One in five hospitals in poor condition

Minister of Health David Clark says under-investment in infrastructure by the National Government has left many hospitals in "very poor" condition. Photo by Lynn Grieveson.

Over 19 percent of hospital assets are in poor or very poor condition, according to a Treasury report. The problem is most acute in the South Island, Thomas Coughlan reports.

The health system faces a decade of crises like the one unfolding at Middlemore Hospital unless billions of dollars are found to make urgent upgrades to hospital facilities. Treasury’s 2018 Investment Statement, which aims to report on the state of the Crown’s assets, found that 19 percent of hospital assets were rated in poor or very poor condition. 

The situation in the Southern Region was the worst with 16 percent of hospital assets there in ‘very poor’ condition and a further 9 percent in ‘poor’ condition, meaning a full quarter of hospital assets in the region were rated ‘poor’ or ‘very poor’.

Treasury estimated that ageing DHB assets would require $14 billion of spending over the next ten years. It said depreciation reserves were insufficient to cover the required investment in hospital assets.

Health Minister David Clark cast doubt on the numbers.

“The Treasury’s numbers are pretty ropey in my estimation because we actually don’t know the quality of all of our buildings in any kind of comprehensive base line assessment kind of way,” he said. 

Clark said that he was launching a National Asset Management Plan to better ascertain the state of New Zealand’s health assets. 

“Effectively DHBs have been left to their own devices to report on where they think the assets are at without any independent scrutiny," he said. 

$14 billion a 'ropey' number

Clark said today that he had committed to spending more than the previous Government on health, but could not commit to the Treasury figure as the Government did not yet know the full quality of the country’s buildings. 

The scandal around the state of Middlemore Hospital gathered pace on Thursday as further reports emerged about the poor state of the country’s health infrastructure.

RNZ reported that both Clark and former Health Minister Jonathan Coleman were sent reports on the state of Middlemore Hospital, specifically the Northern Region Health Plan 2017-2018 which mentions the disrepair of buildings in the Auckland, Northland, Waitemata and Counties Manukau DHBs.

But problems in the Northern region may only be the tip of the iceberg. The Southern Regional plan for the same period says that both Dunedin and Nelson hospitals are no longer “fit for purpose” and are near the end of their economic life. 

A cause of the deterioration of the buildings may be that large DHB deficits forced boards to defer repairs and maintenance to direct funding to operational expenditure. A separate report from Treasury published in 2017 found that a number of DHBs reporting underspending in maintenance also had net deficits. The report suggested this may be evidence that funding was being directed into operations. 

A report from the Ministry of Health reporting the financial performance of the DHBs published in February found similar concerns. Only five of the twenty DHBs reported breakeven or surplus positions. The sector as a whole is posting a $73 million deficit. 

In spite of this blow-out, capital expenditure, which would include things like new buildings, is currently $140 million under budget. $365 million was budgeted for this financial year, but expenditure so far has been been just $225 million. The DHB report says this shortfall is due to delays in project commencement.

The funding

Auckland University Associate Professor Tim Tenbensel said health funding had been largely static for the past eight years.

“The big picture is that it’s been on pretty meagre rations since 2010,” Tenbensel said.

“Government spending on health per capita has flatlined for the last eight years.”

Labour pledged an additional $8 billion spending in health over four years during the election, including $1.4 billion for the rebuild of Dunedin hospital. Clark said the report on hospital assets would take some time to produce.