PRESENTATION ON THE NATIONAL LABORATORY SERVICE AMENDMENT BILL, 2017 SELECT COMMITTEE ON SOCIAL SERVICES 12 June 2018 1

HISTORICAL PERSPECTIVE After the first democratic elections in April 1994 the Hon Minister, Dr. Zuma, appointed a Task Team to investigate the services and to make proposals for the restructuring of the laboratory services. The largest component of the public laboratories is the South African Institute for Medical Research (SAIMR). The SAIMR was established in 1912 and formalized in a “Founding Agreement” in 1917. The two parties to the agreement were the Department of Health and the Chamber of Mines (as the representative of the successor to the original agreement, the Witwatersrand Native Labor Association). The other laboratories were established by the several homeland and provincial administrations (plus the Medical Schools of the universities) and are managed largely by the new provincial administrations. 2

INEQUITABLE ACCESS AND SUSTAINABILITY Post 1994, the Public Health Service laboratory services were fragmented owing to historical developments and policies. Laboratory services were non-existent in former homeland areas, with the exception of KZN This resulted in provinces being dependent on the SAIMR for the provision of laboratory services. In provinces like LP, MP and NW, if a sample was collected and sent to a laboratory, if that lab could not conduct the test, the process ended there, there was no further referral. At the time (1998), SAIMR was also responsible for blood transfusion services in the OLD TRANSVAAL. Further, provinces like LP, MP, NW were not able to recruit and establish their own laboratories. This was compounded by SAIMR refusing to provide transfusion services if the Private sector was used. In Limpopo, a batch of tests results were compared with the private sector and major discrepancies were found in the accuracy of testing. Lastly, by 1998 the SAIMR was insolvent due to poor payments from the provinces. 3

ESTABLISHMENT OF NHLS Following extensive deliberation he Health MINMEC, a committee comprising the Minister of Health (as Chairperson) and the nine provincial MECs (political heads) responsible for health resolved that: Owing to the poor state of laboratory within SAIMR and provincial departments of Health; The need for greater equity in access to health care and thereby within laboratory services; and the need for a uniform and coordinated laboratory service A provincial model of provision of laboratory services was not appropriate, and that all laboratory services comprising of SAIMR, provincial laboratories and homeland laboratories must be amalgamated. Two of the major questions that delayed the amalgamation of all of these services and their re-organization were: whether to privatize, nationalize or manage the service as a parastatal; and the ownership of the SAIMR as an existing institution. The MINMEC, resolved on 02 October 1998 that the National Health Laboratory System (NHLS) would be a parastatal organization. 4

OBJECTIVES OF NHLS The NHLS was created with the objective to: Address equity in access to laboratory services; Address capacity with respect to the ability of recruitment of specialised skills in former disadvantaged areas; Become the platform for teaching, training and research related to laboratory services, including the training of registrars; and To build and sustain a network of pathology services to meet the public health needs of South Africa. 5

SUMMARY OF PROBLEMS AND CHALLENGES 11/16/2018 SUMMARY OF PROBLEMS AND CHALLENGES Whilst the NHLS has achieved certain objectives, such as consolidation and strengthening of laboratory services, infrastructure, improvement in access and offers high quality teaching, training and research structures, it is the overall leadership and governance of NHLS that has created problems and challenges. Problems and challenges are summarised as follows: Leadership and governance Service vs. Business Interface between NHLS and external stakeholders Including managing reconciliations, gate keeping and debt management Using fee revenue to Fund national functions Poor internal policies and controls These problems undermine the good efforts made by NHLS since 2000 and has started to impact on the service delivery. NHLS has been unable to effectively address concerns by several stakeholders (provinces) As financial issues mounted (unpayment by provinces) debts of NHLS towards service and good providers (commodities, reagents) increased Cash flow issues affected even payroll functions. Over the last year almost 2000 staff have left NHLS 6

LONG TITLE OF THE BILL To amend the National Health Laboratory Service Act, 2000, so as to: define certain expressions and to amend or delete certain definitions; make the Preferential Procurement Policy Framework Act, 2000, applicable to the National Health Laboratory Service; adjust the objects and duties of the National Health Laboratory Service; strengthen the governance and funding mechanism of the National Health Laboratory Service; and provide for matters connected therewith. 7

AMENDMENTS PROPOSED Clause 1 Seeks to amend Section 1 of the Act by deletion of the definition of “teaching environment” (the expression is never used in the Act). The clause also seeks to amend the expression of “chief executive officer” and adding the definitions of “diagnostic health laboratory services”, “National Health Council”, “prescribed” and “private health sector”. 8

AMENDMENTS PROPOSED Clause 2 11/16/2018 AMENDMENTS PROPOSED Clause 2 Seeks to amend Section 3 of the Act by including the Preferential Procurement Policy Framework Act, 2000 (Act No.5 of 2000) to apply to the NHLS. The clause also seeks to provide that the Board of the Service is the accounting authority of the service. 9

AMENDMENTS PROPOSED Clause 3 Seeks to amend Section 4 of the Act by adding the word “diagnostic” to paragraph (a) to ensure that the NHLS’s core mandate is to provide diagnostic health laboratory services to the public. Furthermore, paragraph (b) is amended by inserting the word “support”, and deletes the word “provide” to reduce the burden on the NHLS by giving the NHLS a supporting role instead of it being the provider of training for health science education. Clause 4 Seeks to amend Section 5 of the Act by making it clear that the training that must be undertaken by the NHLS must be to its staff members only. 10

AMENDMENTS PROPOSED Clause 5 Seeks to strengthen the governance of the NHLS and the accountability thereof by replacing section 7 of the Act and to provide for the composition of the Board of the service anew. The Board will consists of the following members, appointed by the Minister: (a) The chief executive officer by virtue of his or her office; (b) the chief financial officer of the Service by virtue of his or her office; (c) three members representing— the national Department of Health; the Department of Science and Technology, nominated by the Director-General of that Department; (iii) the higher education sector, nominated by the Council on Higher Education; (d) six members who must have extensive experience in the fields of: (i) Commerce, finance, auditing and economic matters; (ii) corporate management; (iii) public health; (iv) diagnostic laboratory services; (v) legal matters; and (vi) epidemiology; and (e) One representative of Organised Labour. It is further proposed that the Board is accountable to the Minister. 11

AMENDMENTS PROPOSED Clause 6 Seeks to amend Section 8 of the Act in order to align it to the new section 7 and delete reference to “[and must ensure that appropriate laboratory professionals are appointed]”. It is also proposed that the words “and must ensure that appropriate laboratory professionals are appointed” be omitted in section 8(1) of the Act as the members from the bodies and institutes referred in the new section 7 are not necessarily laboratory professionals. 12

AMENDMENTS PROPOSED Clause 7 Seeks to replace Section 9 of the Act and to empower the Minister to appoint the Chairperson and the Vice – Chairperson from the members of the Board amongst the non-executive members of the Board. The clause also provides for the Board in consultation with the Minister to designate a Chairperson or Vice - Chairperson amongst the members in the event the Chairperson or Vice - Chairperson being absent or unavailable for two consecutive meetings until such time that the Chairperson or Vice Chairperson is able to resume his or her functions. 13

AMENDMENTS PROPOSED Clause 8 Seeks to amend Section 10 of the Act in order to provide that a member must vacate his or her office if he or she has been absent for two consecutive meetings of the Board without leave of the Board. The current position is that the member must be absent “from more than” two meetings without such leave. 14

AMENDMENTS PROPOSED Clause 9 Seeks the insertion of section 10A after section 10 to provide for the removal from office of a Board member or the Board under certain circumstances i.e. if the Board is unable to perform its duties in terms of this Act or on the grounds of mismanagement; if there is a total breakdown in the relationship between the Minister and the Board; or if there is a breakdown in the relationship amongst the members of the Board, which renders the continued effective functioning of the Board impossible. The Clause also provides for appointment of an interim Board within 21 days of the dissolution, consisting of a minimum of three persons and it is further proposed that a new Board must be constituted within 180 days of the dissolution of the previous Board. 15

AMENDMENTS PROPOSED Clause 10 Seeks to amend Section 11 of the Act by providing that the meetings of the Board and the conduct of business at meetings must be “determined” by the rules as follows: amend subsection (1) by deleting reference to [prescribed] and replacing it with determined. The replacement of the word “prescribed” with “determined” is necessary as a result of amendments proposed to section 27 of the Act. The Clause also seeks to amend subsection 3 to allow for the member presiding at the meeting to have a casting vote in the event of an equality of votes by deleting reference to [in addition to his or her deliberative vote]. 16

AMENDMENTS PROPOSED Clause 11 Seeks to amend section 13 of the Act by substituting paragraph 1(b) as to empower the Board to appoint a chief financial officer and any other employees of the service as the Board deem necessary to the executive management committee. Clause 12 Seeks to insert sections 13A, 13B and 13C in the Act after section 13 to provide for the appointment of the chief executive officer, the functions of the chief executive officer and the accountability of and reporting by chief executive officer. Clause 13 Seeks to replace Section 18 of the Act by providing that the Minister in consultation with the Minister of Finance may prescribe a financing mechanism for the service. It also provides for the funds of the Service. 17

AMENDMENTS PROPOSED Clause 14 Seeks to repeal section 20 of the Act. The provisions of that section have become redundant as a result of the new proposed section 18. Clause 15 Seeks to repeal section 25 of the Act due to the insertion of section 10A into the Act. 18

AMENDMENTS PROPOSED Clause 16 Seeks to amend section 27 of the Act by inserting the word Regulations in the heading of section 27. It also seeks to insert 2 sub-sections after sub-section (3) to allow for the Minister to make regulations regarding anything to be prescribed in the act. The Minister makes regulations after consultation with the National Health Council. The regulations must be published in the gazette for at least 1 month before commencement. 19

AMENDMENTS PROPOSED Clause 17 Proposes transitional provisions in respect of the current Board and chief executive officer of the Board. Clause 18 Seeks to provide for the short title or the name of the proposed Act and commencement date. 20