The Southern District Health Board ended last financial year with a deficit of $1.6 million, but expects to be in the red by $10.5 million this year.
The board's end-of-year result was much better than the $14.9 million deficit expected, but management has pointed out much of that was due to one-off improvements.
In the coming year, it expects to have revenue of $828.4 million, up about $15.3 million on the year to the end of June. Spending on staff is the largest item, expected to be $307.5 million this year, $17.1 million higher than last year's spend.
Health Minister Tony Ryall approved the board's annual plan this week in a letter saying the board's financial position was "of concern", but the "planned net result" aligned with what had been agreed with the National Health Board.
He said actions which would contribute to the clinical and financial sustainability of services included the work being done to determine the future of Wakatipu Health services and the assessment of Dunedin Hospital systems. Both are projects involving the National Health Board and their outcomes are not known.
He acknowledged it had been difficult for district health boards to determine the impact of the Christchurch earthquakes and they had not been included in annual plans.
The impacts of the earthquakes were ongoing for the health sector, and would need to be managed beyond what was included in the annual plan.
In the plan, the board says its budget has assumed the impacts of population movements from the Christchurch earthquake will be recognised with compensation for any extra costs.
The board's projected budgets assume there will be $20 million in savings and efficiency over a three-year period.
The board has been under pressure to show how it can achieve a break-even budget over time, but the projected deficits for the coming two years are $8.6 million next year and about $6.4 million for the 2013-14 year.
In the plan, the board says the $6.4 million "residual deficit" is less than 1% of revenue.
The board faced a "large challenge" to achieve this goal and then move into a break-even position and a "truly sustainable financial position".
This challenge would extend beyond the three years of the plan, and would increase with expected large increases in operating costs resulting from capital expenditure on facilities to ensure they were up to standard.
(Boards have to pay charges on capital funding money from the Government which usually has to be found from operating revenue.
It can amount to millions of dollars.)Local priorities identified by the board for this year are rural health, development of southern clinical services, older people's health, mental health and addiction services, primary care, Maori health and public health.
