Health expenditure outcomes & the ffc’s health recommendations Briefing to the portfolio committee on Health 20 October 2011

Presentation outline Role and Functions of the Financial & Fiscal Commission Highlights of the Department of Health (DoH) Annual Performance Plans for 2010/11-2013/14 Selected DoH’s Achievements in 2010/11 Expenditure Outcomes Progress on past FFC recommendations FFC recommendations for 2012/13 Conclusion and issues for the future Presentation on 2010/11 Health Budgets & Expenditure Outcomes for 2010/11 - Portfolio Committee on Health 20 October 2011

About the Financial and Fiscal Commission The Financial and Fiscal Commission (FFC) is established in terms of S220 of the Constitution and the FFC Act (2003) as amended FFC makes recommendations on the equitable division of nationally raised revenue among and between the three spheres of government (and on any other financial and fiscal matters). The criteria that the FFC must use in making the recommendations are listed in S 214 (2) of the Constitution. FFC required to submit its Recommendations 10 months prior to the tabling of the DoR Bill and the budget in Parliament.

Selected NDoH’s Strategic Objectives for 2010/11 Presentation on 2010/11 DoHS Annual Report - PC on Human Settlements 11 October 2011

NDoH Expenditure Outcomes: 2010/11 Presentation on Health Budgets & Expenditure Outcomes- Portfolio Committee on Health 30 October 2011

Highlights of Audit Outcomes on NDoH Performance in 2010/11 The Department received a qualified audit opinion for 2010/11 financial year and the basis for the opinion was Movable tangible capital assets The asset register used to account for assets was not properly maintained during the year under review Matters of emphasis Irregular expenditure to the amount of R43.3 million was incurred due to non-compliance the supply chain management procedures (AG Report, p.142) The reported performance information was found to deficient in respect of reliability, validity, accuracy and completeness against indicators (AG Report, p.143) Conditional Grants The Transferring Officer did not adequately monitor expenditure and non-financial performance information as required by the DORA

Provincial Health Expenditure Outcomes: 2010/11 KZN & FS provinces spent the lowest share of their health adjusted budgets at 93.4% and 95.4% respectively. The highest expenditure shares were recorded by GP at 100.5% & NW at 100.2% Presentation on NDoH Budget & Expenditure Outcomes- PC on Health 30 October 2011

Provincial Health Expenditure as 31 August 2011 Average provincial health expenditure was at 38.9% as at 31 August 2011 Only the Eastern Cape spent above the National Treasury: Expenditure Benchmark of 41.7% by August 2011 Presentation on NDoH Budget & Expenditure Outcomes- PC on Health 30 October 2011

Health Conditional Grants Expenditure Outcomes: 2010/11 Provinces are struggling to spend on Forensic Pathology Services & Hospital Revitalisation grants 4 Provinces (EC, FS, GP & NC) spent less than 90% on the Forensic Pathology Services grant 6 Provinces (EC, FS, GP, KZN, LM & NC) spent less than 90% on the Hospital Revitalisation grant Presentation on NDoH Budget & Expenditure Outcomes- PC on Health 30 October 2011

Presentation on NDoH Budget & Expenditure Outcomes- PC on Health 2011/12 Health Conditional Grants Expenditure Outcomes as at 31 August 2011 (Exp. Benchmark: 41.7%) Only the Health Professions Training & Development Grant and National Tertiary Services Grant are spending at 41% HIV/AIDS, Infrastructure and Revitalisation Grants reported slow expenditure Presentation on NDoH Budget & Expenditure Outcomes- PC on Health 30 October 2011

FFC’s past health recommendations

FFC’s past health recommendations

FFC’s past health recommendations

Health Recommendations for 2012/13 DoR Government should finalise implementation of OSD and formalise the performance evaluation system In dealing with the expansion and implementation for OSD, government should: Be mindful of rising public sector wage bill relative to other priorities Rethink funding of personnel costs which are centrally determined but funded by provinces through PES Full costing of OSD implementation must be undertaken and national government must take responsibility for funding, preferably though a specific purpose conditional grant Formalise performance evaluation with aim of boosting productivity by emphasising high competence of health personnel

Health Recommendations for 2012/13 DoR Government should extend its ongoing efforts to reform health fiscal frameworks by taking into account the burden of disease giving rise to budget pressures, to cover: With respect to MDG 6 (AIDS) and the massive impact on maternal mortality and child mortality, it is important to emphasise a need to protect programmes such as those for combating HIV/AIDS from being underfunded or re-prioritised downwards. Review of funding for HIV/AIDS, opportunistic and other infectious diseases through a regular review of usage costs for chronic disease services in HIV/AIDS, TB, maternal and child health to inform resource allocations in public sector health care system Institutionalisation of a budget process that forces provincial health budgets to be based on estimations of needs of health care service users and holds provincial governments accountable for underfunding of hospitals and clinics  

Health Recommendations for 2012/13 DoR Proposes the re-examination of distribution of resources between different levels of care without weakening the role played by tertiary hospitals, but also strengthening role played by primary health care in health system Certain functions, such as procurement, human resources and financial management, should be devolved to hospital management to boost efficiencies and better performance Regarding the NHI scheme, there are issues concerning health financing arrangements as well as clarity on whether healthcare funding arrangements through provinces will be impacted upon (Submission on 2011 DoR Bill)

Conclusion and issues for the future Government should finalise implementation of OSD and formalise the performance evaluation system The department must give priority on the maintenance of the asset register system in line with the PFMA and GIAMA Compliance with the supply chain management procedures needs to be adhered to There is a need to rationalise health infrastructure grants and come up with a revised delivery model for infrastructure delivery Valid, Accurate and Complete Non-financial Performance Information should be in line Treasury requirements Development of the monitoring system to monitor conditional grants expenditure and non-financial performance information as required by DORA The Commission is finalising its submission on the NHI Green Paper which will be made available to the Committee as well