Much of the savings come from updated funding agreements between the hospital and Te Whatu Ora Health New Zealand, which Waitaki District Health Services chief executive Keith Marshall believes will help it break even "within a couple of years".
It reported a deficit of $564,000. It had budgeted for $4.056 million.
Mr Marshall said the agreement, made earlier this year, for an additional $3.5 million was "huge" in helping the financial situation of the hospital.
Discussions were ongoing and for the first time in more than 20 years it felt like the hospital and the central health organisation were engaged in solving the problem once and for all.
Many of the issues were historic from when the Waitaki District Council took ownership of the hospital, but it still remained as the primary public provider of health and disability services in the district.
He could not say when the deficit would be able to hit zero, but he believed it would happen within two or three years, Mr Marshall said.
The report was a sign the hospital was on the right track.
"It’s still not good, but it’s transformationally better than anything we’ve had before," he said.
"We really have made a huge turnaround."
It had lowered the budgeted deficit for the next reporting period to $1.3 million.
As well as lowering its deficit, the hospital had also achieved pay parity for all its staff.
Not only did pay parity help keep staff in a tight recruiting market, it was also "just the right thing to do", Mr Marshall said.
Staff at the hospital had always been paid less than government employees and finally it was able to pay them what they deserved, he said.
For some staff — including nurses, who received a 27% wage rise — the difference was "huge".
