New Dunedin hospital faces cost pressures and delays as beds, services cut

Dunedin's planned new hospital continues to be plagued by delays and budget blowouts.

Te Whatu Ora confirmed this afternoon the government had approved another $110 million for the project. But beds had been cut as had operating theatres, imaging services and other aspects of the $1.5 billion build.

Questions had been raised in recent months about whether the project would need to be scaled back due to inflation.

Te Whatu Ora said an increased budget of $200m was needed to deal with cost pressure, but revised plans had cut $90m from that.

The additional funding meant the project would continue with some changes which incorporated design flexibility to increase capacity in the future, Te Whatu Ora's media release, which did not directly address bed cuts, said.

"Due to an increase in costs identified earlier this year, it was necessary to consider whether there was scope to modify the design of the New Dunedin Hospital without impacting on the core objectives of the build," infrastructure and investment chief Jeremy Holman said.

"An increase of $200m was identified as part of a review of the cost of all health infrastructure projects, and therefore we have undertaken a thorough value management exercise.

"The New Dunedin Hospital is currently the largest infrastructure build in New Zealand, which means any increase in costs will be felt exponentially across the build. When developing a publicly funded building project of this size, it is important that we are fiscally responsible while still delivering a fit-for purpose health facility.

"Dunedin hospital clinicians and service designers were consulted on proposed amendments to the plans and were a big part of us reaching the updated design that meant we could save $90 million of the projected $200m escalation.

"We did this by focusing on how we could reduce any impact on key clinical services while considering design efficiencies."

But what it meant in real terms was 23 fewer beds than initially signalled, though space would be set aside for 12 more in future.

It also meant 23 operating theatres instead of 28, two MRI instead of three and the PET CT scanner to be installed later.

The Pavilion Building and one link bridge between the inpatients and outpatients buildings were also scrapped.

Labour campaigned in 2017 on getting the rebuild started before the 2020 election - a promise which was not fulfilled - and getting it completed before the 2027 timeframe claimed by the then National-led government.

After taking the reins of power, Labour reiterated that promise.

But now the project was not due to be completed until 2029.

Dunedin-based National MP Michael Woodhouse said the government were letting down the people of the south.

"It's highly cynical for it [today's announcement] to be dumped on the people of the south just five days before Christmas," Woodhouse said.

"This has been a live issue for months and the [Health] Minister [Andrew Little] has spent that time denying there were cuts being contemplated. The minister owns this because he said there would be no cuts to capacity without them going across his desk first and obviously cabinet would have had to approve the extra funding, but it doesn't go anywhere near the needs of the new hospital."

The government was risking further budget blowouts and cuts, Woodhouse said.

"The biggest cost pressure on this project is delay. They have got to get on with this, but most of all they have got to build the hospital that the south deserves."