DHBs on notice over financial performance

Health Minister David Clark says District Health Boards are on notice to improve their financial performance and demonstrate they have a plan to return to financial sustainability.

The Ministry of Health has today released monthly financial reports which show almost all DHBs are expecting to end the current financial year in the red, with a potential budgeted year-end deficit for all DHBs of around $346 million.

David Clark says the forecasts are disappointing, but not altogether unexpected.

“Our public health service was chronically underfunded by the previous Government. For nine years DHBs were financially squeezed and staff were put under huge pressure. 

“I’m advised the major driver of DHB deficits is increased staff costs, including the hiring of an additional 2,667 full time equivalent staff in the first half of 2018/19 (at a cost of around $126 million). That includes 440 extra medical staff, 1,271 more nurses and 303 allied health workers. 

“In our first Budget we invested $2.2 billion more in DHBs over four years – the biggest increase in operational funding in the last decade. Another $750 million was put into capital works in Health. However, we always knew that it would take more than one Budget to address the legacy of underfunding.

“This Government will continue to invest more in Health so that DHBs can continue to deliver the quality services that the public expect and deserve. But DHBs must also spend every health dollar wisely.

“It is clearly challenging for DHBs to improve their financial position while at the same time introducing new ways of working that will improve access to services. Some DHBs are managing that transition better than others.

“At the end of last year I wrote to all DHB chairs expressing my disappointment with their collective financial performance. It is not acceptable to see some DHBs forecasting deficits to continue for years to come.

“In that letter I made it clear I am monitoring the performance of all DHBs closely and will consider a range of options to improve performance if necessary, including changes to the membership of boards. I also raised these matters directly with Board chairs and Chief Executives last week.

“The Government is managing significant cost demands after nine years of underfunding across the board, but we are prudently managing the books and running a surplus. We expect DHBs to display the same sort of financial discipline,” David Clark says.