Ministry called to aid SDHB

SDHB chief executive Chris Fleming. Photo: ODT files
SDHB chief executive Chris Fleming. Photo: ODT files
The Ministry of Health has been called in to help the Southern District Health Board develop a financial recovery plan, as its annual deficit soars towards $26million.

Yesterday, the ministry finally released monthly updates on financial performance for DHBs, which were halted at the end of June last year.

They show almost all 20 DHBs are expecting to end the current financial year in the red.

The potential budgeted deficit for all DHBs is about $346million.

Health Minister David Clark said the forecasts were disappointing but not unexpected, putting the blame on the previous National government.

DHBs were $33.5million over budget for December 2018.

Southern DHB's $8.34million figure was trumped only by Auckland DHB's $9.6million.

The SDHB's year to date result was a $25.9million deficit.

The Otago Daily Times earlier reported the deficit was $29.9m, that figure was in the Ministry of Health report, but this morning the ministry said that figure was a mistake and updated the figure to $25.9m.

The previous National government replaced the SDHB board with a commissioner in June 2015, partly due to the board projecting deficits upwards of $30million.

In December the Government approved $40.3million "equity support" to the SDHB, but demanded it put restrictions in place on delegation of financial authorities.

The newly-released documents said the ministry was also now assisting the SDHB to develop a financial recovery plan.

SDHB chief executive Chris Fleming said the year-to-date deficit result underscored the organisation's ongoing challenge - trying to balance the investments needed to transform the health system with the need to manage costs.

"Like many DHBs, we have faced cost pressures associated with industrial settlements, and we can expect to incur further costs as a result of ongoing industrial action," he said.

"However, for Southern DHB, the single most significant issue relates to our high utilisation of pharmaceuticals relative to other parts of the country, accounting for nearly half of our overspend to date.

"We have among the highest rates of patients taking more than 11 medications.

"This is an issue we need to tackle as a health community, not simply because it uses resources we need to direct elsewhere, but because it is not in the best interests of our patients."

The 2018-19 annual plan for the SDHB is still to be approved by Dr Clark.

"I am monitoring the performance of all DHBs closely and will consider a range of options to improve performance if necessary, including changes to the membership of boards," Dr Clark said.

"I also raised these matters directly with board chairs and chief executives last week."

Dr Clark said the Government always knew that it would take more than one Budget to address the "legacy of underfunding" from the previous government.

However, in a letter to DHBs also released yesterday, Dr Clark said they needed to improve their financial performance.

"We recognise that improving the financial sustainability of the sector cannot be done all in one year, but it is important that DHBs are doing all they can locally to manage in a financially prudent way," he wrote.

"I will be monitoring the performance of all DHBs closely for the remainder of the financial year and will consider a range of governance options to strengthen and improve performance if necessary."

Some of those options have already been deployed with the SDHB.

The SDHB recorded a $21.4million deficit in 2017-18 - against a budgeted $14 million loss - and the previous year's deficit was revealed to be $21.8million.

It had previously forecast a deficit of $22.39million for 2018-19.

On Monday, National health spokesman Michael Woodhouse predicted combined DHB deficits might be as high as half a billion dollars.

"The Government has neither provided the funding they claimed they would nor set expectations for continued fiscal discipline," he said.

"The financial chickens are coming home to roost.

"At some point Dr Clark should stop blaming previous administrations and get on with the job."


Have we not been paying state appointed commissioners a considerable sum to deal with this for the last four years? And wasn't part of the justification for paying Chairman Grant $1500 an hour due to the pressure she would be put under for having to make and carry out unpopular decisions? Wasn't suspending local democracy considered to be the only way to deal with the deficit? Or do you suspect that Dr. Christie and the old democratically elected board where right when they pointed out the the problems were caused by the previous government's population based funding model?