While the Southern District Health Board's $42 million
cost-savings plan has ''merit'', the savings are not enough,
says the Treasury in a report on the board's financial state.
The Treasury's report to Health Minister Tony Ryall and
Finance Minister Bill English was released this week under
the Official Information Act.
It recommended approving the board's 2012-13 plan, with a
stipulation greater savings were expected in future years.
''The Treasury does not consider these savings to
fundamentally change the DHB's business or cost structure.
''The Treasury believes that the DHB can manage a stronger
savings programme that relieves financial pressure from the
DHB on an ongoing basis.''
The Treasury would seek a ''more active role'' when the
health board put together its next annual budget, the report
Mr Ryall has withheld parts of the Treasury report, citing
privacy and the right to free and frank expression of
opinions. The health board hired Price- waterhouseCoopers
(PwC) to help identify savings.
Savings cited in the Treasury report are higher than the $30
million figure the health board released to the Otago Daily
Times last November.
The savings, over three years, included reduced spending on
aged residential care, fewer mental health inpatient beds and
subsidising urgent after-hours primary care to reduce
pressure on hospitals. Other savings included recording
depreciation differently, restructuring and better
The National Health Board had warned it would be risky to
push too hard for savings.
''The NHB agrees with PwC advice that if pushed harder there
is considerable risk that the organisation may fail to
support management in embedding the required savings,'' the
The SDHB planned a $11 million deficit this year, 1.3% of
revenue, the report said.
Health board chairman Joe Butterfield, when contacted, agreed
more savings could be made.
''There are practices here which, by today's standards, are
regarded as less than 100% efficient. But they may require
capital investment before we can change. They may require
professional practice changes ...''
He declined to give an example of a practice which was not up
to scratch by today's efficiency standards.
Funding and finance director Robert Mackway-Jones, when asked
about the apparent discrepancy between figures, said the
savings figures were regularly updated.
Mr Ryall recently cited the Treasury's advice in his formal
letter of approval to the board for its 2012-13 annual plan.