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Wairarapa DHB told off


Deficit blows out by $781,000 in latest report

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Wairarapa District Health Board has been given a hurry-up from Health Minister David Clark to improve its financial performance in the next six months.

It reported a deficit of $5.557 million in the six months to December 31, which is $781,000 bigger than budgeted, earning it a red dot in a Ministry of Health report released last week.

Collectively, the 20 DHBs are $207m in the red at the halfway point of their June 30 financial years, and Wairarapa is among 14 with red dots contributing to a $33.5m blowout over budget.

Clark says in a letter received by Wairarapa DHB on December 17, 2018 that the government “provided DHBs with the highest increase in funding in 10 years” in 2018 and he expected their financial position to improve because
of it.

“This expectation is unlikely to be met,” he says in the letter.

In last year’s Budget, the government put $2.2 billion more into DHBs over four years. Another $750m was put into capital works.

“We recognise that improving the financial sustainability of the sector cannot be done all in one year but it is important that DHBs are doing all they can locally to manage in a financially sustainable way,” Clark says in the letter.

Clark met all DHB chairpersons on December 13 to deliver the call for better financial management and the letter was a follow-up.

He again raised these matters directly with board chairpersons and chief executives last week.

He said several DHBs were likely to need “equity” from the government this year for working capital pressures.

He did not signal Wairarapa was one of them and the ministry documents say Wairarapa’s 2018/19 annual plan has been approved, while plans of several other DHBs have not been.

The Ministry of Health report says the net deficit position of all the DHBs is 59.4 per cent of the planned deficit for the year at the halfway point.

To achieve the $348m deficit across all DHBs budgeted for the year, “DHBs will need to realise significant efficiency improvements over the last six months of the financial year”, the ministry says.

Wairarapa DHB is budgeted to have a $8.995m deficit in the year to June 30, 2019 but it is forecast to blow out to $12.326m in the report.

The report identifies the cost of outsourcing services is higher than expected and also clinical supply costs across DHBs.

“The government is managing significant cost demands after nine years of underfunding across the board, but we are prudently managing the books and running a surplus,” Clark says. “We expect DHBs to display the same sort of financial discipline.”

Michael Woodhouse. PHOTO/GETTY IMAGES

National’s Health spokesman Michael Woodhouse says Clark is in a panic.

“Mr Clark has been forced to release details of the DHB shortfall after months of keeping them from the public and it is worse than we thought.”

Not only had he failed to deliver on his pledge to rein in the deficits of DHBs, they had worsened on his watch.

“It is unprecedented to have the core of New Zealand’s health system mired in this much red ink and every sign is that their financial position will deteriorate this year,” Woodhouse said.

“DHBs still have outstanding pay negotiations to be settled and any hope of more funding for priorities like mental health or cancer looks forlorn.

“There will be no room for new initiatives unless Clark cuts health services. That could be cuts to surgery, primary care and community health. Clark’s officials say as much – DHBs ‘will need to realise significant efficiency improvements’ to reach their full-year targets’.”

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