NATIONAL DEPARTMENT OF HEALTH

1. NATIONAL DEPARTMENT OF HEALTH Select Committee on Finance PUBLIC HEARINGS ON THE DIVISION OF REVENUE BILL Tuesday, 24 February 2009

2. NATIONAL DEPARTMENT OF HEALTH DIVISION OF REVENUE ACT(DORA). • Department manages 5 conditional grants plus one new Disaster Response grant ( Cholera- Limpopo) • Health Grants are part of the health system since its inception in 1998 • Health conditional grants account for = +/- 95% of total NDoH budget.

3. NATIONAL DEPARTMENT OF HEALTH The six (6) Conditional grant allocations are for: • HIV and AIDS } • Forensic Pathology Services} Schedule 5 • Hospital Revitalization } • National Tertiary Services } • Health Professions Training & } Schedule 4 Development } • New – Health Disaster Response (Cholera)

4. NATIONAL DEPARTMENT OF HEALTH Comprehensive HIV and AIDS Conditional Grant. Purpose of the grant: • Enables health sector to develop a specific response to HIV & AIDS • Supports prevention programmes, voluntary counseling & testing, PMTCT, post prophylaxis and home-based care

5. NATIONAL DEPARTMENT OF HEALTH Comprehensive HIV & AIDS Plan. Allocation criteria: • Antenatal HIV prevalence • Estimated share of AIDS cases • Populations pos-demarcation. NB. Additional funding from Treasury is shared equitably (according to Treasury).

6. COMPREHENSIVE HIV AND AIDS PLAN: ALLOCATIONS.

7. COMPREHENSIVE HIV AND AIDS PLAN : BIDS and IMPLICATIONS OF UNDER FUNDING. • Comprehensive inputs received and submitted for the 08/09 bid was R938m and actual received : R300m. • Inputs submitted for the 09/10 bid: R1.4b and actual received is R200m. • Inputs submitted for 10/11 and 11/12 were R2.1b and R1.7b respectively and actual received is R325m and R407m respectively. • Implications for under funding: • Cannot roll out ARV programme as intended. • Have to prioritize treatment over prevention which is not ethically correct. • Drugs become a major cost driver for patients already in the system as treatment cannot be stopped.

8. COMPREHENSIVE HIV AND AIDS PLAN – CURRENT INTERVENTIONS. • Constant contact with donor agencies to assist with funding gaps such as PEPFAR; EU and DIFID. • Redirecting funding from other programmes such as Home Base Care to ARV. • Non core functions such as training are funded by donors. • Constant contact with provincial programme coordinators to also identify possible savings from their equitable share to be shifted to ARV. • Redirecting funding from capital to recurrent to provide for ARV and therefore business plans will also be amended to be aligned with the shifting of funds.

9. COMPREHENSIVE HIV AND AIDS PLAN: 3RD QRT EXPENDITURE 08/09. • The overall actual expenditure as at December’08 was standing at 71.6% against the target of 75.0%. • Six Provinces below the target of 75% as at the end of December were: FS 72.2%, GP 70.6%, KZN 65.6%, MP 65.1%, NC 73.5% and NW 53.8%.

10. NATIONAL DEPARTMENT OF HEALTH • The Forensic Pathology Services Grant only received inflationary increases. • This grant is due to finish in 2010/11.

11. NATIONAL DEPARTMENT OF HEALTH 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 services for the criminal justice system

12. NATIONAL DEPARTMENT OF HEALTH Forensic Pathology Services Allocation criteria • In accordance with the National project Plan as modified for demarcation and inflation

13. FORENSIC PATHOLOGY SERVICES

14. FORENSIC PATHOLOGY SERVICES : 3rd QRT EXPENDITURE 08/09. • Low expenditure of 70.6% is recorded against the target of 75.0%. • Improvement has been effected on this grants but provinces such as FS 61.0%, LP 65.0%, MP 67.4%, NC 40.8%, NW 63.4% and WC 58.9% are still experiencing challenges.

15. FORENSIC PATHOLOGY SERVICES: INTERVENTIONS. • Funds have been withheld for December as well as the roll over for the Northern Cape province due to underperformance. The blockages are related to the implementing agency. The matter has referred to the court. • MP & KZN has resolved the limitations and are now on track. • Expenditure has picked up for MP and KZN and are requesting additional funding as they are projecting over expenditure. These will be dealt with during the 09/10 Adjustment Budget process. • Continuous support for development of business plan.

16. NATIONAL DEPARTMENT OF HEALTH Hospital Revitalization Grant Purpose of the grant: • Plays a key role in transforming and modernizing infrastructure and equipment 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.

17. NATIONAL DEPARTMENT OF HEALTH Hospital Revitalization. Allocation criteria: • Based on projected cash flow figures for approved projects over MTEF period. • Expenditure on health technology and hospital management and quality improvement also taken into consideration. • Project based allocation approach is aligned with equity based approach over long term.

18. HOSPITAL REVITALIZATION: ALLOCATIONS.

19. HOSPITAL REVITALIZATION: BIDS AND IMPLICATIONS • Initial allocations for approved project plans had to be reduced/cut due to budget pressures experienced by National Treasury. • Budget cuts had to be effected as follows: - WC for 09/10 : R19m. - LP for 10/11 : R21m and - MP for 11/12 : R22m.

20. HOSPITAL REVITALIZATION: IMPLICATIONS FOR UNDER FUNDING: • Budget cuts reduced the targets planned for the hospital revitalization grant project. • Revision of the departmental Strategic Plan was necessary. • Focus changes to be on current ongoing projects and no further future planning. • Possible short fall of funding from 10/11 onwards on the affected provinces unless additional funding is received from National Treasury.

21. HOSPITAL REVITALIZATION 3rd QRT EXPENDITURE. • Low expenditure has been recorded under this grant with provinces spending 68.6% against the target of 75.0%. • EC 59.2%, FS 71.0%, • KZN 37.9%, is due to the delay in the awarding of a tender for the Hlabisa, Rietvlei and Lower Umfolosi Hospital. • Limpopo 49.1%, is mainly due to the delay in the awarding of the tender by the Department of Public Works.

22. HOSPITAL REVITALIZATION 3rd QRT EXPENDITURE. • Under-expenditure in MP 28.3%, is enhanced by the lack of capacity in critical areas. • NC at 56.7%, is experienced due to unpaid invoices which will be processed in January. • NW at 68.0% and WC at 44.5% are due to the Peer Review Process which further delayed projects as a result tenders were only awarded two months later than the scheduled period.

23. HOSPITAL REVITALIZATION - INTERVENTIONS. • Transfer payments for November and December were withheld due to poor spending for LP; MP and WC. • Rollover funds were approved late in the financial year and it has become a financial challenge for affected provinces to fully spend the total allocated budget by the end of the financial year. However, commitments are being made to secure the unspent funds. • LP province is working on a turn around strategy to improve their under spending. • Strengthen monitoring and fast tract implementation for on onsite projects.

24. NATIONAL DEPARTMENT OF HEALTH National Tertiary Services Grant. Purpose of the grant : • Aims to provide strategic funding to enable provinces to plan, modernize and transform the service. • Operation in 27 hospitals across 9 provinces (mostly in Western Cape and Gauteng) • Western Cape and Gauteng receive 61.9% of allocation in 2007/08 as these provinces provide the highest proportion of tertiary services

25. NATIONAL DEPARTMENT OF HEALTH National Tertiary Services Grant. Allocation criteria: Cost of designated tertiary services as determined by the costing and the review of the NTSG.

26. NATIONAL TERTIARY SERVICES

27. NATIONAL TERTIARY SERVICES • Final allocations from the Bid inputs submitted for this grant resulted in the following funding gap per financial year: • 08/09 : R2,2b. • 09/10 : R2,6b. • 10/11 : R3,6b. • Implications for under funding: • The provinces now have to use their provincial equitable share to fund the gap. • Funding of the PHC get reduced from provincial share. • Under developed provinces do not achieve the goal of equity and capacity building. - The aim of reliving pressure on the costs related to tertiary services from bigger provinces is not achieved.

28. NATIONAL TERTIARY SERVICES 3rd QRT EXPENDITURE. • Year to date expenditure is almost on target at 73.8% except for : • EC at 71.9% • LP at 67.4% • MP at 62.3% • NC 39.4% and • NW at 61.1%. NB.Provinces have indicated that they will spend their full allocations by the end of the financial year.

29. NATIONAL DEPARTMENT OF HEALTH • The Health Professions Training and Development Grant only received normal inflationary increases. • No bids were submitted for this grant.

30. NATIONAL DEPARTMENT OF HEALTH Health Professions Training and Development Grant. Purpose of the grant • The grant funds the costs associated with the training of health professionals. • The development and recruitment of medical specialists. • It also enables the shifting of teaching activities from central to regional and district hospitals.

31. NATIONAL DEPARTMENT OF HEALTH Health Professions Training & Development. Allocation criteria: • Target allocation criteria is being reviewed as a process of grant reform. • Based on a historical approach derived from medical students distribution.

32. HEALTH PROFESSIONS TRAINING & DEVELOPMENT

33. HEALTH PROFESSIONS TRAINING & DEVELOPMENT 3rd QTR EXPENDITURE. • Year to date expenditure is low at 71.0% against the target of 75.0%. • Under expenditure is realised in the EC at 67.8%, KZN at 58.3%, LP at 67.7%, MP at 50.4%, NC at 39.3.1% and NW at 70.0%.

34. NATIONAL DEPARTMENT OF HEALTH Health Disaster Response ( Cholera) New Grant Purpose of the grant: • To control the Cholera outbreak and reduce the morbidity and mortality due to the communicable diseases.

35. HEALTH DISASTER RESPONSE (CHOLERA)NEW GRANT

36. NATIONAL DEPARTMENT OF HEALTH: CONDITIONAL GRANTS

37. Summary Year to date Expenditure (as at 31 Jan’09) • The target for end of January 2009 expenditure ( 10 months) is 83.3% • The overall expenditure for all conditional grants amounts to 82%. • The variance between budget and expenditure is only 1.3%. • Prior year overall expenditure as per audited financial statements was 96.1%.

38. NATIONAL DEPARTMENT OF HEALTH: CONDITIONAL GRANTS

39. Conditional Grants Monitoring and interventions. • Monthly reports received from provinces in line with the In-year-monitoring (IYM) system developed by Treasury. Significant improvement in meeting deadlines. • Monthly IYM reports forwarded to NT by NDOH - on time. • Quarterly Performance reports submitted. Challenges still exist with meeting deadlines. The matter is being addressed. • Withholding of funds for non compliance with DORA or under expenditure. ( Forensic Pathology Serv.& Revitalization grants). • Regular visits to provinces for support and monitoring. • Access to donor funding for funding gaps.

40. Conditional Grants Monitoring and interventions. • Concerns raised by the Auditor General in previous audits have been addressed. • Recent discussions with the Auditor general officials indicate that there is vast improvement in the monitoring and management of the grants. • Stricter monitoring is being implemented, hence withholding of funds. • The Department is also establishing a new Financial Provincial Support unit to strengthen monitoring and support role to the provincial departments of health.

41. CONCLUSION. • The Department accepts the National Treasury’s FFC formula and the criteria used for the Provincial Equitable Share (PES). • However, in some grants the formula does not address the intended purpose ( disease burden and demographics). • The legal implications of national and provincial levels of accountability impacts on NDOH’s ability to intervene. • Provinces have the legal right to develop their own models of health services which sometimes is not in line with the National strategy.