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A million-dollar accounting mistake has made the Southern District Health Board’s financial performance worse than expected.
The Ministry of Health and the SDHB itself both missed the mistake, which cost the board $1.6million in January and which chief executive Chris Fleming said would be even more expensive this month.
"While it is hard to comprehend how an error in excess of $1 million in a month could occur, this is less than 1% of the total DHB expenditure in a month," Mr Fleming said.
The problem occurred when the SDHB’s pharmaceuticals budget was loaded for the year, but with only half the correct budget for December entered and almost nothing for January.
Making the oversight even worse is that, like many DHBs, the SDHB is spending more on pharmaceuticals than forecast: projections were that it would spend $108million on medicines whereas it is now forecast to spend $115million.
"This is really disappointing," Mr Fleming said.
"The phasing is reviewed by finance, by the service and by the Ministry of Health and all three missed what is now an obvious error."
Overall, the SDHB budget for the past month was a deficit of $4.49million, a result Mr Fleming said was very disappointing.
Apart from the pharmaceutical budget issue, also contributing to the shortfall was the board receiving $700,000 less than it expected from the ministry to implement the nurses’ pay equity settlement and spending $807,000 more than budgeted for outsourcing of procedures.
The SDHB already outsources several cancer and orthopaedic treatments, but board papers showed it getting outside clinicians to provide medical imaging, ear nose and throat, ophthalmology, plastic surgery and urology work had driven up those costs.
Mr Fleming said the board planned to discuss the pay equity issue with the ministry.
The settlement has added $15.8million in costs to the SDHB, much of which was covered by increased government funding provided for that purpose.
For the financial year to date the SDHB’s deficit is $16.7million, having budgeted to be $11.1million in the red.
However, its spending has been hiked to meet the demands of the Covid-19 pandemic.
Unbudgeted expenses for the Covid-19 vaccination programme have been $5million so far, which the ministry is expected to reimburse. .
On a "business as usual" budget, the SDHB’s deficit is $11million against a planned $5million deficit.