REPORT TO THE SELECT COMMITTEE ON APPROPRIATIONS ON HOSPITAL REVITALISATION GRANT PERFORMANCE

1. REPORT TO THE SELECT COMMITTEE ON APPROPRIATIONS ONHOSPITAL REVITALISATION GRANT PERFORMANCE DR SIBONGISENI DHLOMO MEC FOR HEALTH KWAZULU NATAL

2. CONTENT • Grant Framework • Trends in grant Financial performance • Third quarter performance • Preliminary 2009/10 Outcome • 2010/11 MTEF allocation • Preliminary 2010/11 allocation by project and category • 2009/10 Grant Performance by Project and category • Some factors contributing to under expenditure • Monthly Reporting • Way Forward

3. GRANT FRAMEWORK • To provide funding to enable provinces to plan, manage, modernise, rationalise and transform the infrastructure, health technology, monitoring and evaluation of hospitals, and to transform hospital management and improve quality of care in line with national policy objectives

4. TRENDS IN GRANT FINANCIAL PERFORMANCE 2005/06 TO 2009/10 (AS AT 31/03/10) • HRG budgets have grown rapidly over the past five years • Planning and project management has not kept pace, resulting in under expenditure due to delays – explained later

5. 3RD QUARTER PERFORMANCE-by allocation

6. PRELIMINARY 2009/10 OUTCOME-by allocation TOTAL HRG 2009/10 BUDGET ACTUAL Variance % Spent Institution 186,445 109,865 -76,580 59% King George V 94,652 51,277 -43,375 54% LUWMH 53,962 24,398 -29,564 45% Hlabisa 46,449 20,313 -26,136 44% Rietvlei 45,625 12,937 -32,688 28% Dr Pixley ka Seme 2,425 0 -2,425 0% Dr John Dube 8,000 459 -7,541 6% Edendale 6,500 460 -6,040 7% Madadeni 5,500 5,804 304 106% Grant Management 449,558 225,513 -224,045 50% Total

7. HEALTH ORGANISATIONAL QUALITY GRANT INFRASTRUCTURE TECHNOLOGY DEVELOPMENT ASSURANCE MANAGEMENT Institution BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL 122 925 86 606 56 350 21 839 6 670 1 420 500 0 0 0 King George V 69 660 17 233 5 600 31 396 18 392 2 606 1 000 42 0 0 LUWMH 48 660 18 000 500 4 599 4 302 1 799 500 0 0 0 Hlabisa 40 146 13 044 1 500 5 654 4 303 1 589 500 26 0 0 Rietvlei 45 625 12 937 0 0 0 0 0 0 0 0 Dr Pixley ka Seme 2 425 0 0 0 0 0 0 0 0 0 Dr John Dube 8 000 459 0 0 0 0 0 0 0 0 Edendale 6 500 252 0 208 0 0 0 0 0 0 Madadeni 0 0 0 0 0 0 0 0 5 500 5 804 Grant Management 343 941 148 531 63 950 63 696 33 667 7 414 2 500 68 5 500 5 804 Total PRELIMINARY 2009/10 OUTCOME-by category

8. 2010/11 MTEF HRG ALLOCATIONS • Grant allocation increases by a nominal 27 percent from R449.5 million in 2009/10 to R500,8 in 2010/11 • Projected allocations are expected to increase further than currently shown due to rescheduling on the 2009/10 under spent funds , currently negotiated with the National Treasury. • Adjustment budget will paint a fairer picture in terms of future allocations

9. Health Quality Institution Infra Dev Techno Org Dev Assurance Grant Mngmt Total King George V 80 068 298 48 605 000 9 284 500 221 550 - 138 179 348 Ngwelezane 30 294 313 5 132 000 8 248 000 222 666 - 43 896 979 LUWMH 44 270 063 851 000 8 162 457 733 335 - 54 016 855 Hlabisa 18 950 000 739 000 6 967 500 460 000 - 27 116 500 Rietvlei 14 810 596 2 029 000 7 426 800 310 000 - 24 576 396 Dr Pixley ka Seme 49 794 186 - - - - 49 794 186 Dr John Dube 2 425 000 - - - - 2 425 000 Edendale 50 900 000 2 975 000 - - - 53 875 000 Madadeni 15 500 000 25 000 000 - - - 40 500 000 King Edward 8th 56 295 000 3 980 000 - - - 60 275 000 Empangeni Tertiary - - - - 250 000 250 000 Grant Management - - - - 5 909 736 5 909 736 Total 363 307 457 89 311 000 40 089 257 1 947 551 6 159 736 500 815 000 PROVISIONAL 2010/11 MTEF ALLOCATION

10. 2009/10 INFRASTRUCTURE BUDGET ACTUAL Variance % Spent Institution 122,925 86,606 -36,319 70% King George V 69,660 17,233 -52,427 25% LUWMH 48,660 18,000 -30,660 37% Hlabisa 40,146 13,044 -27,102 32% Rietvlei 45,625 12,937 -32,688 28% Dr Pixley ka Seme 2,425 0 -2,425 0% Dr John Dube 8,000 459 -7,541 6% Edendale 6,500 252 -6,248 4% Madadeni 0 0 0 0% Grant Management 343,941 148,531 -195,410 43% Total • Of the Infrastructure allocations, King George V had the largest share • LUWMH has the second largest allocation and only spent 25 percent of the allocation in 2009/10

11. INFRASTRUCTURE PERFORMANCE-Explanatory notes (1) King George V (Under spent by R36.3m) • Slow contractor: District Hospital, TB Surgical wards; • Delays in designs & documentation (Consultants): TB Complex, Creche, Landscaping Ph1, Aircon TB multi storey, Psychiatric Phase 2, Waste facility, Psychiatric Closed unit; • Tender procurement delays (DoW): security facility & Landscaping Ph1, Creche, Workshop & Laundry.

12. INFRASTRUCTURE PERFORMANCE-Explanatory notes (2) King George V (Under spent by R36.3m) continued Department not having adequate monitoring capacity to follow up on slow contractors and consultants’ delays in designs & documentation; Department did not act on building defects timeously; Department did not have dedicated project manager to follow up on tender document delays and variation orders.

13. INFRASTRUCTURE PERFORMANCE-Explanatory notes (3) LUWMH (under by R52.4m) • Tender procurement delays (DoW): New Mother & Child Hospital (R365m) delayed for 16 months; • Department did not have monitoring capacity to detect inaccuracies with tender documents (exclusive of prof. fees, escalation and contingencies); • Differences in interpretation of ‘appeals lapsing’ period to re-advertise tender.

14. INFRASTRUCTURE PERFORMANCE-Explanatory notes (4) Hlabisa (Underspent by R30.7m) Tender procurement delays: New District Hospital (15 months), Kitchens to Nurses Home, Upgrade to existing theatre; Delay in Final Account (consultants): Phase 1 Dept lacking capacity to follow up and manage delays and outstanding documents

15. INFRASTRUCTURE PERFORMANCE-Explanatory notes (5) Rietvlei (R27.1m underspent) • Slow contractor: Ph3A - pharmacy, laboratory • Design & tender procurement delays (DoT): Access road to Hospital; • Dept not able to constantly follow up/manage delays Dr Pixley ka Seme (R32.7m under) • Delay awaiting NDoH approvals of Initial Project Implementation plan; • Delay in constituting DoH internal design review team due to lack of capacity

16. INFRASTRUCTURE PERFORMANCE-Explanatory notes (6) Dr John Dube (R2.4m underspent) and Madadeni (R6.2m under) • Non-delivery of IAs: Delay due to switching Implementing Agents from DoW to IDT, then back to DoW; • Department not efficiently managing progress of IAs due to lack of capacity

17. INFRASTRUCTURE PERFORMANCE-Explanatory notes (7) Edendale (R7.5m underspent) • Delay of 12 months awaiting NDoH approval of design brief (still not approved); • Delay in funding approval by NDoH for emergency projects. • Dept not consistently following up on outstanding approval due to lack of capacity

18. HEALTH TECHNOLOGY PERFORMANCE-explanatory notes Spending not in line with budget: Delays on construction resulted in delays in acquisition of health technology at King George V Over expenditure at LUWMH, Hlabisa and Rietvlei due to spill over of purchases that had been scheduled for the previous years Department not having a dedicated resource to drive this aspect of Hospital Revitalisation; Planning not aligned to SCM processes and timeframes

19. ORGANISATIONAL DEVELOPMENT PERFORMANCE-explanatory notes Underspending mainly due to: • Non - approval of filling of ‘Critical Posts’: due to concern of committing the DoH to additional staff costs which it couldn’t meet in 3 years time, when no longer covered by Revite • Delay of Implementation of Hospital Information System, initially due to finalizing the Agreement, then due to moratorium by NDoH; • Delays in implementing Digital Radiography Picture Archiving Communication System / Radiography Information System.

20. Some factors contributing to under expenditure (1) • IMPLEMENTING AGENTS (IAs): The DoH has no or very little control over IAs who prove to be inflexible and/ or unwilling to change, and speed things up. • CONSULTANTS: IAs appoint consultants who are not qualified to do the work to the standard required or in the time lines required. Hospital design is complex and requires speciality. The time period to appoint consultants is also slow. • CONTRACTORS: IAs appoint contractors who are incapable of undertaking this complex work.

21. Some factors contributing to under expenditure (2) Lack of Capacity of the Hospital Revitalisation Office; No dedicated project managers for various categories of Health Technology, Quality Assurance and Organisational Development; Supply Chain Management was not properly managed and implemented resulting in project delays, cancellation and appeals; Weak project management and planning due to lack of capacity

22. MONTHLY REPORTING • Historically, formal reporting from IAs was erratic and often inaccurate; • Currently, Revite Project Managers attend Contractor and Consultant meetings so they are aware of on site progress and can act timeously; • Joint task team comprising DoH, DoW and other IAs was in place, but has met erratically; • This has now been replaced by monthly Infrastructure Programme Management Committee meetings.

23. WAY FORWARD • In 2010/11 the Department will re organise its infrastructure management unit in line with Project Management principles. • Key management posts will be filled by appropriately qualified persons with formal training in built environment. • Overall Quality Assurance process currently being developed, improvements expected during 2010/11

24. Thank you!