Deficit threatens work at Middlemore Hospital

By MARTIN JOHNSTON, health reporter

Financial pressure at Middlemore Hospital in South Auckland is threatening services, as its district health board fights for approval to spend $46 million more than it is paid.

The Counties Manukau board refuses to reveal the size of its projected deficit for this financial year, but sources put it at $46 million.

The Health Ministry wants it lower and is checking the board's figures.

Board chief executive Stephen McKernan hopes the financial wrangling can be settled by next month.

When asked if service cuts could be considered, he said: "It is possible that we will - at the moment our financial position is very much unresolved. So when we resolve that we will then be in a better position to determine the impact on what we need to do to achieve that position."

With Counties Manukau's projected loss, Auckland's three district health boards expect deficits of nearly $120 million.

This is 71 per cent of the $170 million combined deficit of the country's 21 district health boards. It is also well over the $80 million the Government budgeted for deficit support to all boards running losses.

For Counties Manukau, $46 million is a big increase on the $27 million loss it posted for the financial year that ended last month.

One senior health source said the reasons for the increase included inadequate Government financing of Middlemore's burns unit, and failure to give enough money to cater for population growth and poverty. Counties Manukau is the fastest growing district and has the country's most-deprived population economically.

A May board document said the risks of the ministry's proposed funding package for this year were a reduction in hospital services, and a "reduction of safety and standards of care" for patients.

National's health spokesman, Roger Sowry, said: "Deficits like that are unsustainable and there will be a whole range of service cuts that flow unless the Government puts more money into health."

National has promised a rescue package to end health board deficits, on top of the Government's already-announced increases of $400 million annually for this and the next two years.

Health Minister Annette King indicated that hospital-service cuts were unlikely, but did not rule them out.

"I would be very surprised if there's service cuts. There could be service changes. Boards might decide to provide it with a different provider, but there's no plans to cut the range of services."

If more than the $80 million set aside to provide deficit support was needed, the Cabinet would have to consider that, she said.

The health source questioned the Government's ability to avoid health cuts while the gap was so large between the losses and deficit support.

"Everyone is interested to know whether this will stick after the election. The only way health boards can manage their budgets is to reduce services."

Auckland and Waitemata planning documents both suggest that cuts will be needed to comply with Government funding limits.

Mrs King has so far approved the budgets of only two boards, Wairarapa and South Canterbury.

nzherald.co.nz/hospitals