17 Jun 2015

Region reacts to Southern DHB decision

6:45 pm on 17 June 2015

Otago and Southland leaders are supporting Health Minister Jonathan Coleman's decision to sack the board of the Southern District Health Board (DHB) and replace it with a commissioner.

However, one of the outgoing board members says it will be a challenge to turn the DHB's deficit around without negatively affecting services.

Dunedin Hospital.

The Government said it remained committed to redeveloping Dunedin Hospital. Photo: RNZ / Ian Telfer

Dr Coleman said he had written to the board today and told them he was replacing them. Kathy Grant has been appointed commissioner and takes over tomorrow.

He had previously warned the board might be replaced with a commissioner because of its poor financial performance: its deficits have been growing since it was formed by merger in 2010, and its forecast shortfall for this financial year is about $27 million.

"The financial problems at Southern DHB are long-standing. I do not have confidence that the current governance arrangements are suitable for delivering on the changes required in Southern DHB," Dr Coleman said today.

The DHB had also forecast its deficit would further increase in 2015/16 to between $30 million and $42 million, which accounted for more than half the combined deficit of all 20 DHBs nationwide.

"This situation of fluctuating forecasts and progressively worsening deficits cannot continue."

National Mp, Jonathan Coleman.

Health Minister Jonathan Coleman said he had written to the board today to let them know about his decision. Photo: RNZ / Alexander Robertson

The Government remained committed to redeveloping Dunedin Hospital and providing people in Southland and Otago with high-quality health services, Dr Coleman said.

"All DHBs are funded according to the same population-based funding formula. This formula includes adjustments to recognise rural populations, age and other demographic issues.

"In a tight fiscal environment, all DHBs need to use available funding effectively. No other DHB has failed to control its finances in the way that Southern has."

New commissioner confident

Mrs Grant has been appointed commissioner and has indicated she will appoint Graham Crombie and Richard Thomson as deputies, with a third deputy with a strong clinical background to be appointed by the end of the month.

"Mrs Grant is from Otago and brings significant local knowledge. She has significant business and governance experience and a proven track record in turning around struggling organisations," Dr Coleman said.

"The team will bring together a mix of strong financial, governance and clinical skills.

Dr Coleman thanked the board for their work and said his decision was not intended to devalue their efforts and achievements.

"However, a new approach is now necessary. My decision is based on the need for a new approach to the DHB's long-standing financial issues, and to help move the DHB to a more sustainable position over time."

Mrs Grant said she was confident she could turn the board's finances around.

"This is a significant challenge but one that is absolutely critical in terms of the southern part of the South Island," she said.

"We need to address the issues and put in place a model that is both financially and clinically sustainable."

Ms Grant said as commissioner she would have powers to work with management that the old board did not.

Dr Coleman told Checkpoint he had not given Ms Grant a deficit figure to aim at, but said it needed to come down.

Support for today's decision

Otago and Southland leaders have supported the decision to sack the Southern DHB's board.

Dunedin deputy mayor Chris Staynes said the Southern DHB's problems have been very concerning to the city, and a commissioner was the right move to put things back on an even keel.

Southland district mayor Gary Tong said the fate of the DHB has been the talk of the community and an enquiry was necessary, though rural people feared their vital health services would be disrupted.

The senior doctor representative on the board, John Chambers, said he was not surprised the board had been thrown out. The pressure on its members had been building up relentlessly, he said, and something had to give.

Another board member, Tim Ward, said the new commissioner would definitely have a challenge to turn the DHB's deficit around.

Mr Ward said the budget might be able to be adjusted around the edges - but making fundamental changes in the 15 months given to the commissioner would be difficult.

"It's hard to see where that level of change could be brought about, without having any detrimental effect on what the level of service provision is."

Mr Ward was disappointed he had lost his job but said at least the decision was quick.

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