MidCentral in strife over deficit

Midcentral District Health Board does not expect to break even for another two years, despite a terse Government warning to get back in the black in the next financial year.

The DHB is on track for a$9.9 million deficit this year – nearly three times the shortfall it was expecting.

The board hoped to return to a $3m deficit next year, and break even by 2011-12, management told a parliamentary select committee yesterday.

Health Minister Tony Ryall sent a terse letter to the board last month demanding it meet its budgeted deficit of $3.5m this year, and break even next year.

The letter says the board needs to address its finances before the situation worsens, and its plan "does not provide any pathways or actions to improve that".

"Your board must take ownership of MidCentral's financial performance, and support your management in dealing with this situation," Mr Ryall wrote.

The board has been under intense scrutiny in the past year – answers it had to provide to the select committee last year were in response to probing questions on its toilet paper and pen purchases.

At the select committee yesterday, Labour MP Iain Lees-Galloway asked MidCentral's management whether it would be possible to meet the minister's demands.

DHB chairman Phil Sunderland said it was negotiating with the National Health Board but he still believed the plan to break even by 2011-12 was "practical".

When Mr Lees-Galloway asked if Mr Ryall's expectations were unrealistic, Mr Sunderland said he could not comment. "We have put a plan before him that we believe is a reasonable plan and we are waiting for him to identify again his expectations."

National MP Michael Woodhouse asked why the DHB's financial situation had worsened when it had had a $26m funding boost this financial year. DHB chief executive Murray Georgel said most of the money had gone to extra services, not balancing the books. "It was efficiently used, but unfortunately we used all the extra revenue at the expense line."

An $11m funding boost has been earmarked for MidCentral before this year's Budget.

The 21 DHBs are budgeted to be about $116m in the red when this financial year ends on June 30. Capital and Coast has the largest planned deficit, at $47.6m.

- © Fairfax NZ News