Northland DHB's forecast deficit to be close to $13m

The NDHB has its challenges given the geographically-spread region it provides healthcare in.

The Northland District Health Board is forecasting a budget deficit of almost $13 million by the middle of this year but a lift in funding cap could see it receiving more money for the next financial season.

District Health Boards' financial reports released by the Ministry of Health show Northland DHB's approved budget deficit for year ending June is $12.8m — up from $4.2m at the end of November last year.

The $12.8m deficit compares with $8.4m in red the Northland DHB posted last year and $7.5m in 2018.

The 20 DHBs are forecasting a total $561m deficit in the year to June.

The ministry allocated Northland DHB $632m this financial year and would not comment on whether a lift in funding cap meant an increase in its budgetary allocation for the 2020/21 season.

That's because no decisions have been made on DHB funding as the budget process for 2020/21 is currently under way.

All DHBs' funding is provided through the Population Based Funding Formula (PBFF). It applies across the country and is based on projections from Statistics New Zealand to equitably distribute the DHB funding according to the needs of each DHB's population.

A ministry spokeswoman said that in the past, Northland DHB's funding growth has been impacted by the maximum funding increase rate but the cap has been lifted.

Northland DHB chief executive Dr Nick Chamberlain has in previous years asked the ministry to remove the funding cap and said it was good it has been removed.

"I think Population Based Funding is as good a funding model as anything around the world. The issue is when it is adjusted to meet an overall funding envelope, like the use of capping the percentage of funding available to any DHB.

"When this occurs, the PBF is no longer as accurate, it no longer funds the true costs of providing care let alone addressing unmet need.

"Invariably, high need and high growth regions, of which Northland is that perfect storm of high need and high growth, get disadvantaged most. This perpetuates inequity."

Chamberlain said there were capacity constraints across Northland DHB; therefore
aspects of outsourcing of services such as surgeries and lab services were considered in planning as business as usual.

He said the planned deficit of more than $1m a month was tracking largely to plan.

Salary, he said, was always the most significant cost.

"Nothing needs to change as long as we have as pure a Population Based Funding model as possible."

Chamberlain said funding allocation was made based on the population as per the Census data rather than Northland DHB asking the government how much funding it needed.

Whangārei MP Dr Shane Reti is backing the NDHB, saying it's boxing above its weight given the challenges of providing healthcare in a geographically-spread region.

To be fair, he said the Government has invested in projects such as the endoscopy and radiotherapy suites at Whangārei Hospital that did not come out of the usual budgetary allocation.

"We in Northland are different to a metropolitan city in that there's a high proportion of Maori and high rurality, plus our population is the fastest growing in the country although I've concerns with Census figures," said the deputy chair of Parliament's Health Select Committee.