SDHB's deficit hits $40m

Lisa Gestro.
Lisa Gestro.
The Southern District Health Board's deficit has blown out to $40 million, almost double what the organisation projected it would be this financial year, but the current financial situation is likely to be much worse.

Nationwide DHB financial results for May, released by the Ministry of Health yesterday, did not include an estimated $100 million in one-offs stemming from the resident doctors' strike, changes to the Holidays Act and costs from troubled IT project the National Oracle System.

The ministry predicted the SDHB's deficit could hit $45 million for the year ended May 31, and noted its forecasts "are expected to be conservative".

The SDHB had budgeted to record a $22 million deficit.

In 2015, then-health minister Jonathan Coleman fired the Southern District Health Board after it forecast a final deficit of $27 million for the financial year, a figure which had doubled in the previous six months and which was forecast to hit $42 million.

A commissioner team has run the SDHB since then, and is scheduled to hand over to a newly elected board after October's local body elections.

SDHB acting chief executive Lisa Gestro said the organisation's financial position continued to be affected by rising drug expenses and medical workforce costs.

"The deficit figures published reflect the ongoing challenges we face as we continue to try to balance the need to deliver services, invest in improvements to our health system and manage costs."

Southern is one of a group of DHBs which have "monitoring and intervention framework" status, and ministry staff have been working with the SDHB since January to develop a financial recovery plan.

The SDHB's most recent annual plan predicted it would record a $14.7 million deficit in 2019-20, the deficit falling to $4.8 million in 2021-22 - numbers which look highly unlikely given yesterday's financial report.

The SDHB was the fourth-largest contributor to a national combined DHB deficit figure of $423 million, and the ministry estimates one-off costs could result in a year-end deficit of at least $522 million.

National Party health spokesman and Dunedin list MP Michael Woodhouse, who for months has predicted combined national DHB deficits amounted to $500 million, said he took no comfort in being proven correct.

"This is one of those rare occasions when a politician hates to be right ... I'm not surprised and I'm deeply disappointed," Mr Woodhouse said.

Mr Woodhouse said the SDHB's deficit posed a difficult challenge for the soon-to-be-elected board.

"I don't think it is a reflection on the commissioners, who have been tasked with mathematical alchemy to make ends meet."

Health Minister David Clark said DHBs would receive an extra $2.8 billion over the next four years as part of this year's Budget, and had been directed to improve their underlying deficit position in 2019-20. However, he conceded it would take time for all DHBs to reach a sustainable financial position.

"This Government doesn't accept that deficits are inevitable nor do we accept DHBs cutting services to manage their financial position," Dr Clark said.

"Some DHBs manage to post small surpluses, break even or only post small deficits while maintaining services - it can be done."

There may be still more bad news to come for health budgets, as the ministry's report warned an extra $142million equity had already been provided to support DHB deficits and that cash balances should continue to be monitored.

Comments

I'm looking forward to Ms. Grant's next 'Commissioner Update' article in the Star. I wonder how she'll spin this one? At the end of the day though, the last government are entirely to blame for this. First they refuse to change the population based funding model which put the SDHB at a huge disadvantage, then Dr. Coleman's 'solution' is suspending local democracy and imposing commissioners to no avail., which is unsurprising as the original funding model hasn't changed. And last time I looked Ms. Grant was being paid $1500 per hour.

ms gestro makes an interesting point the increase is due to increasing drug and medical workforce costs. funny that it does not mention the high cost of management wages vs productivity. "The deficit figures published reflect the ongoing challenges we face as we continue to try to balance the need to deliver services, invest in improvements to our health system and manage costs." the point is you are given taxpayer dollars to deliver these services and the people of Southland and otago give you that money, and they are rural and city and deserve the same services ...to deliver their children in clean, equipped fully functional units not on the side of the road, the office floor, a child/mother hub with no equipment and an overworked midwife, the cancer patient who cant get treatment because they didn't follow the normal way of diagnosis, the young mum who has to go to givealittle to have a chance of living, the elderly waiting for joint replacements sent home 5 times..not good enough ...these folks are your responsibility to provide care for now get moving and do your job and stop whinging.

 

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