The leadership team at the Canterbury DHB has not properly explained how it would save money to fix an enormous financial shortfall, Crown Monitor Lester Levy says.
Crown Monitor Lester Levy says it's appropriate the CDHB board is asking more probing questions of the management team. (file pic) Photo: RNZ / Jessie Chiang
The DHB is in the red to the tune of $180 million, and is endeavouring to cut $56m from its deficit.
Seven executives, including chief executive David Meates, have resigned in the last few weeks.
Shell-shocked staff protested outside the board's offices on Thursday, while the board was voting on its annual plan.
Dr Levy, an experienced senior health administrator and former chairperson of both Waitemata and Counties-Manukau DHBs, told Nine to Noon he was brought on board last year because of the serious financial position of the Canterbury DHB - at the time it was seriously deteriorating, he said.
His role was to influence the board and management and work with them to reduce the deficit and improve management controls.
He said the context was more complex, because Canterbury had experienced a lot of difficulties, however, since 2014-2015 revenue has increased from $1.55 billion to $2.06b - a 33 percent increase.
"An appointment of this nature is a signal to the organisation that there is diminishing confidence in its ability to manage its finances."
Costs had risen from $1.57bn to $2.21bn - a 41 percent increase. "So there's a sustained expenditure gap between what is coming in as revenue and what is being spent."
The accumulated deficit is $840 million this year and if savings are made it would be $958m next year, he said. "So it's a lot of money and a complex issue."
He was appointed by former Health Minister David Clark and he believes he has worked well with former chairperson John Wood, current chairperson Sir John Hansen, and Barry Bragg who heads the finance audit committee.
He also believes that this year the board wants more accountability from management about finances, and is "digging deeper" and has sought independent external assurance that the financial savings plan put forward by managers was achievable. This approach might be challenging for management, he said, but he regarded it as fundamental governance.
Progress on a savings plan has not been well received by some.
Staff protested outside the board's offices on Thursday. Photo: RNZ / Katie Todd
He said management had tried to offer savings plans via presentations at pace, instead of providing detailed reports and analysis and this hadplaced the board in a difficult position.
Asked about the adversarial, disrespectful nature of the relationship that some resigning managers referred to, he disagreed and said: "There is an unwillingness I guess for this model to change and that's difficult... there is a kind of resistance to a different point of view and I think that's quite difficult."
He said while the majority of the board was united, others held different views.
An independent advisor had been brought in, which the current management team did not appreciate, especially as they had three clinical advisors within the team. He said the board wanted an independent viewpoint and he agreed with that decision.
Asked how he explained the departure of seven managers in an 11-member management team, he said it was a tight team but he "did not know the dynamics".
"The board has been very clear that services will not be cut, so it's not what's done that needs to change, but how...they [the managers] have put up a plan that has the potential to get to break-even but there's questions about whether the plan is actually going to deliver that."
However, the plan was approved by the board last week.
"You can certainly make significant cuts to costs without affecting services, there's no doubt about that. How you do things, and how well you do things can change... but certainly there has been significant expenditure in Canterbury in the last five years."
Asked about all the events the DHB had handled - the earthquakes, damaged buildings, the 15 March terrorist attacks, the Whakaari/White eruption, the Covid-19 pandemic - he said the leadership team had been excellent, however, the DHB had "some limitations and those can't be overlooked". These included the handling of its finances.
There should have been more effort over the last few years to make incremental savings.
Dr Levy said the government had not so far allocated any money for "shovel-ready" projects to help the DHB despite applications.
"The irony about the Christchurch problem is that if there wasn't this deficit, there would probably be a lot more money for capital devlopment, because the deficit has to be funded somehow."
He said over the weekend he had discussed the seven resignations with Health Minister Chris Hipkins but would not specify what was going to happen next.
He believed other "good people" would step up within the organisation.
Board member angry
Board member Jo Kane, who is an elected DHB member who has resigned from several roles on the board to protest at the way it is handling matters, told Nine to Noon five external reviews showed the DHB was operating efficiently and its financial problems centred on the earthquakes and the three-year delay in completing the new Hagley building.
Kane said the post-quake legacy had never been addressed.
She said she had no problem with board members challenging management but it had to be the right questions - the replacement of the former chairperson and deputy and the appointment of an independent clinical advisor last year had caused difficulties, she said.
"Their [the managers] commitment to Canterbury as a lot of events have unfolded... maybe their professionalism meant I would have thought they still have a job to do but it's about that bottom line and I'm quite frankly frustrated, I'm angry and I'm sad because the public, the New Zealand public deserve to know what's going on..."