National Health Laboratory Service CEO Sagie Pillay says the demand on their 268 laboratories is expected to increase with the introduction of the NHI. Photo: Boxer Ngwenya
National Health Laboratory Service CEO Sagie Pillay says the demand on their 268 laboratories is expected to increase with the introduction of the NHI. Photo: Boxer Ngwenya

Dire warning for NHI’s future

By THANDI SKADE Time of article published Sep 6, 2011

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If the National Health Insurance (NHI) scheme has any chance of succeeding, provincial health departments need to sort out their cash-flow problems and pay outstanding bills to the National Health Laboratory Service (NHLS).

So warns NHLS CEO Sagie Pillay, who says the demand on their 268 laboratories is expected to increase with the introduction of the NHI. And with the financial crisis currently facing the service, it will simply not cope.

The NHLS – the sole service provider contracted to deliver laboratory diagnostic tests, screening for chronic diseases and services for all public healthcare facilities – is owed around R1.7 billion, of which about R1.3bn is owed by the Gauteng, KwaZulu-Natal and Northern Cape health departments.

Last month, The Star published the service’s financial woes, which Pillay said remained the same, if not worse.

“There has been no progress. The financial crisis remains the same and it undermines our ability to provide services,” he said.

He said the service was barely keeping its head above water, with creditors demanding payment.

“There’s no more breathing space. Our creditors have been very sympathetic to our situation, but they can only go so far… I’m particularly concerned for small- and medium-sized businesses who face the potential risk of closing down because we’re not able to pay them timeously.”

But, Pillay said, he remained “optimistic that provinces will do the right thing” and settle their debt by the end of this financial year.

Pillay said defaulting provinces that weren’t taking advantage of a 2.5 percent discount offered to clients who pay their bills on time were losing large amounts of money each month.

The Gauteng, KwaZulu-Natal and Northern Cape health departments are collectively losing out on around R32.5m in total savings.

“If they paid their bills on time they would benefit from a 2.5 percent discount, which in the end could save them a lot of money,” he said.

National health spokesman Fidel Hadebe lambasted provincial departments’ failure to settle their bills.

“This situation is unacceptable, in our view. The minister (Aaron Motsoaledi) has given a clear directive to those provinces that owe the NHLS to work on settling those bills. These are bills that were left unpaid over a long period of time, and the debt has ballooned to this point.”

Hadebe said the matter was being attended to and the department was hoping that the debt would be settled in full soon.

Gauteng Department of Health spokesman Simon Zwane said the department had reached an agreement with the NHLS to pay back R80m a month.

He said the department had fallen behind on payments because of “cash-flow challenges” experienced two years ago, and which had caused a domino effect on all their payments.

While Pillay confirmed that indebted provinces were making monthly payments towards alleviating their debt, it was “nowhere near what we need to function”.

The service needs at least R350m a month to cover its operating costs.

Pillay described the NHI as a “very exciting, complex initiative” that required a creative and innovative approach to public healthcare, adding that more attention needed to be paid to improving management skills, which he said would play a big part in making the NHI effective. - The Star

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