14 Jun 2019

Crown monitor appointed to support deficit-plagued Canterbury DHB

3:40 pm on 14 June 2019

The government has appointed a Crown monitor to support the deficit-plagued Canterbury District Health Board.

Minister of Health David Clark.

Health Minister David Clark. Photo: RNZ / Dom Thomas

The DHB is forecasting a year-end deficit of $103.4 million, according to the latest financial information for all DHBs published this week.

Health Minister David Clark said late this morning Canterbury is also expecting its deficit to increase in future years, adding that is not sustainable and it's why he has refused to approve the DHB's Annual Plan.

He said Canterbury has faced unique challenges, including the aftermath of the quakes eight years ago and the recent terror attack, which it "has handled superbly".

But he said the Christchurch Hospital campus has major redevelopment needs, with the $1 billion new hospital nearing completion, the largest hospital redevelopment project in the country's history.

"The DHB and the Ministry of Health have been working hard on a masterplan and business case. This will need a significant investment from the government, and the DHB must be in a financial position to support this work," Dr Clark said.

"I expect DHBs to improve their financial positions and to demonstrate they have a pathway to maintain financial sustainability."

Dr Levy, who is a former chair of the Waitemata, Auckland and Counties Manukau DHBs, said he aims to take a collegial and proactive approach and provide constructive support to the DHB.

"My role is to support the board in trying to improve its financial position, its sustainability and help address other issues that it faces. And for me success would be that they no longer need a Crown monitor and are able to sail in clear air and that's going to be my approach."

He said the health context is very complex and the challenges compound with population growth and new technology, but new technology also provides opportunities so it is a matter of achieving a balance between those.

The move by the government is less severe than sacking a DHB board and replacing it with commissioners, as happened recently in Waikato. But it shows a lack of confidence that the DHB will get on top of its ballooning deficit, and sends a signal to other DHBs.

Their deficits are also rising, with Waikato forecasting it will end the financial year $62m in the red, and Counties Manukau $45m in deficit.

The move by Dr Clark today follows accusations from the National Party that a lack of leadership by the coalition government is contributing to rising DHB deficits.

National Party's health spokesperson, Michael Woodhouse, is backing the decision.

He said Canterbury DHB's finances have deteriorated dramatically.

"In the last two there has been about a three-fold increase in the deficit - from between $20m or $30m from memory, to over $100m now - and that is a very very sharp descent and a challenge to their financial viability going forward."

Canterbury DHB is also welcoming Dr Levy's appointment as Crown Monitor. DHB chair John Wood said it would provide additional support to work already under way.

"The DHB continues to respond to a number of unique and long-term challenges, including the aftermath of the earthquakes and our redevelopment needs, as well as the recent impacts of the 15 March terrorist attacks," Dr Wood said.

He added financial sustainability and "complex funding requirements" require a joint approach, and the DHB is continuing this work with the ministry and external consultants EY.

Two Crown monitors were appointed by the government to Counties Manukau DHB in April last year. Ken Whelan continues as Crown monitor at Waikato after being appointed to help out there following the resignation of the former Waikato chief executive, Nigel Murray, last year.

In 2013 former ACC chief executive Jan White was appointed Crown monitor at the Southern DHB, and in 2008 two Crown monitors were appointed at Whanganui DHB.

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