CALHN administrators save $100m in six months with more to come
The administrators placed in charge of clearing the health budget deficit have reported a $104.9 million turnaround, with more to come. But the Opposition says it’s come at the expense of health care.
Administrators hauling in the Central Adelaide Local Health Network’s (CALHN) ballooning budget deficit say they have saved more than $100 million in six months, with more to come.
KordaMentha were brought in to reform CALHN — which covers the Royal Adelaide Hospital and Queen Elizabeth Hospital — as its annual budget blowout careered towards $300 million.
In its latest update to the State Government, the administrators say they have achieved a $104.9 million turnaround in six months, compared to the $41 million target for June 30.
They also say CALHN is now on track for financial recovery with scope for more savings.
“During this period CALHN has exceeded FY19 financial performance improvement targets and is showing early improvement on key operational outcomes,” the report signed by administrators Mark Mentha and Chris Martin states.
“We are confident CALHN is now well on the path to organisational and financial recovery with significant further opportunity for improvement presented in FY20.”
The savings were achieved across a range of areas including cutting expensive agency nurses from a peak of 7.7 per cent of total nursing labour hours to less than 1 per cent.
The administrators also took a firm hand to the $600 million CALHN spends each year on supplies and services.
Noting that limited controls resulted in many purchases being made outside of purchasing guidelines, KordaMentha implemented new controls and processes to ensure oversight and review of requisitions worth $5000 or more.
The administrators reviewed CALHN’s top 50 suppliers to identify improvement opportunities, and conducted analysis across major procurement categories to cut costs.
An improvement in discharge procedures of patients ready to leave freed up the equivalent of 45 beds compared to the same time last year, while there has been a concerted effort to retreive money owed by the Federal Government for medical procedures.
KordaMentha have a three year plan to save $277 million - originally comprising $41 million last financial year, $101 million this financial year and $134 million next financial year.
CALHN chief executive Lesley Dwyer said as well as financial performance, CALHN’s operational and organisational performance is improving.
“A clinical organisational restructure is enabling managers to have better day to day control and oversight of the activities they manage,” she said.
“Improving our performance is benefiting patients — which is at the centre of everything we do.”
Health and Wellbeing Minister Stephen Wade said: “Initiatives that are saving money are also delivering better patient outcomes, which is the focus of everything we do.
“Wasting money means less services and more patients waiting to get the care they need.
“I congratulate the hardworking staff at our central hospitals for refocusing and reining in their budget — delivering better outcomes for patients and taxpayers alike.
“The Marshall Liberal Government is getting on with the job of fixing the financial and organisational mess we inherited from the former Labor Government.”
Opposition health spokesman Chris Picton said: “Since corporate liquidators KordaMentha have taken over, clinicians have said ramping is worse than ever and emergency department overcrowding is out of control.
“Clearly, KordaMentha’s cuts are coming at the expense of health care. This is what happens when the Marshall Liberal Government puts profits ahead of patients.
“The latest State Budget documents showed that the government is planning to cut 1100 health staff this year – the biggest reduction in health staff in the state’s history.
“The KordaMentha plan is to cut $460 million over three years including over 170 beds from our public hospitals.”
Mr Picton noted the Auditor-General has confirmed he is investigating the awarding of a contract to KordaMentha without public tender process, and that fees to the company have already cost the taxpayer over $23 million with many of its interstate consultants paid over $5000 every day.