'Difficult' year; cost cuts likely at ODHB

Tough times lie ahead for the Otago District Health Board and costs will have to be reduced in the face of a budgeted $7.3 million deficit, board members were told at a meeting yesterday.

Chief executive Brian Rousseau said "very tight" funding meant it was imperative costs were reduced and the district health board faced a "very difficult" year.

"We are going to have to start focusing on some clear strategies around cost reduction."

Community-based organisations and services at Dunedin and Wakari Hospitals were under significant pressure, he said.

The Otago Community Hospice and the Plunket Society in Otago-Southland are two organisations which have recently spoken out about lack of funding for their services.

Mr Rousseau said after the meeting the board was still in discussion with the Ministry of Health about its 2008-09 district annual plan.

"Our books don't balance at the moment and that is why we are still engaging with the Ministry of Health to say: `What is the solution'."

If more funding was not available, the board would have to find ways to reduce costs, and that was very difficult to do without reducing services, he said.

"Our strategy to date has been not to cut services unless we absolutely have to."

Demand for health services was growing faster than funding and the board had already been making hard and unpopular decisions to cut costs for the past five years, he said.

The board's draft 2008-09 annual budget is forecasting a $9.3 million deficit.

However, that will be offset by a $2 million underspend in mental health spending, carried forward from previous financial years, which will bring the deficit to $7.3 million.

Chief financial officer Robert Mackway-Jones said the $2 million underspend was the last part of $5.5 million of ring-fenced mental health funding given to the board about five years ago.

The revaluation of land and buildings in June resulted in increased capital charge and depreciation costs of about $1.4 million, which was unfunded.

The board's budgeted total revenue is about $511 million and budgeted costs are about $520 million.

It finished last financial year with a $4.9 million unaudited deficit, $1.6 million higher than budgeted.

Mr Rousseau said there were some opportunities to generate revenue from elective services, although the board did have restraints with facilities and staffing.

The board started this financial year with a slightly better than expected result for July, with a deficit of $415,000 compared with a budgeted $955,000 deficit.


Add a Comment



Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter