
Insufficient maintenance budget (North West) and reduction of infrastructure budget (Western Cape); and
Lack of accurate infrastructure commitment register (Free State and Mpumalanga).

Financial management and supply chain management

Three provincial departments had unqualified audit opinions for the 2015/16 financial year; Gauteng, Eastern Cape and Western Cape. Gauteng and Eastern Cape were commended for improving their audit outcomes, moving from qualified to unqualified audit outcomes. Gauteng has however incurred irregular expenditure amounting to R493 million for 2015/16 from R335 million in 2014/15. Areas of financial concerns for the Eastern Cape was related to the exponential increase in medico legal claims, from R390 million in 2012/13 to R6.9 billion in 2015/16. The Eastern Cape department has developed a strategy to address medico legal claims which are mainly attributed to maternal and child health.

The Western Cape received an unqualified audit opinion, however faces challenges related to medico legal claims, having 218 active medical negligence claims with 350 claims notified but not in court.

North West and Limpopo have regressed from unqualified to qualified audit outcomes. North West has broken a 5-year trend of unqualified audit outcome. Areas of qualification for the North West was mainly attributed to irregular and fruitless and wasteful expenditure; accruals (from R981 million to R657 million); and uncertainties with regard to the number and value of medico-legal claims. Limpopo’s areas of qualification include assets, accrued departmental revenue and commuted overtime.

KwaZulu-Natal received a qualified audit opinion. The qualification issues were similar to the previous financial year (2014/15) with an addition of management of commuted overtime. Other areas relate to irregular expenditure and asset management. KZN incurred irregular expenditure amounting to R2.5 billion.

In addition to receiving qualified audit opinions, the financial health of three provincial departments is in a concerning state, these are; Free State, Mpumalanga and Northern Cape.

Free State reported a continuous increase in accruals which leads to inadequate budget for the department. Furthermore, the Free State was qualified on irregular expenditure since 2007/2008. Mpumalanga has incurred irregular expenditure amounting to R1 billion in 2015/16. Northern Cape was qualified on six areas, irregular expenditure (R1.9 billion), assets, accruals and payables, accrued departmental revenue and commitments.

There are supply chain management and procurement inefficiencies in all the provincial departments. Supply chain management inefficiencies highlighted includes the following:

Poor contract management;
Lack of controls for assets and inventory;
Slow-down of procurement processes leading to increases in transaction costs;
Lack of monitoring mechanisms in order to identify areas of non-compliance;
Insufficient Standard Operating Procedures and training on Supply Chain Management and procurement;
Procurement activities conducted through contracts arranged at provincial level leading to long turnaround times;
Misalignment of plans with budget; and
Unavailability of appointed members for Bid Committees.

Implementation of the Ideal Clinic Initiative

In the North West, none of the districts in the province have facilities that achieved the Ideal Clinic status. Eastern Cape, Mpumalanga, Limpopo, KwaZulu-Natal had 15, 19, 34 and 11 clinics that scored 80% and above, respectively. The Western Cape has only begun to implement the initiative in April 2016.

Challenges highlighted include:

Budget constraints to support the implementation of this initiative;
Procurement of medical equipment and tracer drugs remains a challenge;
Lack of running water and generators;
Signage and notices in PHC facilities not implemented;
Developmental partners not fully involved in the Ideal Clinic initiative;
Health Patient Registration System not implemented in most primary health care facilities;
Challenges with governance structures in some departments which hamper the effective functioning of Clinic Committees;
Staffing levels not in line with WISN report recommendations;
Inadequate operational managers to drive the project; and
Integrated clinical services management (ICSM) protocols and guidelines not available or implemented at most PHC facilities.

COMMITTEE OBSERVATIONS AND RESPONSES

7.1. Department

Having considered the 2015/16 annual report of the Department of Health, the Committee made the following observations with respect to financial and service delivery performance:

The Department has again achieved an unqualified audit report for the fifth consecutive year. The Committee was however concerned that the Department is not moving towards a clean audit opinion.
Three provincial departments also received unqualified audit opinions (Eastern Cape, Gauteng and Western Cape).
The Committee noted with concern the regressions in audit outcomes of Limpopo and North-West, moving from unqualified to qualified audit opinions.
Most provinces spent close to 100% of their total budget in 2015/16 financial year.
Overall, the Department is performing well with regards to spending of the allocated budget. The Department spent 99.4% of its budget. However, Programme 2 under-spent by 9.5%.
The Committee noted with concern the Department’s high budget expenditure (99.4%) but poor performance against set targets (64%).
The Committee noted with great concern the significant amount of irregular expenditure in the public health sector amounting to R7.7 billion.
Under-expenditure on the HPV Vaccine Grant to the amount of R41.3 million was noted as a concern.
In terms of percentage of targets fully met, overall performance was at 64%. The worst performing programme in this regard is Programme 5, which only achieved 45% of its targets yet spent 100% of its allocated budget.
The lack of reliability of performance information from provinces remains a concern.
Neonatal mortality rate do not show a downward trend, instead it rose from 12.8 per 1000 live births in 2014/15 to 13.1 per 1000 live births between 2015/16.
The Department has enrolled 396 567 patients on the Central Chronic Medicine Dispensing and Distribution (CCMDD) programme. This initiative is commended by the Committee as it is aimed at reducing the need for patients to wait in long queues in facilities for the collection of their chronic medicines.
There is a need for the Department in conjunction with National Treasury, to honour its commitment to support the operational functioning of the Nelson Mandela Children’s Hospital.

Entities

Having considered the 2015/16 annual reports of Entities, the Committee made the following observations with respect to financial and service delivery performance:

South African Medical Research Council (SAMRC)

The baseline allocation for the SAMRC will decline over the MTEF, this is a serious concern as the entity will not be able to meet its obligation of leading research to inform health policies.
The Committee observed that the SAMRC experienced a number of resignations during the period under review.
The Committee remains concerned about the high prevalence of eosophageal cancer in the Eastern Cape.

National Health Laboratory Services

The Committee noted that most targets set by the NHLS were not achieved.
The Committee noted with concern the dwindling numbers of medical scientists training under the NHLS.
The Committee noted that the NHLS continue to experience high failure rates of pathologist due to failing the board exam.
The Committee was concerned about the funding model of the NHLS.

Council for Medical Schemes

The Committee noted that many targets set for 2015/16 were not achieved.
The Committee was concerned about how the CMS fulfills its mandate in terms of protecting members of the public, especially in light of the substantial escalation of monthly contributions.

Office of Health Standards Compliance

The Committee raised a concern on lodging of complaints with the OHSC in rural areas.
The delays in the appointment of the CEO was a concern to the Committee.

Compensation Commissioner for Occupational Diseases

The CCOD’s continuous non-submission of annual reports and financial statements remains a concern. This is a concern as it reflects a lack of accountability as to how the entity is spending its allocated finances and how this is affecting the compensation of ex-mine workers.
The CCOD committed to table its report at the end of October 2016.

Provincial Health Departments

There are inconsistencies amongst provincial departments regarding the recruitment, compensation and conditions of service for CHWs as well as clear integration into WBOTs.
Many of the primary health care facilities did not achieve the ideal clinic status.
Medico legal claims against provincial departments continue to rise.
There are supply chain management and procurement inefficiencies in most of the provincial departments.
Financial management remains a challenge in many of the provincial departments. Continuous areas of concerns relate to accruals and irregular expenditure.

Recommendations

Having made the above-mentioned observations, the Committee recommends that the Minister of Health should:

Present to the Committee a turnaround plan to improve the reliability of performance information as continuously reported by the Auditor General.

Implement strategies to ensure improved spending of the HPV Vaccine Grant.

Present to the Committee a turnaround plan to ensure improved service delivery performance in relation to the financial performance, in ensuring value for money.

Present to the Committee a plan to improve performance in Programme 5 (Hospitals, Tertiary Services and Workforce Development), where 100% of the budget was spent and only 45% of the targets were fully achieved.

Present to the Committee the reasons for the increase in neonatal mortality and implement interventions aimed at reducing this concerning trend.

Assist provincial departments to strengthen financial management planning of provincial departments in order to improve and maintain financial audit outcomes.

Assist provincial departments to address SCM challenges to reduce wastage, shorten procurement turnaround times and improve contract management.

Ensure that provincial departments have appropriate accountability mechanisms and skilled personnel in order to address continuous findings on compliance to financial legislation.

Finalize the National Community Health Care Worker Policy to address uncertainties regarding recruitment of CHWs, integration into the public sector health workforce, remuneration in line with the scope of work performed and, access to training and skills development programmes.

Further strengthen the Ideal Clinic initiative at provincial level.

Ensure that the operational functioning of the Nelson Mandela’s Children’s Hospital is supported by the Department.

Expedite the submission on the NAPHISA Bill to Parliament.

In collaboration with National Treasury, establish measures to ensure increased funding of the SAMRC.

Ensure that the SAMRC conducts further research on the causes of eosophageal cancer especially in the Eastern Cape.

Ensure that the OHSC accelerates the process of appointing a CEO.

Ensure that the NHLS implement effective measures to enable improved pathologists and medical technologists pass rates.

Ensure that the NHLS implement a strategy to attract learners and students to the medical science profession.

Fast-track the development of the new funding model for the NHLS.

Ensure that financial statements of the CCOD are audited and presented to the Committee within three months of this report.

Unless otherwise indicated, the Department of Health should respond to the recommendations within three months from the day the report is adopted by the House.

CONCLUSION

The report provided an assessment of the performance of the National and Provincial Departments of Health and its entities on its budget allocation and service delivery performance for the 2015/16 financial year. The overall assessment and production of this report allows Parliament to make recommendations to the Minister of Finance to amend the budget of the Department of Health and its Entities.

Key milestones were achieved during the reporting period (2015/16). Some of the highlights include improvement in audit outcomes of two provincial departments, Gauteng and Eastern Cape moving to unqualified opinions. The Department is commended for the enrolment of 396 567 patients on the Central Chronic Medicine Dispensing and Distribution.

Report to be considered.

Documents

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