DHB budget deadline not aligned with funding data

The Southern District Health Board is unlikely to submit its budget to the Ministry of Health for approval by an early March deadline.

Chief executive Chris Fleming told the board last week that the organisation was "in a predicament" because the Ministry of Health had changed planning cycles and brought everything forward a month.

"Some of the timeframes are completely unrealistic in terms of meeting them ... the executive are going to have to meet and have some tough conversations and discussions and debate about the priorities, as are the board. We can’t get to that position of being completely robust by then."

The most obvious issue was predicting government funding.

"I doubt we will know the actual funding increase we are going to get until after the Government Budget; particularly in an election year those things are pretty tightly held."

Board chairman Dave Cull said his preference was to give the ministry what the organisation could, but to acknowledge there were holes in it.

"It’s rather odd that we are meant to have a budget projection by March for a year that starts in July but we won’t know what the Government will give us until May."

The SDHB’s annual plan was also likely to be late, Mr Fleming said; it needed extensive consultation, and that was unlikely to be finished by deadline.

The ministry had been warned that the SDHB would probably initially file preliminary documents which were not board-approved, Mr Fleming said.

With Southern having recorded one of the highest DHB deficits last year, $85.8million, its finances are being closely watched.

The SDHB appears before Parliament’s health select committee for its annual review this Wednesday, and its financial performance will be one of the main issues discussed.

Mr Fleming told the board that so far its year-to-date deficit was $22.5million, an improved performance on the corresponding time period last year, of $25.9million.

"We are challenged financially, but I think it is quite helpful to note that we are one of the few DHBs where their financial position is actually an improvement on last year, it’s just that the expectation was that it would improve by even more."

Jean O’Callaghan, chairwoman of the board’s finance subcommittee, said its financial position was clearly the biggest risk the organisation faced, and there had to be greater focus on mitigating that risk.

"We don’t need anyone to be telling us that we have got to be making improvements ... the financial position remains a high risk for the organisation and we do have to make sure it is a real focus in the coming months."

She said the committee felt reporting back on the SDHB’s savings plan was not as robust as it should be, and it had asked for more concise and consistent reporting.

Mr Fleming said the DHB had been asked by the ministry to identify five initiatives from savings plans expected to have most the significant impact in 2020-21.

"It is clear that the Ministry of Health’s and Minister of Health’s expectations are that the financial performance of Southern, and in fact all DHBs, improves in 2020-21.

"We will need savings initiatives to both contribute to this as well as make space for investment in priorities ... the tough challenge is always looking to see what we may be doing which we potentially should either do differently or not at all to free up resources to enable ... investments in priority areas. Unfortunately, the low-hanging fruit have already been extracted."