The Treasury has warned the Southern District Health Board could fail to deliver the benefits promised from the rebuild of Dunedin Hospital unless it improves its investment and asset management practices.
The Government yesterday released further details of its Investor Confidence Rating report on the SDHB.
The board achieved the unwanted distinction of receiving the only "D" among 25 government agencies assessed for their asset management systems by Treasury, with a score of 36/100.
The next lowest entity was Capital and Coast District Health Board with 51/100.
"Southern District Health Board is currently undergoing significant change and disruption associated with its recent restructure and the planned rebuild of Dunedin Hospital," a Treasury report to Cabinet released to the Otago Daily Times under the Official Information Act said.
"The assessment reflects this and emphasises the need for SDHB to build its investment and asset management capability in the lead up to the hospital rebuild and beyond or risk further performance and service delivery."
The audit was taken between September 17, 2017, and February 2018.
The Cabinet considered the paper - brought by Finance Minister Grant Robertson last October - and confirmed the SDHB's "D" grading.
The SDHB passed on "organisational change management maturity" but failed the other eight criteria.
It rated just 2/10 for quality of long term investment plan and for project delivery performance, and a mere 4/20 for benefits delivery performance.
"SDHB has grasped the importance of having appropriate asset management practices in place to support its core services but has not yet made sufficient progress to demonstrate the required levels of maturity," Treasury said.
The SDHB's asset replacement projects set out expected benefits but they typically did not set, measure or track performance against targets.
There was also no systematic reporting on the extent to which projects were delivered on time, Treasury said.
Significant effort was needed to address the gaps, and help would be provided by the Ministry of Health and other agencies, Mr Robertson said.
In its response to Treasury, the SDHB said the "D" reflected significant financial problems over many years, and noted a commissioner team had been put in place, a new CEO appointed, and its management team had been significantly restructured.
It said it was committed to improving its rating, and hoped to reach "C" in the next assessment.
The Ministry of Health said it considered the "D" was fair, but said given time the new management team could achieve improvement.
