Report of the Portfolio Committee on Health on the Annual Report of the National Department of Health 2004/2005 and for it’s entities the Council for Medical Schemes and the Medical Research Council, dated 15 November 2005:

The Portfolio Committee on Health, having considered the Annual Report of the National Department of Health 2004/2005 and for it’s entities the Council for Medical Schemes and the Medical Research Council, referred to it, reports that it has concluded its deliberations thereon.

The Committee further reports as follows:

Background information on submitting annual reports of the Departments and entities reporting thereto to Parliament

On the 30^th of September 2005 the National Assembly referred the Annual Report of the National Department of Health 2004/2005 and it’s entities the Council for Medical Schemes and the Medical Research Council, Department to the Portfolio Committee on Health. The Committee decided to call upon these entities for extensive hearings on their Annual Reports, Financial Statements, and the report of the Auditor General.

In terms of current National Assembly processes, all Parliamentary Portfolio Committees are required to consider and report on the annual reports of Departments and public entities after they are tabled in Parliament. The objective for consideration of the annual reports is to assess the performance of the department and public entities that report to the Department against the targets set in the previous financial year.

Furthermore, the purpose of processing the annual reports from both the National Department and entities reporting thereto, is to ascertain whether the strategic plan, budget and business plan are in line with the requirements of section 654 (1) of the Public Finance Management Act (PFMA).

The Committee, having oversight over the Department of Health together with entities that report to the Department, in terms of fulfilling its functions, has to report to Parliament on the Annual Reports, which cover all activities that the Department has done during the year ending on 31 March 2005. This also applies to the financial statements that that Department must submit.

The Committee having heard and considered evidence on the Annual Report of the National Department of Health 2004/2005 and it’s entities the Council for Medical Schemes and the Medical Research Council presents its report thereon.

Overview of presentations on the Department of Health and its entities

2.1 Department of Health

The Director General for the National Department of Health, Mr T Mseleku together with the Chief Financial Officer of the Department, Mr G Muller presented the 2004/05 Annual Report and financial statement for the National Department of Health. The main focus of the presentation was on legislative mandates, administration, strategic health, health services delivery programmes and challenges

Legislative mandates

The legislative mandates for the departments are the Constitution of the Republic of South Africa, National Health and Care Acts, Public Finance Management Act and Medicines and Related Substances Act as well as the Medical Schemes Act.

Mr Mseleku briefly gave an overview of the priorities of the Department from 2004 to 2009. Amongst the priorities of the Department the following were identified:-

Improving governance and management of the National Health Services;

Improving of management of communicable and non-communicable disease through strengthening of primary health care, emergency services and hospital delivery system; and

Contribute towards human dignity by improving quality of care and promotion of healthy lifestyle

2.1.2 Programme Administration

The programme presented by the Director General, provides improved integrated planning with provinces and districts as well as packages of care for primary health care, district hospitals and tertiary care. The administrative side of the Department also focussed on the review of annual reports of the provinces.

2.1.3 Programme 2: Strategic Health Programmes

This programme focussed on how provinces should work with the National Department in terms of integrating all activities within health care like telemedicine facilities, offering of VCT and PMTCT to patients. In their strategic programme the Department has managed to monitor 74 NGO’s, that have been funded, issuing of licences to pharmacist, TB related issues have also been intensified.

2.1.4 Programme 3: Health Service Delivery

This programme covers guidelines to improve management for hospitals, which has been improved by 60%. Through its service delivery processes the Department had managed to improve employer relations with the National Department of Health and 55% of grievances have been solved internally.

The Department also touched on improving hospital revitalisation programmes

2.1.5 Challenges

The challenges faced by the Department were:

TB control and campaign intensifications;

improvement of services in public hospitals;

retaining of and recruitment of health professionals; and

improvement of emergency medical services.

The Committee deliberated on the Report and raised the following concerns:

limited operations for 2004/05 in regard to South African Aids Trust;

concern about appointment of 5 trustees instead of 7 on South African Aids Trust;

failure by the Department to take the resolution taken by SCOPAs report on management;

issue of the slow pace of hospital revitalisation especially in KwaZulu-Natal;

non-availability of business plans from 2 provinces for HIV and AIDS;

late submission of reports and incomplete information on reports; and

lack of reconciliation and monitoring between the National

Department and KwaZulu-Natal on expenditure

The Committee then RESOLVED to ACCEPT the Report by the national Department of Health

2.2 Report by Council for Medical Schemes

2.2.1 Background Information on Council for Medical Schemes

The Council for Medical Schemes is a statutory body established by the Medical schemes Act to provide regulatory supervision of private health financing through medical schemes. The governance of the Council is vested in a board appointed by the Minister of Health, consisting of a Non-executive Chairman, Deputy Chairman and 13 members.

The Executive Head of the Council is the Registrar, also appointed by the Minister in terms of the Medical Schemes Act. The Council determines overall policy, but day-to-day decisions and management of staff are the responsibility of the Registrar and the Executive Managers.

2.2.2 Overview of presentation on Council for medical Schemes

The main focus of the presentation by the Council for Medical Schemes was

Functional activities of the Council

Annual Financial Statements

Challenges

2.2.3 Functional activities of the Council

Activities that were indicated in a report by the Council for Medical Schemes were the monitoring of solvency and financial soundness of medical schemes, control and co-ordinating the functioning of medical schemes in a manner that is complementary with the national health policy, investigating complaints and settling disputes in relation to the affairs of medical schemes.

The Council also collects and disseminates information about private health care in South Africa, make rules (that are in line with the Medical Schemes Act) with regard to its own functions and powers, and makes recommendations to the Minister of Health on criteria for the measurement of quality and outcomes of the relevant health services provided for by medical schemes.

The Council was also involved in a project that focussed on investigating causes of governance failure and possible solutions in a number of schemes that included Prosano, Protector Health and Commed.

In regard to valid complaints against medical schemes the Council had received 1848 complaints and was able to solve 91% of these complaints as well as 20 appeals against decisions of disputes.

2.2.4 Annual Financial Statements

The Council indicated that the operating budget expenditure for the Council for 2004/05 was R34, 889.976 billion from a budget of R35, 751 848 billion and this was covered by an income of R29 644,910 plus a surplus of R6 million. In terms of audit reporting the Auditor General stated that the Council’s financial statements comply with requirements of Generally Accepted Accounting Practice (GAAP) and other applicable laws.

2.2.5 Challenges

Apart from the work that the Council was doing there were challenges that the Council was faced with:

to ensure that more people could afford to join medical schemes;

the issue concerning the high cost of private hospital services remains a challenge to the Council; and

the continuance of pursuing fair treatment of members by the medical schemes

The Committee deliberated on the Report and raised the following concerns:

the decline of General Practitioners in terms of total benefits paid;

the issue of broker fees which seemed to have increased by 206,4% was raised by the members;

600 unpaid accounts which rose by 35,71%;

the increase of months for claims from 4.2 to 5.7 months; and

complaints from the clients that have not been resolved.

The Committee then RESOLVED to ACCEPT the Report by the Council for Medical Schemes

2.3 Medical Research Council

2.3.1 Overview of presentation on Medical Research Council

The Medical Research Council is a statutory Council established under Act 589 of 1991. The objectives of the Medical Research Council are to promote the improvement of the health and quality of life of the population of South Africa through research, development and technology. The Medical Research Council performs its functions as may be assigned to by and under the Act.

The Council interacts with the National Department of Health, Department of Science and Technology together with 9 Health Science Councils and Non-Governmental Organisation as well as the Portfolio Committee on Health

2.3.2 Functional activities of the Council

The Medical Research Council is engaged in research translation through policy, practice, promotion and product. The National Department of Health is the principal channel, through which the MRC research can improve the health of the nation as the National Department of Health develops national health policies to be tabled in Parliament, in conjunction with the 9 provinces.

The Medical Research Council is also involved in research through practice by interacting with other stakeholders such as health care professionals, social workers and other professionals.

The research that is done by the Medical Research Council through health promotion creates a healthy environment for South Africans because health choices that people can make protect their health and well being. The Medical Research Council is involved in identifying the determinants underlying the behaviours that lead to disease determinants such as poverty, lack of education or gender power imbalances.

The Medical Research Council was also involved, through its functional activities in developing products such as patents for new drugs and vaccines, medical devices and disclosure of new biomedical or public health processes such as training programmes for lay health workers.

Other functional activities that the Medical research Council embarked on are:

Research strategy and business plan

New opportunities for research

Capacity building (training off scientists particular black scientists)

Developing of new drugs within 3 years

2.3.3 Annual Financial Statements

The Council indicated that the operating budget expenditure for the Council for 2004/05 was R350 million. R180 million was a budget from Medical Research Council and R170 million was an amount from external income. The amount is reliably sustainable year after year.

2.3.4 Challenges

Challenges that are faced by the Council are:

R403 million which would be needed for the next three years. This amount would be needed in terms of facilitating more research projects for the Council; and

Telemedicine facilities –That the Council was experiencing challenge in terms of not having a policy governing telemedicine.

The Committee deliberated on the Report and raised the following concerns:

the budget of R180 million was not enough taking into account the amount of work that was being done by the Council;

lack of skills in operational research capacity both in South Africa and the South African Development Countries;

preparedness of Council in terms of dealing with the avian flu; and

non-compliance with laws, rules and regulations in that the Council has failed to institute a fraud prevention plan as required by Treasury Regulation 27.2.1.

The Committee then RESOLVED to ACCEPT the Report by the Medical Research Council.