The Southern District Health Board's proposed budget showing an $18.5 million deficit has been rejected by the Ministry of Health and a revised plan is expected to be submitted this week.
In a report to this week's board meeting, general manager of finance and funding Robert Mackway-Jones said the board would be submitting the altered plan after the meeting.
It is listed for discussion in the closed session.
The rejected budget shows revenue of $802.113 million.
This budget was used for the first month of the new year, with the board performing better than expected, recording a $1.4 million deficit, $400,000 lower than anticipated.
In a list of key financial issues and risks, Mr Mackway-Jones included the requirement for the board to break even within four years.
The board received little demographic funding to manage demand and growth in services.
It was still over-funded under population-based funding and had ongoing financial sustainability issues.
There was ongoing pressure from demand-driven services, wage demands and pricing pressure from suppliers and contracted providers.
Mr Mackway-Jones also referred to the likely loss of the tertiary funding adjuster of $8 million during the 2011-12 financial year.
This money is distributed under population-based funding to recognise complex services provided by seven district health boards regionally or nationally.
Mr Mackway-Jones said Auckland, for example, had some national services and the tertiary adjuster helped compensate for their provision.
The Dunedin Hospital was deemed a tertiary provider and received funding, but also would pay some of its allocation to Auckland, Canterbury and Wellington, where it accessed particular services.
It was proposed the tertiary adjuster would be recalculated using a new model called "role delineation", which would see Otago no longer assessed as "tertiary".
Accordingly, it could lose the $8 million it received at the moment.
This would not change the type of services delivered in Dunedin, "only the funding associated with it".
The board assumed if the change was implemented, funding compensation would be given from a transitional pool, which would mean Southern would become more "over-funded", according to population-based funding.
Mr Mackway-Jones said boards held mixed views on the possible change and decisions had not yet been made.
His view was that the use of the new model was fair, but more work would be required, including a review of comparable hospitals and services, before it was introduced.
