Buller District Council has pulled its support for a planned healthcare centre in Westport in its current form.
Buller mayor Garry Howard told RNZ councillors had agreed unanimously at a meeting last night to withdraw an offer to buy the centre once it was built.
He said the decision was significant in several ways, but was unlikely to mean the development would not continue. He said that would depend on the next government.
Mr Howard said the move formalised what the council had earlier signalled, after the partnership group steering the development announced that ACC would own the proposed $12 million Integrated Family Healthcare Centre, and enter a long-term lease deal with the West Coast District Health Board (DHB).
The Ministry of Health previously said it would pay for construction, transferring ownership initially to West Coast DHB, which would then on-sell the property to ACC.
The deal sparked a public backlash from concerned West Coasters that the ownership and lease model would not meet the region's needs.
Mr Howard said the council would now advise the Ministry of Health it has suspended the offer, and would now support community efforts to ensure a fit-for-purpose health facility is provided for the Buller District.
Ian Powell, the head of the senior doctors' union, has applauded the council's stance. He said it was further proof that a plan driven by the government does not make good clinical or financial sense.
"The council has grasped very well the level of alarm from the community - and not just the community but senior doctors and other health professionals working in Buller.
"What it demonstrates is the direction of Buller health services is being driven from outside the West Coast, rather than from inside it."
Mr Powell said earlier that the funding model could strip millions of dollars out of patient care in the region, while senior doctors claimed it hinted at a government retreat from funding public hospitals.
Mr Powell claimed the DHB would be paying a hefty rental of $750,000 to $1m a year while still having to maintain the building and equipment. He said while ACC is a Crown entity, the deal would see it operating like a private firm seeking to profit from the financial arrangement.
"More money would be spent on repayment costs and less on patient services," he said.
Garry Howard said the council had been looking for external investors to support the development and ease the burden on ratepayers in the event it purchased the facility, but the partnership group's decision to go with ACC flew in the face of community wishes.
He said the council's stance would no doubt force a re-think about the facility and whether it was fit for purpose.
"This issue about a public-private partnership is very much a New Zealand debate - should hospitals and health care facilities be the role of government and government funding, or is New Zealand going to continue with a model of public-private partnerships where they're simply leased facilities from a private owner," Mr Howard said.
The proposed 10-bed centre will contain six medical and two emergency beds and one maternity and one palliative care bed. It will also include a range of outpatient, community and primary care services including GPs, practice nurses, and allied health.