DHB deficits top $200m

District Health Boards have been put ‘‘on notice’’, with the Health Minister threatening wholesale changes to membership if spending isn’t brought under control.

After months of refusing to release the figures, the Ministry of Health has published the latest financial reports of the 20 DHBs – and they make for grim reading.

A sector-wide deficit of $207 million has been posted, with every DHB now in the red. DHBs were forecasting a $372m deficit to June 30, which had deteriorated by $24.1m since the November, 2018 forecast.

Supporting documents also warned that if DHBs continued to spend to budget for the remainder of the year, or failed to achieve revenue targets, ‘‘a higher deficit than planned is expected’’.

Health Minister David Clark said he had put the DHBs ‘‘on notice’’, and would consider ‘‘a range of options to improve performance’’ if necessary.

That included changes to board memberships, which Clark said he had raised with board chairs and chief executives last week.

Canterbury, Counties Manukau, Southern and Waikato DHBs posted the biggest deficits; $41m, $24m, $29m and $24m, respectively.

Each DHB had its own set of cost pressures to deal with, including geographical challenges, higher proportions of high-needs populations or demographic changes.

But documents showed the Ministry of Health cited increased staff costs as the major driver of deficits, including the hiring of an additional 2667 full time equivalent staff in the first half of 2018-19, at a cost of around $126m.

‘‘That includes 440 extra medical staff, 1,271 more nurses and 303 allied health workers,’’ Clark said.

Outsourced personnel costs, however, were still unfavourable to budget by $43m – that was across 17 DHBs. Generally, outsourced personnel costs are incurred to cover unfilled personnel vacancies.

Clark released a letter he sent to DHB chairs in December, alongside the release of the deficit figures, designed to both set out his expectations in cost reductions and blunt any reaction the Government had not done enough in its first budget to bring the health sector back up to sustainable funding levels.

While the previous Government came under heavy fire for ‘‘underfunding’’ the health system, DHBs were expected to make explicit ‘‘efficiency savings’’ of one per cent.

It’s not clear whether specific spend reduction targets still apply, but Clark did tell chief executives he expected DHBs to be ‘‘doing all they can’’ to improve financial results.

In another letter sent at the same time, Clark also instructed DHBs to prioritise improving their mental health and addiction services, and be ready to roll out the Government response to the wide-ranging Mental Health and Addiction Inquiry report report.

Publicly released last December, the report makes 40 recommendations including a massive increase in access to services.

Health Minister David Clark said he had put the DHBs ‘‘on notice’’, and would consider ‘‘a range of options to improve performance’’ if necessary.

CRYING OUT FOR CASH

A limited amount of ‘‘equity support’’ was available but it came with strings attached, in the form of stringent monitoring conditions.

Of the 20 DHBs, Clark said seven had made requests for ‘equity support’, or additional cash, ranging from $3m to $64m to improve the state of their books.

Canterbury District Health Board (CDHB), which was facing

an estimated $98.4m deficit this financial year, made the largest request.

It was one of eight health boards yet to have their annual plans signed off.

The CDHB had sent a new annual plan after Clark rejected previous drafts and asking the board to save more, CDHB chair John Woods and chief executive David Meates told the Health Select Committee on Wednesday.

In a letter sent to Wood last December, Clark confirmed an interim injection of $30m. DHB requests for equity funding significantly exceeded the available amount, he said.

‘‘This first tranche of equity support is thus focused on addressing the greatest short term pressures on working capital.’’

Clark said he had asked the Ministry of Health to implement new measures for DHBs requiring equity support.

‘‘I expect boards to provide to me, on a quarterly basis, their representation that cost increases have only been approved where unavoidable,’’ he said in the letter.

This included justifying any increase in staff spending on the same period the previous year.

SERVICES SLIPPING

In his general letter to all DHBs, Clark also indicated displeasure that a number of key measures of performance were slipping: specialist wait times, elective surgical wait times and those for radiology or cancer services.

All three were the subjects of National Health Targets under the last Government, which publicly reported throughput against a clearly defined set of parameters.