By: Lucy Bennett
Health Minister David Clark has warned district health boards to tighten their belts or face the prospect of someone else doing it for them if their financial performance doesn’t pick up.
A report from the Ministry of Health on the financial performance of the country’s 20 DHBs in the first four months of the 2018/19 financial year showed almost all DHBs were on track for a deficit, Clark said.
“That is disappointing, and underlines again the importance of a rigorous annual plan process,” he said in a statement to the Herald.
The scale of the combined deficit for all DHBs is not known because monthly financial performance data has not been publicly released since the end of the 2017/18 financial year.
At that time, the combined deficit of the DHBs had blown out to $240 million, double what it was the previous year.
Clark met DHB chairs in December and followed up with a letter spelling out his expectations that their financial positions needed to improve in the 2018/19 year.
“We are now halfway through the financial year and, based on current evidence from DHB annual plans, this expectation is unlikely to be met,” he wrote in his letter of December 17.
“This is very disappointing as in 2018 the Government provided DHBs with the highest increase in funding in 10 years.”
DHBs receive around $13 billion of the $18b health budget. In Budget 2018, health received an additional $2.2b over four years and an another $100m to help cover deficits.
Several DHBs had signalled they would need more funding to alleviate pressure on working capital and Clark warned those that got it might also be subject to additional measures and reporting to show how they would improve their financial position.
“I will be monitoring the performance of all DHBs closely for the remainder of the financial year and will consider a range of governance options to strengthen and improve performance if necessary,” Clark wrote.
Those options included replacing board members, he said.
Clark told the Herald he expected the Ministry of Health to publish the first four months’ financial performance data in February.
He said the data, which showed actual spending against budget, had not been released earlier because budgets were still being finalised through the DHBs’ annual plan process.
Director-General of Health Ashley Bloomfield told National’s health spokesman Michael Woodhouse at the ministry’s annual review before the health select committee in December that the DHBs’ annual plans had not yet been signed off.
Woodhouse told the Herald that DHB sources had informed him that their financial situations were dire, with some already struggling to meet targets in the as-yet-unsigned budgets.
Clark has blamed the previous National government for the deficits, saying it had underfunded health for years.
DHBs are struggling with rising populations and growth in the number of patients requiring more complex health services, higher personnel costs and ageing infrastructure that requires a large cash injection.
Source: NZ Herald