District health board financial statistics
With the passing of the New Zealand Public Health and Disability Act in December 2000, major changes to the structure of the New Zealand publicly funded health sector came into effect from 1 January 2001. Existing hospital and health service (HHS) providers and the Health Funding Authority were disestablished, and 21 district health boards (DHBs) were created. The Ministry of Health initially carried out all the funding obligations of the former Health Funding Authority.
The June 2002 financial year was the first year in which the DHBs started to take over responsibility for the needs analysis, health planning, prioritisation, and funding of health and disability services for their respective populations from the Ministry of Health (previously carried out by the Health Funding Authority).
To maintain transparency and accountability, DHBs are required to produce financial statements separately detailing the performance of their three distinct arms. The three arms are:
- Governance – consists of the board members, who are jointly responsible for the development of policy and strategy.
- Provider – responsible for the running of public hospitals and other related public health services.
- Funder – responsible for the allocation of funding to the governance and provider arms, as well as to non-government health providers for the purchase of medical services, such as maternity services from private hospitals and general medical subsidies payable to general practitioners.
The DHB financial statistics include financial information on the full range of DHB activities.
There are now 20 DHBs throughout New Zealand. They are just one type of the many providers of health care services. The 20 DHBs are:
- Auckland DHB
- Bay of Plenty DHB
- Canterbury DHB
- Capital and Coast DHB
- Counties Manukau DHB
- Hawke's Bay DHB
- Hutt DHB
- Lakes DHB
- MidCentral DHB
- Nelson Marlborough DHB
- Northland DHB
- South Canterbury DHB
- Southern DHB1
- Tairawhiti DHB
- Taranaki DHB
- Waikato DHB
- Wairarapa DHB
- Waitemata DHB
- Wanganui DHB
- West Coast DHB.
1 Otago DHB and Southland DHB merged to form Southern DHB on 1 May 2010.
In the year ended June 2003, DHBs were funded on the basis of contracts with health providers located in their area. As from 1 July 2003, DHBs have moved to funding based on the population living in their area.
The change to population-based funding from 1 July 2003 means that for DHB inter-district services (that is, when a person is required to move from their population DHB to another DHB for medical services) there will now be a transfer of funds from the funder arm of one DHB to the provider arm of another DHB.
Information presented in this release measures the full range of DHB activities. It covers the direct provision of public hospital and health services, the purchase of publicly funded services from other health service providers (for example, private hospitals, general practitioners (GPs), home-based care providers) and the governance of DHBs.
In Tables 1 and 2, total DHB results are recorded net of transfers between provider, funder, and governance arms of an individual DHB. This means revenue received by the funding arm, and passed on to the provider arm, is recorded as expenditure for the provider arm only.
Fund transfers for DHB inter-district services are not netted out in these statistics. The total funds received by the funder arm of the DHBs are recorded as Ministry of Health revenue. Funds received from another DHB are recorded as 'other funds from government'. Payments by the funder arm of the population DHB to the provider arm of other DHBs are recorded as 'direct medical supplies and all other expenses'. The costs of the treatment are recorded as expenses of the provider arm of the recipient DHB. The change to population-based funding has increased the level of both income and expenditure. The net surplus/deficit is not affected.
From 31 March 2000, the DHB financial statistics have been sourced from the financial information provided by DHBs to the Ministry of Health.
Between 30 September 1997 and 31 March 2000, the DHB financial statistics contained were sourced from financial information provided by publicly funded HHS providers to the Crown Company Monitoring Advisory Unit.
Up until 30 September 1997, all 23 Crown Health Enterprises along with Crown Public Health were surveyed by Statistics New Zealand. Financial information relating to their income and the costs involved in providing health care services to individuals was collected. Data relating to their assets and liabilities was also collected.
The New Zealand Blood Service statistics were included in the statistics from the September 1998 quarter to the June 2003 quarter. The New Zealand Blood Service is an amalgamation of the blood donor services from the DHBs. The New Zealand Blood Service is excluded from this release from the September 2003 quarter onwards.
All revenue and expenditure is stated exclusive of goods and services tax.
Ministry of Health revenue
This is the revenue received by the funder arm of each DHB from the Ministry of Health. The funding arm is then responsible for the allocation of this revenue to the governance and provider arms, and for the purchase of medical services from other health providers.
Other funding from government
This includes any other revenue received from government, such as Mason mental health monies, waiting time fund revenues and payments from other DHBs (DHB inter-district flows) from 1 July 2003.
Medical charges refers to any charge related to the provision of health services. They include money received for clinical training, public health, accident insurance revenue, user part-charges and private patient revenue.
All other income
All other income includes income from the renting and leasing of buildings and land, income from royalties and patent fees, pharmacy sales, and other forms of operating income not elsewhere included. Also included is interest received.
Employee costs include:
- net earnings of all DHB employees
- severance and redundancy payments
- honoraria payments
- sickness and holiday pay
- levies paid to the Accident Compensation Corporation
- employer contributions to superannuation.
From 1 July 1998, HHS providers were required to pay a capital charge to the Crown, based on their equity. The intention of the capital charge was to make explicit the true costs of the taxpayers' investment by requiring recognition of those costs. This practice has continued with the DHBs.
The DHBs pay the capital charge to the Crown monthly, calculated at 8 percent of the month's balance of equity.
Direct medical supplies and all other expenses
Direct medical supplies includes:
- purchasing drugs and medicines, medical, surgical and optical supplies, radiology supplies, dressings, and industrial chemicals
- cost of patient appliances and treatment services (such as prosthetics, X-rays, blood testing, scans, and laboratory tests)
- cost of purchasing medical services (such as maternity services from private hospitals and general medical subsidies payable to GPs)
- payments from other DHBs (DHB inter-district flows) from 1 July 2003.
All other expenses include items such as: bad debts written off; business insurance premiums; fringe benefit tax paid; local authority rates; fees and levies; rents; grants and contributions to other organisations; general office expenses; maintenance and vehicle expenditure; and other supplies not directly medical.
Purchases of medical equipment that are treated as fixed assets are excluded.
Net non-operating items
These include gains and losses on items outside the normal course of DHBs' business, such as the sale of assets above or below book value, gains or losses on the revaluation of capital assets and infrequent transactions. Net non-operating items are distinct from ordinary operations. A positive figure means income is greater than expenditure.
Equity is equivalent to total taxpayers' funds shown in DHBs' annual accounts. It comprises mainly Crown equity, revaluation reserves, and retained earnings.
Total debt comprises current liabilities, long-term loans, and other term liabilities.
Other current assets
Other current assets comprises current assets such as petty cash, bank accounts, prepayments, accounts receivable, and provision for doubtful debts. It excludes inventories and short-term investments, as these are recorded in other asset categories. Other current assets includes bank accounts net of bank overdrafts.
Seasonally adjusted series
No seasonally adjusted series are available.
Information obtained from Statistics NZ may be freely used, reproduced, or quoted unless otherwise specified. In all cases Statistics NZ must be acknowledged as the source.
While care has been used in processing, analysing, and extracting information, Statistics NZ gives no warranty that the information supplied is free from error. Statistics NZ shall not be liable for any loss suffered through the use, directly or indirectly, of any information, product or service.
Timed statistical releases are delivered using postal and electronic services provided by third parties. Delivery of these releases may be delayed by circumstances outside the control of Statistics NZ. Statistics NZ accepts no responsibility for any such delays.
District Health Board financial statistics can be viewed at
www.health.govt.nz or use Infoshare to access time-series data.