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$105.7 million Palmerston North Hospital plans endorsed

$105.7 million Palmerston North Hospital plans endorsed

13 August 2014

MidCentral District Health Board has endorsed plans for a major redevelopment of Palmerston North Hospital that could cost around $105.7 million and cater for the region’s surgical and acute needs for the next 20 years.

Yesterday the board endorsed a final draft indicative business case for the part of the hospital’s redevelopment. It will go to neighbouring Whanganui DHB on Friday for discussion and any implications, before being presented to the regional Capital Investment Committee next month, and the national Capital Investment Committee in October.

The proposal is to build a hot floor of emergency department, theatres, procedure rooms, a critical care unit, cardiology interventional services, sterile support unit, and telephony services within a new facility that meets new seismic standards for these services. Other services requiring refurbishment would also be addressed in space made available by the new build including a revamped Medical and Surgical Acute Assessment Unit, Emergency Department observation beds, radiology, post acute surgical beds and day recovery beds.

The report, which follows a process of engagement with clinicians, managers and consumers over nine months, addresses important seismic, material and functional issues the hospital is facing. Consumer interviews identified the real issues lack of space presents for their own experience of the system and recovery, and clinicians noted the difficulties of providing appropriate modern care in facilities that were crowded, and no longer fit for purpose.

The report and considers four options to address the issues identified including: status quo; two new build options; and a longer term additional $146 million proposal that includes a new wards building and new main entry to the acute medical facility also being built.

The report notes that if the board only addressed seismic issues with existing buildings that house acute services, then the estimated cost would be around $75 million, but would severely compromise functionality and capacity. The $105 million option that addresses all major issues with acute services, as well as addresses seismic issues, was seen as the preferred cost effective option to the Board.

The business case also says there is need for significant changes in the way services are configured and delivered, to ensure the hospital realises the benefits around operational efficiencies, improved patient experience, and improved quality.

Dr Helene Carbonatto, Executive Director, noted that “Building a new facility without addressing the issues around how well our patients flow through the system, would counteract any of the benefits we identify as supporting the business case except for the seismic issues.”

MDHB believes the redevelopment can be funded through its own cash reserves – it already has a cash balance of $60 million and is forecasting surpluses over the next five years to accommodate the full cost of the build. (MDHB is one of only three DHBs to maintain a positive working capital balance and its debt to total assets ratio is less than 50percent, and the lowest in the country.)

Mike Grant, Deputy Chief Executive, noted that the investment in the new hospital services will not compromise investment in primary care and noted that MDHB has committed close to $10 million a year for the past 10 years to improve primary health care services in the region, and this additional funding is reaping excellent results for patients in the district. “It is now time to focus our attention on improving hospital acute services for patients and their carers, and ensure we can deliver excellent services now and into the future.”

The previous redevelopment of the hospital finished in 2002 and cost around $52 million. The two clinical services blocks are 23 and 25 years old from the time they were planned.

The national Capital Investment Committee will consider the recommendations in October 2014, and will recommend whether MDHB can move to the development of a detailed business case to address the issues identified in the indicative business case.


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