Hospitals Out of the Red

Health Minister Bill English said today most hospitals would be out of the red and recording a surplus in two years time now that details of the funding transfer announced in the Budget had been finalised.

"People want certainty about hospital services. This deal will mean an end to the substantial losses that hospitals have suffered in the past which have caused unnecessary concern in the community.

"Under the transfer nearly $130 million will be transferred from Vote: Health Service Providers to Vote: Health. This will allow the Health Funding Authority to pay hospitals a fair price for the volume of services the HFA wants to buy.

"By the year 2000/01 most hospitals are projected to record a surplus and the combined deficit of all hospitals will be nearly eliminated. The exact position of each hospital will not be known until the current business planning round is finished.

"The Government has always covered the losses made by hospitals, but this deal will put them on a much sounder financial footing because they will be able to plan for a more realistic amount of revenue. It is an acknowledgement that a lot of the on-going deficits being run by hospitals were being spent on health services that were needed.

"A key step in implementing the transfer has been removing variations in the funding of health services across the country. Bringing the four regional health authorities together into the HFA has allowed a fairer national pricing system to be developed, which incorporates premiums for rural and tertiary services. However, hospitals will still need to do better in areas where their services cost more than the fair national price.

"There will be on-going refinements to the system. The HFA and the hospitals will work together cooperatively to look further at price and volume issues within the hospitals.

"The transfer comes into effect immediately so will apply to contracts negotiated for this financial year. It will leave more than $100 million to pay for on-going capital investment in the public hospital sector.

"The transfer, referred to as the deficit switch, was proposed some time ago and meets the recommendations in this year's Audit Office report about the reporting of hospital financial performance to ensure that the public gets a true and fair view of the results," said Mr English.

Ends

For further information contact:
Liz Rowe, Press Secretary,
04-471 9154 (wk) or 04-383 5491 (hm)
Hospitals Out of the Red
Health Minister Bill English said today most hospitals would be out of the red and recording a surplus in two years time now that details of the funding transfer announced in the Budget had been finalised.

"People want certainty about hospital services. This deal will mean an end to the substantial losses that hospitals have suffered in the past which have caused unnecessary concern in the community.

"Under the transfer nearly $130 million will be transferred from Vote: Health Service Providers to Vote: Health. This will allow the Health Funding Authority to pay hospitals a fair price for the volume of services the HFA wants to buy.

"By the year 2000/01 most hospitals are projected to record a surplus and the combined deficit of all hospitals will be nearly eliminated. The exact position of each hospital will not be known until the current business planning round is finished.

"The Government has always covered the losses made by hospitals, but this deal will put them on a much sounder financial footing because they will be able to plan for a more realistic amount of revenue. It is an acknowledgement that a lot of the on-going deficits being run by hospitals were being spent on health services that were needed.

"A key step in implementing the transfer has been removing variations in the funding of health services across the country. Bringing the four regional health authorities together into the HFA has allowed a fairer national pricing system to be developed, which incorporates premiums for rural and tertiary services. However, hospitals will still need to do better in areas where their services cost more than the fair national price.

"There will be on-going refinements to the system. The HFA and the hospitals will work together cooperatively to look further at price and volume issues within the hospitals.

"The transfer comes into effect immediately so will apply to contracts negotiated for this financial year. It will leave more than $100 million to pay for on-going capital investment in the public hospital sector.

"The transfer, referred to as the deficit switch, was proposed some time ago and meets the recommendations in this year's Audit Office report about the reporting of hospital financial performance to ensure that the public gets a true and fair view of the results," said Mr English.

Ends

For further information contact:
Liz Rowe, Press Secretary,
04-471 9154 (wk)