New details on the huge deficit facing New Zealand hospitals have been revealed in a document dump by health authorities this afternoon.
More than 450 pages of financial reports have been released - mostly monthly financial reports from Health New Zealand.
Overspending had dropped from $163m in July to $149m in August.
The papers showed April was a turnaround month, where Health NZ (HNZ) went from expecting a big surplus to a $1.4 billion deficit that the government has promised to handle with impacting the front line.
The papers reveal a panicked tone.
"We are intensely focused on managing this situation," one report said.
But Health NZ was warning of "fundamental deficiencies" in its systems that made cost controls difficult.
The newly-released papers show that a March monthly report had Health NZ still forecasting a surplus of $500 million. March was when Health Minister Dr Shane Reti has said he found out for the first time massive overspending that would incur a $1.4b deficit by mid-2025.
The board was swiftly sacked and Dr Lester Levy was appointed a commissioner.
Stat holiday costs over Christmas and later holidays added significant costs.
The reports said there were three main drivers of the deficit, including such one-off costs, an unfunded pay equity payment that did not come through by July of more than $400m, and writing off of Covid stocks.
Official Information Act papers previously reported by RNZ showed Treasury and the ministry were aware in early 2024 that they did not have visibility of just what was going on, even to the extent that HNZ's information for Budget 2024 was inadequate, with the ministry pleading with it on February 2 to get vital data to it by a February 15 cut-off.
The papers stated: "The underlying expenditure run rate in April has deteriorated dramatically, circa $100m per month, due to additional hours being paid for largely additional nursing FTE although vacancies in all staff categories have reduced."
One impact has been infrastructure capital spend. This has been much less, at only about half the $1.5 billion budgeted.
Levy said it was "not mismanagement" by Health New Zealand, and did not want to be drawn on the Prime Minister Christopher Luxon in July questioning the agency's financial literacy.
He did "not want to criticise anyone", Levy said. "I'm not personally going to go there."
The papers show by mid-2023 that Health NZ was well aware it was recruiting nurses "over budget", yet the big blowout in April 2024 appeared to come as a surprise.
Chief executive Margie Apa said one complication was that staff did not leave at the expected rate - that turnover was low.
Levy stuck on Tuesday afternoon by his earlier assertion that back office bloat was a key cause of HNZ's woes, although the monthly reports repeatedly stated: "Management and admin personnel are below budget due to reform savings initiatives and holding vacancies."
They show 800 fewer back office staff by August 2023 compared to the year before.
Asked how many more back office jobs would go from now, Levy said: "We don't have answers" to that yet.
The haemorrhaging of cash at the agency is said to be moderating.
Apa said they were aiming to get "much better at cashflow forecasting" - this, over two years since Te Whatu Ora (HNZ) was set up, and about four years since a transition team of consultants began designing it.
A year ago, HNZ was saying it would meet regularly "with our monitors ... to ensure that our monthly performance reporting products are appropriately informative".
Apa promised they would be "testing assumptions every day" and in much more detail.
Frontline healthcare affected
The newly released briefing has raised the forecast deficit at HNZ from $1.4 billion, to $1.76 billion.
The Labour Party said the briefing to the health select committee three weeks ago was released on Monday at its "insistence".
According to the briefing, the central health agency aimed to return to break-even position by Budget 2026.
In July, it was reported to be losing $130m a month, and a Commissioner took over to head off a $1.4 billion deficit for the financial year to mid-2025.
But that was an underestimate: its monthly reports for July and August were even worse, according to a newly released letter to the select committee on 18 September.
"Without interventions, Health NZ is estimated to continue to lose about $147 million every month, which would lead to a projected deficit of $1.76 billion by 30 June 2025," it said.
HNZ had been making "interventions" focused on short-term restructuring and regionalisation "focusing on resourcing the frontline", and medium-term financial sustainability and "reducing unwarranted variation".
The government had said this would not impact frontline healthcare but - according to critics - it already was.
The financial figures in the briefing show about $650m more was spent on medical personnel in the year to July - almost $12 billion - compared to 2022-23.
However, spending on doctors dropped almost $90m for the month of August 2024, compared to June 2024, when it had peaked at $360m. The spend on nurses similarly dropped, by about $40m.
Both the doctors and nurses spend was higher in August 2024 than August 2023, though not by much.
The total spend on nurses for the year to July 2024 - almost $5 billion - was almost the same as for the previous year. This is despite HNZ saying that a primary driver of its deficit was recruiting about 3500 nurses.
It told the Health Ministry in March 2024 of "significant overspending across the entity, amounting to around $100 million above budget in the month", with "the major contributor ... recruitment of nurses in the hospital sector, which was reported to be around 3500 full time equivalents (FTE) more than budgeted", said a monitoring report in June 2024.
HNZ's total revenue for the latest financial year was up $1.5 billion, at $27.2 billion.
It has reset its budgets for 2024-25 around the four regions, though in each region the budget was less than what was actually spent in 2023-24; for instance, half a billion less for Northern (including Auckland and Northland); and a bit less than that in Southern ($5.5b forecast, versus $6b actual spend in 2023-24).
Labour health spokesperson Ayesha Verrall said in a statement today the government had taken "the scalpel to regional health budgets".
"The government has manufactured a financial crisis to justify stripping back the health system. These cuts are affecting patient care."
