SDHB deficit balloons to $85.8 million

David Clark
David Clark
One-off costs have caused the Southern District Health Board's deficit to blow out to $85.8million - almost four times over budget.

Even allowing for an additional $41million incurred to meet one-off costs, which included compliance with the Holidays Act, the SDHB's deficit was $44million, double the $22million it was expected to be in the red in 2018-19.

Nationwide, DHBs are just over $1billion over budget.

The SDHB is run by commissioners, installed by then health minister Jonathan Coleman in 2015 when the board's deficit was at $27million and projected to reach $42million.

The commissioners will be replaced by the board being elected at Saturday's local body elections - a group which will be faced with a huge task to relieve the organisations's financial woes.

DHBs are among many public and private organisations which miscalculated leave entitlements under the Holidays Act 2003 and underpaid staff.

Dr Clark said a deal had been struck with health unions and the Labour Inspectorate, whereby the Government would have 12-24 months to pay employees money owed to them.

''This is a complex and time-intensive task: by its very nature, health work is a 24/7 proposition.

''There are over 100 different collective agreements and a range of rostering, allowances and overtime provisions which have changed over time.''

Any further funding needed would be obtained through ''the usual cost pressure budget process,'' Dr Clark said.

SDHB chief executive Chris Fleming said the organisation had faced numerous cost pressures, many of which were unavoidable.

''As is the case for many DHBs, clinical supplies is a major cost category at Southern, with pharmaceuticals being a significant cost both for the community and the hospitals.

''Our pharmaceutical usage is high and is further compounded by the increasing use of high-cost pharmaceuticals to treat our patients, especially those with cancer.''

Personnel costs had also been high, as DHBs had had to deal with industrial disputes and large employment contract settlements.

''Despite these challenges, and indeed because of them, we remain committed to our journey to invest in reshaping the health system,'' Mr Fleming said.

''Demand will only increase as our population ages and new treatments become available and we need to deliver this care in ways that are sustainable into the future.''

As well the one-off cost of the Holidays Act, the latest figures included a $5.1million impairment stemming from troubled IT project the National Oracle Solution.

''The team at Southern is now beginning the 18-24 month project on the implementation of the Health Finance, Procurement and Information Management System, a replacement for our existing system,'' Mr Fleming said.

National health spokesman Michael Woodhouse said the deficit figures were appalling, and Dr Clark should take responsibility for them rather than blaming the previous National government.

''It is a debacle, it is a sad indictment on this Government ... the health sector is in disarray under his watch.''

Mr Woodhouse said the Holidays Act costs were roughly what was expected, but they would not be one-off costs.

''There will be another $80-90million cost pressure on the budget to comply with Holidays Act requirements in the future.''

Southern is one of several DHBs with ''monitoring and intervention framework''status; since January Ministry of Health staff have been helping the SDHB develop a financial recovery plan.

In addition, Dr Clark announced last month that a Crown monitor would be installed to help the newly elected SDHB with its work.

mike.houlahan@odt.co.nz

Comments

Does anyone know how much this commissioner has cost and it is apparent for no benefit. Once again great value of tax payer money

"National health spokesman Michael Woodhouse said the deficit figures were appalling, and Dr Clark should take responsibility for them rather than blaming the previous National government" well why not?, national blame Labour at any opportunity, besides national were the ones who put the dhb's in this mess. I seem to remember a certain ex politician claiming money from the sale of soe's would be put toward schools and hospitals, plain to see that didn't happen.

Here is a good cause for the government to spend some of that 7.5 billion surplus on. As for the commissioners, they have failed utterly and completely in their appointed task, not that I expect that they'll be returning any of their fees. As for Michael Woodhouse blaming the present government for today's sad situation, well, let's just say this man's chutzpah knows no bounds.

So much for the non-democratic appointment of a commissioner who was to ensure budget overruns where to be contained. It just shows also, the "model" isn't working for this area. Perhaps a relook at the "model" is required.