In a statement commenting on the review by Deloitte of the boards' mental health services planning and funding processes and cost structure, Mr Shand said it must be the catalyst for overdue change.
The review, commissioned by the Ministry of Health, concluded that the boards were restricting funding for mental health services to support their own services rather than those in the community.
This severely limited funding available to community organisations and severely reduced the sustainability of mental health services.
It was found that the two boards over-priced their services by almost $5.5 million last year and it was critical of the budgeting procedures used, saying there was no evidence of detailed costings to justify the pricing.
The report also drew attention to the poor relationship between community organisations and the Otago board, a situation which was exacerbated when in, 2007, the board withdrew from plans to use accumulated mental health funds of $5.5 million for new community services and further last year when contract terms with community services were unilaterally cut from three years to one.
Mr Shand said the report findings which showed much higher increases in funding for the services the Otago board provided than those for outside community services being funded by the board, confirmed why it had been increasingly difficult for Pact to sustain its existing level of service.
The imbalances resulting from such practices had to be corrected to ensure sustainable services.
The over-provision of services by the hospital could be relatively easily corrected by transferring some services to community organisations.
Mr Shand welcomed the report and was optimistic, saying there was a growing acceptance of the necessity for change by planning and funding staff at the board and most providers in Otago.
Plunket Society Otago-Southland operations manager Barb Long, who was critical of the Otago board's withdrawal from a proposal to fund a service for Dunedin women with postnatal depression, said it was disappointing to learn that the money which could have been used for this had gone into board services.
The society had introduced a limited service for women as a result of fundraising.
Mental health services campaigner Jim Crowe said he would like to see $5.5 million spent in the community as promised.
Good faith had to be restored between the board and community organisations where trust had been fractured.
The actions of the Otago board had meant that people with mental illness and their families had missed out on support and care which was "theirs by right", he said.
Official comment has yet to be made by the district health boards on the report.
Questions posed to the Ministry of Health yesterday were met with a statement saying it had been having constructive discussions with the boards on the 12 recommendations in the report and details would be released after talks concluded.
