‘No health cuts’ even as budgets blow out
Health Minister Jonathan Coleman says ‘‘there will be no cuts to services’’ around the country despite sector sources predicting massive deficits for district health boards (DHBs) this financial year.
Coleman will not disclose the total amount, but sector sources say it is projected to be more than $160 million for the 2017-18 year.
The only publicly available figures – unaudited Ministry of Health figures published online – show 11 of 20 DHBs were in the red a month before the end of the 2016-17 financial year, totalling a forecast deficit of $99m.
The confirmed deficits for DHBs were expected ‘‘shortly’’, Coleman said.
‘‘We will only know national forecasts [for this financial year] once ... all DHB annual plans are confirmed,’’ he said.
The Canterbury DHB, which has the biggest forecast deficit at $51m, warned ‘‘significant service cuts of unprecedented scale’’ would be needed if the Ministry of Health did not accept its deficit.
Labour health spokesman David Clark said it was ‘‘not good practice’’ that no DHB had had its annual plan approved two months into the current financial year.
‘‘If health is not funded adequately, services get cut, and that’s been the pattern since 2009.
‘‘DHBs have made efficiencies gains where they can, they’ve made cuts already and they are finding that those cuts and efficiencies are harder to find and they can’t do that without the funding.’’
Labour had pledged an extra $8 billion in health funding over four years, partly to address the deficits, he said.
‘‘We want to make sure that health is funded in a sustainable way.’’
DHBs had been ‘‘pushed backwards’’ by the ministry’s $38m budget blunder earlier this year, which left 14 DHBs receiving too much funding and six not enough.
The ministry was putting pressure on several DHBs – including Canterbury, Counties Manukau and Southern – to cut costs and reduce spending, with disagreements between some DHBs and the MOH blowing up in the media.
‘‘They’re on a standoff that’s because of a failure of leadership by the minister. They’re in a war of words instead of a productive conversation.
‘‘It’s unlikely to be resolved before the election. It makes it someone else’s problem.’’
As of May, Canterbury DHB had the biggest forecast deficit for 2016-17 at $49.4m, followed by Capital and Coast, at $24.2m and Southern at $21.9m.
Health system expert and Otago Business School dean Robin Gauld said DHBs’ financial woes raised questions over the adequacy of health funding.
The ministry and the DHBs appeared to have a strained relationship, which was ‘‘inadequate’’.
‘‘We need a serious, independent look at levels of funding and performance across the board.’’
It also raised ‘‘serious and unresolved questions around the adequacy’’ of the complex formula determining DHBs funding.
The formula placed ‘‘much heavier constraints’’ on some DHBs over others – the Southern DHB for example had been in deficit for years.
Coleman said it was not unusual for annual plans to be approved into the financial year.
‘‘For example, for the last two years, nine sets of plans had been approved by October.
‘‘With an average DHB budget of $650m, these plans are each thoroughly examined and negotiated.’’
Ministry director of critical projects Michael Hundleby said DHBs had shown they could reduce their deficits without cutting frontline services.
‘‘DHBs have looked at rationalising back office functions, curtailing international travel, reducing layers of managers, better staff management and reducing waste.’’