The Waikato DHB has become so dysfunctional that Health Minister David Clark looks likely to sack the board and install a commissioner.
"This step is not being taken lightly," Clark said in a statement. "However, I am increasingly concerned by Waikato DHB's deteriorating financial position, instability at a governance and leadership level, and ongoing performance issues."
The DHB has two weeks to respond to the minister, but board chairwoman Sally Webb already supports appointing a commissioner.
The DHB has grappled with a number of recent issues, including resignation of former chief executive Nigel Murray after a spending scandal, the appointment of a Crown Monitor in August 2018, pulling the plug on a multi-million dollar online doctor service after it failed to attract users, and having one of the largest DHB deficits in the country.
The Waikato DHB deficit was $37.2 million in 2017/18, and is forecast to balloon to a $56.1m deficit for 2018/19 - with increasing deficit forecasts in future years.
Murray resigned in October 2017 after a DHB investigation and a State Services Commission inquiry found he spent $218,000 on travel and accommodation, half of which was either unauthorised or unjustified.
Then board chairman Bob Simcock resigned the following month after the Herald revealed the Serious Fraud Office was investigating.
At the same time the DHB spent $25m on a virtual health solution that was a flop and eventually scrapped, a situation that is the subject of an investigation by the Auditor-General 's office.
Webb said many board members already supported a commissioner appointment because trust and confidence in the board had been undermined.
"I welcome this action from the minister," Webb said.
"I know a number of my fellow board members have been discussing the possibility of resigning as a group to enable the minister to appoint commissioners so this will not come as a surprise to them."
She said one of the reasons trust and confidence had been eroded was the board's failure to find a suitable chief executive, a process it put on hold in February.
However, board member Dave Macpherson said a commissioner was not needed, though new leadership was.
He took issue with the minister's characterisation of the board's governance and leadership instability, saying it was to do with Webb's efforts to overturn the Coroner's findings into the death of his son Nicky Stevens.
"That public fuss caused CEO job applicants to withdraw their applications, leading to the board stopping the process halfway through," Macpherson said.
"Every DHB in the country is facing significant financial pressure in trying to meet the expectations of the minister and their community for provision of health services; Waikato is no different, and is being honest to the minister about this difficulty - unlike the last board who hid their deficit from the last Government."
Macpherson said many board members did not think the board was dysfunctional.
"There have been some issues, as there have been with many boards, but several of those issues lead back to the people the minister has appointed, in my opinion."
Board member Mary Anne Gill, who has already said she would not seek another term, said was proud of some of the board's achievements and she would continue to serve until the minister said otherwise.
"This board has made huge inroads in addressing the inequities there are in our population, particularly among Māori and people in our rural areas."
Sacking an entire board is relatively rare and signals the governance level of a DHB is in dire straits.
In 2015 then Health Minister Dr Jonathan Coleman sacked the 11-member board at Southern District Health Board over serious financial concerns including a $42 million deficit.
If a commissioner was appointed, it would require a law change to cancel the October 2019 elections. Any deputy commissioner appointments would be made by the commissioner.
Clark said a commissioner would be required to make sure there was meaningful engagement with the community and iwi.
National's health spokesman Michael Woodhouse supported appointing a commissioner on the condition that the minister committed to returning the board to the normal democratic process as soon as possible.