Southern NSW Local Health District (SNSWLHD) chief executive Max Alexander has warned that cost cutting is likely if the LHD is to stay within its budget.
The subject of the LHD’s financial deficit which is in the region of $20 million was raised at the board meeting in December 2011 when possible cost savings were also discussed. One of the measures under consideration was to completely close the emergency department at Pambula hospital, which currently operates from 7am to 10pm.
The LHD has been asked to provide a “turnaround plan” for Ministry of Health officials who want to know how the LHD will operate within its budget before signing the 2011-2012 service agreement.
Asked whether this agreement has been signed yet, Dr Alexander told the News Weekly: “Southern New South Wales Local Health District is currently finalising the terms of its service agreement with the Ministry in preparation for signing.”
The News Weekly also asked whether the Health Ministry was providing any financial assistance to help the LHD meet its budgets but Dr Alexander said that it was NSW Heath policy for Local Health Districts to operate within their budget.
It would appear that hospitals within the Southern NSWLHD have for a number of years been operating with substantial deficits but now the Health Ministry has come down on the LHD asking for explanations and also a plan on how it intends to close the gap of the annual $20 million deficit over as little as possibly three years.
Conversations between Health Ministry officials and the LHD have highlighted financial department issues. CEO of the LHD, Max Alexander pointed to the difficulty in establishing “a rock solid cash flow and creditors’ analysis”.
In a snapshot of the situation, the board looked at the creditors’ situation on November 30, 2011 when over $1.25 million was owed to creditors who had waited more than 47 days.
The News Weekly asked Dr Alexander if the LHD had come up with a plan to reduce expenditure and if so how it would affect Pambula and Bega hospitals?
Dr Alexander said: “In the face of increasing demand, Local Health Districts are required to identify savings to either reduce cost or increase revenue in order to remain on budget.”
One of the proposed service changes discussed at the board meeting was to “close Pambula ED in toto” although it was recognised that the various options proposed would take a lot of time and effort to work up with a risk of failure. The dollars saved, Dr Alexander told the board, would not cover the deficit.
Service efficiency measures that were discussed included theatre costs and efficiency, “seriously capping the number of orthopaedic operations”, reducing medical admissions, closing medical beds to recoup dollars and reducing HACC (Home and Community Care) services as there is currently a $800,000 annual gap in the funding and cost of the service.
Possible workforce savings the board listed were to increase the move from RNs (Registered Nurses) to ENs (Enlisted Nurses) and AINs (Assistants in Nursing) and “dramatically increase nurse substitution for scarce doctor services”.
Dr Alexander has not said which options would be used to bring the finances back in to budget.
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