Presentation to the Health Portfolio CommitteeNHLS Annual Report 2010/2011

Sagie Pillay CEO

Adv Sesi Baloyi Board Chair

Nov 9,2011

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OUR MONEY

Clean audit

For the fifth year in succession, the NHLS received a clean audit report. The NHLS posted an accounting surplus R264 million.

Affordable prices

Prices for the priority programmes of HIV, TB and pap smears were reduced, on average, by 10%, resulting in R217,7 million savings to provincial health departments.

Overall, test prices decreased by 1%, well below the inflation rate increase of 4.1%.

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Cash flow

The accounting surplus of R264m did not materialise into cash due to the poor payment pattern by certain provinces. Debtors have increased by R340m, resulting in a cash deficit of R83m, despite reducing capital expenditure to R122m (R98m lower than 2010).

Segmental analysis of net cash deficit

This net cash deficit of R83m is made up as follows: Subsidy to National Institute for Communicable Diseases Subsidy to National Institute for Occupational Health and the National Cancer Registry Funding of teaching and training, and research Laboratory services

NHLS is mandated by the NHLS Act of 2000 to fund the Institutes and teaching, training and research from the laboratory test fee-for-service.

The impact of this on test prices is 14%. 3

Turnover for the year increased by R397m or 13% from R3,049m to R3,446m. The increase was attributable to the conversion of the KwaZulu-Natal flat-rate billing model to the fee-for-service model from 1 April 2010.

Gross margin as a percentage of turnover increased by 2.2% from 29.1% in 2010 to 31.3% in 2011. This increase is attributable largely to the change in sales mix.

Overheads increased by R98m or 10% from R938m to R1,036m.

This is largely attributable to an increase in temporary employee numbers as well as salary increases.

The planned implementation of Oracle Release 12 led to a R15m increase in software development expenses. Other significant increases related to an increase in the cost of utilities, salaries increased due to OSD.

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Working capital management

Inventory of R 73m (2009 - 2010 - R69m) is managed at 31 days which is 19 days better than the prior year of 50 days. Debtors of R1,786m (2010 - R1,328m) are at 154 days (2009 - 2010 - 126 days) due to the poor payment pattern of certain provinces. This has resulted in creditor days worsening from 45 days on 2010 to 62 days this year.

Capital expenditure

During the current financial year, capital expenditure amounted to R122m compared to the prior year amount of R213m and was funded purely from internal resources. Capital expenditure was spent as follows to maintain existing infrastructure:

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2010 – 2011 Financial highlights

POSITIVES:

Unqualified Audit Opinion – 5th year in a row

Test Prices decreased by 1%

NEGATIVES:

Growth in revenue, whilst still positive, is declining

Debtors collections is poor

Capital Expenditure % of Turnover of 3% is the lowest in last 5 years

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5 Year financial summary

2007 2008 2009 2010 2011

Turnover 1 735 414 2 236 963 2 667 398 3 033 151 3 455 924

Growth % 29% 19% 14% 14%

Materials 430 427 614 354 804 586 904 034 867 799

Overheads 1 122 738 1 425 376 1 422 827 1 804 505 2 105 271

Net Capital Expenditure 125 385 122 669 176 527 213 326 108 058

Invested in Debtors 76 350 115 468 379 855 -9 201 458 005

Net Cash Generated/(Utilised) (19 486) (40 904) (116 397) 120 487 (83 209)

Net Capital Expenditure % of Turnover 7% 5% 7% 7% 3%

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Annual price increase

Year 2007 2008 2009 2010 2011

Annual Price Increase 4.5% 2.2% 4.0% 6.0% 1.0%

CPI 4.6% 7.2% 11.5% 7.1% 4.1%

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DSO

Year 2007 2008 2009 2010 2011

DSO 57 114 147 126 154

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HUMAN RESOURCES

Scarce skills development

 

The NHLS is committed to increase its training of the next generation of world class pathologists. During the past year the following increases in the scarce-skilled areas were achieved:

Pathologists and medical officers: 8.7% (207 to 225)

Registrars 2,9% (207 to 213)

Medical scientists: 2,4% (207 to 213)

Medical technologists: 2.2% (1385 to 1415)

Medical technicians: 23,5% (528 to 625)

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Workplace Skills Plan

 

The were 4,796 training occurrences at a cost of R39,543,687; that is 2,8% of payroll compared to the 1% stipulated by the Skills Development Act.

 

Employment equity reached an 83% representation of black males and females.

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Workforce Profile

The overall headcount increased by 2.8% in the reporting period compared to 2.4% in 2009/10.

Executive complement was fully filled.

Pathologists and medical officers increased by 8.7% (18), making the total 225. The increase was mainly among Africans, Indians and Coloured females.

Registrars increased by 2.9% mainly among African, Coloured and Indian females including Coloured males. African females in particular increased in number from 40 to 49.

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Five-year trend

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Five-year trend

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Five-year trend

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Five-year trend

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Workforce profile

• An increase of 2.4% (5) medical scientists was recorded in 2010/11 compared 2009/10. Africans showed the most increase in numbers followed by Indians and then Coloured. This category was dominated by white females, whose numbers are stabilizing.

• An increase of 2.2% (30) medical technologists successfully completed the internship programme, mostly African males and females. The drop in number from 129 in the previous year was due to the low national pass rate of 47%. NHLS has achieved a 53% pass rate, 6% above the national mark.

• A significant increase of 23.5% (124) medical technicians was recorded, mostly NHLS laboratory support staff, who enrolled for further training to enhance capacity in the laboratories. African shows a significant increase, followed by Indian and Coloured. White medical technicians’

numbers remain constant and lower. 18

Five-year trend

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Five- Year Trend

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Core skills training

• A total of 1, 042 registrars , interns and students was recorded at the end of the 2010/11 financial year compared to 1, 025 in 2009/10.Registrars in training in 2010/11 were 213 compared to 207 in 2010/11.

• Medical scientist interns number reduced by 12.2% (9); this is line with the current organisational needs.

• The total recorded for student medical technologists is 2.9 % lower than the previous year. This is a result of reduced numbers qualifying for admission into the tertiary institutions; hence 61 new bursaries were awarded to matriculants in 2010/11 compared to 74 in the previous financial year. 16 out of the 61 bursars (26%), were attracted from the rural areas.

• Student medical technicians increased by 8.6%. This is a combination of student medical technologist who opt for the technician level qualification and skills development of serving laboratory employees.

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Skills Development and grants

• A total of R39, 6 million was invested in various technical and managerial skills development initiatives. This is 2.8% of the payroll compared to the legislated 1%. NHLS has earned mandatory grants which are re-invested in the training of staff.

• Under the newly established NHLS Learning Academy:

• 58 employees were enrolled on various leadership and management development programmes funded by the NHLS

• A total of 4796 short term skills initiatives were funded and implemented

• Grants were received from various donors to enhance skills development:HWSETA: 44 phlebotomy technicians, DST: 10 additional medical technologists and scientistsBasil Read: 5 medical technologist and 1 post-graduate studentCDC: Improvement of training laboratories. 23

Employment equity

Employment equity, skills development and transformation (EESDT) structure was devolved into the regions during the 2010/11 financial year with a central committee that oversees the organisational activities.

The Department of Labour conducted a workshop on the Legislated Employment Equity Framework to guide the EESDT Committee.

The representation of Black employees within the NHLS continues to improve from 81% to 83% over the past three financial years.

The representation of Black executive and management appointments in 2010/11 was 67%, of which 72% of these were female.

The representation of female in top and senior management positions was recorded at 47% in 2010/11, an improvement from the 45% recorded in the previous reporting period.

The executive team recorded 25% female representation.

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ACADEMIC AFFAIRS

 

Training of scarce skills

 

The NHLS trains all pathologists in South Africa. Bilateral agreements were developed to govern the relationships between the NHLS and nine university affiliates which share joint responsibilities towards service, teaching and research.

 

A bilateral agreement was drafted to regulate the NHLS’s relationship with eight Universities of technology regarding the training and qualifying of medical technologists.

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Research

 

The NHLS is renowned for its cutting edge research in fields particularly benefitting South Africa and its people. A total of 177 new grants to fund such research projects to the value of R178,399,660 were awarded by local and international agencies.

 

NHLS researchers published 486 research projects in peer-reviewed journals and academic text books.

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QUALITY ASSURANCE

Doing it better

 

An external survey showed a 6.9% improvement in customer satisfaction from 59.7% to 66.6% over the previous year.

 

By year-end 72 laboratories had been accredited against a target of 184 by the 2014/2015 financial year.

 

The total number of enrolments in the NHLS proficiency testing schemes increased by 9% to 2,599.

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INFORMATION TECHNOLOGY (IT)

Improving service delivery

 

A specimen tracking project was initiated and piloted in KwaZulu-Natal. The specimens and laboratory reports are scanned by the driver at the point of collection and delivery; the information is then transmitted via a cellular data connection to TrakCare Lab laboratory information system (LIS). Turnaround times are therefore measured more accurately, and the loss of specimens and reports while in transit is eliminated. The information will be used to produce audit and turnaround time reports in an effort to improve the overall service to the NHLS customers.

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Saving test costs

 

To save costs for the Department of Health, an electronic gate-keeping (EGK) system was piloted and implemented at Tygerberg and Groote Schuur hospitals in the Western Cape. EGK uses the LIS to approve or reject laboratory tests based on the protocols for patient management devised by the hospital.

Cell phone technology employed

 

Phase one of the Mobilabs project which gives access to laboratory results through cell phones, was rolled out to 213 clinicians in the Eastern Cape and 110 in the Free State. In addition, 361 cell phones and 232 laptops were installed in hospital wards and in clinics in the Eastern Cape and Free State, respectively, enabling clinicians to access electronic results.

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COMMUNICATIONS

The Communications, Marketing and Public Relations department was added to the corporate structure in 2010 to create a single brand identity for the National Health Laboratory Service, to elevate its profile, to improve both the internal and external communication and develop a stakeholder relations strategy.

Customer Satisfaction Survey

A new measurement tool was developed to survey the satisfaction levels of a wider sample of customers for the NHLS. The tool will be implemented in the next financial year.

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Media

An annual advertising budget of R400 000.00 the NHLS generated advertising value equivalent (AVE) in excess of R3million across all three mediums of print, electronic and broadcast. The NHLS is proud to have gained considerable awareness in the general press from the outstanding surveillance and research work being conducted.

 

Internal communications support was offered with the development of an extensive internal campaign in delivering feedback from the Culture and Climate Survey Feedback road shows.

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Our Priorities• Because HIV, tuberculosis (TB) and cervical cancer are the three

biggest disease burdens in South Africa, the NHLS established

the National Priority Programmes (NPP) Unit early in 2011 to make

the diagnosis of these diseases more accessible and affordable to

our people. During the year, the NHLS conducted:

• 5.7 million HIV tests

• 5.9 million TB tests

• 13% more cervical cytology tests

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National Priority ProgrammesStrategic Alignment of HIV and TB activities

80%TB patients are HIV-co-infected

POCPOC

CD4

EIDTB HIV

Logistics Training

CultureCulture

molecular

microscopy

IT R &D QA

Priority Programme

• Greatest laboratory synergies likely to arise in molecular testing at both a POC and centralized laboratory level• Laboratory planning needs to occur around mutual technology platforms,skill and support needs.

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National Priority ProgrammesTuberculosis

VOLUMES PER ANNUM

Year CULTURE MICROSCOPY DST LPA DST MGIT

2004 273 829 1 815 333 34 542

2005 349 246 2 300 241 36 871

2006 481 757 2 720 813 48 049

2007 581 671 2 927 017 5 963 64 943

2008 729 424 3 373 134 23 126 58 887

2009 759 643 3 276 347 61 423 39 334

2010 931 542 3 501 652 94 649 34 980

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National Priority ProgrammesTuberculosis

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Table 3: Number of MDR-TB patients diagnosed by the NHLS by province per year

PROVINCE 2004 2005 2006 2007 2008 2009 2010Grand TotalEASTERN CAPE 452 556 889 1 105 1 225 1 415 1 738 7 380FREE STATE 108 155 208 173 307 248 367 1 566GAUTENG 568 740 747 1 019 935 1 162 1 062 6 233KWA-ZULU NATAL 261 737 2 052 2 407 1 378 1 422 1 481 9 738LIMPOPO 77 44 82 99 168 181 183 834MPUMALANGA 165 130 147 537 618 375 557 2 529NORTH WEST 110 171 169 365 262 368 202 1 647NORTHERN CAPE 167 144 200 188 171 314 264 1 448WESTERN CAPE 1 082 1 168 1 196 1 525 1 572 1 478 1 320 9 341Grand Total 2 990 3 845 5 690 7 418 6 636 7 174 6 693 40 716

Table 4: Number of XDR-TB patients diagnosed by the NHLS by province per year

PROVINCE 2004 2005 2006 2007 2008 2009 2010Grand TotalEASTERN CAPE 3 10 64 127 194 195 237 830FREE STATE 1 3 4 4 9 11 9 41GAUTENG 3 16 21 39 40 61 65 245KWA-ZULU NATAL 27 191 323 291 208 247 211 1 498LIMPOPO 1 5 3 3 9 2 23MPUMALANGA 1 2 13 13 16 28 73NORTH WEST 2 6 9 3 11 12 3 46NORTHERN CAPE 5 11 6 15 30 37 34 138WESTERN CAPE 29 21 39 53 62 89 96 389Grand Total 71 259 473 548 570 677 685 3 283

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Total number of Cervical Screening determinations Apr ‘10– Mar ‘11: 582 005

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The Gynae (PAP) smears indicate all Gynae cases and smears received (some cases have >1 smear).

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Gene Xpert Rollout (GX)

Together with the Department of Health, the NHLS was the first laboratory diagnostic service provider on the African continent to introduce GX technology for the diagnosis of TB and rifampicin resistance. This is groundbreaking technology that produces a result in two hours. Microscopy and cultures can take up to between 48 hours and four weeks, respectively.

 

 

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Information Management: Monthly reports

In support of the NPP, the NHLS’s Corporate Data warehouse improved the provision of information to the Department of Health on multidrug-resistant TB and early diagnosis of HIV-infection in infants at 6 weeks. Monthly management summary reports by facility and by province are now automatically circulated to the provincial and national health departments. An antiretroviral hotline was also launched which enables clinicians who have registered on the system, to obtain results telephonically.

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REGIONS

Better and faster

 

Processing specimens to the testing laboratories and delivering results to clinics in the shortest possible time was one of the main objectives for laboratories in the four NHLS regions. Many of these laboratories are in very remote areas. Courier services to and from laboratories were overhauled with daily or twice daily pick and delivery times. Remarkable improvements in turnaround times, particularly for the priority programmes of HIV and TB, have been noted which means that appropriate treatment can be started earlier. In Gauteng, Free State and Northern Cape, for example, HIV PCR for babies increased by 12% - thus an improvement in the coverage of babies born to HIV-positive mothers.

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NATIONAL INSTITUTE FOR COMMUNICABLE DISEASES (NICD)

Finding the best health solutions

 

PulseNet Africa, part of an international molecular subtyping network for foodborne and waterborne disease surveillance which provides early warning of disease outbreaks, emerging pathogens and acts of bioterrorism, was launched and will be run by the NICD Enteric Diseases Reference Unit.. Six other regional PulseNet networks exist: for the USA, Canada, Latin America, Europe, Middle East and Asia Pacific.

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The Special Pathogens Unit conducted Ebola virus reservoir host studies in the Democratic Republic of the Congo. Ebola haemorrhagic fever is a deadly disease of which the cause is unknown. The purpose of the mission was to try to the feasibility of conducting an international research expedition to sample bats, particularly Hypsignatus monstrosus, but also other fruit bat species implicated as potential reservoirs of Ebola virus.

 

Rotavirus is the most common cause of severe diarrhoea among infants and young children. Comparing the number of diarrhoea cases and the detection rate of rotavirus a year after the introduction of the rotavirus vaccine, NICD surveillance found a 20% decrease in diarrhoea cases and 49% in rotavirus-positive cases for 2010 and 2009, respectively.

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2010 Football World Cup

 

The Division of Epidemiology prepared a Synopsis Guide for 2010 Football World Cup visitors to South Africa, which was posted on the NICD website. From February to August 2010, the monthly communiqués included pre- and post- 2010 Football World Cup communicable disease alerts for healthcare workers, visitors and the general public.

 

The Outbreak Response Unit assisted the Department of Health with monitoring and response to communicable diseases during the 2010 Football World Cup period, both directly related and unrelated to the football activities. Laboratories were supported by facilitating the collection and testing of clinical and environmental specimens during foodborne disease outbreaks and other communicable disease incidents. Daily situation reports were provided.

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Disease outbreaks

 

The Outbreak Response Unit: assisted the Department of Health in reporting, field investigation, development of clinical and laboratory guidelines, management of laboratory surveillance data and interpretation of results, and recommendations for prevention and control of a number of disease outbreaks, namely Rift Valley fever, brucellosis, rabies, foodborne diseases, enteroviral meningitis, Odyssean malaria, pertussis, diphtheria, Crimean-Congo haemorrhagic fever, Legionnaires’ disease and cholera.

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Disease warning systems

 

Automated systems were developed by the Corporate Data Warehouse to alert outbreak response personnel to the diagnosis of priority communicable diseases. The system provides timely notifications and patient information following the confirmation of the following infections by NHLS laboratories throughout South Africa: Salmonella Typhi, Vibrio cholerae, and Neisseria meningitidis. A similar system was designed and piloted in 2010 to send automated SMS alerts.

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NATIONAL INSTITUTE FOR OCCUPATIONAL HEALTH (NIOH)

 

Making workplaces healthier, safer

 

A strong research thrust is on the priority diseases within South Africa with many research activities directed towards HIV and TB in the workplace. New research initiatives covering health technology assessment, biomedical waste and point-of-care have begun.

 

A total of 326 workers were assessed for various occupational diseases mainly from the non-mining sector with a few workers with tuberculosis and occupational asthma from the mining industry. This represented an increase of 98% from the previous year.

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Field work was conducted to evaluate the provision of HIV and TB services in the mining sector; 60 mines and quarries in the nine provinces were visited. The final recommendations focused on the need for regulatory reform, provision of an effective surveillance system and services and development of a monitoring and evaluation system.

An allergy database was developed which contains a list of the common allergy tests available in South Africa.

Concerns were raised about the health risks posed by the asbestos cement pipes in one of the two Orlando Towers, a popular bungee jumping and power swinging venue in Soweto. A team from the NIOH carried out a risk assessment and monitored the air in and around the towers.

 

The Toxicology Section has continued working in the nanotoxicology and risk assessment of nanomaterials programme within the NIOH Nanotoxicology Strategic Plan, established in 2009.

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Cancer statistics

 

The National Cancer Registry within the NIOH is the only national source of cancer incidence statistics and the registry data are regularly used and quoted by numerous stakeholders. Regulations were drafted to set out the legal basis for the reporting of cancers by health professionals, health facilities and pathology laboratories to the registry.

 

Cervical cancer

 

Cervical smear screening for the National Cytology Programme, which forms part of the NHLS’ priority programmes alongside HIV and TB, increased by 13%.

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REACHING OUT

..to our workers

 

NIOH Pathology section developed an outreach programme to assist mine workers in all aspects of the compensation process; 1,502 autopsies were carried out as part of the compensation process in terms of the Occupational Diseases in Mines and Works Act

 

The Special Bacterial Pathogens Reference Unit, NICD, trained environmental health officers from the City of Johannesburg on the dissection and storage of rodent organs for surveillance purposes; and pest control, health and veterinary personnel from the Eastern Cape on plague surveillance and management.

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The NICD’s Epidemiology Unit assisted the City of Johannesburg with training for the expanded programme on immunization as well as with epidemic preparedness response training, particularly on the measles outbreak in South Africa. The Outbreak Response Unit trained healthcare workers and doctors on how to prepare for epidemics and to manage foodborne disease outbreaks; and helped with the training in several provinces for the mass measles and polio vaccination campaign.

 

The Chemical Pathology Division at Stellenbosch University helps the Multiple Sclerosis (MS) Society of the Western Cape to inform MS patients about recent developments on their disease. Staff members assisted clinicians at regional hospitals in the Western and Eastern Cape regions on how to efficiently use laboratory services.

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Healthcare and other support for the under-resourced sector of our population are needed as new and ambitious government HIV guidelines and earlier entry onto highly active antiretroviral treatment regimens are being implemented. Staff of the medical microbiology and virology divisions plays leading roles in HOPE Cape Town, a non-profit organisation providing outreach, education and counselling on HIV/AIDS and TB to the community in the Western Cape province. This academic and teaching connection supplies HOPE with knowledge to where it is most needed.

The medical student elective programme for HOPE - KID-CRU - is very popular among overseas students and they appreciate the opportunity to see our country with all its realities in the townships. This rotation provides a further strong link between HOPE Cape Town and Stellenbosch University

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…to Africa

 

The NICD’s Respiratory and Meningeal Pathogens Reference Unit held a laboratory training workshop in The Gambia to help in the fight against pneumococcal disease in West Africa.

 

Training on sexually transmitted infections was given to over 100 African dermato-venereologists in Moshi, Tanzania; to about 150 healthcare workers in Harare, Zimbabwe; and to technologists in microbiological surveillance in Madagascar and Zimbabwe.

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ACCOLADES

Our people making us proud

• Dr W Burgers, Division of Virology, University of Cape Town (UCT), was awarded a Wellcome Trust Intermediate Fellowship in Public Health and Tropical Medicine.

• Dr E Gray, Immunology Laboratory, NICD, was selected by the Gates Foundation to be honoured by the Collaboration for AIDS Vaccine Discovery (CAVD) Council of Principal Investigators as a young/early career investigator who has made important scientific contributions to the work of CAVD. She received a Fogarty award to undergo two months’ training at Duke University Medical Center, Durham, USA.

• Dr S Kgalamono, Occupational Medicine Section, NIOH, won one of three Young Investigators Awards at the International Mesothelioma Interest Group Conference held in Japan.

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• Ms N Mkhize, Division of Virology, UCT, received the L’Oreal Women in Science award.

• Dr R Weyers, Department of Haematology and Cell Biology, University of the Free State, was one of a select group of young haemophilia therapists to receive an International ACHIEVE award and travel to Milan.

• Prof A-L Williamson, Division of Virology, UCT, was awarded the Cancer Association of South Africa AG Oettlé Memorial Medal for work on the human papillomavirus, the leading cause of cervical cancer.

• Dr N Wolter, Respiratory and Meningeal Pathogens Reference Unit, NICD, received the Robert Austrian Research Award 2010 in Pneumococcal Vaccinology presented to her in Tel Aviv, Israel. The award included a $25 000 grant for her research project.

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• Prof CA Wright, Division of Anatomical Pathology, University of Stellenbosch, was appointed as a member of the International Academy of Cytology Task Force to promote education and professional development in cytology in developing countries for the period 2010-2013. She was also elected to the Board of the International Academy of Cytopathology.

• Ms A Picton, Immunology Laboratory, NICD, was awarded a South African Fogarty AIDS and TB Training and Research Programme Fellowship to train at the University of Texas

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Other proudly NHLS achievements include:

• The Division of Anatomical Pathology, UCT, was placed first among the 333 international participating laboratories in the general diagnostic external quality assessment module of the Royal College of Pathologists of Australasia.

• Immunopaedia, an on-line training site in immunology, developed by Prof C Gray, of the Immunology Laboratory, NICD, received the prestigious Science Prize for Online Resources in Education (SPORE).

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THANK YOU

Our appreciation to the Honourable chair and the Committee for this opportunity to present the 2010/11 annual report

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