Virus ups SDHB costs by $26m

Projects have been delayed or cancelled and services are managing bottlenecks of patients as the Southern District Health Board copes with the ongoing impact of Covid-19.

The pandemic has forced the SDHB, which last year had one of the highest DHB deficits in the country, to spend about $26million extra on unbudgeted operating costs and $1.2million in capital expenditure.

"However, we know the impact of Covid in terms of our operations goes wider than this," SDHB finance executive director Julie Rickman said.

"A range of projects slowed or stopped during the intense organisational focus on addressing Covid-19, and there may be indirect cost and efficiency implications as a result."

An issue like Covid-19 was not contemplated when the SDHB drew up its 2019-20 budget — in which it predicted a $10.9million deficit, down from $85.8million the previous year.

The arrival of the pandemic in New Zealand in February, and then in the southern region days later, resulted in the SDHB incurring millions of dollars in costs to prepare for possible cases in hospitals and in the community.

"This included the need to set up systems right across the southern health sector to treat Covid-19 patients.

"While we are fortunate these were not tested to the extent we feared possible, the preparation work was still required."

The SDHB, then and now, had to find the money for Covid-19 testing and also had ongoing costs from maintaining the health system in readiness for any future change in alert levels.

"In some instances we have needed to modify our ‘business as usual’ to reflect the requirements of new normal," Ms Rickman said.

"For example, we are continuing with increased levels of infection prevention and control requirements than prior to Covid-19."

The SDHB’s burgeoning deficit, which resulted in ministry staff being detailed to work with the organisation on steadying its finances and Crown monitors being put in place, was highly inflated last year due to one-off costs.

However, in November the board warned the ministry its latest deficit projection had risen to $15.7million.

The ministry recently revealed that nationally DHBs had collectively spent more than $600million to fight Covid-19.

The SDHB’s spend ranked sixth out of 20 health boards, a figure which likely reflected the enormous efforts of southern health professionals when Covid-19 was detected in the region last year.

Clusters of the disease broke out in Queenstown and Bluff, and cases linked to a Dunedin high school and Lakes District Hospital required a rapid response so any possible spread of Covid-19 was prevented.

Ms Rickman said that, overall, the DHB had been well supported by the ministry to manage the financial implications of Covid-19.

"They have provided support as we go and direct Covid-19 costs are for the most part being covered.

"They have enabled expenditure decisions to be made swiftly, have accommodated the reduction in services provided (for example, elective surgeries) without reducing this income, paid for equipment such as ventilators and have assumed responsibility in areas such as national PPE procurement to achieve consistency across the sector."

However, the costs to the SDHB had been greater than just the emergency response.

During Alert Levels 3 and 4 many patients had appointments and procedures postponed, a backlog the DHB was still trying to clear.

It also believed those deferrals had contributed to the recent surge in complex cases arriving in emergency departments, a phenomenon which had contributed to bed block and resulted in elective surgery being deferred over December and January.

"While the ministry has agreed to fund us to catch up on treatment deferred by Covid-19, we now face the challenge of finding the staff and resource capacity to care for the extra volumes caused by lockdown, on top of the existing workload," Ms Rickman said.

"These indirect costs [from Covid-19] are continuing to be felt, and have been a lesson in the ongoing consequences of such a disruption ... The overall cost to our society as a whole has been much less than might otherwise have been the case.

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