THE National Health Laboratory Service (NHLS) is still struggling with cash-flow problems due to tardy payments from provinces, despite intervention earlier this year by Health Minister Aaron Motsoaledi, Parliament heard on Wednesday.

The cash crunch threatens the NHLS’s ability to continue providing services, and compromises its capacity to invest in new technology and train staff.

Presenting the NHLS’s annual report for the fiscal year ending March 31 2012, NHLS CEO Sagie Pillay said it had been an "annus horribilus" as cash-flow problems nearly crippled the organisation. At the end of 2011 the total provincial debt ran to R2.1bn, with Gauteng and KwaZulu-Natal owing R1.7bn between them.

Following the minister’s intervention, provinces settled their bills by the close of the 2011-12 fiscal year but the situation was once again cause for concern, Dr Pillay said. At the end of August, Gauteng owed the NHLS R470m and KwaZulu-Natal had a debt of R1.5bn, he told members of Parliament’s health committee.

Provinces were not paying their bills quickly because they were battling with significant budget deficits, he said on the sidelines of the meeting.

The NHLS provides diagnostic tests for the state sector, including tests for HIV, tuberculosis and cervical cancer.

Its tests were roughly half the price of those provided by the private sector, Dr Pillay said. Those prices could be reduced if provinces paid their bills timeously, as the NHLS prices currently factored in the risk of provinces not paying their bills, he told Business Day.

The NHLS also believed test prices could be further cut if separate funding could be provided for the NHLS’s teaching and training functions, he said.