Health New Zealand Te Whatu Ora is extending its cost cutting to last three years and signalling more voluntary redundancies, while reporting a deficit of over $700 million.
“Some of the significant changes made in recent months are having the desired effect, but it is clear further change is needed to live within budget,” its chief executive Margie Apa said today.
It is pushing out by one year, to mid-2027, when it aims the “reset” – launched after the board was sacked midyear – to return the agency to budget.
This was “a more realistic timeframe” even though cost cutting was working, Apa said in a statement.
In its confirmed financials out today, it revised down the forecast deficit in 2024-25 to $1.1 billion from the $1.7b it forecast several months ago.
The health agency still has to fill a $1.1 billion hole in the next year, while nurses call for health bosses to listen. (Source: 1News)
HNZ’s new statement of performance, also released today, pointed towards more restructuring to save “in the order of” $660m this financial year.
This would include more voluntary staff redundancies, and “consolidation of roles, responsibilities and expertise into a single national function”, while “streamlining” the likes of finance, HR, data and digital, and infrastructure and investment, the statement said.
Last week HNZ proposed cutting almost 1500 roles in data and digital, and the Public Health Service that runs immunisations and monitors outbreaks.
RNZ understands Health NZ has up to another seven restructure proposals across its various units to lay out.
“These savings will not impact frontline clinical care,” the performance statement said.
One wildcard was it still did not know just how much all the Holidays Act paybacks to hundreds of thousands of staff and ex-staff would cost, but it forecast it at $1.66 billion (on top of what has already been spent), the report said.
It issued its confirmed financial figures for the 2023-24 financial year, by contrasting the $722m deficit with an earlier target of a $54m surplus.
Earlier, it had provisionally put the deficit at $930m. It was lower largely due to less spent on redundancies and the delayed Holidays Act paybacks than anticipated, it said.
It had treated and cared for more people in the last year than ever before, Apa said. More than 1.3 million people through EDs (up 50,000), almost 2.1m people had a first-off specialist assessment (up 40,000) and GP appointments hit 21m.
“The number of people enrolled with a GP reached just over five million (5.023m), which is the highest number ever,” Apa said.
Its new Statement of Performance Expectations said the leadership had moved “swiftly to tackle Health NZ’s current distressed financial situation”.
‘Hard reset’ needed – Levy
“We are in a ‘hard reset’ changing the way we operate, primarily to address unacceptable waiting times for assessment and treatment,” Commissioner Dr Lester Levy said in an introduction.
HNZ was working with the Ministry of Health on new service and funding models for key services such as primary care by GPs, and the health of older people.
It gets $28.3b revenue a year, but many health workers, unions and opposition politicians say it has been underfunded.
“The reset includes a devolved model of decision-making empowering regions,” Levy said.
This would improve financial accountability, prioritisation and responsiveness, the report said.
One aim this year was to develop new ways of measuring performance against access, waiting time and quality, to kick in from 2025-26.
The report shows a budget rise for the National Public Health Service to $533m this year from $486m last year. Last week HNZ said it would cut scores of jobs in public health.
It is anticipating a $250m overspend on primary and community care in 2024-25, from 3000 providers, ahead of revenue of $9.4b.
In hospital and specialist care, the overspend for the current year was forecast at $850m, on $15.1 billion in revenue. It had a $744m deficit in 2023-24.
“The focus for hospital and specialist services is to ensure all people in New Zealand receive timely access,” the Statement of Performance Expectations said.
Mental health services were expected to break even, with $2.7b of expenses (compared to a 2023-24 deficit of $21m), and kaupapa Māori-based services similarly, on expenses of $578m.
The report gave prominence to acknowledging inequities in health outcomes for Māori, to a Te Mauri o Rongo statement of values, and to a short update on establishing iwi Māori partnership boards.