District health board chiefs are bracing themselves to make deep cuts to their services next year after receiving Government indications their funding will slip.

Papers for an Auckland District Health Board committee meeting yesterday suggested it might have to cut as much as 5 to 10 per cent from its spending.

Health Minister Tony Ryall has widely signalled in speeches that because of the recession, the sector - although in line for an increase in next year's Budget - will receive much less than the $750 million boost it got this year. Health is receiving more than $12 billion this year.

The Auckland DHB's chief planning and funding officer, Denis Jury, said yesterday the Health Ministry had indicated that, after adjusting for inflation, "the funding for next year is likely to be less than this year".

The board has not been told what it will receive, but 10 per cent equates to $150 million of its $1.5 billion of income this year, most of which comes from the ministry.

Auckland has the largest income of the 21 DHBs, has more than 9000 staff and undertakes the country's most complex health care.

To prepare for cuts next year, it intends to review all its contracts - from agreements with rest homes to the running of its own hospitals. All DHBs are doing likewise.

Contracts found to be out of line with the Government's and the DHB's priorities will be modified, the Auckland committee paper says, "either by changing service specifications or amalgamating services, or possibly terminated".

"One other way is to do a 5-10 per cent cut in funding to all contracts, to drive efficiency. This would seem a fair process and may be considered as part of the initial phase."

Many cuts have already been made in the health sector, as the National Government imposes its priorities by shifting money into areas it considers higher priority.

Ministry purchasing of public health services - which pays for the bulk of DHB public health work - has shrunk by $7 million to around $60 million.

The Auckland Regional Public Health Service has lost $500,000 of ministry money, leaving it with $11.6 million this year, and it expects a further cut next year.

It has 167 fulltime-equivalent staff, having cut 15 positions, and 12 more are being "held vacant" until the future is clearer.

Clinical director Dr Julia Peters said the cuts so far were mainly in the health promotion area, including nutrition and physical activity programmes for children.

Dr Jury said the Government had signalled it wanted public health services to focus on their core regulatory functions, "as opposed to health promotion".

It has also cut back Labour's plans to boost health services in high schools. National will still expand them for colleges in the poorest areas as well as alternative schools and teen parent units.

But it has abandoned plans to extend this to decile 3 high schools from next July, and will spend the $2.09 million annual saving on subsidies for GP visits.

Mr Ryall reiterated that his priority areas included shorter waits in emergency departments, better help for smokers and more immunisation.

One example of shifting money was the decision not to fund DHB fruit-in-schools co-ordinators. This freed up $4 million to subsidise GP care for young children.