Lakes District Health Board deficit for the financial year is more than budgeted but would have been lower without the pandemic. Photo / Andrew Warner
Lakes District Health Board deficit for the financial year is more than budgeted but would have been lower without the pandemic. Photo / Andrew Warner
Lakes District Health Board might be $12.9 million in the red, but all in all, it's a "very good financial result" - although the health minister thinks otherwise.
The board budgeted for a $10.1m deficit for the 2019-2020 financial year and as at the end of May 2020 was forecastinga deficit of $14.5m. It was based on the year to date actuals at that point.
However, the unaudited results for the year have come out at $12,925,000 which is a result that is better than forecasted, board chief executive Nick Saville-Wood told the Rotorua Daily Post.
Lakes District Health Board chief executive Nick Saville-Wood. Photo / File
"No chief executive is happy operating in deficit, however, considering the significant issues faced by the DHB in the 2019-2020 year, the results were better than what was being forecast."
Saville-Wood told the board at a meeting on August 14the deficit was, "all in all a very good financial result".
He said there were a number of factors that caused the deficit to go above budget, including the Covid-19 pandemic, adjustment to holidays act provisions, inter-district outflow which is when the community is treated at another district health board, and outsourced clinical and locum costs.
Additional costs directly related to Covid-19 and the holidays act provisions were $1.8m and $1.5m respectively.
Without those two significant issues, Saville-Wood said the forecast deficit was $9.7m.
Additional costs directly related to Covid-19 and the holidays act provisions pushed the Lakes DHB deficit up. Photo / Andrew Warner
When asked if the deficit was the best achievable result, Saville-Wood said yes, considering what had occurred in the past year.
"The results are better than expected, albeit still a deficit."
According to the 2020 Budget, the Treasury is expecting district health board deficits of $1 billion a year, for the next four years.
In fact, the Budget said: "There is a significant risk that DHBs' deficits may be higher than what has been included in the fiscal forecasts, which would adversely impact the Government's operating balance and net core Crown debt."
Health Minister Chris Hipkins. Photo / File
Health Minister Chris Hipkins said he had made it clear to board chairs that they must have a "credible plan" to return to financial sustainability.
"The Government doesn't accept that DHB deficits are inevitable.
"We acknowledge the challenges DHBs face including the cumulative effects of nine years of underfunding which will take time to unwind and a series of costly events including the ongoing Covid-19 response."
However, he said the Government had increased district health board funding "considerably" including this year's Budget uplift of $3.9b for the next four years.
But Rotorua National MP Todd McClay believed the Labour-led Government had underinvested in the health system, and poor health management started before the pandemic resulting in debt "skyrocketing" and a slow down in treatment.
"Sadly a $12.9m deficit at Lakes DHB means local people have to wait long for their operations and treatment.
"I don't think anyone will believe a $12.9m deficit is a good outcome for our DHB. The Government should be doing more to support our hard-working doctors, nurses and health staff. Their focus should be on people being treated quickly rather than joining waiting lists."
The audit is due to be completed in October with the DHB already engaging with auditors.
Lakes District Health Board has not received any deficit support from the Government in this financial year and the budget for 2020-2021 is currently with the minister for approval.
