NATIONAL DEPARTMENT OF HEALTH

1. NATIONAL DEPARTMENT OF HEALTH PRESENTATION ON THE FFC RECOMMENDATIONS ON THE DIVISION OF REVENUE 2011/12 17 AUGUST 2010

2. Introduction. • The Department has been requested to comment on the Division of Revenue Bill and the FFC recommendations. • Noting that the aim of the Department of Health is: - To promote the health of all people in South Africa through an accessible, caring and high quality health system based on the primary health care approach.

3. Introduction continued. • The Department will also comment on : • Whether sections of the Bill can be reworded or deleted as appropriate provision already exists in other legislation, • Whether objects and the body of the Bill should be amended to accommodate or reflect the government’s priorities or whether these should be included in the conditional grants frameworks and • Whether the Bill should be amended to better accommodate and compliment the outcomes approach, and what these changes should be.

4. The Four Main Health Outputs: • Noting that the Health Department strives to achieve the following outputs, based on Government’s outcome number two “ a long and health live of all South Africans” of the Service Delivery Agreement: - Improving Life Expectancy. • Reducing Maternal Mortality Rates and Child Mortality Rates. - Combating HIV&AIDS and TB. - Enhancing Health Systems Effectiveness.

5. Division Of Revenue Act(DORA). • Department manages 5 conditional grants. • Conditional Grants have been part of the health system since its inception in 1998 • Health conditional grants account for = +/- 95% of total NDoH budget.

6. The FIVE conditional grant allocations are: • HIV and AIDS ( Schedule 5) • Forensic Pathology Services ( Schedule 5) • Hospital Revitalization ( Schedule 5) • National Tertiary Services ( Schedule 4) • Health Professions Training & Dev ( Schedule 4) • Schedule 4: Allocations to provinces and municipalities to supplement the funding of programmes or functions funded from provincial or municipal budgets. • Schedule 5: Specific purpose allocations to provinces.

7. Comprehensive HIV and AIDS Conditional Grant Purpose of the grant: • Enables the health sector to develop an effective response to HIV & AIDS. • Supports prevention programmes, VCT, PMTCT, PEP, HCBC, Step Down Care • Subsidizes funding for ARV treatment. Allocation criteria: • Antenatal HIV prevalence. • Estimated share of AIDS cases. • Populations post-demarcation.

8. Forensic Pathology Services Grant Purpose of the grant: • Assists with the transfer of medico-legal mortuaries from SAPS to the health sector. • To provide a comprehensive forensic pathology service for the criminal justice system. Allocation criteria: • In accordance with the National project Plan, as modified for demarcation and inflation.

9. Hospital Revitalization Grant Purpose of the grant: • Plays a key role in transforming and modernizing infrastructure, health technology, equipment & Monitoring and Evaluation in hospitals. • Funds upgrading and replacement of hospital infrastructure - focuses mainly on projects where entire hospital is upgraded. • Also supports management development initiatives including personnel, procurement delegations and financial management capacity.

10. Hospital Revitalization. Allocation criteria: • Based on projected cash flow figures for approved projects over MTEF period. • Includes expenditure on infrastructure, health technology, organisational development & quality improvement • Project based allocation approach is aligned with equity based approach over long term.

11. National Tertiary Services Grant. Purpose of the grant : • Aims to provide strategic funding to enable provinces to plan, modernize and transform services in tertiary hospitals. • 26 hospitals/complexes of hospitals are funded. • Western Cape and Gauteng receive the largest proportion of the grants these provinces provide the highest proportion of tertiary services. • Allocation criteria: • Cost of designated tertiary services as determined by the costing and the review of the NTSG.

12. The Health Professions Training and Development Grant • The grant is under review for integration with the Department of Higher Education. Problems identified : • Training of specialists and sub specialists takes place public sector academic hospitals and primary centers. • Currently 1687 registrars post are unfilled. • The review will address infrastructure, governance, financing and operational issues.

13. CONDITIONAL GRANTS MTEF ALLOCATION

14. Comments on the Bill • The Department agrees with the provisions regarding the duties of transferring national officer in respect of Schedule 4 allocation ( chapter 3 Part 2, clause 9). • Schedule 4 :” specifying allocations to provinces to supplement the funding of programmes or functions funded from provincial budgets”; • An amendment is proposed regarding Chapter 3, Part 3, under the clause on withholding of funds, clause 16 (c) (2). The two grants should not be exempted from withholding of funds.

15. Comments on the Bill continued • The transferring national officer , as part of the oversight authority towards implementation and ensuring achievement of the health outcomes, should have the authority to withhold funds if they are not utilized for intended purposes or there is under performance. • This would give the transferring national officer the opportunity to intervene timeously.

16. Comments on the Bill continued • Related amendments to the framework will be submitted to the National Treasury related to the two grants ( National Tertiary Services and the Health Professional Training & Development grants). • The amendments are related to development of business plans as a prerequisite for transferring funds by the transferring national officer to the receiving provincial officer, in line with Chapter 3, part 2, clause 10 (a) (iii).

17. Comments on the Bill continued • Concerns have been raised by some provincial receiving officers related to timeous transfers from the Provincial Revenue Fund to the provincial departments due to cash flow challenges. • It is proposed that a clause be included in the Bill to protect or ensure prompt transfers to the receiving officers from the Provincial Revenue Fund once received from the transferring national officer.

18. Comments on the FFC Recommendations. • In line with Chapter 3 of the FFC, related to the performance of the grants, the Department intends ensuring clear role clarification between the national and provincial level with regard to oversight, accountability, responsibility and control of the grants, in line with the priorities in the Service Delivery Agreement. • This will be included in the framework of all the conditional grants.

19. Comments on the FFC Recommendations. • The Department agrees with the recommendations under Chapter 3, paragraph 7.3, related to the transparency in the allocations of the grants, that in some cases, targeted allocations to the challenges, and not equitable share formula allocation, should be applied. • All the recommendations in Chapter 3 are agreed with and supported.

20. Comments on the FFC Recommendations. • Noting that Chapter 4 is more related to Municipal Revenue matters, the Health Department would like some of the recommendations to be applied to hospitals with regard to patient fees revenue collection and management. • It is proposed that a uniform revenue retention strategy be developed for the Health sector, as an incentive for collection of due patient fees.

21. In conclusion • The Department acknowledges the work done by the FFC and the equitable share formula for the allocations to provinces. • The recommendations related to the reform of the Local Government equitable share formula are also noted, with special reference to the data availability challenges. The Health Department shares the same challenges, however appreciates that some work with Treasury, is currently underway to determine a possible specific formula for the public health sector, to address the health demographics and work load per province and or hospital.