Financial review provides clarity on Canterbury DHB path ahead

  • Jonathan Coleman
Health

Health Minister Jonathan Coleman has released the second stage of a financial review by PwC on Canterbury DHB’s future financial performance.

“Supporting the Canterbury rebuild is a key priority, and the Government is committed to ensuring Cantabrians receive the health services that they need,” says Dr Coleman.

“The PwC report helps to provide clarity on the future financial challenges facing Canterbury DHB. The DHB needs to take steps to ensure it’s in a better financial position by 2018 when the new major hospital facilities open.”

The review found that depreciation and capital charges associated with the close to $1 billion of new hospital facilities are the primary drivers behind growing deficits.

PwC forecasts that if no changes are made, Canterbury DHB will have deficits of $38.5 million in 2016/17 and $46 million in 2021 – which is around 3.3 per cent of the DHB’s total funding.

The report follows a stage one financial review, released in November 2015, which found the DHB’s finances were relatively stable and recommended against additional government funding.

“It is important to note that the deficits are nearly completely non-cash deficits. While they need to be solved over time, they don’t affect the operational activities of the DHB in the short to medium term,” says Dr Coleman.

“The review recommends a mix of solutions to help the DHB improve its financial sustainability.

“This includes reducing the depreciation rate, leasing rather that owning some of their facilities, and reviewing the future facilities building plan.

“Moving the DHB to a more sustainable financial position needs to be the key priority for the new Board. I’ve written to the Chair outlining my expectation that they manage their performance in line with PwC’s recommendations.

“I’ve also written to the Hospital Redevelopment Partnership Group to ask them to lead work on reviewing the future facilities building plan.”

The Government has supported Canterbury DHB since the earthquakes through providing an additional $86 million to help meet the costs of earthquake recovery, as well as $76 million in temporary relief from capital charge payments on funds held by the Crown.

An extra $20 million is also being provided as part of a package of initiatives to boost mental health services in Canterbury. This includes an extra 27 FTE primary care and community based mental health workers.

The Government is also delivering close to $1 billion of new hospital facilities, which alongside Burwood, the Acute Services Building and Outpatients facility, includes progressing a business case for the Parkside facility and assisting the DHB with its business case for mental health services currently at Princess Margaret Hospital.

Canterbury DHB’s annual budget is currently $1.4 billion – an increase of $331 million over the past eight years.

The report is available on the Ministry of Health website here: www.health.govt.nz/publication/canterbury-district-health-board-stage-two-financial-review