Northland District Health Board underfunded by almost $30m - CEO

Northland District Health Board is holding back its annual report to the Government as chief executive Nick Chamberlain battles a financial crisis amounting to a $7.5 million deficit this year after underfunding of almost $30m over three years.

Dr Chamberlain sent an email to all the DHB's roughly 2500 staff late last month saying the board would not submit its annual report until it received more funding.

"This year we are receiving $8.4m less than our share of population-based funding.

"We are the only DHB in New Zealand in this situation and this is because we have had our funding capped," the email said.

"Because of this cap, over the past three years, NDHB has had to forego $29.4m of health funding. For the last financial year we will post a deficit of $2.5m. This year, the projected deficit is about three times this figure."

Health Minister Jonathan Coleman said: "Northland DHB received an extra $36m in new money this year, taking the DHB's total funding to $616m for 2017/18.

He said that was a $190m funding increase over the last nine years.

"There's over 100 more doctor full-time equivalents and over 130 more nurse full-time equivalents at Northland DHB compared to 2008.

''The DHB's funding is provided through the Population Based Funding Formula. It applies across the country and is based on projections from Statistics New Zealand to equitably distribute the DHB funding according to the needs of each DHB's population."

The Northern Advocate approached Dr Chamberlain for further comment, but was told he would not comment further that because there was an election campaign underway.

In the email, which was leaked to media, he said the board had instructed him to write to all staff because they, and the executive leadership team "are aware of the extreme pressure that you are all working under, with huge growth in demand and an inability to provide all of the services that our population need".

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.

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 its area than previously thought. He believed that had cost the board $29.4m in funding over the past three years. He calculated that current funding was $8.4m short of what it should be based on population.

He believed the health 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."

Sam Kunowski, system outcomes group manager for the Ministry of Health, said every year Vote Health provided funding for all DHBs.

''The Ministry of Health has to divide that funding up between 20 DHBs according to the Population Based Funding Formula (PBFF) which takes into account the make-up of their populations.

"The formula uses information from Statistics New Zealand for their estimates of population numbers for the country. The PBFF was recently reviewed to ensure it remained a fair and equitable way of distributing funding to the DHBs and as a result a number of minor changes were made,'' Mr Kunowski said.

''For a number of years the allocation process has provided for both a maximum and minimum level of funding growth for DHBs.

"The cap ensures a fair balance of funding across all DHBs and ensures DHBs with lower population growth are able to fund and maintain services for their own populations.

''Under the PBFF model, Northland's funding growth has increased by an average of 4.82 per cent over the last three years, the largest increase out of all DHBs for the last three years. On average, DHBs received 3.26 per cent during that time. The ministry is in discussions with NDHB around their annual plan.''