Ref. No.: 20080604

ENCLOSURE to health REPORT 20080604

Background Information

1.This enclosure provides a summary of the financial performance of the DHB sector for the eight-month period ended29 February 2008 and shows a net deficit for the sector of $3.1M ($28.7M favourable to the planned $31.8M deficit).

2.Tables and appendices have been compiled from rounded data and may not necessarily cross add.

Consolidated Statement of Financial Performance ($'000)
29 February 2008
Year to Date
Actual / Phased Plan / Variance / % Variance *
$ '000 / $ '000 / $ '000
TOTAL REVENUE / 7,149,144 / 7,054,204 / 94,940 / 1.3%
Operating Costs
Personnel Costs / 2,510,467 / 2,493,087 / (17,380) / (0.7%)
Outsourced Services / 244,029 / 194,860 / (49,169) / (25.2%)
Clinical Supplies / 608,576 / 607,546 / (1,030) / (0.2%)
Infrastructure/Other Supplies / 730,961 / 726,491 / (4,470) / (0.6%)
Subtotal / 4,094,033 / 4,021,983 / (72,050) / (1.8%)
Payments to Providers
Personal Health / 2,114,320 / 2,143,982 / 29,662 / 1.4%
Mental Health / 245,858 / 251,418 / 5,560 / 2.2%
Public Health / 4,922 / 2,553 / (2,369) / (92.8%)
Disability Support Services / 668,551 / 638,564 / (29,987) / (4.7%)
Maori Health / 24,519 / 27,514 / 2,995 / 10.9%
Subtotal / 3,058,170 / 3,064,031 / 5,861 / 0.2%
TOTAL EXPENSES / 7,152,203 / 7,086,014 / (66,189) / (0.9%)
NET RESULT / (3,059) / (31,810) / 28,751 / 90.4%
Average FTEs YTD / 51,092 / 51,928 / 836 / 1.6%
Avg Annual Cost Per FTE ($) ** / 73,705 / 72,016 / (1,689) / (2.3%)
Case Weighted Discharges - Inpatients / 368,167 / 370,911 / (2,744) / (0.7%)
Case Weighted Discharges - Daypatients / 61,305 / 56,196 / 5,078 / 9.1%
Total Case Weighted Discharges / 429,672 / 427,107 / 2,334 / 0.6%
Note:
* The % column shows the year to date variance as a percentage of phased plan.
** The cost per FTE is calculated by annualising YTD Personnel Costs divided by the average YTD FTEs .

3.The above table summarises the Statement of Financial Performance for the sector for the eight-month period ended29 February 2008, and is compiled from monthly templates submitted by DHBs.

4.Total Revenue for the period is $94.9M (1.3%) favourable to plan. The favourable variance is primarily due to increased funding being allocated to DHBs for Aged Residential Care (ARC), Home-Based Support Services and rebased Primary Maternity Services funding.

5.Expenditure in Personnel Costs at $2,510.5M is unfavourable to plan (0.7%). AverageYTD Full Time Equivalent (FTE) personnelas at 29 February 2008 are1.6% below plan, with the average consolidated cost per FTE being2.3% greater than plan. This reflects salary negotiations being settled at levels higher than planned, and the increased costs to recruit and retain personnel.

6.Outsourced Services reflect an unfavourable variance to plan of $49.2M (25.2%). The majority of this unfavourable variance ($32.3M) is attributable to outsourced medical staff (Medical, Nursing, Allied Health and Support Personnel) which is indicative of the difficulties facing the sector to recruit and retain permanent staff. Outsourced management costs (personnel and contracted services) are unfavourable by $7.7M.

7.Outsourced Clinical Services are $9.2M unfavourable to plan,reflecting the increased workload being outsourced by the sector to reduce waiting lists/maintain elective services.

8.For the period ending 29 February 2008:

  • Ten DHBs reported operating surpluses.
  • Eleven DHBs reported deficits of which 8had planned for deficits.
  • Ten DHBs returned unfavourable variances to plan:
  • The major influences on the unfavourable variances are
  • Increased outsourcing costs to reduce waiting times / maintain services
  • The impact of Multi Employer Collective Agreements (MECA)
  • Non achievement of planned efficiencies
  • ElevenDHBs returned favourable variances to plan.
  • The major contributors to the favourable variances are
  • Delays in the implementation of services

9.Funder arm: Total revenue is greater than plan by $72.3M (1.1%). Payments made by the Funder arm to the DHBs’ own Provider are more than plan ($21.4M). Payments to other providers are less than plan ($5.9M), indicative of the delayed implementation of services.

10.Provider arm:Net results range from West Coast DHB with the highest deficit at 20.8% of revenue to WaikatoDHB with the highest surplus at 1.6% of revenue. In dollar terms Capital & Coast DHB reports the highest deficit at $16.2M and the Waikato DHB has the highest surplus at $5.7M.

11.Case Weighted Discharges (CWD):Eight DHBs report CWD delivered less than plan, with West Coast DHB reporting a shortfall of 15.3%. West Coast DHB notes that this is due to staff shortages, and the timing of visiting specialities. Wairarapa DHB has outperformed planned levels by 20.0% and notes that this is due in part to increased throughput of procedures with high case weights, and in part to seasonal variation.

12.FTE: The year-to-date average FTEs for the sector are below plan across all categories, primarily in Allied Health, Management and Medical FTEs, highlighting the difficulties facing the sector in the recruitment and retention of permanent staff.

13.The consolidated cost per FTEis 2.3% greater than the planned cost, with particularly smaller DHBs paying higher rates for Medical FTE. The majority of DHBs report total average compensation per FTE within $3,000 of plan.

14.Capital expenditure:for the sector is behind plan due mainly to

  • timing delays in payments
  • delays in initiating capital projects – notably Nelson Marlborough DHB (WairauHospital) and Auckland DHB (IT related projects).

Four DHBs are currently undertaking major capital works – Bay of Plenty; Capital & Coast; Counties Manukau and Waikato – these projects are all on time.

15.Capital charges: Overdue charges have been discussed with the following DHBs and further discussions to resolve issues are being held:

  • Capital & Coast DHB
  • Southland DHB
  • Auckland DHB
  • West Coast DHB.

Implications for REDUCING INEQUALITIES

16.There are no implications identified in this report for reducing inequalities.

Appendices attached to ‘ENCLOSURE TO HEALTH REPORT 20080604’:

Appendix 1: DHB Net Results by Arm for the eight-month period ended 29 February 2008.

Appendix 2:DHB Funder Arm Revenue Allocation for the eight-month period ended 29 February 2008 separated into payments to own Provider and Governance, and payments to Other Providers.

Appendix 3: DHB Provider Arm Results for the eight-month period ended 29 February 2008.

Appendix 4: Case Weighted Discharges for the eight-month period ended 29 February 2008.

Appendix 5: Average YTD Consolidated FTE Numbers by DHB as at 29 February 2008.

Appendix 6: Annualised Average Consolidated Cost per FTE by DHB for the eight-month period ended 29 February 2008.

Appendix 7:DHB Balance Sheet as at 29 February 2008.

Appendix 8:Capital Expenditure per DHB for the eight-month period ended 29 February 2008.

Appendix 9: Outstanding Capital Charges as at 29 February 2008.

Compendium:“One-page” Summary Reports per DHB as at 29 February 2008.

COMPENDIUM

Health Report: 20080604

“One-Page” Summary Reports per DHB

as at 29 February 2008

A “one-page” summary report is intended to reflect key performance variances to plan. The areas covered include:

  • The actual to planned net performance by each arm and the consolidation
  • The variance in actual to plan for capital expenditures and equity injections
  • A variance for key inputs, Full Time Equivalents (FTEs), and outputs, case weighted daypatient and inpatient discharges.

There has been a change in reporting FTE information on the “One-Page” summary reports, with the data now being reported as YTD average figures.

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