The embattled Whangaroa Health Services Trust was just months away from running out of money after eight years of losses wiped out its cash reserves, an independent report has found.

The trust, which provides free GP visits and operates an aged-care facility at the former Kaeo Hospital, reached crisis point in June when many of its clinical staff resigned, including long-serving GP Alison McAlwee.

Chief executive Mana Hape and board chairwoman Violet Walker quit shortly afterwards, prompting the district health board to ask retired health boss Kim Tito to run the trust as a short-term measure.

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Even before the trickle of resignations turned into a flood, consulting firm EY had been commissioned to investigate the trust and come up with options to ensure its future viability.

The report revealed the trust had spent more than it received every year since 2010, eroding a $1.6 million reserve eight years ago to $400,000 this year. Even the $400,000 was flattering because it included unpaid debts to the IRD and advance funding from the health board.

At that rate the trust would be unable to pay its bills by October this year.

Over the same period the health board had also raised concerns about the quality and safety of clinical services due to staff shortages, high turnover and a reliance on short-term locums.

The EY investigation found a breakdown in the relationship between management and health centre staff, intensified by financial pressures and an attempt to bring in a new model of care.

Clinical staff said management's poor communication and ''top-down'' style were to blame; managers believed the problems were caused by resistance to change and unprofessional behaviour by staff.

Stakeholders described the environment at the trust as ''toxic'' with a culture of blame.

The report found the trust's poor finances were due to the board's low oversight and lack of financial understanding, compounded by management's poor budgeting, analysis and reporting.

In 2017 the health board cut funding by $300,000 a year when the trust withdrew from after-hours medical care, but at the same time the trust's new model of care — which would have involved opening satellite clinics at Matauri Bay and Taupo Bay — increased its costs.

The new model was eventually abandoned because the trust didn't have the resources to make it work.

The report also found the intensely local focus of the trust's governance structure caused problems, including personal attacks on trustees and managers, and information being passed to trustees by clinical staff.

The report came up with a series of short-term recommendations as well as two options the authors said would help ensure the trust's future.

Option A calls for a ''strengthened status quo'' with a delayed trustee election, a new model of care and a new chief executive.

Option B calls for a split in services with Kauri Lodge aged-care facility remaining under trust control but another operator taking over the health centre.

Both options call for a short-term funding injection by the health board to keep the trust afloat while a recovery plan is agreed, and a feasibility study looking into expanding Kauri Lodge and relocating the health centre.

Public meetings have been held around Whangaroa to discuss the two options. The last meetings will take place at Whangaroa Memorial Hall in Kaeo at 1pm-3pm and 6.30pm-8.30pm today.

■ Go to to read the EY summary report.