Non-medical facility built at Middlemore without approval

Thursday, 10 May 2018, 4:25 pm
Article: RNZ

Phil Pennington, Reporter

Middlemore Hospital, which desperately needs wards and operating theatres, has in the past eight years completed a multimillion-dollar non-medical building without government approvals.

Middlemore Hospital. Photo: RNZ / Jesse Chiang

RNZ was invited yesterday to tour Middlemore, which is looking to repair three leaky buildings which have faced a litany of problems.

The multiple meeting rooms in the Ko Awatea One building were virtually empty, while just across the parking lot were overfull wards. The hospital is reported to also need at least six new operating theatres just to keep up with current demand.

The Ministry of Health and Treasury require DHBs to prepare 10-year capital intentions for projects worth $10 million or more, including getting approval from both the regional capital committee and the ministry's Capital Investment Committee, plus approval from the Ministers of Health and Finance.

Acting chief executive Gloria Johnson said the building, completed in 2011, was thought to be under the $10m threshold.

However, capital works manager Chester Buller - who was on staff when the building opened in 2011 - told RNZ he knew it cost over $10m. He said its construction had nothing to do with him.

Dr Johnson and new chair Mark Gosche said it was the first they had heard of the problem.

It came on the heels of an internal investigation which uncovered the $12 million Ko Awatea Two building - which is about to open and houses a 250-seat lecture theatre - had not been properly approved at any level.

"This didn't go through our usual prioritisation processes and if it had, we believe that it would not have been prioritised above other needs," Dr Johnson said.

"Because it actually is a build that costs more than $10 million, it should've gone through regional and national approval processes as well, and it hadn't," Dr Johnson said.

Dr Johnson said she has alerted the State Services Commission and the Health Ministry. She said the newly-elected board had tried to pull out of Ko Awatea Two entirely early last year.

"It was immediately questioned as to whether or not this should be going ahead.

"We looked into whether or not we could stop the construction but we couldn't. We got legal advice and found it would've cost us more to pull out of it."

Dr Johnson said Ko Awatea Two was paid for by selling about $11 million of medical equipment, mostly sterilisers, to a finance company, then leasing them back.

This was an "unusual" method to get around the fact that usual sources of capital spending would not have been available for such a non-priority building, she said.

"It's a very bad deal because we're paying a very high rate of interest.

"It's equipment that is integral to the operation of the hospital - it's not as if at the end of the four years we'll be able to say 'we don't need sterilisers anymore'. We'll have to extend the agreement further."

She said she was not sure how this all had transpired, but added the former board chair and top managers did appear to have been very determined to get the two Ko Awatea buildings built.

RNZ is seeking comment from those in leadership at that time.

The Ministry last night told RNZ its review of Counties Manukau's financial management was not yet complete.

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