The Government has been forced to pour extra emergency money into New Zealand's financially embattled District Health Boards after being warned hospital workers' pay could be affected without a bailout.

The Treasury is also sounding the alarm, admitting the financial situation of the country's District Health Boards (DHBs) has the potential to shift the focus from health outcomes to financial management.

But Health Minister David Clark said the Government doesn't accept those deficits are inevitable; "nor do we accept DHBs cutting services to manage their financial position".

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An Equity support report, released to the Herald under the Official Information Act (OIA), reveals the Government made a $142 million payment to seven DHBs ahead of June 30 this year.

This is on top of the $92 million urgent payment made to DHBs in January, taking the bailout figure to more than $234 million for the 2018/19 financial year.

The Government allocated a further $134 million for more equity support in the 2019/20 year, bringing the total amount of DHB bailout money across the last two financial years to $368 million.

That funding is to provide "equity support to address immediate liquidity pressures" in DHBs.

In other words, it was emergency funding to help pay some DHBs' bills including the payment of nurses, doctors and other health workers.

But Clark told the Herald the Government would never allow DHBs to get to a point where they could not meet basic operational payments, such as these.

He added that DHBs have required equity support several times in recent years.

The report reveals Canterbury DHB was given $52 million before June and $30 million in January; Southern DHB got $17 million before June and $40 million in January.


As well as the additional funding, officials will be keeping a closer eye on the DHBs which received more money, including requiring DHB boards to provide a detailed explanation for any increases in expenditure, including new staff and any additional contracts.

Clark had already put some embattled DHB boards on notice late last year. In a press release, he said he was disappointed at their "collective financial performance".

The report released under the OIA, written by Ministry of Health officials, also contained comment from the Treasury.

"The increasing deficits outlined in this report are concerning," its officials said.

The DHB deficits, Treasury said, would place increasing pressure on any new spending planned by the Government and would likely worsen any future surpluses.

The Government made a $142 million payment to seven DHBs ahead of June 30 this year.
The Government made a $142 million payment to seven DHBs ahead of June 30 this year.

"There is also a risk that the health sector focus may be shifted toward the financial part of the Triple Aim [the Ministry of Health's mission statement] and at the expense of health outcomes."

Clark said the deficits were a result of underfunding over the nine years of the National Government.

"Some DHBs manage to post small surpluses, break-even or only post small deficits while maintaining services. It can be done."

Last month, the Treasury's Crown accounts revealed the overall DHB deficit was $1 billion – some $700 million higher than expected in May's Budget.

Clark said the most of the $700 million was largely due to an error in payroll records, where money was owed to DHB staff through the Holiday's Act.

In September, a sizable report into New Zealand's health and disability sector questioned whether it would be better to have fewer DHBs, DHBs with different functions or more sharing of resources at the national level in the future.

The interim report doesn't make any recommendations – those will come with its final verdict in March next year.