SDHB savings plan falls short: report

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 said.

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 purchasing.

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 report said.

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.