Bay of Plenty District Health Board deficit now almost $17 million

The Bay of Plenty District Health Board has finished the financial year almost $17 million in debt.

Its chief executive says the organisation is delivering more services than ever and that the increased demand has meant unbudgeted spending.

The latest district health board (DHB) financial reports for the year ended June, released this week, showed Bay of Plenty DHB's deficit grew by more than $6m in a single month.

And its year-end result for 2018/19 was more than $6m over budget in total.

Nationwide, DHBs are now more than $1 billion in the red – $700m higher than the expected deficit, as forecast in May's Budget.

The National Party and the Government have continued to play the blame game this week as to who is responsible for that.

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Bay of Plenty DHB was one of 11 DHBs around the country that were deemed by the Ministry of Health to have reported "negative results" at year-end – in that they did not achieve a result that was close to or better than budget, even when one-off costs were excluded.

DHBs took a huge hit from one-off costs in 2018/19, mainly due to an error in payroll records.

Health officials have found that $550m to $650m is owed to DHB staff around the country to comply with the Holidays Act.

That issue cost Bay of Plenty DHB almost $2m. The resident doctor strikes cost almost $750,000 and National Oracle Solution (NOS) impairment cost more than $1.5m. The DHB had more than $4m in total one-off costs.

However, there was also an extra $2m-plus in unplanned spending, or "variance to budget".

The DHB had initially planned for about a $10.5m deficit in 2018/19.

Bay of Plenty DHB chief executive Helen Mason, who leaves the role later this year, said that $2m-plus variance was mainly due to an increased volume of services delivered, "which in turn is reflective of the increasing population of the Bay of Plenty".

She said there was increased demand pressure on almost all services at the DHB including acute inpatient services, emergency department attendances, and services for older people.

Mason said the DHB budgeted according to anticipated numbers of patients and that it continued to deliver over and above those anticipated numbers, which meant more spending.

For example, in the 2018/19 financial year, Bay of Plenty DHB delivered 11,269 surgeries compared with 10,937 the previous year – an increase of 332.

Mason said the Ministry was regularly kept abreast of developments that may impact year-end results, and so Bay of Plenty DHB's final financial result was "within expectations".

She said the DHB was expected to incur a further deficit during 2019/20.

"We have been able to maintain service delivery standards to date and our staff strive to ensure that our health funding is always used in the best possible way."

Opposition leader and Tauranga MP Simon Bridges said this week that debt was only one issue for Bay of Plenty DHB and that it was not the most significant.

He claimed there was a decline in services and higher waiting times for local patients.

Mason said: "There are a limited number of services where meeting waiting times is a challenge and this has been driven by factors including high patient volumes and ongoing strike activity."

Bridges also said New Zealand's DHB debt was "criminal" when the Government had a $7.5b surplus .

"And DHB debt does have an effect on local services because it constrains our hospitals ability to do more surgeries and other procedures."

Across all 20 DHBs in New Zealand, there was more than $665m in total one-off costs reported in 2018/19 – about $590m for Holidays Act compliance provision, more than $32m for resident doctor strike impact, and more than $43m for NOS impairment.

National's health spokesman Michael Woodhouse this week said the DHB deficit blowout was "entirely foreseeable" and that Minister of Health David Clark should have taken steps to avoid it.

He said Clark had let deficits balloon to record highs because the Government had neither provided the funding they claimed they would, nor set expectations for continued fiscal discipline.

Woodhouse also said the Government had been in power for two years and needed to take responsibility.

However, both Finance Minister Grant Robertson and Clark this week defended the deficit blowout by pointing the finger at the previous National government.

"We have had years of under-investment in our health system and that builds up over time," Robertson said.

He said the Government planned to spend even more on health to reduce the deficit. In May's Budget, the Government allocated almost $20b to health.

Clark expects it to take up to two years for DHBs to review and rectify the Holidays Act pay issue, which he has called an "historic issue".

He said more than 100,000 health workers, both current and former staff, have been "short-changed over many years".

Outside what was owed to workers by DHBs, Clark said the underlying deficit was $415m and that four DHBs (Canterbury, Waikato, Counties Manukau and Southern) accounted for most of that.

Meanwhile, Ashok Shankar, an organiser at the Public Service Association (PSA) union, said the holiday pay errors mainly affected members who worked irregular hours, such as shift work and being on call.

"Fatigue and stress are already big problems for these workers, so payroll problems are the last thing they need on their minds."

- Additional reporting: Jason Walls, NZ Herald