Labour casts doubt on National's DHB savings plan

Health Minister Tony Ryall. Photo / APN

One of the National Government's ways to save millions of dollars in health to spend on new services is struggling to proceed, a document obtained by the Labour Party indicates.

Labour is using the letter, written by a district health board chief, to cast doubt on National's spending promises.

Health Minister Tony Ryall has estimated that $700 million can be saved over five years by DHBs sharing many back-office tasks, such as financial management and the purchasing of medical supplies.

Yesterday, he rejected Labour's questioning and said he was confident the savings targets could be achieved.

The Government established the agency Health Benefits Ltd (HBL) to undertake shared DHB functions. The agency describes itself as "critical" to changing the health sector.

The November 1 letter, from Hawkes Bay DHB chief executive Kevin Snee, on behalf of all 20 DHBs, to HBL head Nigel Wilkinson, says health boards want the new agency to succeed, but are not adequately "engaged" with its plans.

This had led to "confusion" for DHB staff offered secondment to HBL without proper processes being followed. The letter also suggests significant staff restructuring is planned, referring to business cases and "timing of information release to unions".

"We are keen to deliver the $700 million savings over five years ... We note that the delivery of the savings is very challenging ..."

Labour health spokesman Grant Robertson said the letter was confirmation the $700 million savings could not be achieved "without putting huge pressure on the overall services DHBs provide".

He said the letter also put a question mark over National's health spending promises based on saving money, such as free after-hours primary care for children under six.

However, Mr Ryall said HBL was going very well and exceeding savings targets. "Joint work by DHBs and HBL has already achieved savings of $55 million in the first year against a goal of $30 million. These efficiencies free up money for more patient services."

Savings were made by standardising and bulk-buying things such as electrocardiography electrodes, fuel contracts, continence supplies, and intravenous fluid bags and needles.

"Also, in the next few weeks we expect to announce a new all-DHB banking arrangement which will save up to $4 million per year.

"Funding National's after-hours free doctors' visits for under six-year-olds is not dependent on DHB savings. We have already made the efficiencies within the ministry to pay for this."