Hospital upgrade blows out budget

Tauranga Hospital says fears that patient care will be compromised following revelations that an upgrade to facilities has gone tens of millions of dollars over budget are unfounded.

"There will be no changes in service delivery, building scope or any reduction in bed numbers as a result of a budget overrun of around $28 million," Bay of Plenty District Health Board chief executive Phil Cammish said yesterday.

Mr Cammish made the comment in a statement released after a parliamentary select committee heard on Wednesday that the budget for refurbishing and building facilities at the hospital had swollen to $155 million from an initial estimate in 2003 of $110 million.

The 40 per cent increase in the estimate prompted National's Bay of Plenty MP, Tony Ryall, to say patient care was likely to suffer if funding was re-directed to cover the shortfall.

But Mr Cammish said a budget re-evaluation now put the cost of the project within the $135-138 million range, or 30 per cent over budget.

"As a result of trimming back some items and firming up estimates made in the business case, the increase has been cut back to $28 million."

He said the Government, which approved the upgrade in July 2004, would be asked to pick up the shortfall because the health board had been stung by sharp rises in building and compliance costs.

"We can't control building-cost inflation or compliance costs," he said. "We believe we have a very strong case that funding should be made available to meet this gap."

The best estimate for such inflation in 2003 had been 3.5 per cent a year, but the estimate was now 10 per cent annually.

Budget adjustments to reach the revised figure of $135-$138 million included reducing to $4 million a $10 million estimate for a system that allowed electronic storage of x-rays.

This reduction was possible partly because some of the cost could be met by the health board's equipment-renewal policy.

Scrapping plans to expand existing floor platforms also allowed further trimming of the budget.

Mr Cammish said cutting the scope of the upgrade was not an option because it was needed to service Tauranga's growing population.

The board plans to present its case for additional funding to the Government on April 21.

Mr Ryall said it had an obligation to pay.

"Unless the Government pays for the difference, it will be paid for in reduced services in the future."