Provincial Budget Briefings: National Treasury, North West Province, Western Cape & Free State

Meeting report

HEALTH PORTFOLIO COMMITTEE
13 May 2002
PROVINCIAL BUDGET BRIEFINGS: NATIONAL TREASURY, NORTH WEST PROVINCE, WESTERN CAPE & FREESTATE

Chairperson: Mr Ngculu (ANC)

Documents handed out:
Presentation by North West Province
Presentation by National Treasury
Budget Analysis by National Treasury
Presentation by Free State Province
The following documents are awaited.
Presentation by Western Cape Province

SUMMARY
The meeting began three days of hearings into the provincial health budgets for 2002/2003. The Portfolio Committee was briefed on some of the issues that the provinces had dealt with in the previous year, how they had spent their budgets and where they intended to improve their handling of their financial concerns in the coming year. The briefings also sought to give some idea of where the current budget fitted into the Medium-Term Expenditure Framework (MTEF). The Committee was briefed on the first day by National Treasury and the Health Departments of the North West Province, the Western Cape and the Free State.

MINUTES
Morning Session
The Chairperson, Mr Ngculu (ANC), explained that the purpose of the meetings was to allow Parliamentarians to get to grips with some of the issues around provincial spending patterns, and to develop an idea of the progress and the problems. This was felt to be essential to the development of programs on the part of the National Parliament.

He informed Members that, subsequent to the disruption of the final day of hearings into the Choice on Termination of Pregnancy Act, he and Ms Dudley (ACDP) had reached an understanding. Mr Ngculu asked that the events of the previous week not be allowed to affect the working relations within the Committee. Ms Dudley said that she would be happy if the Chairperson wanted to circulate the letter that she had written to him about the issue.

Presentation by National Treasury
Dr Blecher led the presentation, giving an overview of the budgets for each of the nine provinces, containing information on the previous years budgets (2001/2002), listing over/under-expenditure, the distribution among certain key areas such as HIV/AIDS, hospital rehabilitation and professional training and research. Overall, it was felt that the provinces had done well, with KZN having spent 104% of its budget, and Eastern Cape having underspent by R341 milllion, leaving around 8% of its budget unspent. The presentation also tracked some of the year on year changes in the provinces. 2001/2002 witnessed a 12,5% increase in the budget overall, with 2002/2003, the period under discussion, now witnessing a much smaller 4,4% increase. This was however offset by the fact that there had been a number of once-off expenditures in the 2001/2002 financial year, such as the building of the Nkosi Albert Luthuli Hospital, which cost R360 million. This figure can also be adjusted upwards, if the Treasury agrees to roll-over unspent funds from the previous year. Dr Blecher pointed out that this increase may prove inadequate if the effects of inflation have been miscalculated. This possibility has been made more likely due to the fact that large numbers of medicines are imported, and consequently their prices will be likely to increase due to the rapid devaluation of the rand. He suggested that there was a need to develop a health sector specific inflation indicator.

Provinces which are cause for concern are Mpumalanga and the North West, both of which had seen quite a large growth in their budgets, raising questions about their capacity to make effective use of the money. He also identified the Free State as a potential cause for concern. This was due to the fact that the Free State had surprisingly overspent their budget from 2001/2002. If they were obliged to cover the difference from this year's budget, they would be placed under pressure to meet their targets. However, the most worrying province, according to Dr Blecher, was the Eastern Cape. While some of the underspending was due to the large late adjustment payments made to the province, there remains a problem with the issue of capacity. This was a serious issue, and Dr Blecher said that separate consultation with the provincial representatives was underway. Dr Blecher also identified some areas for concern. They included the large increase in HIV/AIDS expenditure, which raised questions about the existence of sufficient capacity to spend the money effectively, particularly in the light of underspending in this area the previous year.

The grant devoted to hospital management and quality improvement would need attention, since this was the first time that the grant was being administered by the Health Department and not the Treasury, and similar attempts in the past with other Departments had not been successful. He did however point out that the fact that various strategic plans had become statutory, which he hoped would improve monitoring and evaluation. He suggested that overall, there was a need to strengthen the evaluation in this sphere.

Dr Blecher's presentation also drew attention to the issue of inter-provincial inequities. Gauteng and the Western Cape continued to spend much more per capita than the national average, with Gauteng spending 174% of the national average. This was contrasted with the Northern Province, which spent 62% of the average in 2001/2002. Another area of concern in this regard was the Eastern Cape, which for the first time this witnessed a decline in its per capita expenditure from R 608 million in 2001/2002 to R 601 million in the 2002/2003 financial year. This represented a drop from 74% of the national mean to 71%. He suggested that this was worrying, and should hopefully not become a trend.

Discussion
Dr O Baloyi (IFP) asked whether the contingency fund, which could be used to help cover shortfalls, at the Treasury's discretion, was meant to be worth R2 million, as in the handout, or R2 billion, as Dr Blecher had mentioned in his presentation.

Mr Ngculu asked whether Treasury was happy with the figures. He asked whether the increases were fulfilling the roles for which they were intended. Was there interaction with those in charge of spending the allocations, and if not, how the committee could attend to the matter in the provinces?

Dr Blecher said that the figure was meant to be R2 billion. Mpumulanga and North West had had a large increase, but that this was off a very small base. He also said that, due to the time constraints, he had focussed his briefing on the global allocations, and that the Intergovernmental Fiscal Review would deliver more detail. In terms of interaction with those doing the spending, this interaction took place largely at a provincial level, although efforts were being directed at facilitating such interaction at national level. This would hopefully encourage a sense of ownership of the budget, and allow assessment of the budget and performance in terms of the national priorities set by the Department. In terms of whether the expenditures were of use, he said that performance indicators remained an area of weakness, and steps needed to be taken to improve the indicators of for example the costs per patient, the number being treated etc.

Dr Luthuli (ANC) said that, in relation to KwaZulu Natal and the Eastern Cape, these were provinces under pressure, yet their per capita income had decreased. She asked whether this was not likely to have a negative impact.

Dr Blecher said that KZN appeared to have a decrease, but this was due to a number of large once-off expenditures the previous year. In particular, the Albert Luthuli Hospital, as well as the issue of a large amount of back-pay that had to be paid, and the impact of the cholera epidemic. The increase in this province was actually 8,5% if the effect of these were ignored. The concerns related to the Eastern Cape had already been articulated, and it was hoped that the underspent funds would be allocated back to the province, to help supplement the budget. In the Eastern Cape, the adjustments were made fairly late.

There was a continual process of looking at the formula used for calculating the equitable share, and once the census data was included, the situation would be further improved. There was also the recommendation that HIV be included in calculations of the equitable share. The process of hospital reform had led to a more rapid process of negotiating arrangements with private providers. The capital works program was another area of concern, because the Treasury was considering increasing the grant for this, but there were concerns over the underspending of R300 to R400 million. This suggested the need to look at the health service infrastructure.

In terms of revenue retention, Dr Blecher said that this was an issue which as yet was still unresolved between the Department and the Treasury. There was a need for incentives to encourage the hospitals to generate revenue, and this could best be done through keeping the revenue in the hospitals. The hospital maintenance and quality improvement grant was also raised, as this was the first year that the grant was in existence, it may need specific attention. Decentralisation initiatives need to be speeded up, and those in progress need to come to fruition.

Dr Baloyi asked whether there were still provincial health and welfare departments which were combined. He also asked whether those provinces that had succeeded in obtaining budgets which were to their satisfaction had experts who were able to skilfully argue for those resources, as he had had the sense that this was the case. If so, he said that he hoped the training fund was devoting some attention to developing this in managers. He concluded by asking to what extent the problems in the capital works program were due to failures on the part of the Department of Public Works.

Dr Blecher said that he was unsure about the issue of the combined Departments. Dr Muller, a representative from the National Department, said that the Limpopo/Northern Province and North West were the only two provinces where this was the case. In one sense it was hoped that the training grant was a short term development, to be phased out over one or two years. He emphasised that it had not worked in either the Education Department or the Social Development Department. He said that the Committee may be able to help make it work. In relation to the issue of Public Works, he said that Treasury was very open to the Department undertaking their own works functions, and that at present, only the Western Cape had its health works budget in the overall Works budget. There was a general consensus over this issue.

North West Province
The briefing for the North West Province was delivered by Ms Hlabatau, the CFO, Dr Oosthuizen, the Acting Chief Director for Health Service Delivery and Mr Netshipale, the director of Primary Health Care Programs and Communicable Diseases. The briefing involved a brief elaboration of the strategic goals in the province, a discussion of the 2001/2002 expenditure patterns and a report back on some of the successes and progress in the province, in relation specifically to HIV/AIDS, the achievement of equity and the development of mechanisms to improve capacity.

The expenditure patterns revealed that 65% of the budget was devoted to personnel, which left 35% for the attainment of the strategic goals. In terms of the improvement of capacity, it was indicated that performance indicators had been built into the job descriptions and contracts of staff. Improved financial controls, such as the establishment of an Internal Control Unit, improvements in the area of procurement, for example through the provincialisation of the Emergency Medical Services and the outsourcing of some procurement functions. The improvement of service delivery capacity through several PPPs, the outsourcing of the primary school nutrition program (PSNP) to local women's group (which also furthered the empowerment of local communities), the establishing of links to tertiary educational institutions. The facilitation of stakeholder involvement, such as a farm worker summit. In relation to the MTEF, the North West province had idenitifed several shortcomings in the process. The presenters suggested that the time-frame for the completion of the input was inadequate to allow sufficient stakeholder involvement. The lack of resources, with 65% of the budget committed to personnel leaving insufficient funds to address equity issues. The fact that the allocation of funds is dependent on previous year's expenditure patterns and the limited skills with which some of the management staff were able to make an input into the process.

In terms of the conditional grants, the North West Province overspent their hospital revitalisation and rehabilitation grant by a considerable margin, yet they failed to spend all the money allocated to both the PSNP and HIV/AIDS. In terms of the issue of equity, this matter was dealt with in some depth. It was remarked that there remained difficulties in shifting funds between establishments, and that the status quo remained in most cases, due to fear of lowering the quality and standards of service delivery. However, there had been successes in the areas of decentralising the system and establishing financial, human resources and procurement delegations, which allows more effective management of the allocated resources. It was recommended that the creation of equal conditions of service for provincial and local health service staff would hasten the achievement of a single public service, with the same pay and career progression structures. It was also suggested that there were difficulties in attracting different types of staff to rural areas, although allowances existed solely to attract doctors to these areas. The result was that such initiatives were largely unsuccessful.

It was also suggested that the remain inequities between the provinces, with the money allocated by the National Department not being ring fenced, which led to competition between the Departments within the province. Mr Neshipale went into some depth explaining the provinces response to the issue of HIV/AIDS. The approach in the province could be characterised as a bottom-up approach, stressing that there was a need to empower communities and local organisations. PMTCT pilot sites had been established in the province, that Home Based Care had started to be implemented, with NGO's funded. About 101 district trainers were trained and 467 care givers were trained in 2001/2002. Steps had been taken to involve the tertiary institutions in the province in the fight against AIDS. He went on to say that the province had also engaged in a door-to-door campaign, with the aim of promoting awareness, distributing condoms and making people aware of the HIV/AIDS calendar days. A health promotion survey had been carried out, to assess the availability of health promoters in the various districts. Mr Netshipale also said that the Department had organised workshops for private practitioners in the province, to promote closer relations with the aim of making people aware of HIV/AIDS. The final issue raised in the promotion was the issue of provincial legislation, with Ms Hlabatau saying that the Department had drafted the Provincial Health Bill and passed the Provincial Council on AIDS Act.

Discussion
Mr Matabane said that he had hoped that the presentation would have provided more information on how the goal of 'health for all' was being achieved, and to what extent they were reaching the poorest of the poor.

Ms Mnumzana (ANC) asked what was not working in terms of Primary Health Care. She also asked for information on the impact of HIV on the budget. In relation to the issue of health workers working with those diagnosed with HIV, what support systems were in place? Also on the issue of AIDS, was the province ready and able to implement the program of providing Nevirapine for all?

In relation to the issue of PHC, Dr Oosthuizen said that there were now eighteen well-developed districts delivering PHC services, with all clinics having regular doctors visits and the mobile clinic service reaching all its designated areas at least once every four weeks. He added that this year would see the expansion from eighteen 18 to 24 districts.

In terms of the issue of Nevirapine provision, Mr Netshipale said that there was a plan in place, and that this involved adopting a regional approach. At present, there were two pilot sites up and running, with the goal being that all regions would have access by 1 June 2002. This meant that there would be 38 sites up and running - all the hospitals as well as some of the health centres. The goal was to have one councillor for eight clients, but there was a need for more councillors.

Ms Jacobus (ANC) asked what the reasons were behind the underspending on HIV/AIDS and the Primary School Nutrition Program. What was being done to ensure that the situation improved? Was there a budget for the counselling of Home-Based Care (HBC) workers?

Mr Netshipale said that there was a mentorship program in place, which ensured that HBC workers received weekly counselling sessions. In terms of the under-expenditure, he said that in relation to PSNP, there had been the decision to decentralise the program to various women's groups, to further the aims of empowering local communities. This had proved more difficult than expected, because of the difficulty in accessing all the areas in the province, as well as the fact that the one-week training program had proven inadequate to equip the women with the skills necessary to run the feeding schemes. The tendering process had delayed the implementation of the schemes. By the end of the year, the goal of decentralising the program had been achieved, but the money had not been spent.

In terms of HIV, the plan had been to involve the NGOs in the provision of lay counsellors. There had been a concern that testing should not be provided without counselling from these lay councillors. But, despite the fact that the tender had been advertised, by the end of the year, there had been only one tender received, and that had proved inadequate. The North West is a rural province, and lacked the requisite skills base. Mr Netshipale said that a similar problem had been encountered in the PMTCT program, in that there were simply insufficient numbers of appropriately qualified trainers.

Ms Dudley (ACDP) raised the fact that some of the slides used in the presentation were absent from the document that the Members had received. She asked whether NGOs had been used in the areas where underspending had occurred. She had been approached by NGOs who were trying to access some of the funds, but who could not access the system. She also asked for the group's suggestions on incentives to encourage staff to work in the rural areas, as well as for their suggestions in regard to the provision of PMTCT trainers.

Mr Netshipale said that in a twelve month cycle, one process of providing funding to NGOs was conducted. NGOs' attempts to access funds were limited by the PFMA requirements governing the awarding of such funds, which stressed for instance, that business plans be developed, which was untenable given the capacity of the NGOs in some cases, particularly in the rural areas.

In terms of councillors, one response would have been to employ councillors through the Health Department, but this would have been more expensive than using the NGOs. It would, consequently, mean fewer councillors. The reason for this was that NGOs could provide a stipend, rather than a salary.

Dr Oosthuizen addressed the issue of attracting staff to the rural areas. He said that these areas could not attract doctors, yet there was still a need to attract nursing staff to the Level 1 hospitals. He said that there were other considerations, such as support and job satisfaction which impacted on the ability to attract and retain staff. This was particularly true of the small number of specialists in the province. He added that the answer was not simply to look at financial incentives, and to this end, a rural incentive commission had been set up.

Dr Luthuli said that hospital revitalisation was crucial. What problems had led to the underspending?

Dr Oosthuizen said that the biggest problem in this regard had been the length of time that it had taken to go through the tender process.

Ms Twala (ANC) raised a question in relation to the problem of transporting patients. She asked what the state of the working relations between Public Works and Health in the province was, and who paid for what in terms of ensuring that patients could be transported. She also asked why no theatre nurses had been trained in 2001/2002 and what incentives there were available to the counsellors.

A representative from the National Department said that there was a task team looking at monetary and non-monetary incentives, looking at experiences in other countries. He also said that, in terms of counselling, in January 2003, clinical psychologists would hopefully be allocated to the various provinces.

Dr Oosthuizen said that the issues in relation to Public Works and the transport of patients centred on the servicing of the Health Department's vehicles. There was the problem that vehicles were taking four to six weeks to get fixed in the Government Garage, so the Department had assumed responsibility for the maintenance of its vehicles.

In relation to the lack of theatre nurses, this was due to the provincial training colleges not being accredited to training for this type of speciality, but that this year, they had been given permission to carry out such training.

Mr Ngculu asked how the strategic plan was linked to the budget. There had been an indication previously that expenditure per capita had dipped below the base mean. This could indicate the start of a worrying trend, leading to long term problems. What were the issues in terms of achieving equity? There was no money ring-fenced for this.

Ms Hlabatau said that she could email the specific information regarding the link between the strategic plan and the budget to Members. She also addressed the issue of equity, saying that only 35% of the budget was available to be shifted around, as the rest was locked into fixed personnel expenditure. Effectively, the national priorities and strategic goals were growing at a faster rate than the budget. The issue of the ring fencing of money worked in the following way. The province still allocated a certain amount to Health, but at the provincial budget lekgotla, the Health Department's allocation at the discretion of the province was less than it should be, because the Provincial Treasury included the ring-fenced conditional grants in their calculations.

Mr Matabane said that there was still no indication of whether the facilities were properly staffed, which would aid the Committee in facilitating improvements. He said that the reasons why the targets etc were not being achieved needed to come into the report, as well as for example indications of whether the Department was reaching new areas.

Ms Dudley said asked whether there was anything written in terms of the PFMA guidelines that they, as Parliamentarians, could take back with them to advise NGOs etc. She also asked when the Department called for funding proposals.

Mr Netshipale said that applications were taken in January, and were advertised in newspapers, as well as through community structures. The major problem remained that NGOs were unable to provide business plans. He also returned to the issue of the PSNP, saying that they had good documentation on the decentralisation, and that the strategy was linked to poverty alleviation. They actually needed more than what they had been allocated this year, and that they would spend it all this year. He added that the delay had been due to the delay in implementation caused by the lack of capacity at community level, for example in the business skills levels. He also said that they had requested Sangoko to do training on this.

Ms Hlabatau said that, as far as the shortcomings of the presentation were concerned, they had complied with the format requested last year. She added that the indicators requested could be provided.

Western Cape
Prof Househam delivered the presentation on behalf of the Western Cape. He started by tracing the ten point plan developed by the province. He drew attention to some of the highlights of the province's experiences in 2001/2002 and the budget for 2002/2003. The discussion of the trends was divided into the various programmes within the province. He started by looking at the administration programme, saying that one of the most significant developments in 2001/2002 was the fact that the provinces own revenue had increased by 34%. This had to an extent mitigated the fact that the province had been held accountable for the previous years overspending. In terms of the district health services (programme 2), the province had a very high utility rate of services, at 3,5 per capita, where the national average was 2,9 per capita. This suggested that there was a high level of accessibility in the province. He drew attention to the upgrading of George hospital and the Worcester Hospital, in relation to Programme 3: Hospital Services. The George Hospital was also responsible for the treatment of around three hundred patients from the Eastern Cape.

Programme 4 concerned the academic hospitals, of which the Western Cape has two: Tygerberg and Groote Schuur. These would face major challenges in future, in light of the restructuring of specialised services training. The sustainability issue had to be addressed through revenue growth. There has been some success in managing down over-expenditure, although this had reportedly led to some unhappiness among clients. In terms of the Health Sciences programme (Programme 5), the province had failed to achieve its targets in post-basic training levels. He added that the shortage of appropriately qualified nurses in the province was around 900. He added that there were questions over the future of the nurses college. The final programme, programme 6, was concerned with Health Care support services, which he said mainly centred around laundry and prosthetics. He said that, particularly in terms of laundry, the costs had been managed down, but at the expense of quality.

Prof Househam went on to discuss some of the aspects of the budgetary process. The budgetary processes for 2002/2003 were no longer based on previous expenditure, but the budget was now developed according to a formula which made use of the population size, as well as taking account of various other issues such as equity. However, non-service programmes (Programmes 1, 5 and 6) would continue to be based on historical patterns of expenditure. He also drew attention to issues arising from the alterations in the calculations of conditional grants, which stemmed from Treasury's finding that Gauteng and the Western Cape were over-resourced relative to the other provinces. This had led to much work being done towards developing a ten-year strategy. By June, it was hoped that the province would have a better idea of what the targets and plans would be. It was accepted that there would in all likelihood be a large reduction in the number of tertiary beds, with a corresponding increase in regional and district beds. Hospitals would need to be repositioned in line with this long-term view, and thus to an extent they were in a holding pattern, waiting for certain political and managerial decisions to be made before advancing any strategy.

He also raised the fact that the Western Cape was at present trying to build its bridges with the National Department after the events of previous years. He concluded by raising the issue of health inflation, saying that health expenditure had decreased in real terms by 4% since 1997/1998. He also said that the growth in the budget for stock of 3,7% would struggle to cover inflation, particularly in light of the increased cost of medicines, given the depreciation of the currency.

Discussion
A Member said that if political and management decisions stood in the way of providing adequate planning, there was a concern that such decisions might take more than a year to be made. He asked how the Department would function in such circumstances. He suggested that there was the need for a plan, which could be adjusted in the light of these decisions.

Prof Househam said that there was a clear idea, but it had not yet been formalised into a policy document. He also said that they were looking at the conditions and the needs. They had also already drawn up a business plan for they year. He said that the delays were in terms of developing a five to ten year plan. The key was to unlock resources, and shift them, for example to the Cape Flats, which lacked resources, where there were tertiary beds at Groote Schuur and Tygerberg. He also said that Somerset Hospital at the Waterfront was on valuable property. He clarified further, saying that Tygerberg had a backlog of maintenance, but there was no point in funding upgrades until certain decisions had been made.

Ms Mnumzana raised the issue of the increase in personnel expenditure, asking if it was linked in any way to the decrease in transfers. She also asked, in relation to revenue growth, how the province benefited, whether it had a revenue retention scheme and, if so, what the scheme was.

In relation to the issue of personnel and transfers, the discrepancy was due to the fact that the EMS had been provincialised. This meant that there was now a need to pay the salaries of those staff, but that they no longer had to transfer money to the local government for the service. He added that at present, attempts were being made to eliminate one-person ambulances, to ensure that there were two staff per ambulance. He went on to say that the Western Cape had eliminated 8500 posts, and needed to restructure its personnel in order to meet the need, such as the need for nurses.

In terms of revenue retention, Prof Househam replied that at present, the province retained 50% of the amount by which they exceeded the revenue generation targets set by the Treasury. This was set to increase to 100%. Some of these resources were channelled back to the institution, and some were channelled elsewhere, to meet equity needs. He added that one hospital functioned as a closed account. It received initial funding, and then kept all income it generated. This pilot program was being monitored with a view to expanding on it.

Dr Baloyi (IFP) asked what the strategy was to ensure that the revenue generation schemes did not come at the cost of the poor, particularly if these revenue generation measures concentrated on attracting foreign funds. He also said that the key measurable objectives did not seem to link to the targets.

Ms Engelbrecht said that no project would be allowed to prevent South African patients from accessing the services. However, she said that there were empty beds in certain services, which could be made use of, provided there was adequate monitoring to ensure adequate provision to the indigent.

Prof Househam said that they had developed more clear objectives, although they were not included in the report.

Ms Vilakazi asked what the situation was in relation to HIV patients and Disability Grants.

Prof Househam said that there was an agreement with social services that, should someone get AIDS and be unable to work, there would be a fast-tracking of the process, so that they could access Disability Grants more easily.

Mr Ngculu asked what the reason was for the erratic MTEF allocation. He also raised a question in relation to how beds were allocated and how this related to their utilisation.

Prof Househam replied that he had referred earlier to the number of beds in use at the present time. The number of beds could not instantly be reduced, because of the need to ensure that there were enough secondary beds. There was thus a need to work on both current and future utilisation. They had looked at what was happening, and what was felt sshould be happening. He also said that primary level allocations increased as tertiary decreased. He also said that there still existed big institutions with lots of equipment. There was also the reality of community expectations. He agreed that the erratic MTEF was a cause for concern, since there was the risk that something could be cut this year that there might be funds for next year. Part of the variability this year was due to the equitable share adjustments.

Mr Jooste added that there had been no provision for inflation in this year's budget.

Dr Luthuli said that quality of care related to the attitudes of staff members as well, and asked what was being done about this. She understood that there was a huge difficulty in moving resources from tertiary care to PHC, and to under-resourced areas. It would require heart, mind and will. She said that the Committee was very interested in monitoring this.

Ms Engelbrecht said that quality was a key consideration. Provincial standards had been established, and various issues identified, among them the issue of attitude. The lack of support for staff was a major factor in this. This was also influenced by community perceptions, with one hospital in the Eastern Cape being viewed by the community as where people go to die. Yet this ignored the reality that 75% of the people being admitted were HIV positive.

Dr Baloyi said that he wanted to reiterate his impression that the Provincial Departments were staffed by highly qualified people with expertise in tertiary areas, but who seemed less comfortable dealing with PHC issues. He asked if this was linked to staff members being recruited from the academic sphere and specialities.

In relation to the previous question, Prof Househam said that South Africa had moved from being a world leader in PHC in the 1940s and 1950s to focus on other aspects of health, for various reasons, and efforts were underway to reverse this. He said that there had been good progress in the Western Cape, with numbers at PHC level having doubled. He said that budget shifts were a necessary component of this change. He added that there remained the need for adequately trained Gps and specialists, to support those working at PHC level. He said that maybe it was unfair for him to answer Dr Baloyi's question, as he was a trained paediatrician.

A Member raised the issue of the licencing of hospitals. She asked whether the granting of licences to private hospitals did not exacerbate the drain of doctors and other staff from public facilities.

Prof Househam agreed that opening private hospitals could lead to a drain on public service staff. He said that this was taken into account when deciding on whether or not they could grant a licence. He also spoke to the issue of 'health tourists'. He said that revenue generation could not be done at the expense of State patients. The NHS in Britain had approached the province to help deal with their backlogs, but that this would only be done if it would ensure that more, not less State patients could be treated.

Ms Vilakazi asked for further clarity on the issue of social grants to those who could not work.

Prof Househam said that the AIDS patients would have to be assessed by social services, and if she/he was felt to qualify, they would receive a grant.

Ms Mnumzana said that the Western Cape had been the first to role out PMTCT. She asked how far the program had come, and how it was working. She also asked if there had been any increase in voluntary testing.

Prof Househam said that the strategy had been to have complete coverage within the province by July 2003. By this year June, the coverage would already be significant. He added that anti-retrovirals were being made available to all women in line with the court ruling. He also said that in sites where there was PMTCT, there had been a high uptake for counselling and testing, over 85%. He reiterated that there were attempts to bring the province in line with events nationally.

Mr Ngculu asked about the different remuneration scales and conditions of service.

Prof Househam said that there was that problem, and the current plan was to transfer certain staff to local government. Transfer costs amounted to more than R 70 million in Cape Town alone. He concluded by saying that the issue of a single public service urgently needed to be addressed, and this was a national matter.

Afternoon session
Free State Province
Dr Litlhakanyane outlined the mission and goals of the Free State Health Department. He then proceeded to trace some of the key features of the expenditure for 2001/2002. This was the first year in which the full amount for stocks and livestock had been spent, in fact exceeding the amount budgeted for. He attributed this in part to the fact that the stores were insufficiently budgeted for, as the sharp rise in the cost of medicines had not been anticipated.

A significant success this year had been the filling of several critical posts, both in management positions and among the general staff. The expenditure on stores and livestock now meant that hospitals had a three months supply of stock, with personnel trained in effective stock management. In terms of equipment, he said that they had purchased an MRI scanner, and several bakkies, to replace redundant ambulances. The provincialisation of the EMS had also meant that more than 200 new personnel had been trained. Several clinics had been built, increasing access to services throughout the province. Increased access was also facilitated by training staff in sign language. Dr Litlhakanyane indicated that a new prosthetics workshop had been built.

One of the biggest achievements by the Free State in 2001/2002 was the achievement of a 30% excess in own revenue generated. This was attributed to the purchase of equipment for which services could be charged. The target for the year was R54 million, but R67 million had been generated. He was confident that the figure set for the current year of R59 million would similarly be exceeded. In discussing the coming years budget, Dr Litlhakanyane said that there was a concern over the drop in the budget for personnel, as well as for stores and livestock. If these drops were to become trends, there was a concern for both access and quality of the service. Another cause for concern was the issue of equity. Interprovincial inequity remained a concern, but it may be dealt with in part through a review of the allocation of funds to highly specialised services. In terms of intraprovincial inequity, there were pockets of under-development within the province. The strategy for dealing with this had been to draw up a formula for determining the allocation per district. He said that they had also reviewed existing staffing levels at the various establishments, and there may be a need for further decentralisation of services. He said that the issue of access to health care in rural areas remained a problem, particularly for women and children.

Dr Litlhakanyane then moved on to discuss the issue of Public-Private Partnerships (PPPs). Two hospitals in Bloemfontein were under-utilised and this had led to an agreement whereby beds were leased out. The initial agreement yielded R20 million, which had been used to upgrade Bloemfontein Hospital. The contract was worth R150 million over fifteen years.

On the issue of HIV/AIDS, the allocation of a Conditional Grant for HIV/AIDS had not been fully spent. This was attributed to the late appointment of co-ordinators for both the VCT and the CHBC programs, which meant that the programs had lacked dedicated management. He did however trace some of the strategic objectives which he felt would enable the province to spend the allocation in the coming year.

Dr Litlhakanyane concluded by saying that while the budget had been overspent by 3,5% the previous year, this was attributable to the once off costs of large expenditure on equipment as well as the fact that stocks and livestock had been under-budgeted. He reiterated the fact that the province had been able to increase its revenue generation by 30,8%, partly due to the new equipment purchased. He said that the 4% increase for 2002/2003 amounted to a R13 million increase in expenditure. He also drew attention to the fact that health inflation was higher than the CPIX, and the salary increases were also higher than the budgeted increases. The coming year's budget would be very tight, if they were to be held accountable for the over-spending, and he asked the Committee for assistance in approaching Treasury to persuade them against pressing for the money to be repaid.

Discussion
Ms Mnumzana (ANC) asked whether the province experienced a drain of skilled personnel, and whether any strategies had been developed to combat this. She raised a question in relation to the outsourcing of services such as the distribution of stock. What caused the shortages of stock which hampered quality service delivery? And Ms Mnumzana also asked what the percentage coverage of the DOTS program in the province was, and whether it varied between the districts.

Dr Litlhakanyane addressed the issue of the 'brain drain', saying that salaries were a factor, which could only be addressed at the Bargaining Council. Most of the staff that left were going to private health services or to the bigger provinces. As a way of addressing non-monetary issues, which were felt to be push factors in people leaving the province's service, they had offered training for staff at lower levels, Levels 1 - 4. The staff were tested for their existing knowledge, and then trained, as a way of investing in the staff. People signed contracts with the Department for the same period as they were trained for. There was an increasing focus on the mid-level staff, and developing their capacity. In relation to this, the province had purchased a system, the ICAM system, which was unique to the Free State. This was a satellite-based system which allowed interaction throughout the province's classroom. The cost had been R11 million, and there were ongoing payments for the satellite service, but it allowed training to reach several areas of the province simultaneously, and did not leave remote areas under-resourced when staff went away for training. He said that financial management training, for example, was now being carried out throughout the province. The biggest training needs were for theatre nurses, as well as primary health care nurses. This was to an extent being addressed through the provision of bursaries, but the ICAM system was also being made use of.

Dr Litlhakanyane indicated that there was a shortage of specialists in the rural areas, and this was being addressed through community service and the Cuban doctors program, but there were still shortages. The focus was to use training as a way of developing people, and encouraging them to remain within the Department.

He addressed the issue of outsourcing, saying that there had been complaints of shortages and that outsourcing was not the only answer. This was because people still needed to be able to manage their stock, and this involved training staff.

Dr Luthuli asked what was contained under miscellaneous expenditure, and why it had been overspent.

Dr Litlhakanyane explained that this figure related to old losses for which the Department assumed responsibility from the Treasury last year, and which there was little that the Department could do to recoup the losses. his function had devolved to the Department from the Treasury, and was one of the problems that they had had with their Treasury Department.

Dr Baloyi asked what the reason was for a discrepancy between figures on pg. 10 of the document and the figures on pg. 15.

The reply was that some of the figures had been preliminary ones, and were still in need of final adjustments. Dr Litlhakanyane asked if he could confirm the figures in writing at a later stage.

Mr Ngculu asked for clarity on the issue of the losses and how the National Department fitted into the picture.

Dr Litlhakanyane replied that it was not the National Department, but rather the provincial Treasury which was responsible.

Ms Twala (ANC) asked whether the province was going to expand the PMTCT program. If so, how was this going to be achieved, and if not, why?

In reply, Dr Litlhakanyane said that there was one urban and one rural pilot site in the province and that these had done well, with an uptake rate of 70%, although the goal was to achieve 80%. He said that there was an ongoing need to deal with stigmatisation. At this stage it was difficult to measure the success, because the oldest babies are only eight months old, which means that the follow-up tests are still to be done. They had been looking at expanding the program to three districts, but at the moment the expansion was not possible due to the issue of the over-expenditure. He did however say that there were ongoing attempts to assess what was possible, looking at the issue of capacity.

Ms Twala asked what the reasons were for the overexpenditure.

Dr Litlhakanyane said that the figures were still to be finalised, but that the over-expenditure was sitting at around R69 million. One of the issues was the R11 million mentioned earlier in relation to losses incurred in the miscellaneous fund. There was another issue of a R7 million telephone account which previously had been paid for by the Premier, but which the Department was now being charged for. The equipment over-expenditure had been partly due to the fact that some of the equipment had been bought in previous years, but the department had only been billed and paid for the equipment in that year. He also said that the issue of stocks had been incorrectly budgeted for at the start of the year. The other factor, which was difficult to measure, was the impact of HIV/AIDS, which placed an increased demand on the services, for example in the need to treat opportunistic infections.

Ms Mnumzana said that the DOTS system was in use. How was it managed? What was the percentage rate of coverage and did this differ according to the districts?

Dr Litlhakanyane said that he did not have the figures with him, but it was clear that the Free State had one of the highest rates of TB. He did however point out that full coverage had been achieved with the DOTS program. A stipend was now being provided for DOTS support workers. He said that TB was taken very seriously in the Free State, because there was a serious rate of the illness. Cure rates had increased to around 60 or 70 % in two years, but this still lagged behind the national target of 85%, although the Free State had been operating off a very low base. The TB test turnaround time had been reduced from five to two days.

Dr Baloyi asked what budget funded the supernumerary staff, and for how long.

Dr Litlhakanyane replied that the supernumerary fund was paid from the provinces own budget, and concerned a large pool of surplus staff who were retrained and deployed where they were needed.

Ms Mnumzana asked whether the excess revenue would be rolled over, and whether the province had a revenue retention scheme.

Dr Litlhakanyane said that they did not as yet have such a scheme, because there had only been two pilots, in the Western Cape and Gauteng. He did point out that the province was investigating this possibility.

Dr Baloyi said that he was not clear on the logic behind the supernumerary fund. He was concerned by the mention of R 11 million that could not be accounted for and he was worried about the possible creation of loopholes which could be exploited.

Dr Litlhakanyane said that these were sub-programs. He gave the example of a program which was in the process of restructuring, and which then had excess numbers of cleaners. If there were new demands, these people could be retrained to meet the needs. The number of such positions were being managed down.

Dr Luthuli asked whether haemorrhaging of stock contributed to the lack of supplies. She also asked for clarity on what own revenue was. Did it refer to revenue collected from departmental receipts?

In relation to own revenue, Dr Litlhakanyane said that there were other sources, such as revenue gained from students' training.Revenue in excess of the targets set by the Treasury went to the Treasury, and in the next financial year it became part of the budget, at the discretion of the provincial Treasury. He explained that there were three sources of income within the provincial budget: the conditional grants, the equitable share and the department's own revenue, which was distributed by the Provincial Treasury. They had exceeded the targets for two years in a row, so now there was the goal of trying to retain some of that money.

As far as the stores were concerned, they were actually budgeting less this year for medicines than they had the previous year than was spent the previous year. He agreed that haemorrhaging may be a factor. He pointed out that outsourcing the control of the stock had meant that the responsibility for many of the losses had been transferred, but they had to look at theft at hospital and ward level. He added as an illustration that eleven people had been suspended for this issue in the previous week. The province wanted tighter stock control, and for this there was a need for training.

Mr Ngculu asked for clarity on the issue of interprovincial equity.

Dr Litlhakanyane said that, if one looked at the provincial per capita expenditure, it was clear that there were inequities. In his view, this issue violated the Constitutional right to equality. He explained that the system now was that money from the equitable share went to the Provincial Treasury and the Treasury decided whether it should supplement that or not. In Gauteng, the province supplemented the money. He also pointed out that there had been a historic overfunding of Gauteng and the Western Cape. At Universitas, they had implemented a no-walk-in policy, which meant that there had to be a referral system. In Gauteng it was possible for them to use their conditional grant to fund first and second level care.

Mr Ngculu asked what the relationship was between the implementation of the District Health System and the increase in personnel.

Dr Litlhakanyane explained that district hospitals were usually managed by junior staff, but accounted for a bigger portion of the budget and lacked management. He said that with the implementation of the District Health System, higher level management had been appointed to strengthen the district hospitals.

Mr Ngculu concluded that there was still a need to get a sense of the types of institutions and service, in order to improve service and access.

The meeting was adjourned.