The Waitaki District Council yesterday agreed to transfer all operations and assets to Health New Zealand Te Whatu Ora (HNZ) from July 1, a move Mayor Gary Kircher described as "bittersweet".
At present the hospital is run by Waitaki District Health Services Ltd (WDHSL), which come July 1 will act as HNZ’s landlord, owning and maintaining the hospital buildings.
The facility has faced clinical instability in recent years, closing its emergency department three times last year due to a shortage of doctors.
The council first considered negotiating a deal in March.
Council chief executive Alex Parmley said HNZ gave notice it would not renew its hospital funding and WDHSL would not have been able to meet the operating costs.
The council needed to agree to a deal yesterday to ensure there were hospital services come July.
"There is a lot of work to do to transfer staff."
That work needed to start today.
Mr Parmley apologised to the community for not consulting on the issue, but there was "no time".
"These sorts of negotiations usually take a lot longer than the two-month window we were provided with."
The agreement is separated into two parts, the sale agreement and the lease.
HNZ will pay $1 million for the assets and $250,000 for stock.
It will lease the hospital buildings from WDHSL for an initial term of 10 years, charged at $1m a year before outgoings.
HNZ will provide cashflow support to WDHSL until the transfer date.
The council has given advances on funding to WDHSL over recent years to ensure services could continue. The remaining loan is $2m.
The council agreed to convert this to a term loan for a period of five years.
Mr Kircher said the deal was "as good of a solution as we could have hoped for".
Having HNZ run the hospital would help solve staff rostering issues and it had made a commitment to ensure stable health services.
HNZ would provide an annual report to the council and had confirmed there were no plans to close the hospital.
It was a bittersweet decision for the council, as the hospital had been a part of council life since the late 1990s and had seen highs and lows, he said.
He had invited Health Minister Shane Reti to a meeting where the council could officially handover the hospital and reiterate the commitments made between the two parties.
HNZ chief executive Fepulea’i Margie Apa had send a letter to the council, which reiterated those commitments.
"We will work in good faith to ensure that health services are delivered to best meet community needs.
"We will engage with the Waitaki District community on these matters in partnership with council."
WDHSL joint interim chief executive Hugh Kettlewell said patients who had appointments beyond July 1 should not notice any change to how the hospital worked.
He said WDHSL would "absolutely" be able to pay off its loan within five years.
