Auckland District Health Board is facing a major budget blowout and an unplanned deficit of more than $10 million this financial year.
Board members heard this morning that the DHB, which provides some specialist services for the whole country, planned to break-even in the year ended June.
Late last month, however, it was already $11 million in the red.
Under-delivery of services, both for its own population and more widely, had left an almost $13 million hole in funding.
Papers for today's meeting said this was because of staff strikes, winter pressures and staff shortages.
Higher-than-expected pay deals also contributed, and high costs for eye treatment, transplants, cancer and x-rays.
Building repairs and maintenance, including asbestos removal, were more than $3 million over budget.
Expenditure blowouts were mainly driven by several factors: under-spending on full-time staff, leading to higher than planned spending on outsourced personnel; the costs of clinical supplies, including drugs, instruments and equipment; and less funding than expected for services.
In the latter category, the DHB said savings that it had assumed would flow from management of hospital (as well as community) medicines by drug-buyer Pharmac had "not yet" been achieved.
Other higher than expected clinical costs included:
- Ophthalmology. The papers say that a new drug approved by Pharmac which was now also available for patients with diabetes retinopathy conditions "has increased the number of patients receiving treatment". This was partially offset by lower costs for some existing treatments. More expensive lenses also added to costs.
- Transplants. Costs associated with transplants were $700,000 in the six months to January compared to previous years.
- Adult and child cancer services. Unusually high volumes driving higher-than-normal expenditure on high-cost drugs.
- Radiology. Over a million dollars over budget because of "volume and cost of high-cost interventional radiology procedures".
- Infrastructure. A cost blowout of almost 3 million dollars for repairs and maintenance "reflecting greater-than-planned infrastructure maintenance and asbestos costs", with a further one million dollars in bad debts.
The Auckland DHB said in a statment a number of new national collective agreements have come into force this year, with additional cost implications.
As well, industrial action, winter pressures and staff shortages had led to an under-delivery of elective surgery volumes for the first five months of the financial year, which had had a negative effect on revenue. But, for the past two months these volumes have been at or above its plan.
The DHB also said it has been able to partially mitigate these extra costs and lost revenues through "careful management across the DHB", including implementing a recovery plan for elective surgery.