24 Jul 2019

Auckland DHB chief executive declares deficit for financial year

11:42 am on 24 July 2019

Managers of the country's largest public hospital, in Auckland, have declared a deficit for the recently ended financial year.

Auckland Hospital

Auckland Hospital. Photo: RNZ / Bradley Ambrose

They are refusing to say yet what the size of the deficit is, but they expect to end the current financial year, next 30 June, in the red too.

It means just two of the country's 20 DHBs may have ended the year in the black. According to the latest DHB financial results for the year to 31 March, along with Auckland, Nelson Marlborough and South Canterbury DHBs are also expected to break even on June 30.

Auckland DHB chief executive Ailsa Claire told the DHB's 11,000 staff in a blog this week: "Auckland DHB, we have a problem" - borrowing a famous phrase connected to the moon landings.

Ms Claire said for the first time during her leadership - the past seven years - the DHB was in deficit. She wouldn't disclose the size to RNZ, saying it was "quite a large deficit for us as an organisation".

She said it would be up to the board to say how big it was and when it would be public.

However, the two reasons for the blowout were the pay awards, covering its own staff, and those they contracted work out to, she said.

The DHB was also not having its costs covered for work it provides for patients from other DHB areas - what's known as inter-district flows.

"Auckland DHB serves patients from other DHBs and about 50 percent of the work we do is for other patients. The other DHBs pay us for that work, and unfortunately at this stage the price, which is nationally set, is quite a lot below what the actual cost of that work is."

Ms Claire ruled out any cuts to services, saying that in order to manage demand things needed to be done differently.

"This is not about making cuts, it's about improving our processes and managing our resources (including our people) as well as supporting you in the work you do."

She said changes needed to be made now and "every little bit counts", that included not printing in colour, turning lights off and shutting down computers when staff left for the day, and thinking about other discretionary spending.

A Fix it Fast team would help staff make changes. Other changes, including speeding up the provision of diagnostic tests to shorten the length of time some patients need to spend in hospital, and adding more patients to surgeons' lists for non-urgent surgery, would be explored.

Ms Claire stressed it was not about making staff work harder - because they were already working hard - but making changes that staff themselves wanted.

Health Minister David Clark said in a statement that the previous government underinvested in health and the country was living with the consequences.

He said Auckland DHB had managed its finances well over the years.

"While any deficit is not ideal, I understand ADHB is looking at a relatively small underlying deficit. Like all DHBs, it is facing some one-off costs such as correcting historic Holidays Act pay issues that will add to its deficit in the short term".

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