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

2. Presentation outline
Role and Functions of the Financial & Fiscal Commission
Highlights of the Department of Health (DoH) Annual Performance Plans for 2010/ /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

3. 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.

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

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

6. 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

7. 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

8. 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

9. 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

10. 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

11. FFC’s past health recommendations

12. FFC’s past health recommendations

13. FFC’s past health recommendations

14. 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

15. 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

16. 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)

17. 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