West Coast District Health Board (WCDHB) is to receive its biggest ever government bail out of $6 million.
Health Minister Tony Ryall has agreed to the DHB's request for $6m equity support for the current financial year.
"The purpose of the deficit support is to enable WCDHB to restore financial
liquidity," Mr Ryall said, in a letter to DHB chairman Rex Williams.
However, he warned the DHB to stay within its budgeted deficit of $7.59m.
The DHB is currently forecasting a $9.25m deficit - a difference of $1.66m.
"It is my expectation that your board will require renewed efforts to identify and implement mitigation strategies which will ensure that the WCDHB delivers a net result in line with plan for the 2009/10 year," Mr Ryall said.
Mr Williams wrote to Mr Ryall and Finance Minister Bill English on January 29, seeking help.
His letter revealed the DHB had already received advanced funding of $3.5m. Without the advance, it would have been under cashflow pressures from January, he said. However, that money has to be paid back by June 30.
His letter also noted the DHB had funded its $2.38m deficit in 2006/07 without seeking government help. It had also funded its $6.28m deficit in 2007/08 alone, after government refused a $4.6m bail out.
Last financial year the DHB received $3m from government to help fund its $7.68m deficit.
In his initial response to Mr William's letter, Mr Ryall blasted the DHB for failing to show how it planned to fix its budget blowout. Its recovery plan was inadequate, he said in a letter dated February 22.
"The plan you have provided explains the reasons why you have a deficit position, but does not provide any pathway to meeting your 2009/10 DAP (district annual plan) deficit of $7.6m."
- NZPA
