New Wellington hospital a financial 'albatross'

Wellington's new regional hospital has been described as a "wonderful facility" by Capital and Coast District Health Board (DHB) representatives, but the huge cost of servicing its debt will present challenges into the future.

At a Parliamentary health select committee today, the $377 million project, paid for entirely through a loan, was described by DHB chairman Sir John Hansen as somewhat of a financial "albatross".

He said the situation exposed a flaw in population-based funding principals used by the Health Ministry which didn't allow for new buildings, and suggested a national, long-term hospital building programme and funding mechanism entailing all regions needed to be set up.

Capital and Coast's closing operating deficit for the 2008/2009 year was $40.5m - a 0.2 percent improvement on the opening deficit - but new regional hospital costs of $25.6m meant the overall deficit was $66m.

The overall deficit for the 2009/2010 year, including $37.7m in new hospital costs, was expected to be only slightly better at $59.3m, but projected figures showed the actual operating deficit was expected to improve from $40.5m to a closing figure of $21.6m.

Chief executive officer Ken Whelan said he was cautiously optimistic that efficiencies and savings would lead to the DHB achieving a closing operating deficit in the 2010/2011 year of only $400,000, however, new regional hospital costs would add $39.7m to that.

"When you put $377m on a Visa card there are going to be consequences," he said.

It was hoped a large chunk of debt could be serviced through the sale within the next few months of some DHB land at Kenepuru in Porirua.

Among other initiatives, Mr Whelan said the board had "re-engaged" with clinicians in terms of striving to find operating efficiencies, and that was paying off.

Questioned about morale among staff, reported as having been at a low in recent years, Mr Whelan said it had lifted.

"The organisation, I think, is in a very good space and we have people working together..." he said.

Capital and Coast received a funding increase of $32m for the 2008/2009 year, and has had an indication the increase in the next budget will be $21m.


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