Department of Health 2021/22 Annual Report; with Minister and Deputy Minister

Meeting report

Dr Joe Phaahla, Minister of Health, expressed his sincere condolences on the passing of the Chairperson of the Select Committee on Health and Social Services, Ms Maurencia Gillion (ANC). 

He acknowledged the attendance of Dr Sibongiseni Dhlomo, Deputy Minister of Health. He said the presentation on the Department of Health's (DOH's) annual report for 2021/22 would be led by Dr Sandile Buthelezi, Director-General (DG), DOH, and key executive officials from the Department. 

Department of Health 2021/22 annual report

Overview of Covid-19 pandemic context

Dr Buthelezi commenced the briefing with an overview of the Covid-19 pandemic context. He said COVID-19 had occupied the national interest throughout the 2021/22 financial year (FY), health budgets were redirected, and health managers were reassigned to COVID-19 activities. A vaccination programme was implemented, although no systems were available prior to this very different challenge, and there was no new money for COVID-19 systems. There had been unprecedented collaboration with public and private sectors and innovative activities.

In the 2021/22 FY, during COVID-19, there were three Ministers (one acting), two DGs (one acting), and two acting chief financial officers (CFOs). The National DOH had relocated its offices, and staff were working remotely because of lockdowns.

There were five waves of infection between March 2020 and July 2022. The Delta and Omicron waves were in May and November 2021.

Cumulative vaccination summary

The vaccination programme had involved a massive scale-up, as it had never been done before. The various stages of lockdown have resulted in a rapidly changing environment.

The NDoH procured vaccines in February and March 2021. J&J had delayed deliveries, and the programme ran into vaccine shortages in July and August. Every effort was made to rapidly scale up vaccination sites to improve vaccine access. Eligibility was implemented in phases to accommodate the vaccine supply and the changing knowledge of the vulnerability.

Work was accelerated on:

• Establishing a service delivery platform; 
• Vaccine supply management: selection, regulation issues, procurement, distribution, storage, ancillary supplies, waste disposal;
• Development of vaccination guidelines;
• Healthcare worker training;
• Adverse events following immunisation surveillance;
• Recording and reporting through the Electronic Vaccine Data System (EVDS);
• Development of vaccination certification tools;
• Communication and Demand Generation; and
• Financing and cost recovery mechanisms.

Phase II: Accelerated vaccine rollout

The rollout began on 17 May and continued to the end of the year. As vaccines became available, there was a rapid increase in:

• The number of vaccination sites (and vaccinators);
• Eligibility for vaccination;
• Access to vaccination sites;
• Dedicated large vaccination sites, e.g., stadia and conference centres;
• Sites linked to primary health care (PHC) and other health facilities;

• Private healthcare providers' involvement;

• Mass sites established by medical schemes.
• Private pharmacy sites – pharmacy chains and independent pharmacies;

• Workplace occupational health services;
• Sector dispersed and smaller employers directed to fixed sites -- community or private occupational health and safety (OHS) sites.

• Public service essential worker programmes, involving the Department of Basic Education (DBE), the South African Police Service (SAPS), the SA National Defence Force (SANDF), the Department of Social Development (DSD), the Department of Justice (DOJ), the Department of Home Affairs (DHA) and the Department of Correctional Services (DCS).
• Roving/outreach services, initially to congregated settings, and then to other sites such as South African Social Security Agency (SASSA) queues.

A strength of the vaccination programme was the collaboration with the private sector, facilitated through a joint committee, in which public sites vaccinated private people (insured - medical aid members), private sites vaccinated public sector dependent people (uninsured - no medical aids), where medical schemes agreed to pay for vaccines and vaccination costs from reserves at R80.50.

Working with the private sector

There are 76 medical schemes with well over 250 packages. The schemes agreed to pay for vaccines and vaccination costs for members and dependents, and accepted responsibility for their members on the day of their vaccination. Members and dependents were vaccinated in public and private sites, and private providers vaccinated non-scheme members.

The costs had to be reconciled, but there was a short time to establish the reimbursement system. No budget was provided, so a donor and service staff had to be identified and engaged in setting up the system. An interface with the 'switching mechanism' of the medical schemes was negotiated, where schemes confirmed membership on the date of service. Hundreds of providers' service level agreements were required to participate. A time lag was implemented, starting with May 2021 claims first, then June, etc. The Council for Medical Schemes (CMS) approved the extension of the period for scheme claims from 30 days to 120, and now to 365 days, to clear the backlog. 

DoH achievements and highlights in 2021/22

• Programme 1: Administration

The Department was engaging with the remaining provinces and service providers to fast-track the integration of provincial systems and the National Case Management System. The service providers --  CAJV and Norton Rose Fulbright -- continue to assist the provinces in handling medico-legal cases.

A policy and legal framework was gazetted to manage medico-legal claims. The legislative process to manage medico-legal claims would be initiated as soon as the South African Law Reform Commission (SALRC) has recommended the required reforms.

• Programme 2: National Health Insurance

There were National Council of Provinces (NCOP) public hearings on the National Health Insurance (NHI) Bill in Parliament. The Department continued to attend the line-by-line review by the Portfolio Committee in Parliament.  

Tabling of the Primary Health Care (PHC) service benefits framework to the National Health Council (NHC) would be prioritised in the 2022/2023 financial year. 

Regarding medical aid beneficiaries registered on the Health Patient Registration System (HPRS), the legal advice received by the Department stipulated that the Act would need to be amended. 

• Programme 3: Communicable and non-communicable diseases

To improve the number of PHC facilities with youth zones, the Department conducted training and review meetings with the healthcare providers and would continue monitoring non-reporting provinces.

There was ongoing creation of activities to stimulated demand for COVID-19 vaccination amongst the 18 to 34-year-old population, and implementation of the “Ke Ready” campaign. 

The National Strategic Plan (NSP) for non-communicable diseases (NCDs) was published in the first quarter of 2022/23.

• Programme 4: Primary Health Care

The national quality improvement programme involved finalisation of inspection tools for private Emergency Medical Service (EMS) and general practitioners was underway through the Office of Health Standards Compliance (OHSC). These would be included upon conclusion of the process. 

The performance of PHC facilities that qualified as ideal clinics through the ideal clinic initiative would improve when provinces integrate COVID-19 activities into the PHC services, because the provincial and district teams would not be divided between the two.

The processes for presenting the traditional medicine policy and implementation guidelines to the technical NHC would be prioritised in 2022/23.

• Programme 5: Hospital Systems

Among the DoH's actual achievements, 52 PHC facilities were constructed or revitalised, 21 hospitals constructed or revitalised, and 121 public health facilities (clinics, hospitals, nursing colleges, EMS base stations) were maintained, repaired and refurbished. 

• Programme 6: Health System Governance and Human Resources

For implementation plans for strengthening clinical governance, the NDoH engaged Limpopo Province to reinstate the nursing directorate, or to allocate dedicated professionals. Limpopo Province was being prioritised in 2022/23.

The community service policy published, and a review of the policy would be prioritised during the 2022/2023 financial year.

The alpha version of the networked TB/HIV-plus information system had been developed; work had commenced on harmonising all patient reporting systems

Sector conditional grants

Per the audited provincial financial statements, the conditional grants' expenditure as of 31 March 2022 indicated expenditure of only 95%, or R50.8 bn against total adjusted budget of R53.5 bn, which was below the acceptable norm of 100%. All the grants were underspent, with various explanations provided. Rollovers had been requested.

The major contributor to under-spending in all the conditional grants was the Health Facility Revitalisation Grant (HFRG) due to the poor performance of the contractors and the effect of the Covid-19 pandemic.

However, the TB and Human Papilloma Virus (HPV) components had spent 100% of their allocation. 

Indirect grant overview 

The total conditional grants' expenditure for indirect grants as of 31 March 2022 stood at 87.7%, or R1.3 bn against the total adjusted budget of R1.5 bn, which was below the acceptable norm. 

The non-personal services component, such as the Ideal Clinic, Patient Information System (PIS), and Improvement in Conditions of Service (ICS), were significant contributors to under-spending. This was due to the system, which went offline. The last payments were made at the end of the year but went through only in April, which led to the under-spending.

Audit outcome

The Department had received a qualified audit opinion. The qualification area related to a limitation finding in accrued departmental revenue involving the recoupment of the Covid-19 vaccine. 

The systems implemented by management were only sometimes adequate to ensure that all transactions and events were accurately recorded in the financial statements.

The NDoH had implemented a system to ensure that all the transactions and amounts were recorded and available in the accounting records. The accounting records were available and were provided to the audit team. It reconciled the transactions and events to the financial statements. The only issue was a difference of opinion between the NDOH and the audit teams on the appropriate treatment for claims that medical aid funds had subsequently rejected.  However, full details for these transactions were and are available, and the amounts were fully quantified and auditable.

Other matters raised by AGSA

The Auditor-General of South Africa (AGSA) identified material misstatements in the financial statements. Regarding capital work in progress (R61.7 million) the Department and the audit team had disagreed about the treatment of feasibility fees and research expenditure on capital projects. 

The matter was referred to the Office of the Accountant-General at National Treasury, which confirmed that the treatment by the NDoH for these expenditures was correct. However, the AGSA informed the Department that a technical opinion obtained supported their audit finding. To avoid a qualification on this matter, the Department had agreed to pass an adjustment relating to the prior period.

On accruals of R363.5 million, the annual financial statements had not disclosed administrative fees for COVID-19 vaccination events at private facilities.

Regarding contingent assets of R123.7 million, the AGSA had requested the Department disclose the value of vaccines in private facilities. 

Events after the reporting date involved an amount of R673 million, where the Development Bank of Southern Africa (DBSA) commitment value for a contract that was advertised before the end of the financial year, but the documentation from the supplier to conclude the award was received only after the end of the financial year.  

Professional fees and contracts were increased on the commitments register due to the increasing construction value for the Coega project. However, due to various contracting requirements, this needed to be formally communicated to the professional service provider (PSP).

There had been irregular expenditure of R61.4 million. The AGSA had identified eight cases of possible irregular expenditure, and the Department was required to record the amount in the annual financial statements as cases under consideration.

A prior period error involving R210 million had been omitted, and had to be included for payables in the 2020/21 annual financial statements.

R7,6 million: An inventory drafting error had been made -- the figure of R7.6 million for COVID-19 vaccines had been duplicated.

Irregular, fruitless and wasteful expenditure 

It was reported that R61 413 000 cases were identified during the previous financial year (2020/21).

There were a further eight cases where the determination and investigation process could not commence during the reporting period.

The irregularities were due to non-compliance with supply chain management (SCM) prescripts, payments towards expired contracts, and non-verification of tax compliance.

Five cases of fruitless and wasteful expenditure were investigated and concluded during the reporting period. No new cases of fruitless and wasteful expenditure were reported for the 2021/22 financial year.

Consequent management

The Department acknowledged that, in some instances, investigations were delayed due to the COVID-19 pandemic and the relocation of offices. It started with processes to finalise outstanding cases of fruitless, wasteful and irregular expenditure.

SCM non-compliance

There had been non-compliance with the policy that payments must be made within 30 days, or an agreed period, after receipt of an invoice. It was reported 8 408 invoices to the value of R7. 812 bn were paid on the Logical Information System (LOGIS), of which 1 623 invoices to the value of R138.2 million were paid after 30 days. In total, 80.6% of invoices were paid within 30 days.

The main reasons for the delays in were the closure of the Civitas building, with minimal access to transversal systems, and COVID-19 lockdowns and restrictions.

Asset Management

In disposing of computer equipment during the 2021/22 financial year, the Department could not comply with Treasury regulation 16A7.7 because the computer equipment disposed of was unusable due to water damage. There had therefore been an oversight in not complying with the regulation.

Quality of financial statements

The financial system recorded all financial transactions, and the annual financial statement (AFS) was supported with verifiable source documents. All financial transactions were reconciled daily and monthly as required by the Public Finance Management Act (PFMA) and Treasury regulations.

All inputs from end-user units for the AFS were captured and returned to the end-user unit to confirm the recording accuracy in the AFS.

Audit improvement strategy

The following essential elements were included in the strategy: 

• Proper record keeping;
• Processing and reconciling controls (daily, weekly or monthly); 
• Regular, accurate and complete financial and performance reporting; 
• Compliance monitoring.

The next steps required were developing and implementing the audit action plans, quarterly reporting on the identified findings in the audit management report, the NDoH providing an oversight role in implementing the audit improvement plans and reporting, and strengthening the internal control system of the Department.

(See the presentation for further details.)

Discussion 

The Acting Chairperson said that the Committee had taken cognisance of the issues that were raised in the presentations. 

Ms D Christians (DA, Northern Cape) noted that the targets for the provincial departments under Programme 1 to receive clean audits had been removed. She asked what measures had been implemented to improve the audit outcomes. In particular, what support was provided to poor-performing provinces such as the Northern Cape, which had not received clean audits since 2011? 

She referred to the backlog in surgeries, medical-legal cases linked to poor administration, and high vacancy rates in provinces such as the Northern Cape. How was the Department addressing these challenges? 

Regarding Programme 2's budget allocation reduction, she asked how the Department planned to address the significant under-spending. 

In Programme 3, what health promotion interventions were implemented to promote antenatal care in rural areas? Furthermore, what were the critical lessons learned from the mother-to-child transmission programme for the period under review? When did the Department plan to achieve the complete eradication of mother-to-child transmission? 

What steps were undertaken to support TB patients who defaulted on their treatment during the Covid pandemic? How many tests and contact tracing was conducted during the financial year? 

What measures were taken to replace the shortages of anti-retroviral (ARV) treatment drugs? 

Regarding the high level of teenage pregnancy, she requested the Department inform the Committee of its collaboration with the Departments of Basic and Higher Education. 

How was the Department addressing the high levels of irregular expenditure in provincial departments? 

She asked the Department to explain the fruitless and wasteful expenditure incurred. What action had been implemented against officials, and what would be done to prevent this in future? 

The Chairperson asked how the Department would fill the gap in terms of the vacancy rate. 

What measures were taken to address the poor performance by officials who did not meet their targets?

Ms S Luthuli (EFF, KZN) asked how many unemployed graduates and interns the Department had recruited. 

Mr I Ntsube (ANC, Free State) commented on the importance of proper administration and increased hospital capacity development. He called for prioritising the programmes and interventions on HIV/AIDS.

He asked what contingency measures were in place if there was another pandemic. 

The Acting Chairperson asked whether the DoH collaborates with the Department of Science and Innovation on the local production of vaccines and medication. 

Mr M Bara (DA, Gauteng) noted that the Department had previously received unqualified audits, which had recently changed to qualified audits. The Gauteng and Western Cape departments, and entities such as the South African Medical Research Council, had received unqualified audits. What was the cause of the regression in the recently qualified audits, and how would it be addressed? 

How many Cuban doctors had been deployed to South Africa, and how many remained in the country? What were the cost implications? 

DoH's response 

Dr Sibongiseni Dhlomo, Deputy Minister, responded to the issue of vacancies. He said that the position of the CFO was no longer on an interim basis, as a CFO had been recruited in October last year. 

There were backlogs in certain operations and programmes, including TB programmes, which had been delayed due to the Covid pandemic. The TB/HIV recovery plan was developed during the TB conference in 2022. 

The Department would continue eradicating the backlogs and accelerating essential health programmes. 

The Deputy Minister said that pandemic preparedness was essential. The African Union (AU) had requested the President to prioritise Africa in the manufacturing and distribution of vaccines. South Africa, under the lead of the Department of Science and Innovation, would become a hub for vaccine programmes. 

On the issue of Cuban doctors, South Africa recognised and harnessed the expertise of the doctors as lead epidemiologists. It has benefited South Africa and the world in combating Covid. 

DG Buthelezi added that 187 Cuban doctors had been deployed during the pandemic, and the remaining 67 were in Limpopo at the province's request. The contracts of the remaining doctors would end at the end of April. The doctors had filled a substantial void, and there was a reluctance to end the contracts. The Department would provide feedback on the cost at the next meeting. 

The Department managed the Covid crisis from 2020 until the reporting period. The multiple issues it had to deal with were the prevention of Covid, patient treatments and the procurement of vaccines. It had had to procure for both the public and private sectors. This required the establishment of a mechanism to protect persons who did not have medical insurance. 

The main priority had been to ensure that as many people as possible were vaccinated to reduce the spread of Covid. Numbers were determined according to estimates provided by the medical sector. The Department's financial statements were based on this information. This impacted the audit review by the Auditor General (AG), and there has subsequently been a qualified audit outcome. The Department was working closely with the AG to improve future audits. 

He confirmed that medical and legal cases were a significant challenge and concern for the Minister of Health and the Department. Several law firms had been recruited to conduct investigations at the central and provincial levels. The President had assigned a special investigation unit for further investigation. The Special Investigating Unit (SIU) manages the process. 

Dr Buthelezi said there was an excellent and symbiotic relationship with the Department of Science and Innovation regarding the local manufacturing of vaccines.

In recruiting unemployed graduates and interns, the Department fulfilled its statutory obligation to ensure that medical graduates conduct a two-year internship and one year of community service. Upon successful completion, the graduates were appointed to posts. The Department had successfully employed all graduates in the financial year.  

Mr Phaswa Phineas Mamogale, CFO, DoH, responded on what the Department was doing to return to unqualified audits. The Department had requested the AG to conduct an interim audit, and as of 1 March 2023, the testing of recruitment processes had commenced. 

Chartered accountants (CAs) were sent to the provinces to provide additional support. The CFO Forum and subsidiary SCM forum had been convened to action technical support to the provinces. 

The total amount of irregular expenditure was R359 million nationally. Disciplinary actions had been conducted, and condonement processes were pending. The reports would be finalised in March. 

Mr Andre Venter, DoH, added that the amount for fruitless and wasteful expenditure of R1.5 million was a historic expenditure due to the incompletion of investigations. There had been progress in the current financial year, and the matter would be addressed in the financial statements. 

Dr Nicholas Crisp, Deputy Director General (DDG): NHI, Department of Health, responded on Programme 2. He said the programme was evolving, and the NHI had yet to exist. It was a combined programme of the NHI and the Chief Operating Officer (COO). The COO position had been abolished, and it was now a process of unbundling the combined programme. Part of the staff had been reallocated to other programmes, and vacant posts had been created for some in programme management. 

Concerning affordable medicine, some of the hardware was not purchased in the financial year due to the preparations for the NHI platform. The digital systems were in the reorganisation process, and the hardware and programmes were in the consolidation process.

Mr Ramphelane Morewane, DOH, said maternal health fell within the scope of pregnancy education. Pregnant women were informed of this programme and educated on mother-to-child transmission. If mothers adhered to the prevention requirements, there would be a reduction and minimal transmission. 

The TB recovery plan was based on four pillars: detection of cases, linking those diagnosed to treatment, assisting them in finding TB care, and strengthening TB prevention efforts. 

Regarding collaboration with education departments on preventing teenage pregnancies, there was an ongoing programme to support learners in schools and youth zones in health facilities. 

Gender-based violence (GBV) and sexual assault survivors were assisted in the health facilities and Thuthuzela Care Centres (TCCs). The Department also works closely with law enforcement to assist survivors. 

Ms Jeanette Hunter, DDG: Primary Health Care and Hospital Management Systems, DoH, said that the Department needed to maintain records of the number of facilities found to be compliant. The facilities were in the sampling process, and the samples were small. The peer review mechanism was the most effective method to determine compliance. During the reporting period, it was determined that 1 928 clinics were compliant. Due to the high number of Covid activities, the number of compliant clinics has been reduced. However, since the conclusion of the lockdown, the numbers have been increasing. 

The Acting Chairperson said the lines of communications between the Committee and the Department were always open so if Members needed more information, this can be requested in writing.

The meeting was adjourned.