Otago braces for health cash cut

Otago will lose $32 million worth of health services - an 11 per cent cut - because of a move to population-based funding.

The Otago District Health Board has also been told it must eliminate its $10.7 million deficit.

Though the new regime had been signalled early this year, the final impact was greater than first expected, chief executive Brian Rousseau said yesterday.

"Eventually, our services must be aligned to be delivered at budget break-even. Will we reduce our services? No. Will we change the way we deliver our services? Yes," he said.

That meant putting money into primary healthcare, such as ensuring children were vaccinated rather than having to treat illness that resulted from them not being vaccinated.

Another example was a recent programme overseeing a group of "frequent-flyers" - people with chronic illnesses such as coronary obstruction or high blood pressure who had been admitted to hospital more than four or five times in a year.

An estimated 60 per cent of the board's costs are in wages and salaries and this bill would also be trimmed, Mr Rousseau said. Staff numbers might reduce through attrition.

Work to cut costs had already begun by reducing the number of operating theatres from eight to seven while maintaining surgery levels; amalgamating some wards, limiting elective surgery, trying to reduce the number of people visiting the accident and emergency department, and sharing services with other South Island health boards.

Otago figures for elective surgery were still higher than the national average and Mr Rousseau said he wanted to keep them that way.

The board was negotiating with the Health Ministry on when it would reach its baseline funding and eliminate its deficit. This could be five to 10 years away, a situation to which the ministry seemed "sympathetic".

Mr Rousseau, who moved to Dunedin in February from Middlemore Hospital in Auckland, said he accepted that Otago would have to live with population-based funding, even though it meant less money.

"When I was in Auckland, I was one of those complaining about the health funding system. Otago has effectively been getting other district health boards' money, to put it bluntly."

Otago Medical School dean John Campbell said medical education would come under pressure but would survive the funding cuts.

- NZPA