Hospital output under the spotlight

Public hospitals may be providing less health care per dollar than in previous years, says a Treasury report.

However, there is still no clear picture of the efficiency of the health system overall, as officials do not have enough information.

The Treasury report is the latest in a series suggesting declining productivity at public hospitals.

It shows the national deficit of district health boards was, at $58.3 million, nearly $25 million less than expected in the June financial year.

However, overspending in their "provider" arms (mainly hospitals) was partly offset by savings in their funding divisions (including GP and pharmacy subsidies and non-hospital mental health services).

Spending at the 21 boards' provider/governance arms was 7 per cent higher than in the previous financial year, but the volume of hospital inpatient treatment rose by only about 2 per cent.

"Activity may have increased more in other areas of hospital activity, such as outpatients, but data is not available centrally to confirm this," the report says.

Provider/governance spending last year, at around $4.6 billion, was 2.3 per cent higher than planned, but volumes rose only 0.05 per cent, "indicating a possible fall in efficiency".

The wage bill was $60 million over budget and clinical supplies, which include drugs and artificial joints, cost $54 million more than planned.

The wage bill will be under more pressure once boards settle a national pay deal for nurses, which will deliver substantial pay rises for most.

Deficits in hospitals threaten spending on innovative projects designed to keep people out of hospital, such as community nursing schemes, but a Health Ministry spokesman gave an assurance that the $1.7 billion committed over six years to primary health organisations was not at risk.

"That money has been given separately, explicitly for PHOs. Boards would have to be very explicit about what they did with that money. It would be very difficult for them to use it for any other purpose."

The ministry's deputy director-general for DHB funding and performance, Gordon Davies, said the ministry's monitoring now covered about half of public hospital activity.

It intended to increase this, but it would still be an incomplete measure of health board work. The PHO system would also deliver more data.

Existing hospital figures covered only those patients who were admitted to hospital. Excluded were emergency department attendances, outpatient clinic visits and the associated laboratory and radiology work.

Figures suggesting a drop in some inpatient numbers reflected clinical advances permitting a wider range of procedures to be done in outpatient or day-stay clinics, such as minor eye and throat surgery, Mr Davies said.

Act Party health spokeswoman Heather Roy said the Treasury findings were a damning report for the Government.

"It is becoming crystal clear that under this Government, health money is being spent on bureaucracy building - not making sick New Zealanders better."

National Party health spokeswoman Judith Collins said nurses needed significant pay rises. "[But] we cannot just keep pouring money in without an increase in productivity and a decrease in wastage, bureaucracy and administration."