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After the Otago Daily Times reported the board missed out on $1 million revenue because it did not undertake enough operations, it emerged it had faced a much larger penalty on a different target.
Asked about a rumour in Dunedin Hospital about an $18 million penalty, chief executive Chris Fleming confirmed it had been in the offing.
"The $18 million is the sort of penalty that the Ministry of Health could have imposed on us as a consequence of the number of months that we have been non-compliant with elective services patient flow indicators.
"The ministry waived the option of imposing the penalties," Mr Fleming said in an email.
Indicators include patients waiting too long for treatment, and specialist assessment.
In May, 8.5% of patients promised treatment had been waiting more than four months, the worst result of all 20 health boards, the ministry’s website shows.In January, the figure was 9.4%; in April, it was 9.3%.
Senior doctors’ union spokesman John Chambers said the ministry had "obviously taken pity on the DHB".
Threatened penalties were "no way to run a health system".
"Whatever happened to ‘putting the patients first’?
"The only thing we should be trying to save are lives and the quality of patients’ lives," Dr Chambers said.
Ministry of Health critical projects director Michael Hundleby said the ministry had been "strongly encouraging" the DHB to reduce waiting times.
"The people of Southern DHB deserve the same access to health services as the rest of the country so that more operations are provided to them and they don’t have to wait as long.
"The DHB has shown some improvement in some areas, but the DHB knows it needs to do better in a number of areas and is working towards that," Mr Hundleby said.