PRESENTATION OF THE NATIONAL LABORATORY SERVICE AMENDMENT BILL, 2015 Portfolio Committee on Health 20 June 2017

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.

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

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

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.

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 (commodites, reagents) increased Cash flow issues affected even payroll functions. Over the last year almost 2000 staff have left NHLS

Amendments proposed Clause 1 proposes amendments to section 1 of the Act by, firstly, the deletion of the definition of ‘‘teaching environment’’ as the expression is never used in the Act. The clause also seeks to define words and expressions inserted in the Act by the Bill, namely ‘‘National Health Council’’, ‘‘prescribed’’, ‘‘private health sector’’ and ‘‘diagnostic health laboratory services’’ and to amend the expression of ‘‘chief executive officer’’. Clause 2 seeks to amend section 3 of the Act by including the Preferential Procurement Policy Framework Act, 2000 (Act No.5 of 2000), thereby making the provisions of that Act applicable to the Service. The clause also seeks to provide that the Board of the Service is the accounting authority of the Service.

Amendments proposed Clause 3 proposes amendments to section 4 of the Act. The clause seeks to insert the word ‘‘diagnostic’’ in paragraph (a) to ensure that the core mandate of the Service is to provide ‘‘diagnostic health laboratory services’’ to the public. Furthermore, in paragraph (b) of the section it is proposed that the word ‘‘provide’’ be replace with the word ‘‘support’’ in order to reduce the burden on the Service by giving the Service a supporting role instead of the Service being the provider of training for health science education. Clause 4 seeks to amend section 5 of the Act in order to make it clear that it is the duty of the Service to promote the training of its staff members only.

Amendments proposed Clause 5 seeks to replace section 7 of the Act and to provide for the composition of the Board of the Service anew. In terms of the new section 7, the Board will consist of: the chief executive officer by virtue of his or her office; the chief financial officer of the Service by virtue of his or her office; three members representing the national Department of Health; the Department of Science and Technology; the higher education sector; three representatives of provincial departments; and six members who must have extensive experience in the fields of commerce, finance, auditing and economic matters, corporate management, public health, diagnostic laboratory services, legal matters and epidemiology. It is further proposed that the Board is accountable to the Minister of Health.

Amendments proposed Clause 6 proposes amendments to section 8 of the Act in order to align that section with the amendments proposed to section 7. It is also proposed that the words ‘‘and must ensure that appropriate laboratory professionals are appointed’’ be omitted in 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.

Amendments proposed Clause 7 seeks to replace section 9 of the Act and to provide for the appointment of the chairperson and vice-chairperson of the Board of the Service in more detail. The Minister appoints a chairperson and a vice- chairperson for the Board from amongst the non-executive members of the Board. Whenever the chairperson of the Board is absent or unable to perform his or her functions as chairperson, the vice-chairperson must act as chairperson and if the vice-chairperson is absent or unable to act as chairperson, the members must designate another member of the Board to act as chairperson until the chairperson or vice-chairperson is available. The clause also proposes that in the event that the chairperson or the vice- chairperson being absent or unavailable for two consecutive meetings, the Board in consultation with the Minister designate a member to act as chairperson or vice-chairperson until such time that the chairperson or vice- chairperson is able to resume his or her functions as chairperson or vice-chairperson.

Amendments proposed Clause 8 Clause 9 Clause 10 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 the leave of the Board. The current position is that the member must be absent ‘‘from more than’’ two meetings without such leave. Clause 9 proposes the insertion of section 10A in the Act and seeks to provide for the dissolution of the Board by the Minister under certain circumstances and the appointment of an Interim Board. It is further proposed that a new Board must be constituted within 180 days of the dissolution of the old Board. 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. The replacement of the word ‘‘prescribed’’ with ‘‘determined’’ is necessary as a result of amendments proposed to section 27 of the Act. In terms of those proposals the Minister will be empowered to ‘‘prescribe’’ certain matters by the making of regulations

Amendments proposed Clause 11 seeks to amend section 13 of the Act by providing that the Chief Financial Officer must be appointed to the executive management committee of the Board. Clause 12 proposes the insertion of sections 13A and 13B in the Act. Sections 13A provides for the appointment of the chief executive officer of the Board and section 13B for the functions of the chief executive officer. Clause 13 seeks to amend section 18 of the Act by replacing the words ‘‘income earned from fees for services rendered’’ with ‘‘fees collected’’ in order to provide clarity on the nature and the source of funding.

Amendments proposed Clause 14 seeks to replace section 20 of the Act by providing that the Service may charge such fees for services rendered as may be prescribed by the Minister, after consultation with the National Health Council and the Minister of Finance. In terms of the proposed definition of ‘‘prescribed’’ the Minister may by regulation prescribe the fees that may be charged by the Service. The current position is that the Service determines the fees after consultation with the Minister. Clause 15 seeks to repeal section 25 of the Act. The provisions of that section have become redundant as a result of the proposed insertion of section 10A in the Act

Amendments proposed Clause 16 seeks to amend section 27 of the Act. The section is to be amended to empower the Minister to make regulations regarding amongst others anything that must or may be prescribed in terms of the Act. The Minister makes the regulations after consultation with the National Health Council. Before the Minister makes any regulation, the regulation must be published in the Gazette for at least one month calling for interested persons to submit their comment. Clause 17 proposes transitional provisions in respect of the current Board and chief executive officer of the Board. Clause 18 provides for the short title and commencement date.