Hospitals Report Operating Deficit

Public Health Financial Statistics: March 2001 quarter

Hospitals Report Operating Deficit

District Health Boards have returned the fourth consecutive quarterly operating deficit since the surplus of $5.2 million recorded in the March 2000 quarter, according to Statistics New Zealand. Increased employment costs and rising supply costs have caused District Health Boards to record an increasing operating deficit, rising from the $0.6 million deficit in the nine months to March 2000 to $33.8 million for the nine months to March 2001. However, the operating deficit of $14.1 million recorded in the March 2001 quarter was $0.9 million less than the December 2000 quarterly result.

Total income increased 6.6 percent or $173.4 million, from $2,627.1 million for the nine months to March 2000, to $2,800.5 million for the nine months to March 2001. Over the same period, the cost of providing services increased by $206.4 million or 7.9 percent to $2,834.1 million.

In the nine months to March 2001, revenue from Government was $2,525.2 million, compared with $2,446.0 million in the nine months to March 2000. The proportion of income from this source for the latest nine month period was 90.2 per cent of total revenue, compared with 93.1 percent for the same period a year earlier. Revenue for the March 2001 quarter was 2.3 percent ahead of the December 2000 quarter, as a result of increases in government revenue, medical charges and all other income.

By the end of March 2001, taxpayers' equity had fallen to $898.7 million, reflecting continuing deficits. This was $33.9 million lower than at the end of March 2000. Debt increased to $1,655.8 million at the end of the March 2001 quarter, as District Health Boards borrowed to provide for increased capital expenditure. This resulted in a higher debt equity ratio than a year ago. The ratio moved from 1.51 at the end of March 2000 to 1.84 at the end of March 2001 quarter. A total of $90.2 million was spent on fixed assets in the March 2001 quarter, and expenditure for the nine months to March 2001 was $299.4 million.

At the end of March 2001, total assets for District Health Boards were valued at $2,554.5 million, an increase of $218.2 million or 9.3 per cent on the value at the end of March 2000.

The book value of fixed assets at the end of March 2001 was $1,987.5 million. The debt to fixed asset ratio of 0.83 recorded at the end of March 2001 was up on the 0.78 recorded a year earlier, reflecting the increased capital expenditure over the period with new hospitals being built, older hospitals being refurbished and equipment being purchased.

Ian Ewing DEPUTY GOVERNMENT STATISTICIAN

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