Director general of health Chai Chuah is embroiled in a dispute with the Canterbury District Health Board about its deficit funding.

The Canterbury District Health Board (CDHB) has warned "significant service cuts of unprecedented scale" will be needed if the Government does not approve its planned deficit.

Documents obtained under the Official Information Act show the Ministry of Health (MOH) is at loggerheads with the CDHB over a $54 million deficit blowout in its draft annual plan for this financial year.

DHBs are required to get ministry approval for deficits but director general of health Chai Chuah told the CDHB in March that a $61m deficit (the CDHB has since said the correct figure was $54m) was "unlikely to be acceptable".

DEAN KOZANIC/STUFF Former CDHB acting chairman Mark Solomon has warned the Ministry of Health that unprecedented service cuts will be needed if the board's deficit is not approved.

Since then, Chuah has repeatedly asked former CDHB acting chairman Mark Solomon to come up with a cost-saving plan.

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In response, Solomon outlined in several emails that the CDHB's financial position was affected by "a number of factors outside of the DHB's direct control".

These included the North Canterbury earthquake on November 14, which cost the DHB more than its funding provided, the Resident Doctors' Association strikes, Canterbury's rapidly increasing population, and insufficient revenue increases.

On June 16, Solomon told the MOH: "We have considered whether there are any alternatives to deficit funding, and we do not believe there are any further opportunities for cash flow efficiencies other than those we already have in place."

On June 26, Chuah wrote: "Unfortunately, Canterbury DHB's poor financial performance has deteriorated, and the forecast is for sharper further financial performance deterioration over future years."

He appeared frustrated no cost-saving plan had been put forward and asked Solomon to provide such a plan by June 30.



Solomon wrote back: "To be clear, savings of the scale that you are requiring will necessitate significant service cuts of unprecedented scale . . . Moreover, they would result in inequitable access to services for the Canterbury population when compared with the rest of the country."

The ministry accepted a $38.5m deficit for 2016-17, which had blown out to $49.4m by the end of that year.

A review of the CDHB's financial position by PwC, commissioned by the ministry last year, suggested a $35m deficit for the 2017-18 year.

It also recommended "tighter financial management of key operating costs", a review of the facilities building plan, and reducing the depreciation rate.

In December, Minister of Health Jonathan Coleman wrote to the CDHB with his expectation for a $17m deficit in 2017-18 without "reductions in frontline health services".

Coleman has sincerevised his expectations with a new, undisclosed deficit figure.

MOH director critical projects Michael Hundleby said the ministry was reviewing the CDHB's annual plan.

The CDHB could not answer questions before deadline.