Health Minister Dr Shane Reti says the deficit in the year to June was worse than expected. Photo / Alex Burton
Health Minister Dr Shane Reti says the deficit in the year to June was worse than expected. Photo / Alex Burton
A preliminary assessment of Health New Zealand’s financials suggests the organisation has recorded a deficit of $934 million in the year to June, almost $1b under the expected $54m surplus.
Health NZ’s performance report for the quarter to June, released today, lists several reasons for the deficit including $529m of pay equity funding not being received, having almost 4400 staff over budget at a cost of $406m, $193m of expired Covid-19 stock, $172m spent on Holidays Act remediation and finding $40m less in savings.
Health Minister Dr Shane Reti admits the result is “worse than expected” and while noting the pay equity funding would be included in the current year’s budget, he accepts ongoing financial mismanagement is a contributing factor.
“Certainly the underlying financial performance has contributed as well so no, it is a deficit beyond what was anticipated,” Reti told the Herald.
However, Labour’s health spokeswoman Dr Ayesha Verrall claims Cabinet’s decision not to transfer the pay equity funding in the last financial year was being used to justify cuts to the health system and reiterated warnings of hiring freezes.
“The actual crisis here is that staff and services are being cut and patients are not getting the healthcare they deserve.”
Labour's Dr Ayesha Verrall was the former Health Minister. Photo / Mark Mitchell
The report paints a clearer picture of Health NZ’s dire financial state that the Government signalled in July when ministers claimed the organisation was overspending by more than $130m per month and likely to recorded a $1.4b deficit by June next year.
In response, the Government scrapped Health NZ’s board and appointed Commissioner Lester Levy, who is tasked with orchestrating a “turnaround programme” to find the targeted $1.4-2b in savings for the 2024/25 financial year, as stated in the report.
Reti today said he was confident in Levy’s work in recent months to analyse costs, recruitment levels and outsourcing services, which had contributed to overspends.
“A lot of work has gone into that, pulling together data that previously might not have been available.”
He cited “substantial progress” in developing Health NZ’s operating model and an internal performance monitoring framework, things Reti said the Auditor-General had called for.
Alongside fortnightly meetings with Health NZ officials, Reti said he spoke with Levy every second or third day - largely on financial matters.
He had also requested the Ministry of Health to “step up” its monitoring of Health NZ, including adding a member of the ministry’s executive team to Health NZ’s finance risk and audit committee.
Recent attempts to request documents concerning Health NZ’s financial state through powers in the Official Information Act had been denied, with officials citing an imminent public release of documents.
Health NZ Commissioner Lester Levy and chief executive Margie Apa front Parliament's health select committee. Photo / Mark Mitchell
It was understood the release could happen early next week. Verrall, who had already received the documents, claimed she had tried to release them this week but was allegedly blocked by Health Select Committee chairman Sam Uffindell.
Reti wouldn’t elaborate on what the documents would say but he said it would provide detail to support his claim Health NZ was heading for a $1.4b deficit and how the entity’s cost structure would stabilise.
Health NZ chief executive Margie Apa was not available for an interview and Health NZ could not provide a statement ahead of deadline.
The report also included a progress update on the Government’s five health targets, which Reti welcomed as promising but was careful not to celebrate too loudly.
In a press release, Reti pointed to progress on four of the five targets that had seen shorter wait times in emergency departments, faster cancer treatment, quicker referrals for treatment and people waiting less time for their first specialist appointment.
The report was more conservative in its progress assessment as it found only two of the measures materially improved, using a 2% change as proof of a material difference.
The most improved target concerned people waiting more than four months for elective treatment, which had decreased by 3.7 percentage points to 38.6% of patients in Q2 of this year, compared to Q1. The Government aimed to get 95% of patients receiving treatment within that timeline.
However, the report also included that the actual number of people waiting longer than 12 months for elective treatment had grown and there had not been a reduction between Q1 and Q2 partly due to “sustained industrial action” that caused deferrals to planned care.
The one measure that went backwards was the target of 95% of children to be fully immunised at 24 months of age. By Q2, 76.5% were immunised, down 0.7 percentage points on the previous quarter.
The report cited how immunisation rates had decreased steadily in recent years.
“Anecdotally, we have seen this is due to a range of contributing factors, such as vaccine hesitancy, vaccine misinformation/disinformation and barriers to access vaccinations (including capacity issues within general practice who deliver between 85–90% of childhood vaccinations).”
Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.
