North's DHB 'losing millions'

Northland DHB chief executive Nick Chamberlain says the population-based funding model isn't working.

The Northland DHB is battling a financial crisis that chief executive Nick Chamberlain puts down to a flawed funding model.

Earlier this week Radio New Zealand reported that the DHB would face a $7.5 million-plus deficit this year, following a $2.5 million deficit last year. It quoted Dr Chamberlain as saying that the board would not submit its annual report until it received more funding.

In a frank letter to staff, Dr Chamberlain said the board did not receive sufficient funding because the Ministry of Health's population-based funding model was flawed, meaning the board was struggling to care for one of the highest-needs populations in the country.

It is essential that we can show that we are not simply putting our hands out, but have been, and are, doing everything possible to improve access and provide excellent, high-value health care."

Nick Chamberlain, Northland DHB chief executive

Having twice written to the ministry, asking it to remove its funding cap, the board had resolved not to sign off on its projected deficit without extra funding. Nor would it submit its budget or annual plan to the ministry.

Dr Chamberlain said it was realised after the 2013 census that there were thousands more people living within in its area than previously thought. He believed that had cost the board $29.4 million in funding over the last three years. He calculated that current funding was $8.4 million short of what it should be based on population.

The Ministry of Health said Northland's funding had increased by almost five per cent each year over the past three years, more than any other DHB in the country.

Meanwhile Dr Chamberlain told staff that irrespective of the board's funding negotiations, it needed the assistance to maintain their own health and wellbeing, to provide safe, high-quality care, to improve the way they work and to be as frugal as possible with scarce resources.

"The quality of care that many of you provide is remarkable, and as Janice Wilson, the CEO of the Health Quality and Safety Commission said when she visited, from a patient safety and quality point of view, this is a very different organisation to a few years ago," he wrote.

"I do recognise the toll this can take, and this year our biggest priority is your wellbeing."
He believed the funding system was one of the best in the world, supposedly providing for the number of people in the region as well as the nature of the population.

"It has science behind it, based on the cost of consuming health services, and is a very fair system as long as the principles and rules that govern it are adhered to," he wrote.

"The biggest driver of funding is the (population), and as we all know, our population is growing rapidly.

In addition, because we are either first or second in New Zealand for rurality, percentage aged over 65 years, percentage Maori, and level of poverty and unmet need, this drives significant health demand which all of you are experiencing every day in your work.

"It also results in an increase in cost to service our population, and hence should result in a larger share of population-based funding."

In reality, evidence of under-funding was very clear in every spreadsheet received from the ministry. Northland, the only region in this position, was actually subsidising a number of DHBs that were receiving more than their population-based funding share because their populations were either declining or not growing.

"It is essential that we can show that we are not simply putting our hands out, but have been, and are, doing everything possible to improve access and provide excellent, high-value health care," he said.