About 10,000 people signed up for SmartHealth. The Waikato DHB will discontinue the service on April 30 (file photo).

A Waikato DHB decision to plough millions of health dollars into an ambitious virtual health project allegedly left the health board financially hamstrung.

The virtual health service, SmartHealth, was launched in 2016 with the aim of giving patients access to doctors via a smartphone or computer app.

In April, the district health board voted to abandon the $16 million project after health board members argued ongoing investment in SmartHealth couldn't be justified.

DOMINICO ZAPATA/FAIRFAX NZ Waikato DHB executive director of corporate services Maureen Chrystall said the health board's investment in SmartHealth was significant. However, it didn't prevent the DHB from investing in primary care (file photo).

SmartHealth was championed by disgraced health boss Nigel Murray, but one hospital insider said the project should never have been given the green light.

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The source, who spoke on condition of anonymity, said the virtual health project was proposed as a late agenda item in a public-excluded session of a board meeting in July 2015.

During the meeting, the source alleges Murray presented an incomplete proposal on SmartHealth to the board with the support of then Waikato DHB chairman Bob Simcock.

Simcock had initiated contact with United States-based company HealthTap, whose online platform was used to deliver SmartHealth.

The health board signed a multimillion-dollar contract with HealthTap in 2015 after Murray presented a 23-page business plan in November of the same year.

"SmartHealth was never in our budget forecasts," the source said.

"There was no room in the budget for the initial $8 million purchase. It wasn't planned for, but they went ahead anyway."

In December 2017, Deputy Auditor-General Greg Schollum announced he would investigate the SmartHealth project.

The probe, which is ongoing, is examining the health board's procurement of IT services from HealthTap.

Schollum is also scrutinising the DHB's management of the HealthTap contract.

The hospital insider said the board's decision to buy IT services from HealthTap in 2015 was rushed and put the DHB under financial strain.

That same year, the DHB began the demolition of the Hilda Ross House on the Waikato Hospital campus at a cost of $4.7m.

However, during the building's demolition, asbestos was found in the building, requiring an additional $2.75m of remedial work.

"Hilda Ross blew out and we went into the red," the source said.

"If they [the board] hadn't purchased SmartHealth, we could have endured the Hilda Ross blowout. It was bad financial management from everyone involved."

Waikato DHB executive director of corporate services Maureen Chrystall​ verified the purchase of SmartHealth and the extra remedial work on Hilda Ross House were "unbudgeted" expenses.

"The reality is, though, we dealt with both of them and maintained our financial position of being close to break-even," Chrystall said.

The investment in SmartHealth was significant, but it didn't prevent the health board from investing in primary care or cause it to breach patient waiting list times, she said.

The DHB has an annual budget of $1.3 billion.

"Throughout the year, we will go to the board with a number of proposals and over the last five years, we have had some really big ones. We have purchased linear accelerators, CT scanners, just a vast array of equipment and other things. Any one of those transactions has an impact."

Simcock earlier told Stuff he had initiated contact with HealthTap.

Simcock said a Harvard University professor who was on a sabbatical in New Zealand referred him to HealthTap to assist the board with the challenge of providing healthcare to remote rural communities.

He made two trips to the company's headquarters in Palo Alto, California, and reported back to Murray and the board.

Murray championed the virtual health initiative and took numerous trips to the United States to visit HealthTap's offices.

During one trip to California in September 2016, Murray stayed two nights at Nobu Hotel Epiphany at a cost of US$1722.32 to taxpayers.

About 10,000 people signed up to SmartHealth, well below DHB forecasts.

Health officials hoped to have 20,000 patients signed up to the app by the end of 2018.

The SmartHealth service will shut down on Monday.

SmartHealth has been plagued by controversy since its launch, including allegations that many of those signed up to the app were DHB employees.

A report by the Waikato Senior Medical Staff Association, made public in March, called for an overhaul of the SmartHealth service and the staff involved in its purchase.

The report outlined a number of issues, such as concerns over doctors being rated by patients in a similar way to ride-sharing service Uber, as well as time-wasting inquiries from around the world, including a large number about penis enlargements.