Health NZ headed for likely near-$1 billion deficit

Health New Zealand Te Whatu Ora’s financial position has “continued to deteriorate” in the last quarter, reporting a likely near $1 billion deficit for the last financial year.

The organisation’s Quarterly Performance Report was released today, alongside a statement from Health Minister Shane Reti focused on Health NZ demonstrating “encouraging progress” against the Government’s non-financial health targets.

It follows an appearance from Health Commissioner Lester Levy at Parliament’s health select committee last month where he was criticised by Labour health spokesperson Ayesha Verrall for not having financial documents for the committee to scrutinise. Those documents are due to be presented to the select committee on October 7.

Today’s quarterly report showed the financial performance of Health NZ declined significantly in the three months to June this year. That slump came after a $299 million forecasted surplus in the previous quarter.

“Our financial position continued to deteriorate throughout the quarter. We are committed to resetting Health NZ to ensure that every hour and every dollar we put into our services are adding value to patient care and community wellbeing,” a foreword from Health NZ chief executive Margie Apa stated.

“The preliminary and unaudited financial result for the year ended 30 June 2024 is a deficit of $934 million. This is due to one-off impacts amounting to $589 million and deterioration in underlying financial performance.”

Those one-off impacts included Covid-19 stock written off or consumed, increased costs for noncompliance with the Holidays Act – an issue that has plagued most New Zealand employers, public and private – as well as Covid-19 funding that was not used and returned to the public purse.

“A key contributor to the deterioration in underlying financial performance is staffing exceeding the 2023/24 budget, accompanied by higher outsourcing across all employment groups,” Apa reported.

Health NZ cared for more people in the 2023/2024 financial year than ever before, she wrote, and there were increased discharges and complex treatments. She said that was likely in line with population growth.

There were “highlights” in non-financial performance also, she said, including the proportion of people waiting more than four months for a first specialist assessment falling by 1.9%. For procedures, it reduced by 3.7% compared with the previous quarter.

The proportion of under 25-year-olds seen by specialist mental health services within three weeks of referral also increased by 4% which was “encouraging as this represents a population group who… are exhibiting increased demand for support.”

Newborn enrolment also increased, which boded well for improving childhood immunisation rates and ongoing care, she said.

Challenges ahead included increasing pharmacy and other providers offering vaccinations.

“Although there has been an increased uptake in pharmacists training, we have work to do to promote this as a safe option.”

Waitlists continued to be a problem also, she wrote, and while there had been “efforts” over the financial year to reduce the “tail of long waiters” and those waiting more than a year for a procedure, it still increased in the quarter.

‘Encouraging’ progress on health targets – Health Minister

Reti said the report would be used as a baseline for reporting against the Government’s five health targets.

Those targets were:

The targets were announced in April.

Reti said while the report showed there was “still work to do” and that quarter by quarter there would be variation, Health NZ was “already making progress on four out of the five health targets”.

“This clearly demonstrates the value and the need for targets in the health system, as we’re seeing stabilisation of numbers that have fallen in the absence of a clear focus on performance over the last six years.”

The greatest improvements have been made in reducing wait times for cancer treatment, first assessments and elective treatment, he said.

“I’m pleased to see positive progress made against our cancer treatment waiting time target, which is now sitting at 83.5%, compared to 82.7% in the previous quarter.

“As the system prepares to implement new cancer treatments coming online from 1 October, starting with Keytruda, I expect New Zealanders’ access to cancer treatment to improve even more in the coming months.”

He said there were continued “small improvements” in emergency department waiting times.

“Over 61% of patients received planned care within four months. In real terms, this means 1519 fewer people waiting for surgery.

“However, while people are waiting less time for treatment, they’re still waiting too long to be assessed, with only a small improvement in the wait times for a first specialist assessment.”

Childhood immunisation was a focus he said, particularly to stymie vaccine-preventable illnesses in the future.

“The Government has already invested $50 million over two years to boost immunisations and is working to expand the vaccinator workforce, so people can get immunised wherever they go to access healthcare – through a midwife, at participating pharmacies or at community events.

“We are working hard to turn around the significant financial issues at Health New Zealand.”

He said the health targets were “ambitious” and not something that “we can turn around overnight”.

“Today’s results are promising and I am confident that New Zealanders will see a real difference in access to quality healthcare,” Reti said.