Alexandra-based HealthCentral, which owns the Roxburgh Medical Centre, said in a statement yesterday afternoon the viability of the Roxburgh practice was at risk due to WellSouth PHO withdrawing $130,000 — or 85% — of the practice’s rural funding allocation.
WellSouth chief executive Andrew Swanson-Dobbs said they had been mistakenly paying more than $130,000 a year in rural funding to the medical centre since 2015.
WellSouth chief financial officer Mistelle Jack said a review of the Roxburgh rural contract found the "historic arrangement" should no longer have been in place.
The decrease in funding was a 54% decrease on the previous year, Ms Jack said.
Funds removed from Roxburgh were returned to the pool for all rural practices.
Rural funding models were outdated and Mr Swanson-Dobbs had been part of government negotiations to increase patient subsidies to general practices, she said.
HealthCentral general manger Jenaya Smith said they were blindsided by the announcement and had no prior indication any of the funding was temporary or at risk.
"It was not itemised in our contracts, remittances, or any communications."
The funding cut was initially scheduled to take effect this month. Temporary support secured by WellSouth from Health New Zealand Te Whatu Ora had deferred the impact until January but HealthCentral warned the delay offered only limited relief.
"This unexpected funding withdrawal once again places the long-term viability of the practice at risk. Sudden changes in funding allocation or eligibility criteria by WellSouth creates instability for providers. Primary care practices rely on consistent, sustainable funding to operate, plan ahead and recruit."
HealthCentral bought the Roxburgh practice in December 2022 and the Roxburgh Medical Trust retained ownership of the building.
The trust had battled to attract and retain doctors at the practice for several years before HealthCentral stepped in.
Ms Smith said the previous owners of the Roxburgh practice did not recall any part of the rural funding being temporary.
While HealthCentral bought the Roxburgh practice to ensure the continuity of local health services, it might have negotiated different terms or adjusted the level of services it committed to delivering if it had been aware the funding was temporary, she said.
The fee structure was under review at the moment and there was a risk of Roxburgh facing increases to cover the funding shortfall.
"We remain hopeful that the PHO will reconsider its decision or work towards a more sustainable, long-term solution so any fee increases can be minimal."
In contrast to Roxburgh, HealthCentral’s Alexandra practice — which operates seven days a week, providing after-hours and public holiday care for the wider region — received no increase in rural funding for 2025-26 and that was no longer sustainable, Ms Smith said.
"With no increase in funding, we cannot be expected to absorb the rising cost of staffing weekends and holidays."
Central Otago district councillor for the Teviot Valley ward Sally Feinerman said she was deeply concerned about the threat to the viability of the community’s only primary healthcare provider.
"The potential consequences — reduced services, increased patient fees or even closure — are simply not acceptable."
Mrs Feinerman said she stood with HealthCentral in calling for an urgent review of the rural funding model.
"Let’s be clear: rural health is not a luxury — it is a necessity."
