The country’s DHBs are looking to end the year much deeper in the red with a deficit of nearly $220m now forecast – many citing higher patient volumes than predicted. Others say they are further in the red after making provision for a nurses’ pay deal.
The revised deficit is $75m worse than what was initially budgeted for the 2017-18 financial year – and nearly $100m worse than the combined deficit for the previous financial year.
The Ministry of Health last week released its DHBs’ financial performance report for the 11 months up to May 31 this year showing that deficits continued to balloon at 16 of the 20 district health boards. And the combined deficits worsened by a further $22 million over the previous month.
While eight DHBs managed to stay within their operating budgets in 2016-17, only four out of the six budgeting to breakeven in the 2017-18 year were looking on track as the financial year drew to a close.
Ten of the DHBs reported to the Ministry that higher than expected acute patient volumes was impacting on their bottom lines. Including leading to higher than budgeted for staff costs – including spending more money on outsourced (bureau) health workers – and spending more on outsourced services and more on clinical supplies. Higher than expected infrastructure costs were also reported by MidCentral, Waikato and Waitemata DHBs.
Plus four of the DHBs cited making provision for the likely cost of the new DHB NZNO agreement when it is settled as another reason for their end of year bottom line being worse than projected. (A decision will be announced today on the 5th DHBs’ offer which, if accepted, is backdated to June 4 2018.)
The first Budget of the Labour coalition Government included $100m for additional deficit support for DHBs in 2018-19 plus an extra $549m operational funding for the new year but the lion’s share of the new DHB funding was $750m in capital funding for urgent hospital building refurbishment projects around the country.
The DHB that gained the most headlines for concerns about failing infrastructure – Counties-Manukau – is on target to meet its budgeted deficit target of about $20m in 2017-18 up on $13m in the red last year.
Canterbury DHB has once again the highest deficit – it was budgeted to have a $53.6m deficit but is now projected to end 2017-18 with a $64m deficit with the DHB citing amongst the reasons being higher than predicted volumes, mental health service costs and the ongoing impact of the Canterbury quakes on the board’s facilities, staff and population’s health needs.
The DHB that has proportionately ballooned the most is Waikato DHB – whose controversial former CEO Nigel Murray resigned in October last year. The DHB had broken even the previous year and was budgeting for a $10 million deficit this year but that was revised to $22m soon after Murray’s departure and they are now forecasting a $29.5m deficit. The DHB reported that the revised deficit forecast was mainly due to outsourced personnel costs, clinical supplies costs and infrastructure costs being higher than budgeted due to volumes being higher than planned, plus an unbudgeted estimated cost of the nursing MECA negotiations and planned savings not being achieved.
Other DHBs whose end of year bottom lines are looking sizably worse than initially projected are Bay of Plenty whose forecast deficit has jumped from $2.7m to $10.2m and the Southern DHB whose deficit is expected to worsen from projected $14m to $19.4m.
On the other hand Capital & Coast DHB is looking to do better than projected and is now looking at $19m deficit this year – less than the $21m forecast and roughly half of its $38.5m deficit the previous year.
Auckland DHB is looking to break even and Waitemata DHB is forecast to be $0.5m in the red.