A newly released briefing has raised the forecast deficit at Health New Zealand Te Whatu Ora from $1.4 billion, to $1.76 billion.
Labour said the briefing to the health select committee three weeks ago was released on Monday at its “insistence”.
According to the briefing, the central health agency aimed to return to break-even position by Budget 2026.
In July, it was reported to be losing $130m a month, and a Commissioner took over to head off a $1.4 billion deficit for the financial year to mid-2025.
But that was an underestimate: its monthly reports for July and August were even worse, according to a newly released letter to the select committee on 18 September.
“Without interventions, Health NZ is estimated to continue to lose about $147 million every month, which would lead to a projected deficit of $1.76 billion by 30 June 2025,” it said.
HNZ had been making “interventions” focused on short-term restructuring and regionalisation “focusing on resourcing the frontline”, and medium-term financial sustainability and “reducing unwarranted variation”.
The government had said this would not impact frontline healthcare but – according to critics – it already was.
The financial figures in the briefing show about $650m more was spent on medical personnel in the year to July – almost $12 billion – compared to 2022-23.
However, spending on doctors dropped almost $90m for the month of August 2024, compared to June 2024, when it had peaked at $360m.
The spend on nurses similarly dropped, by about $40m.
Both the doctors and nurses spend was higher in August 2024 than August 2023, though not by much.
The total spend on nurses for the year to July 2024 – almost $5 billion – was almost the same as for the previous year. This is despite HNZ saying that a primary driver of its deficit was recruiting about 3500 nurses.
It told the Health Ministry in March 2024 of “significant overspending across the entity, amounting to around $100 million above budget in the month”, with “the major contributor … recruitment of nurses in the hospital sector, which was reported to be around 3500 full time equivalents (FTE) more than budgeted”, said a monitoring report in June 2024.
HNZ’s total revenue for the latest financial year was up $1.5 billion, at $27.2 billion.
It has reset its budgets for 2024-25 around the four regions, though in each region the budget was less than what was actually spent in 2023-24; for instance, half a billion less for Northern (including Auckland and Northland); and a bit less than that in Southern ($5.5b forecast, versus $6b actual spend in 2023-24).
Labour health spokesperson Ayesha Verrall said in a statement the government had taken “the scalpel to regional health budgets”.
“The government has manufactured a financial crisis to justify stripping back the health system. These cuts are affecting patient care,” Verrall said on Monday.
More information about Health NZ’s financial plight is expected to be released soon.
rnz.co.nz
