DHB head resignation a symptom of poor funding

DHB head resignation a symptom of inadequate health funding

The resignation of the Chief Executive of Capital and Coast District Health Board, Ken Whelan, unfortunately confirms the CTU’s analysis of the funding shortfall in the May Health budget. That analysis showed that the budget required the system to provide new services but on the same budget as last year in real terms. That meant a reduction in other services, and no relief for the District Health Boards (DHBs), which were already running significant deficits.

“Unfortunately we can expect more such stress,” said CTU Economist and Policy Director Bill Rosenberg. “Mr Whelan has brought the issue out into the open, but other DHBs and health services will attempt to struggle on. The public will see it in service deterioration, reductions in services, new user charges or increased DHB deficits.”

Unaudited DHB financial results for the year to June 2010 show a combined deficit of $99.3 million. Largest deficits were at Capital and Coast DHB ($47.5 million) and Southern DHB ($15.2 million). (DHB financial summaries are at http://www.moh.govt.nz/moh.nsf/indexmh/dhb-financialreport-0910.)

The CTU’s analysis of the Health Vote in the 2010 Budget found it was barely adequate to keep up with rising costs and population growth and ageing, but not adequate to fund new treatments. Instead it funded increases in services at the cost of cuts in others. In addition there would be substantial new cost pressures as a result of higher than forecast inflation and the movement of ACC costs to the Health system. Our pre-Budget analysis found that $555 million was required in operational funding to just keep up with rising costs, population growth, and the growth in demand for health services such as that due to availability of new treatments. Of that, $512 million was required simply to keep with costs and inflation. The Health Vote increased by only $508 million, but required $158 million in new services. The gap is reflected in a $111 million shortfall in the funding we calculated was required for District Health Boards (DHBs). We estimated that an additional $454 million was required, but only $343 million was forthcoming. That means existing deficits cannot be addressed, and it is inescapable that the position will worsen.

For details of the CTU Budget analyses, see http://union.org.nz/health-working-papers

ENDS

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