DHBs’ deficit concern

Two of New Zealand’s biggest DHBs were given a stark warning about the state of their finances as the country grappled with the Covid-19 pandemic.

The state of Canterbury DHB’s books were so dire officials had no choice but to advise the then Ministers of Health and Finance not to approve its annual plan last year.

This development was labelled “particularly concerning” by the Treasury, which said in June 2020 that the DHB’s ongoing deficits were “unsustainable”.

But Canterbury DHB acting chief executive Andrew Brant said his DHB was in the process of implementing a number of initiatives to turn the ship around.

The other DHB written to, Auckland, did have its annual report approved by the ministers and its chief financial officer Justine White is expecting to break even by the next financial year.

“We will continue to look for efficiencies, to ensure every dollar is spent in a way that optimises health gain for all,” White said.

Information, obtained under the Official Information Act (OIA), reveals former Minister of Health David Clark wrote to the heads of the Canterbury and Auckland District Health Boards (DHBs) outlining his concerns regarding their financial performances.

In both letters, Clark made his expectations abundantly clear.

“Currently, DHB financial performance is not sustainable, despite Government providing significant funding growth to DHBs in the past two Budgets,” he said in both letters.

In the 2020 Budget alone, the Government allocated DHBs an extra close to $4 billion — the largest ever oneoff spend.

Canterbury DHB had submitted an annual plan for the 2019/2020 financial year which included a draft budget deficit of $180m.

But in June 2020, officials advised Finance Minister Grant Robertson not to approve the plan.

Health Minister Chris Hipkins has since effectively wiped that $180m debt so that the DHB can keep paying its bills.

Clark did, however, sign off on Auckland DHB’s annual plan but it came with a warning. “I am approving your plan on the expectation that you will continue to focus on opportunities for improving financial results for 2019/20 and into 2020/21 and beyond,” he said in a June 10 letter to its chairman, Pat Snedden.