The 2014 South African HIV Clinicians Society conference was plastered with a guerrilla sticker campaign: “Saving the NHLS = saving lives”.

The National Health Laboratory Service (NHLS) – a national asset at the heart of the country’s healthcare system – is in a critical condition. It is in debt to the tune of R5-billion, is leaking skilled staff, and many of the employees who remain are demoralised.

The ongoing financial crisis has severely affected the service’s capacity to deliver necessary services, leaving the future of laboratory testing in South Africa in jeopardy and creating a leadership void, amid perceptions that embattled chief executive officer Sagie Pillay might be on his way out.

This grim picture was sketched by health experts who work closely with the service and three senior people inside the NHLS, who spoke on condition of anonymity.

“We’ve never had a test not come out, but we’ve hit the wall,” said a senior staff member, adding that he was on the verge of walking out.

The cause?
So, what’s gone wrong for the country’s network of laboratories? According to some NHLS detractors, financial mismanagement is the problem; others believe fault lies with a dysfunctional board. Others say it’s because two provinces aren’t paying for services rendered. According to Health Minister Aaron Motsoaledi, it’s the chaotic, glitch-riddled billing system. Some blame an “interfering minister”.

Health experts say that, whatever led to the mess, the implications are “horrifying” – and must be resolved urgently and permanently.

“Without the NHLS, the country’s health system cannot function,” says social justice organisation Section27’s executive director Mark Heywood. “The NHLS is responsible for most HIV and tuberculosis [TB]tests in the public health system and plays a critical role in screening for cervical cancer. HIV and TB treatment depend on accurate and timely tests. Without the service, TB, HIV and cancer patients won’t have access to diagnostic testing, which means they won’t be properly treated. The implications are serious: without lab tests, there can be no other services.”

“Yes,” agrees Professor Francois Venter from the Wits Reproductive Health and HIV Institute, “the NHLS has been lurching from crisis to crisis for four years. It’s nothing short of a monumental stuff-up.”

Motsoaledi intervenes
The crisis reached a tipping point in September; Motsoaledi stepped in to announce a process of reforms to save the service.

“How this was reported made me angry,” said one insider, “because it makes it sound as if the NHLS is to blame for being in debt, which is not the case.”

According to Venter, the service is being held hostage by KwaZulu-Natal and Gauteng, which owe the lab billions of rands. The national health department allocates funds to each province from which they are meant to pay the NHLS for services.

Earlier this year Motsoaledi said faults in the service’s billing system were to blame for its financial woes.

One of his reforms is to bypass the provinces and pay the service a global lump sum directly from the treasury. Another is to create a national public health institute to monitor disease and respond to outbreaks. It would include the National Institute for Communicable Diseases, the National Institute for Occupational Health and the National Cancer Registry, which is currently run by the service, as well as two new institutes – the National Institute for Non-Communicable Diseases and the National Institute for Injury and Violence Prevention.

The minister has also said the cost of training pathologists and technicians, another of the service’s tasks, would become the education department’s responsibility.

Loss may be too much
Motsoaledi’s reforms are “too little, too late”, says a source. “The problem is, we’ve lost so many staff. In the last year 30 pathologists have left – and we already had fewer than we needed. We’ve lost all their years of experience. They are leaving through sheer frustration.

“We’ve also lost 30% of our technologists. People with 10 years’ experience are being replaced by people fresh out of [college].”

A second highly placed source at the service echoes these sentiments, saying the NHLS employed 7 200 people two years ago and is now down to fewer than 6 000. “It’s the best who are going – either being lapped up by the private sector or leaving the country.

“We’re on a treadmill and managers are using ‘austerity measures’ to block everything – like going to conferences. Labs have been forced to consolidate, which means the smaller labs are being swallowed up. Lab managers have to beg for gloves and struggle to get stock. Staff members also wait anxiously each month to see if they have been paid.”

NHLS crucial for quality care and research
Dr Francesca Conradie, president of the Southern African HIV Clinicians Society, says it is worrying that technicians and technologists are leaving. “Laboratory testing is a labour-intensive technical service – we train them; we want them to stay with us. If they don’t, we’ll see a decline in quality.”

She describes the service as an innovative laboratory network that uses technology – such as the celebrated GeneXpert programme, which diagnoses active TB throughout South Africa much faster than ordinary laboratory procedures – to link all systems to a single, central database. “This means that every test can be accessed by health professionals from all over the country so we can see trends and get information, for example, about drug-resistant TB. Because of this the service is one of our best health assets.”

According to Conradie, South Africa’s ability to deliver outstanding HIV care is dependent on laboratory testing. “For TB and HIV, laboratory investigations are needed to initiate and monitor therapy. Ten or 15 years ago we took a wise decision to have a viral load supported programme; we can’t afford to let that fall down because of administrative issues.”

She says the collapse of the service would have devastating implications for people who can’t afford private lab tests – about 80% of patients in the country. “Without the NHLS, healthcare will grind to a halt. This service belongs to South Africa – it must be sorted out urgently.”

Service functioning despite problems
Despite the crisis, the service’s quality hasn’t dropped “yet”, according to a source, who warns that this will happen when unpaid suppliers shut down their services. “We collect from every clinic at least once a day. We rely on private people to go to clinics in remote places and if they don’t get paid the logistics chain breaks – and the system collapses.”

A third source confirms this, describing the situation as dire. “Hundreds of millions of rands are owed to suppliers. Big suppliers can afford a delay; if the smaller creditors don’t get paid they will go under. Each month, the financial people balance who they are going to pay.”

Another insider says that because the service is state-owned it is the last to be paid. “We can’t stop services to the provinces because that would mean punishing patients.”

Crisis heats up in two provinces
That nearly happened in March: Pillay sent a memo to staff announcing the suspension of services to Gauteng and KwaZulu-Natal (See “Testing times for the service” below). At the time, Section27 and the Treatment Action Campaign said suspending laboratory services would make a mockery of South Africa’s flagship HIV and TB programmes.

The memo stated: “The organisation has been under severe pressure due to the fact that Gauteng and KwaZulu-Natal haven’t paid their bills. This increasing pressure of non-payment has resulted in the NHLS not being able to meet many of its own financial commitments … [The] NHLS has made several attempts to explore all options available to ensure payment is received from these provinces, without success.”

Pillay’s threat to suspend services apparently infuriated the minister, and has led to speculation that he is being frozen out of the service.

One source says Pillay has been made the scapegoat. “He hasn’t been a bad CEO. When he came in five years ago he gave the HIV and TB programmes a much-needed kick in the backside. He may not be the greatest manager, but he cares about the patient – and that’s king.” Pillay fell out of favour with the minister, and his five-year contract, which expired in November, was not renewed.

Pillay referred queries to the health department, saying it would be “awkward” for him to comment. He did say, though, the minister’s reform process was a positive development but needed to be implemented urgently.

Bail out won’t bring a long-term solution
Then, of course, there is the matter of the R5-billion debt. “It’s all very well getting paid directly from the treasury but what will happen to the accrued debt?” asked the source. “The NHLS is financially bankrupt and no company in the world can function with a R5-billion debt.”

According to the third source, the service’s board, which is meant to be an independent entity, has been deeply dysfunctional.

“The board has a lot to answer for,” he says, an opinion with which Venter concurred, saying the minister should be held accountable for the situation “being allowed to escalate”.

According to Heywood: “The question that needs to be asked is why the NHLS – one of the country’s most valuable services, an institution of excellence that has global best practices – is coming apart at the seams? Why would provinces not pay? It just makes no sense.”

One source says Gauteng is cash-strapped and can’t pay, whereas KwaZulu-Natal has had an inexplicable “guttural hatred” [sic] of the service since 2010.

“The only thing I can think of is that people with a stake in private labs have a vested interest in crashing the NHLS so they can benefit,” says Heywood. “I’ve heard mutterings that KwaZulu-Natal wants to pull out of the NHLS and go private. However, the operating model of NHLS cannot survive if KwaZulu-Natal pulls out. If the NHLS collapses, it will be a national disaster.”

But the source says there are no “ifs” about it.

“The NHLS has already collapsed. It has already crumbled.”

Nobody working at the NHLS was prepared to go on the record for fear of being victimised. Numerous attempts to speak to senior department of health officials and several attempts to get responses to a set of questions were unsuccessful.

This article was originally published in the NSP Review, a joint quarterly publication of the Treatment Action Campaign and Section27, which critically evaluates the health department’s progress with its National Strategic Plan

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Testing times for the service

2001
The National Health Laboratory Service (NHLS) is established by an Act of Parliament, amalgamating the South African Institute for Medical Research, the National Institute for Virology and the National Centre for Occupational Health, and university and provincial pathology laboratories. 

August 2010 
Health Minister Aaron Motsoaledi discloses that provinces owe the service R945-million.

August 2011 
The service is now reportedly owed R1.7-billion. “The situation is getting worse, with Gauteng the biggest offender,” says Democratic Alliance spokesperson Jack Bloom.  

February 2012  
Motsoaledi appoints a judge to arbitrate between the KwaZulu-Natal health department and the service after the NHLS closes laboratories in the province. The deal reached is for KwaZulu-Natal to pay R541-million (on a debt of over R1-billion up to 2012). In addition, the province pays a flat fee of R45-million a month, but consumes services of R120-million a month, incurring further debt. 

October 2013 
The service’s 2012-2013 annual report is tabled in Parliament, stating that the delayed payment and nonpayment from Gauteng and KwaZulu-Natal threatens its ability to operate, putting patients’ lives and staff jobs at risk. The service’s chief executive officer, Sagie Pillay, tells Parliament that the NHLS’s “viability and sustainability” is threatened, for the second year, because there is still no resolution with the debt situation, as KwaZulu-Natal owes R2-billion. 

March 2014 
KwaZulu-Natal owes R3-billion. Gauteng owes R900-million, prompting Pillay to announce the suspension of services to the provinces. The Treatment Action Campaign and Section27 call on the minister to take urgent action to bring an end to the financial woes and the Southern African HIV Clinicians Society urges “permanent action” to be taken. “The fact that South Africa’s two largest provinces are holding this institution hostage should horrify any citizen who is, or has friends, families or employees, dependent on the state health system,” says the society’s president, Dr Francesca Conradie. Pillay’s letter prompts Motsoaledi to intervene and he gets provinces to make payments. He reassures the public services won’t be suspended and tells reporters that the billing problems aren’t limited to Gauteng and KwaZulu-Natal but that they are the largest users of the service, which explains the large amounts of overdue payments. He also sets up a task team and meets the service’s board and management.

June 2014
The financial crisis resurfaces. R400-million is needed – R200-million for salaries and R200-million to keep creditors at bay – but there is only R250-million in the bank. The NHLS decides not to pay salaries; the health department’s director general intervenes and Gauteng pays R300-million so salaries can be paid. 

September 2014
The minister tells Parliament he has a plan to save the service and announces a series of reform measures, including bypassing the provinces and paying the service a global lump sum. 

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What is the NHLS?

The National Health Laboratory Service is a public network of laboratories in the nine provinces. It conducts diagnostic tests, produces highly acclaimed research, and provides teaching and training for technicians, technologists and pathologists.
It is the largest diagnostic pathology service in South Africa, providing public health services to more than 80% of the population. The service is responsible for most HIV tests in the public health system and has the largest viral load programme in Africa.  Through the GeneXpert programme, the service has led the countrywide implementation of a rapid molecular diagnostic test for tuberculosis, which increases the pick-up rate of TB, including  in people who are HIV positive. The diagnostic test has made significant steps to take control of South Africa’s devastating TB epidemic. In addition to its work in the areas of HIV and TB, the service plays a critical role in screening for cervical cancer.  The service’s divisions include the National Institute for Communicable Diseases, the National Institute for Occupational Health, the National Cancer Registry and the Antivenom Unit.