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The Southern District Health Board hopes to turn in a vastly improved financial result next year, so long as its government funding increases.

The board’s annual report and statement of performance expectations, tabled in Parliament last week, showed that the SDHB racked up a deficit of $89.3million for the year ended June 30, well in excess of the previous year’s $21.4million result.

While the deficit was inflated by one-off costs incurred by all DHBs earlier this year as they resolved employment contract negotiations and reimbursed staff money they were incorrectly unpaid due to a mistake calculating entitlements under the Holidays Act, it still represents a substantial blow-out in operational costs.

"Certainly we have faced challenges, and the pathway to a more robust health system for the South has not been smooth," commissioner Kathy Grant and SDHB chief executive Chris Fleming said in their foreword to the annual report.

"The commissioner team was appointed following the previous board estimating a budgeted deficit of around $40million.

"The fact that the commissioner’s term is finishing while reporting a similar financial position ... is not lost on us."

A newly elected SDHB officially took over from the commissioner last week, assisted by two Crown monitors.

The SDHB’s current financial position is unknown.

DHB deficit figures, once updated regularly but now only amended sporadically, are posted on the Ministry of Health website; there has been no update since June.

Mrs Grant said she believed the SDHB was now a more stable organisation, and important foundations had been put in place for the new board to build on.

The annual report demonstrates the impact of increased personnel costs; budgeted to be $386million in 2018-19, they surged to $442million.

Employment contract settlements and backpay led to a substantial rise in the number of the SDHB’s 4858 employees who earn more than $100,000 annually, from 681 to 866.

More than 140 of those staff who now earn more than $100,000 are in the four lowest pay brackets above the public reporting level of $100,000.

Chief executive Chris Fleming was paid between $540,000 and $550,000 and three SDHB employees were paid more than Mr Fleming.

The SDHB’s five-strong commissioner team were paid a combined $262,000, Mrs Grant receiving $168,000.

The board’s statement of performance expectations for 2019-20 said it hoped to record a $38.5million deficit in 2019-20, but that was based on the assumption that government-allocated revenue would increase, and that additional funding would be received to meet Holidays Act requirements.

"Incremental savings and efficiency targets have been built into baseline budgets ... Acute demand continues to increase; however the DHB plans to meet the elective targets set."

Mrs Grant and Mr Fleming spent several paragraphs of their foreword addressing the SDHB’s controversial review of southern maternity services, which resulted in Lumsden’s primary birthing unit becoming a maternal and child hub.

The change was bitterly resisted by the community and the SDHB’s process for implementing its maternity strategy was strongly criticised in an independent review.

"We have learned some valuable lessons through reflecting on how we as a DHB approached the implementation of the strategy," they said.

"This is a reminder of the need to have robust project management and governance structures when embarking on significant changes.

"We are modifying our approach moving forward to minimise the risk of similar challenges materialising in future changes."


The health funding model is broken and nobody spends anytime fixing it; instead people trim services and waiting lists and then the cycle begins of when treated it cost more. It is only a model implemented at the political level - it can easily be better modelled, and therefore better use of funds catching health before it becomes more costly to treat or to society.

DHB deficit figures, once updated regularly but now only amended sporadically, are posted on the Ministry of Health website; there has been no update since June. How can financial be monitored if this is the behaviour or expectation thru Ministry of Health. Does no-one really care enough to notify monthly figures?







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