Statement from the Disability Services Directorate

Media Statement for Chris Barton, New Zealand Herald

21 June 2006

Please attribute statement to Geraldine Woods, Deputy Director-General, Disability Services Directorate

1. Why is the Ministry of Health releasing the audits about Focus 2000 under OIA? Why is the information not publicly available?

Audits are not routinely publicly released. They are part of a constant quality improvement focus for providers and are produced as such. Before being released publicly they need to be checked to ensure that commercial sensitive material or references to individuals has been removed and the process of natural justice has been followed. This process is outlined clearly under the Official Information Act which is why administratively it is clearer if this process is followed.

A media statement provided to New Zealand Herald reporter Martin Johnston on 1 June 2006 said 'Focus 2000 has undertaken to provide the Ministry of Health with an Action Plan by June 2, which will include how it plans to fix the identified areas requiring improvement from both audits.'

We were incorrect and should have stated 'Focus 2000 have undertaken to provide the Ministry of Health Auditors with an Action Plan by June 2, which will include how it plans to fix the identified areas requiring improvement from both audits.'

The action plan and its contents are negotiated between the provider and the auditor. Where there has been a critical action requirement identified by the auditor in the report the Ministry then receives a copy of the critical action plan. As a general rule and as part of the audit process that has been put in place a copy of the action plan is not received by the Ministry. The action plan is a "live" document that is regularly changed and updated as the provider moves to compliance with all the requirements. The recommendations of the audit report, along with timeframes, usually make up the action plan.

Following an audit, the provider receives a report that details the actions needed to meet the requirements and the evidence that is to be supplied to the auditor for verification of compliance. Where there are large numbers of requirements the auditor may ask the provider to supply an action plan with details of dates, timeframes and person's responsible for doing it.

The auditor monitors the providers progress in meeting the requirements within the agreed timeframes. The auditor maintains contact with the provider to ensure the action plan is being followed within the agreed timeframes. If the requirements are not met within ten working days of the timeline set out in the audit report or agreed action plan the auditor reports this to the Ministry of Health Disability Quality & Audit team.

The auditors contracted are highly skilled and experienced in this area. The Ministry of Health relies on that expertise to follow up and monitor the provider in meeting their requirements. This also allows for an independent assessment of a provider in the event that the audit results are used to terminate a provider's contract.

The auditor keeps the Ministry informed of any problems and delays in meeting the requirements of the audit. Depending on the circumstances of each particular audit the Ministry then considers the next course of action which may include following up directly with the provider as to the reasons for the delays, an extension of timeframes for compliance or a notice of default.


2. Why is the Ministry allowing Focus to sit on a $10 million surplus? How can a non-profit organisation be allowed to make such a profit from MOH funding? (answered June 23)

The Ministry's financial audit report found that Focus 2000 were in a strong financial position of holding cash reserves of $5,917,874.

We expect that organisations have a level of surplus so that they can continue to operate satisfactorily.

The amount of cash reserves that Focus 2000 holds looks high. Therefore the Ministry has asked Focus why they have been accruing this level of funding.

The Ministry has asked Focus to provide a report about this matter in the next week.

2b. Follow-up question. The financial audit (page 4) says Focus has $7.9 million bank deposits and $2.1 million managed investments as at March 2006 - that's a $10 million surplus. Cash reserves of $5,917,874 isn't telling the full story - why do you quote that figure and not the other?

The figure of $5.9m was Focus's cash balance as at the end of the last financial year (30 June 2005). The number is quoted on page 7 of the audit report.

By 31 March 2006, this amount seems to have grown to $7.9m (page 4). This is largely explained by the repayment of a $1.8m loan from Coyle Developments (a subsdiary of Focus) on 28 Feb 2006.

In addition, as reported on page 4, Focus had $2.1m in managed investments as at 28 Feb 06.

The reason for not quoting 31 March 06 figures is that these are not formally audited year end figures. (Please attribute statement to David Chrisp, Manager Business Support, Disability Services Directorate)


3. Why do the audits make no mention of the deaths that occurred in Focus homes?

The Ministry has discussed the deaths with Focus 2000 and investigated the process that was followed by them at the times of death. Four of the deaths occurred in either a hospital or hospice and one death occurred in a Focus home at the request of the family concerned. No coroner was involved with any of the deaths.


4. What is the Ministry of Health doing to distinguish between HIF and HBSS hours in funding claims?

The Ministry considers the Auditor's objectives for transparent separation of Hosted Individualised Funding will be addressed through national implementation of its Individualised Funding service. Individualised Funding (IF) is a service option that provides opportunity for some disabled people to manage the personal support services they require in a way they believe meets their needs best. The national IF service will align the different funding arrangements that occurred when the service operated at a regional level only. Hosted Individualised Funding (HIF) is one arrangement adopted by some of the Ministry's Needs Assessment and Service Co-ordination Services to provide administrative assistance through a host provider, usually a Home Based Support Service Provider. These arrangements (including HIF) will be reviewed as part of the national implementation process.


5. Will the CP Society now be required to furnish consolidated accounts to the Companies Office?

The focus of the audit was Focus 2000 with whom the Ministry has a direct contractual relationship. The Ministry does not have a contract with the CP Society, however, the Society may well have to furnish consolidated accounts to the Companies Office under current accounting practices.


6. Has the CEO of Focus resigned as a director? Why was this sought? (Answered June 23)

No, the CEO has not resigned as a director. The Board of Focus 2000 has confirmed they are looking at their governance structure and strategic direction. To assist them with this task, they have engaged the services of an external agency that has worked with them previously on these matters. This external agency will develop a Planing and Governance policy for the Board and will also look at the strategic direction for their service.

The Planning and Governance policy will review issues including the separation of Board and CEO responsibilities and look at the issue of the voting rights of the CEO. At this stage the Board has indicated it is likely that the CEO will continue to be a director (with voting rights) at this stage. This is a legitimate governance structure.

The Ministry's expectation is that there is a clear delineation between the roles and functions of governance and management. The Ministry does not specify exactly how this is to happen but requires that the organisation's legal entity comply with New Zealand's law.


7. Has the Focus Board put in new processes to ensure they are better informed? Why was this sought? (Answered June 23)

Focus 2000 advises that the Board is undertaking a process, as part of the development of a Strategic Plan and Governance Policy, which includes guidelines for CEO reporting. The new guidelines will ensure that the information provided to the Board is robust. It will include risk, service delivery, complaint and issues reporting.


8. What processes have been put in place to implement a service users focus for the organisation? How are service users and their families now involved in planning, decision making, assessments and evaluation? (Answered June 23)

Focus 2000 has advised they are committed to increasing the involvement of service users in their organisation and they are carrying out a wide range of measures. Some of the key measures include developing and implementing a policy for increased participation of service users and their families in all levels of service, appointing an external independent advocate, reviewing human resource processes such as orientation, ongoing training and staffing appraisal procedures. Other measures are consulting with service users and families about regular meetings and reporting, linking Quality Management meetings and service user and family meetings and increasing consultation with service users. The Health and Disability Commissioner's office is running training on the code of rights and advocacy for service users (in residential services) and their families. Please see the Action Plan for details.


9. What improvements have been made to the complaints process? (Answered June 23)

As explained in the answer to question 8, Focus 2000 has advised they are committed to increasing the involvement of service users in their organisation and have advised they are carrying out a wide range of measures. Some of the key measures involve revising the complaint and concerns management process so that most of the complaints are investigated and actioned within a 3 week period. Another measure involves establishing a risk management system related to complaints including guidelines for those complaints to be reported to the Board. See Action Plan for details.


10. The lack of service users involvement in decision making about their care is a recurring theme of MOH audits of Focus going back to 1997. Why has nothing changed? (Answered June 23)

See Action Plan for details.


11. The lack of a proper complaints process for service users is a recurring theme of MOH audits of Focus going back to 1997. Why has nothing changed? (Answered June 23)

See Action Plan for details.


12. The audit says the money retained by Focus for admin costs "appears to be more than adequate for the administration services required". Does the MOH intend to limit the amount that can be retained?

The Ministry does not intend to limit the amount retained for administration. As outlined in the response to question 4, the Ministry has established a national framework for the administration of individualised funding arrangements such as HIF. Hence the HIF service will be superseded by new arrangements. We are answering your question as it relates to the HIF service.


13. Instead of providing Focus with 290,389 hours of HIF funding why does the Ministry of Health not pay these funds directly to the clients' bank accounts?

See the response to 4. Whether the funding is provided directly to the client by the Ministry or to Focus who pay the client is an issue of administration only. The role provided by Focus in the HIF service is to assist the person with a disability to administer the funding they receive so that the person with a disability can successfully manage the employment of their own supports.


14. The audit refers to Focus getting 290,389 HIF hours in the 18 months to Feb 2006 - what was the value of those hours? We have been told the average hourly rate was about $17/hour which would equate to $4,936613 - is that correct?

There is no one hourly rate for HIF hours. HIF will be a combination of the standard home support rates of $16.00 for Household Management and $17.70 for Personal Care and $20 for Personal Care (Advanced). An average rate of around $17.00 is probably a reasonable estimation.


15. In relation to HIF hours the audit says "the money retained by Focus for administration costs appears to be more than adequate for the administration services provided." What percentage of the hourly funding did Focus retain? We have been told Focus takes about $5/ hour which would equate to $1,451945 - is that correct?

This information is best sourced from Focus 2000.


15b. Follow-up answer when question was asked again on June 22.

In general, where the Ministry is paying a fee-for-service (such as an hourly rate for home based support services), the Ministry expects the provider to use the rate paid to cover both the wages of the care workers and the organisation's overheads or administration costs. The Ministry does not involve itself in business decisions that providers make, such as the apportioning of funds between careworker wages and administrative overheads. (Please attribute statement to David Chrisp, Manager, Business Support, Disability Services Directorate.)


16. What is the total amount of funding Focus received from the MOH and other government departments last year?

The total amount of funding for the 2005/06 will be finalised at the end of the financial year. However it's expected the figure will be similar to the 2004/05 year which was $15,193,682, which include Ministry of Health and district health board funded services. We understand Focus has a small contract with the Ministry of Social Development and we would expect there is also a contract with ACC. We do not know the values of these contracts.


17. What is the total amount of funding Focus has received from the MOH and other government departments since it began providing services in April 1996?

The total amount of funding Focus has received from the Ministry of Health and district health board funded services from the 1996/97 financial year to the 2004/05 year is $62,269,724.