The National Health Laboratory Service (NHLS) is still owed billions of rand by the provinces, compromising its ability to pay its suppliers and threatening its capacity to provide vital diagnostic tests for patients, its CEO, Sagie Pillay, told Parliament yesterday during his budget presentation.
The NHLS is SA’s biggest pathology laboratory, providing diagnostic tests for public health facilities in all nine provinces, the military and prisons. It has battled cash flow problems for several years, as financially-strapped provincial health departments fail to settle their debts on time. By the end of last year, provincial health departments owed the NHLS R2,17bn, a figure that has since fallen only marginally, to R1,96bn at the end of March.
"If we can’t get our money in time we can’t pay our creditors in time.
"If we can’t pay our creditors in time, we don’t get our supplies on time. If we don’t get our supplies on time, we don’t deliver the services on time. And if we don’t deliver services on time, the public sector pays with longer lengths of stay … and inappropriate admissions," Dr Pillay told Parliament’s portfolio committee on health.
The NHLS does all the lab tests for diagnosing infectious diseases such as HIV and tuberculosis, as well as analysing tissue samples to identify cancer.
Earlier this year the NHLS temporarily closed services at 15 laboratories in Gauteng because the province owed it more than R700m by January. Health Minister Aaron Motsoaledi intervened, pressing the department to start honouring its debts to suppliers. But Gauteng still owed the NHLS R534m at the end of March, according to NHLS chief financial officer Dev Erriah.
"We live from hand to mouth. We prioritise payroll. Our creditors are being very tolerant, but we get daily threats of service breaks," he said.
The NHLS owed creditors about R450m, down from R750m at the end of last year, he said.
The biggest debt owed to the NHLS was from KwaZulu-Natal, which had yet to pay R1,2bn, he said. The province and the NHLS are locked in a row over how much the provincial health department owes.
The Eastern Cape owed R118m, Limpopo R52m, the Free State R34m, North West R33m, the Western Cape owed R22m, and the Northern Cape and Mpumalanga owed R10m and R4m respectively.
Dr Pillay said provinces were trying to cut costs by reducing the volume of tests ordered by doctors. "We have to work with provinces to bring their consumption in line with what they can afford," he said. The NHLS had also stopped charging VAT to provinces, he said.
Dr Pillay said the NHLS was running a pilot project with pharmacy chain Clicks to determine the feasibility of providing diagnostic tests to the private sector.
The fees charged to the private sector could subsidise those paid by the state, he said.