11 Oct 2016

Compass contract to fall at least $110m short

From Checkpoint, 5:08 pm on 11 October 2016

The final savings from a controversial nation-wide hospital food contract will fall at least $110 million short of what was pitched to district health boards (DHBs).

Some of the food on offer at Dunedin Hospital on 28 April 2016.

Some of the Compass-provided food on offer at Dunedin Hospital on 28 April 2016. Photo: RNZ / Peter Newport

The contract awarded to Compass was projected to save between $150m and $190m over 15 years - but only if adopted by all 20 DHBs.

Only six have done so, and that means the savings will actually be between $30m and $40m over the 15 years.

Because of the low uptake, Compass can - and is - reviewing its prices for those that have signed up.

The DHBs were first pitched the national food contract back in 2014 - and had until the end of last month to confirm if they were in or out. Only six were in - Auckland, Counties Manukau and Waitemata signed up in 2014, and the Southern, Tairawhiti and Nelson Marlborough DHBs followed suit.

But the country's 14 other health boards officially turned the deal down.

The Canterbury DHB already used Compass but was among those to turn down the national contract.

Acting chief executive Mary Gordon said it was happy with its current arrangements and it would have been a big change to switch to the national model.

"When we looked at the two different models and the level of service, and the quality, our assessment showed that there would be no significant advantage to making the change."

Ms Gordon said the decision was not an easy one, because they knew not signing up would mean other DHBs saved less money.

"You also want to weigh up the national good versus what's best locally for the district health board, but at the end of the day the board were convinced that there was not a significant advantage."

Ms Gordon was also acting as chief executive for the West Coast DHB, which also turned the national contract down.

Other DHBs approached by Checkpoint with John Campbell made similar statements.

Hutt Valley DHB said it was "examining a range of future options for providing hospital food services, which are currently provided in-house". It said it had decided not to join the national agreement "at this time", but would continue to consider it as a future option.

Taranaki also turned down the national deal.

"Compass Group has been providing quality food and catering services, including patient meals, to Taranaki DHB since 1999. We are keen to continue the relationship with them under the current contract and will explore opportunities and options available to leverage the benefits of the national programme," the DHB's chief financial officer, George Thomas, said.

NZ Health Partnerships - the Crown-owned organisation tasked with finding savings for DHBs - was expected to confirm the final sign-up of six, and the vastly reduced savings, in the coming days.

Health Minister Jonathan Coleman had been told of the final sign-up, but was not available for an interview today.

He had previously told Checkpoint that the six DHBs that had signed up covered over 40 percent of the population, and that $30m to $40m in savings was still significant.

In a statement in 2014, Auckland DHB said the three Auckland boards alone would save between $80m and $90m over the 15 years. However, that figure would be lower now, because that was based on 17 more sign-ups, when Compass only got three more.

Compass reviewed its prices for the DHBs that had signed up on 1 September.

Checkpoint sought details of the new pricing, but had not yet heard back.

Who's in?

  • Auckland
  • Counties Manukau
  • Southern
  • Hauora Tairawhiti
  • Waitemata
  • Nelson Marlborough

Who's out?

  • Capital and Coast
  • Hawke's Bay
  • Mid Central
  • Northland
  • South Canterbury
  • Canterbury
  • Whanganui
  • Bay of Plenty
  • Hutt Valley
  • Lakes
  • Taranaki
  • Waikato
  • Wairarapa
  • West Coast


  • Compass to renegotiate contract as only six of 20 DHBs signed up
  • Petitioners call on Southern DHB to ditch Compass
  • Compass contract savings could fall by over $100m
  • Hospital workers reach settlement with Compass
  • Kitchen staff say Compass owes them thousands