Aged impact on budget

Increasing numbers of elderly people in aged care are contributing to the Nelson Marlborough District Health Board's worsening financial deficit. The Government is putting pressure on the hospital to rein in its spending, with Health Minister Tony Ryall telling the board to live within its means and stop spending money on things it is not funded for.

The health board received $360 million in population-based fundDing this year and is forecasting a deficit of $5.4m.

The board has been forced to put together a recovery plan to show where the money is going and how it will be recouped.

Additional aged residential care beds built in Nelson and Marlborough, especially at dementia care level, coupled with the annual 3 per cent population increase of people aged over 65 had contributed to a budget blowout of $314,000. This was expected to increase to nearly $1m by the end of the year, said health board planning and funding general manager Sharon Kletchko.

Now the board was having to redistribute its already "constrained budget" to cover the deficit, she said. "So what we have done for next year's budget is accommodated the deficit. We have added $1m from some other aspect of our bucket."

District health boards could no longer control the number of aged residential care beds built in their districts, which posed a "significant financial risk", the board said in its recovery plan.

Aggressive marketing campaigns by health providers and "innovative arrangements" that made early entry to a rest home an attractive option had also contributed to the problem. In Nelson and Tasman, the maximum amount the board pays for an elderly person in residential care is $799 a week. In total, it spends $30m a year on the subsidy from population-based funding.

About 1440 people get the subsidies to varying degrees, including 206 dementia patients, 580 people in hospital-level care, 32 pyscho-geriatric patients and 624 people in rest homes. Before the 2006 Social Securities Act, district health boards could control the number of beds being built in their areas, which meant they could control cost growth. Boards now had no control over this and the building of new hospitals had increased the number of beds.

The board had not factored in these extra beds and that had contributed to the budget blowout.

Health Minister Tony Ryall said he expected the board's level of funding growth to remain the same or reduce next year.

The board received an extra $13.58m this year and would get more next year, he said.

"However, the amount of the increase will not be as great as it has been in recent years, because of the recession."

The Government could not have district health boards continually providing services that had not been funded, and expected all boards to be working towards living within their means.

- The Marlborough Express

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