Minister, Health Board at odds

Press, 1 August 1989, Page 3

Minister, Health Board at odds

By

DEBORAH MCPHERSON

The Canterbury Area Health Board and the Minister of Health were at odds yesterday over who was to blame for the board’s financial problems.

The Minister announced the board’s share of the Budget allocation would be $266.9 million, but the board claims that will still leave it more than $l5 million underfunded according to the national funding formula. The board's chairman, Mr Tom Grigg, said this year’s allocation would mean little relief from the pressing need to implement cost cutting proposals to save $3O million in the next 12 months.

He also rejected suggestions by the Minister of Health, Ms Clark, that the board’s financial problems owed more to poor management than to this year’s funding decisions. He said he thought the Government was being unrealistic.

“They wonder why we slash and burn. It’s the only way to stay, within budget.” Ms Clark said yesterday the board faced no greater level of constraint than any other Government department or area health board.

“Financial problems facing the Canterbury Area Health Board this year owe more to poor management decisionmaking than to this year’s funding decisions,” she said.

“In fact, Canterbury

was allocated almost $500,000 extra funding to help it meet cross-bound-ary charges and has been told that a further $2.5 million is available once it shows it has a feasible management plan in place.” The $266.9 million was the board’s share of the hospital vote within the health vote, and included $l4 million for Ashburton.

Mr Grigg said, however, that while the allocation was about the same as last year, “on a percentage basis,” the board was still underfunded on a population basis compared with other boards. “The 2.5 per cent GST increase is not being refunded, which is an effective 2.5 per cent cut in funding. “We are also faced with wage back pays from last year of 2.2 per cent, and an extra 4 per cent in general wages and inflaton, whihc could be an underestimate,” said Mr Grigg.

“We were over-funded three years ago, but we paid our money back. Now that we are in trouble we are not getting what we are owed.”

The funding formula for boards was worked out according to the populaton, but weighted with other factors such as the

age of the population, maternity and obstetric days as well as mortality rates. “The more people that die the more money you seem to get,” said Mr Grigg. He said the latest funding allocation showed other area health boards were overfunded, including Otago, which was overfunded by $l6 million and Wellington by $l2 million. Auckland was underfunded by $6 million. “What is equitable or fair about that?” he asked.

“All they will do for those boards that are underfunded is to give them service development grants. That has made no difference to us, because at the last grant we were $14.9 million underfunded, so we have not improved.”

Ms Clark contended that no other board had been treated so generously as Canterbury. The problems facing Canterbury had arisen because the board had not been prepared to tackle the issue of its rate of expenditure during the last two years, she said.

The board had received a grant last year to employ consultants to assist in its move to area-health-board status. Part of that grant was to enable the

board to look at opportunities for restructuring. Up to 70 proposals were put before the board last year as ways of addressing the growth in its expenditure, and some of those had again appeared in the expenditure reduction task force’s report, said Ms Clark.

Mr Grigg said the board had taken measures to reduce spending by “pruming” services in cleaning, food, transport, laundry and minor capital works.

The board had not implemented Cost savings last year, such as closing Jubilee Hospital for the elderly, because of public outrage, said Mr Grigg.

“As a board we are also responsible to the community, and we got such tremendous disapproval to the idea of taking some of those actions. We also did not find an appropriate place for the residents, which was why the hospital was not closed then. “We have been encouraged to consult with community and unions, which is why there’s been a delay in making the decisions.” Ms Clark said the board was overspent at the end of 1987-88 and again overspent by $5.5 million at the end of