District health boards: Main findings from the 2019/20 audits

Letter sent on 20 July 2021 to chairpersons of district health boards by John Ryan, Controller and Auditor-General. The letter summarises the main findings from our 2019/20 audits of district health boards. It also describes other work we have done that is relevant to DHBs and highlights matters that might need attention in the year ahead.

20 July 2021

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District health boards: Main findings from the 2019/20 audits

This letter summarises the main findings from our 2019/20 audits of district health boards (DHBs). It also describes other work we have done that is relevant to DHBs and highlights matters that might need your attention in the year ahead.

It feels something of an understatement to say that the current environment is challenging for DHBs. We remain in a global pandemic. DHBs are on the frontline of the vaccination roll-out as well as any health response to further community outbreaks of Covid-19.

The health sector reforms announced in April 2021 will be the biggest structural change to the health system in at least a generation. To a large extent, the challenges that existed before these reforms were announced remain. Some challenges might be further exacerbated by the disruptions of Covid-19. DHBs’ financial difficulties also continue to be significant.

Each individual challenge is significant in its own right. However, the combination of these challenges increases the risks to achieving the outcomes sought for New Zealanders, using public resources effectively, and the well-being of people working in the health sector.

Under the reforms, all 20 DHBs are proposed to be disestablished by July 2022. However, fully implementing the changes will likely take considerably longer. New structures, processes, and relationships will need to be formed before a “new normal” can emerge.

The next year will be particularly important. As governors, you have a critical role in identifying and responding to the significant challenges posed by the reforms in the context of everything else you are managing.

It is not unusual for staff to consider their employment options during periods of uncertainty. Losing key staff, combined with any impact from the uncertainty about the reforms on your organisation, can diminish previously effective safeguards, reduce productivity, and increase the risk to safe service delivery and good financial management.

Although you are likely already receiving advice, there are three points I want to discuss.

Management and governance capacity

Both your governance and management capacity will continue to be tested in the year ahead. You might want to consider whether your business-as-usual arrangements are right for the challenges. One option would be to create extra senior staff capacity to ensure that there is enough focus on the three broad challenges:

  • the change process from the health sector reforms;
  • the response to Covid-19, including the significant increase in vaccinations required to meet the Government’s objectives; and
  • the delivery of the DHB’s business as usual, which in any normal year is a significant challenge in itself.

Tracking performance

Tracking DHB performance is particularly important this year. It might be useful to review how, and how often, financial and non-financial performance information is considered by the board. Being clear about your key performance indicators will help focus your time and attention on where governance can provide the most benefit and help manage risk.

Risk management

This would be a useful time to revisit your risk assessments and consider what changes might be needed to meet changed risk levels. You might want to consider:

  • identifying key roles and developing contingency plans for them;
  • testing key financial and quality controls to ensure that they remain fit for purpose;
  • understanding which services are the most vulnerable in the current environment and have plans in place to support them; and
  • assessing how your security settings might be affected.

I know you will already be grappling with many of these issues. I hope the matters raised in this letter will be helpful to you during the year ahead.

The appendix to this letter includes insights from our 2019/20 audits and from our other work that is relevant to the health sector. I have also included detailed questions on the matters raised that could form the basis of conversations with management.

Should you wish to discuss matters in this letter please contact Greg Goulding, our Sector Manager for Health at [email protected]. Due to the public interest in the sector, I intend to also publish this information on our website.

Nāku noa, nā

Signature - JR

John Ryan
Controller and Auditor-General

Photo acknowledgement: Kiri Shannon