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District Health Boards' Operating Deficit Increase

Public Health Financial Statistics: June 2002 quarter

23 August 2002
District Health Boards' Operating Deficit Increases

Provisional results for the June 2002 year show that the operating deficit of the hospital and health service (HHS) provider function of district health boards has reached $217.0 million, according to Statistics New Zealand. Rising expenditure combined with relatively more stable income levels has seen the operating deficit grow $148.7 million in the past year, up from $68.3 million at the end of June 2001. The deficit is now at the highest level recorded since the series began in 1993. Twenty of New Zealand's 21 district health boards have provisionally reported deficits for the June 2002 year after non-operating items have been taken into account.

The total cost of providing public hospital health services reached $4,024.5 million in the June 2002 year, up $214.3 million, or 5.6 percent, on the same period a year ago. Employee costs were the major contributor to this increase, rising 9.1 percent between June 2001 and June 2002, to reach $2470.1 million. Growing debt levels were another factor, which saw interest payments increase 10.0 percent this year to $66.0 million.

Government revenue, which accounts for 92.5 percent of total income, increased 2.6 percent to $3,522.6 million over the same period. However, medical charges and all other income fell 8.2 percent in the June 2002 year, to $276.7 million. As a result, total income rose 1.8 percent, or $65.6 million, to $3,807.5 million over the June 2002 year.

The June 2002 quarterly results also show a significant increase in the seasonally adjusted operating deficit, which reached $83.6 million, up from $35.0 million in the March 2002 quarter.

Higher employee costs combined with a 1.7 percent reduction in seasonally adjusted total income were the main factors contributing to the increase.

Taxpayers' equity fell to $782.9 million at the end of June 2002 as a result of the continuing deficits. This was $118.6 million, or 13.2 percent lower than at the end of June 2001.

Correspondingly, debt levels continued to increase, and total debt at the end of June 2002 totalled $1,827.0 million. This is reflected in the debt to equity ratio, which increased from 1.89 at the end of June 2001 to 2.33 at the end of June 2002.

Total debt is made up of current liabilities ($842.3 million), long-term loans ($932.6 million), and other term liabilities ($52.1 million). Long-term loans increased during the June 2002 quarter, up 8.1 percent since the end of March 2002.

The value of total assets remained steady at $2,609.9 million at the end of June 2002, an increase of 0.1 percent from the end of June 2001. Fixed assets, which make up 83.6 percent of total assets, increased $158.2 million, or 7.8 percent, to $2,180.6 million during the same period.

Investments also increased, up 24.3 percent to $39.4 million in June 2002, compared with $31.7 million at the end of June 2001. Conversely, other current assets fell 33.1 percent to $331.8 million. This is largely explained by reduced cash holdings and lower accounts receivable levels by the HHSs. The debt to fixed asset ratio remained steady on 0.84 at the end of June 2002.

Brian Pink Government Statistician END

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