SDHB tackles soaring deficit

Southland District Health Board chief executive Carole Heatly.
Southland District Health Board chief executive Carole Heatly.

The Southern District Health Board has clamped down on spending amid fears a ballooning deficit could threaten chances of building a new hospital.

Health Board chief executive Carole Heatly told board members yesterday the organisation's financial situation was extremely disappointing and if "we don't start living within our means and spending wisely then we won't be able to afford to rebuild any new facilities".

A financial report shows the board has a deficit of $12.3 million, $4.1m above the budgeted year-to-date deficit of $8.2m.

Contributing to the deficit were personnel costs, which are $5.2m above budget so far, and clinical supplies expenses, which are $2m over budget for the year to date, the report says.

"It's extremely disappointing, the financial situation we find ourself in," Heatly said.

The financial position had deteriorated rapidly and action had to be taken immediately, she said.

A weekend meeting had been held with the health board executive team and cost cutting strategies developed, she said.

Leading these would be a change in focus for Patient Services executive director Lexie O'Shea and Finance executive director Peter Beirne, who would work exclusively on cost control, cost reduction and delivering agreed financial targets.

Several other positions had been either reshaped or developed to allow this to happen, including the appointment of a director of operations, the board was told.

Questioned on how these strategies would help cover the millions of dollars needed for a new hospital, Heatly said the board had to start with what it could control on a day by day basis.

"If you look after the pennies, the pounds take care of themselves," she said.

If the board did not learn to live within its means it would not be able to afford new facilities.

The health board received $840m a year to provide health services to the southern district, and while capital for a new hospital would come from the government, ongoing costs associated with that hospital would come from those yearly budgets, the board was told.

"We cannot continue to add to the debt we already have," Heatly said.

Board member Branko Sijnja said he was pleased a response had been made to the financial situation and he endorsed the actions.


How the health board hopes to cut costs:

Finance executive director Peter Beirne and patient services executive director Lexie O'Shea will focus on cost control and cost reductions.

Several positions have been reshaped or developed, including the appointment of a director of operations to ensure the day-to-day focus on cost savings plans.

Moving responsibility for IT, estates, quality and HR to nursing and midwifery executive director Leanne Samuel.

Travel outside the district will be restricted.

A freeze on recruitment of non-clinical staff for three months 

The Southland Times