Massive budget blowout for DHB

Hawke’s Bay District Health Board has ended the financial year with a massive budget blowout.

The DHB had forecast a deficit of $12.9 million but come the end of the financial year this had blown out to a $43.3m deficit – $30.4m worse than planned.

Costs related to Covid-19 account for just $9.7m of the blowout.

The rest was due to various unanticipated costs and losses of income.

The cost of delivering services was $6.6m more than planned, and a cost of $4.2m was incurred when the board failed to carry out as many elective surgeries as planned.

Other unanticipated costs included an extra $2.5m on health for the elderly, and an extra $2.7m on pharmaceuticals.

The DHB does not have cash reserves on which to draw in order to cover the shortfall, unlike some DHBs, so it must be covered by the Health Ministry, which provides additional equity funding so it can make ends meet.

As a result of the blowout, auditors require the board to ask the ministers of health and finance to provide a ‘‘letter of comfort’’ to the auditors.

The DHB’s executive director of financial services, Carriann Hall, told Stuff that a focus of the new board, elected last year, was to understand the underlying issues behind the result ‘‘and supporting management to develop solutions’’.

The deficit had not been unexpected and since January the board had signalled a deficit of at least $24m.

Hall said the DHB had had a number of issues affecting its planned expenditure, including pressure on hospital level care that continued over the summer months, unlike in previous years.

‘‘Growth in both patient volumes and complexity of the services required to care for older people were also significant contributors,’’ she said.

The higher pharmaceutical costs were due to the DHB being ‘‘quick off the mark to take up national investments in new drugs’’.

There were less elective operations performed due to the demand of acute and life threatening injuries and medical conditions, Hall said.