As things stand DHBs are required to pay back to the Government 6% of any capital funding they receive, a policy which has reduces actual funding levels and has seen some DHBs defer investment in new buildings.
With combined DHB deficits heading towards $350 million, Dr Clark today announced that Treasury would review the capital charge system, and that in the interim the Government would directly fund DHBs for some of their capital charge costs for new facilities."DHBs fund capital charges from their existing budgets, and this can have a significant effect on their operational funding for other services following a major investment,'' Dr Clark said.
"I'm not convinced of the merits of this approach when it places considerable cost on DHBs with major new investments, such as Canterbury and Auckland DHBs.''
Canterbury DHB has the largest DHB deficit in the country, in a large part due to capital costs of building new hospital buildings.
With Southern DHB about to embark on a $1.4 billion rebuild of Dunedin Hospital, it will be watching the future of capital charging with close interest.
The Budget included $1.7 billion for capital investment in our hospitals and other health facilities over the next two years.
The interim direct funding of capital charges would reduce some of the immediate cost pressures for DHBs and provide more stability for long term asset planning, Dr Clark said.
"This also aligns DHBs with government departments which receive direct funding for capital charge costs when the Government makes new investments.'
