Coleman Jonathan: Ministerial Statements — Southern District Health Board—Replacement of BoardText is incorporated into the Bound VolumeColeman Jonathan: Ministerial Statements — Southern District Health Board—Replacement of Board[Sitting date: 17 June 2015. Volume:706;Page:4469. Text is incorporated into the Bound Volume.]Hon Dr JONATHAN COLEMAN (Minister of Health): I wish to make a ministerial statement under Standing Order 356 relating to the replacement of the board of Southern District Health Board with a commissioner and a team of deputy commissioners. On 28 May I wrote to the chair of the Southern District Health Board indicating that over the past months I had become increasingly concerned with the deterioration inSouthern District Health Board’s financial performance. I stated that I was considering replacing the board and appointing a commissioner under section 31 of the New Zealand Public Health and Disability Act 2000. I have carefully considered the board’s response and I have today informed the chair that I will be replacing the board with a commissioner and a team of deputy commissioners.My decision is based on the need for a new approach to the district health board’s longstanding financial issues and the need to help move Southern District Health Board to a more sustainable position over time. Deficits have been a feature of Southern District Health Board’s performance for some years but that situation has worsened considerably over the course of the past financial year. The district health board is forecasting a final deficit of $27 million for the current financial year. That figure has effectively doubled in the last 6 months. The district health board has also forecast that its deficit position will further increase in 2015-16 to between $30 million and $42 million. This accounts for over half of the combined deficit of all 20 district health boards. This is a situation that can no longer continue.Over time a number of steps have been taken to drive improvement including the appointment of a Crown monitor and intensive monitoring by the Ministry of Health. The board and senior management have worked to address financial issues and nearly all options available to Ministers have been tried over the years. The Crown monitor has advised that the changes required to lift the district health board’s performance are significant. Since it became public that I have written to Southern District Health Board I note that the Labour Party’s health spokesperson has indicated her support for the installation of a commissioner. I welcome that support and note that political opponents are attempting to shift the discussion to the adequacy of the population-based funding formula and a debate on the merits or otherwise of the amalgamation of the Southland and Otago district health boards in 2010.In regard to the population-based funding formula all district health boards are funded according to the same formula and have been since the early 2000s. In a tight fiscal environment all district health boards are expected to exercise sound stewardship but no other district health board has failed to control its finances like Southern District Health Board has. In regard to the amalgamation of the Southland and Otago district health boards although it was a challenging exercise the Government’s expectation is that any issues impacting on financial performance should now be on a clear path to resolution.The Government is committed to the redevelopment of Dunedin Hospital and the provision of high-quality health services to all the people of the southern region. Southern District Health Board recently published its strategic plan outlining how it will deliver those services. Based on the board’s history of failing to deliver on annual planned expectations I have lost confidence that the current governance arrangements are fit for addressing the challenges that the district health board faces. Kathy Grant has been appointed as commissioner and takes up the role from 9 a.m. tomorrow 18 June. Mrs Grant is a local lawyer and community leader with significant business and governance experience and a proven track record in turning round struggling organisations.After discussions with Mrs Grant she has indicated that she intends to appoint Graham Crombie and Richard Thomson as deputies. A third deputy with a strong clinical background is expected to be announced later this month.Mr Crombie is a Dunedin local. He has a strong background in accountancy with a proven record in high-level assessments of the sustainability of health organisations. He also has lengthy governance experience. Mr Richard Thomson will also be an important part of the commission’s turn-round team. He is a local businessman and has a longstanding commitment to improving southern health services. He will be able to provide key insights into Southern District Health Board. Mr Thomson was chair of Otago District Health Board from 2001 to 2009 and has continued as a Southern District Health Board member since 2009. He is currently serving his second term on Dunedin City Council. The commissioner team will bring together a mix of strong financial governance and clinical skills.The turn-round for Southern District Health Board is not expected to happen quickly. It is going to be hard work. I would like to thank the outgoing board for its work to date. My decision is not intended to devalue its efforts and achievements. However I believe this decision is the right one to ensure long-term sustainability and the delivery of quality health services to the people of Otago and Southland.