'This can never happen again': Health minister furious at $38m Budget blunder
A Ministry of Health blunder has left cash-strapped DHBs scrambling to account for incorrect funding allocations - Auckland's Waitemata DHB was short-changed by more than $12m in the Budget.
The Director General of Health Chai Chuah was forced to apologise to a furious Health Minister for the error, which lead to the Government announcing DHB funding allocations at the May Budget, which were all inaccurate.
Of the 20 DHBs, 14 were over funded, and would have to relinquish some of their funding allocations to balance out six DHBs who were not given enough money according to a complex formula.
Waitemata stood to gain $12.6m it should have been awarded in May, Auckland DHB would gain $10.6m and Northland $6.3m.
But that meant DHBs including Counties Manukau, MidCentral and Southern would have to give up $6.6m, $5.5m and $5.6m respectively, that they had already started planning to spend on services.
DHBs were awarded $439m in the budget - that total figure would not change, but up to $38m of those funds was doled out incorrectly.
Health Minister Jonathan Coleman was furious at his officials, including Ministry of Health director-general Chai Chuah.
* 'Significant concern' over budget shortfall at Nelson Marlborough DHB
* Budget 2017 funding 'short-changing' public health
* Budget 2017: Health funding to record levels with $1.7b injection
"It's unacceptable that they did not get the allocations right. It doesn't change the total amount that DHBs receive, but it changes how that $439m is divided between them."
DHBs have expressed disappointment.
MidCentral chief executive Kathryn Cook said: "Whilst we are disappointed by this advice, particularly at this late stage, we are working hard to revise our budget and annual plan."
Hawke's Bay chief executive Kevin Snee said how the financial loss would impact on budget planning for next year could not be determined until the DHB received formal notification of the revised figures from the Ministry of Health.
It's understood that the error may have led to disproportionately less funding going to DHBs that had seen a higher population growth.
Coleman said he had told Chuah the ministry's performance was "totally unacceptable" and "it places the ministry's reputation at risk".
"He hasn't offered a resignation, but he agrees with me it's unacceptable, that they should have got this right and Minister's have to absolutely be able to rely on the figures."
Consultancy firm Deloitte had already been called in to conduct an independent review of the ministry's procedures.
"DHBs were told they were getting a certain amount and they're having to make adjustments. And of course, people need to have total confidence in not only the figures, but the integrity of the population based funding formula," Coleman said.
"Because we point to that fall the time as the basis for which District Health Boards receive their allocations. There's nothing wrong with the formula - it's been independently reviewed, and as a clear result of that the formula is correct and it's been used for 15 years.
"But it hasn't been properly applied, and I have to be able to take the officials' word as stated - so if they present the estimates and say 'this is the figure', ministers have to be able to accept that.
"This can never happen again."
Coleman said if any employment issues arose, it would be a matter for Chuah.
Chuah confirmed an internal Ministry of Health error "meant that draft figures were formally submitted for Budget 2017 funding allocations for DHBs rather than final figures".
"The difference between the draft and final figures amounts to $38 million which is being correctly redistributed amongst DHBs."
It was an issue "on paper only", as the next financial year did not start until July 1, he said. But Chuah did not provide details on which DHBs would be losing money and which would be gaining money.
The changes would not affect any new initiatives announced in Budget 2017.
"As soon as the error was discovered, I commissioned Deloitte to look into how this happened.
"The initial findings from this review are expected later this month, as well as recommendations on steps to prevent a similar error occurring again," said Chuah.
"I have personally apologised to the Minister, DHB Chairs and Chief Executives and central agencies.
"The Ministry recognises DHBs will need extra time to adjust their planning based on the original planned figures and has extended the deadline for DHB financial plans to be lodged with the Ministry."
Labour's health spokesman David Clark said the error had left Coleman with "egg on his face".
“This has turned financial planning for crucial front line services upside down, while generating further uncertainty for thousands of DHB staff and patients," he said.
“This mess adds insult to injury after a Budget that offered nothing new on mental health, failed to fund primary care adequately and allowed the funding shortfall under this Government's watch to stretch out to a cumulative $2.3 billion.
“While this is embarrassing for the Minister, the bigger impact is that some DHBs will have to make sharper cuts than expected. This affects patients directly. After nine years, patients deserve better. It’s time for a fresh approach,” Clark said.