10 Aug 2016

DHBs' financial performance 'deteriorated significantly'

9:17 am on 10 August 2016

The deficits of the country's 20 district health boards are almost three times higher than was budgeted for, a government financial watchdog says.

In a new report, the Controller and Auditor-General said DHBs' overall deficit hit $65.6 million in 2014-15.

It said that was significantly higher than the DHBs' combined deficit budget for the year, at $23.9m.

The main contributors to the sharp deterioration were the embattled Southern DHB, with a $27.2m deficit for the year, and Canterbury at $18.9m.

The report stated that the larger deficit for Canterbury was "partly due to the government's decision to fund the budgeted deficit through additional equity rather than as revenue as it had in 2014, enabling Canterbury DHB to break even that year."

"Financial sustainability remains an ongoing concern, given the aging population, ongoing staff salary negotiations, and generally higher public expectations regarding service.

"DHBs are under pressure to deliver more during a period of constrained increases in funding."

It noted that health spending in 2014-15 was the second largest area, or "vote" by the government, $16.6b.

Funding increases for DHBs had "levelled off" to a 9.5 percent increase over the five years until June 2015, compared to a 37.5 percent increase over the five years until mid 2010.

"The financial performance of DHBs was relatively stable between 2010-11 and 2013-14, with actual aggregate results better than or close to budget in each year.

"This deteriorated significantly in 2014-15, when the aggregate result was a much higher deficit than budgeted."

The report said DHBs were expected to make efficiencies through collaboration with other DHBs and using shared-service agencies.

At the same time, they are also expected to increase health services delivered, for example, through health targets.

It said there might be "too much focus on the bottom line" among DHBs.

"DHBs are doing reasonably well at marshalling their resources for current operational needs.

"However, we found that their planning for the future and ability to deal with uncertainty or change is limited," the report said.

This year the Ministry of Health has the following DHBs under intensive monitoring:

  • Capital and Coast
  • Hutt Valley
  • Wairarapa
  • Southern (now led by a team of commissioners)
  • West Coast

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