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DHB being pushed into funding deal

For immediate use
18 May 2017

DHB being pushed into funding deal that will take money from patient services; full disclosure and independent scrutiny required.

“The Government is trying to force a public ‘private’ partnership on the West Coast District Health Board that would take money away from patient care and hand it to third party investors,” says Ian Powell, Executive Director of the Association of Salaried Medical Specialists (ASMS).

“We’ve learnt that the DHB is being forced to lose its land to ACC, which will then build an integrated family medical centre in Westport – incorporating the current Buller Hospital – and then lease the facility back to the West Coast DHB.

“West Coast senior doctors are distressed and angry about the financial foolishness of this shoddy deal and that money that should be spent on West Coast patients will be siphoned off to pay a third-party investor. The deal is being brokered by a so-called Partnership Group, on behalf of the Government, and the DHB has been sidelined in the whole process.”

Mr Powell says he understands the Partnership Group initially sought private equity to bankroll the $10 million redevelopment but was unable to find a private financier willing to take on the deal. At that point, ACC found an opportunity to step in and invest in an additional revenue stream.

“The DHB’s Board has yet to ratify the decision but we understand it has been left in no doubt that it is required to do so if there is to be a new facility on the West Coast. But rather than being allowed to make its own decisions about what is best for health care locally, the Government through its ‘Partnership Group’ has pointed a loaded gun to its head. The Board is being forced to rubber-stamp a decision that will end up taking millions of dollars away from patient care on the West Coast.

“While ACC is a Crown entity, in this deal it will be operating like a private firm seeking to profit from the financial arrangement. This is not a case of one government agency giving another one a helping hand.

“A crucial factor is the rate of return, which we understand will be between $750,000 and $1 million going to ACC each year over and above what would be paid back to the Crown under its normal formula for capital works funding. At the same time, the West Coast DHB will be totally responsible for maintaining the new facility.”

Mr Powell says the lease is for nearly 35 years but right of renewal options could result without too much difficulty in it being extended to 99 years.

“It’s an extraordinary situation for a small, cash-strapped DHB to find itself in,” he says. “The people running this DHB care greatly about health care on the Coast and they’re now in a position where the only way they can get an essential health care facility is by agreeing to a funding decision that appears to be ideologically-driven.

“If this deal proceeds, over time it will strip millions of dollars from health care on the West Coast – yet there’s been no transparency or public consultation. It’s a secret deal being pushed through, with the DHB expected to live with the consequences.

“The costs of building hospitals and other essential health infrastructure has always been regarded as a core part of government spending. Taxpayers expect their taxes to be used to provide the health care services they need.”

Mr Powell called for full public disclosure of the deal and full independent scrutiny of the risks.



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