Kitchen spending unknown

The Southern District Health Board has acknowledged it has no idea how much the Compass Group will spend equipping its kitchens over the next 15 years.

''All we do is pay an amount per meal,'' finance director Peter Beirne said.

Under the deal approved this month, responsibility for purchasing any new equipment shifts to the multinational corporation. The board retains responsibility for building maintenance.

The board released financial tables showing Compass' projected spend until 2030 compared with the in-house service.

The board's capital spend was estimated at an average of $160,000 in each of the 15 years, but the projected spend for Compass was blank.

Mr Beirne said capital spending would all be ''wrapped up in the price per meal'' agreed with Compass. He acknowledged this meant the board did not know how much Compass would spend on equipment. The tables show the projected price of patient meals in the in-house service is $5.31 million in 2015-16, compared with $4 million (including capital spending) under Compass. Meals on wheels costs are also shown.

''The interesting thing about the meals on wheels is because the price that we pay drops but the subsidy that the patients pay remains the same, then it looks like there's a better savings for us,'' Mr Beirne said. The board released the financial tables after the Otago Daily Times queried why it had started telling media outlets the projected savings were $1 million a year, rather than $7 million over 15 years. It depended on the accounting method and whether it was measured in today's dollars.

''Both are actually correct,'' Mr Beirne said. Prof Ralph Adler, of the University of Otago accountancy and finance department, perused the tables for the ODT.

''I see that Compass Group is essentially proposing to make the patient meals for about 85% of the current costs incurred by the SDHB.

''A quick check, but not fully exhaustive because I have not looked at every year, shows this percentage remains at the 85% over the 15-year period.''

Prof Adler said he would like to see a break-down of costs into variable and fixed for closer analysis. Health Benefits Ltd negotiated the deal on behalf of boards, and a spokesman said the level of capital spending would be quantified at a later date. It was expected to be ''limited'' at Southern.

eileen.goodwin@odt.co.nz

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