Consultants KordaMentha make a return to rein in SA Health CALHN deficit
KordaMentha, who controversially stepped in as administrators of CALHN as it faced a ballooning deficit, then were dropped as the pandemic hit, are making a return.
SA News
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Consultants KordaMentha will return to direct SA Health’s biggest network out of its spiralling budget deficit.
A “core team” of 15 people will start work next week to cut costs and improve efficiency, a move blasted by the Opposition who said the $4.4m contract was the equivalent of paying each staffer $293,000 for four months’ work.
The company was appointed in November 2018 as administrators of the Central Adelaide Local Health Network (CALHN) which includes the Royal Adelaide Hospital and Queen Elizabeth Hospital as it faced a $300m budget blowout, with plans to save $276m in three years.
Company head Mark Mentha, who has previously overseen the administration of the Whyalla steelworks, told a parliamentary inquiry last year CALHN was “the most broken organisation I have ever witnessed, both financially and culturally.”
Their initial $18m, one year contract was extended in January and that $20.8m contract was supposed to run until February 9, 2021. This included a six-month extension option, increasing the total to $45.78m.
However, the contract was abruptly suspended in April as the pandemic hit.
CALHN chief executive Lesley Dwyer said with KordaMentha’s help the organisation had saved $57m in its first year of the recovery program but faces a $120m deficit this financial year.
“This is a lot of money and I accept that we will not be able to do all of this in one year, which is why our recovery was over several years, but we do need to make big inroads into setting ourselves up well for the future,” Ms Dwyer said.
“Over the next week or so a core team of 15 KordaMentha staff will work alongside us to scope new initiatives and opportunities to assist and strengthen CALHN’s operational services, workforce capability and flexibility for the remainder of the contract extension.”
Ms Dwyer said the maximum cost of the contract for the remaining term is $4.4m, a saving of about $10m from the contract extension signed this year.
Ms Dwyer said CALHN is no longer in administration and Korda Mentha would be consultants.
“We use many people and organisations to assist us to become world-class and for that I make no apologies,” she said.
“Maintaining our momentum is key to achieving a successful turnaround that will ensure our patients receive the world-class care they expect and deserve, and that the community receives a sustainable service delivery model.”
Opposition health spokesman Chris Picton said bringing back the consultants was “inexplicable.”
“It is extraordinary that while we are still facing a global pandemic, the Liberals would bring back their corporate liquidators to make hospital cuts,” he said.
“The Liberals are just so addicted to making hospital cuts that they couldn’t wait to bring back their favourite corporate liquidators. Their legacy has been nurses jobs cut, chronic ambulance ramping and appalling mental health delays. Why do we want to see more patients impacted by cuts?
“And these corporate liquidators have already cost taxpayers tens of millions of dollars – some paid an astonishing $5500 per day.
“Each of these corporate liquidators is costing taxpayers $293,000 for just four months work. How many nurses could we hire with that money?”
Health and Wellbeing Minister Stephen Wade rejected the criticism noting KordaMentha saved $57m of taxpayers’ money in its first year.
“While there is still much work to do, KordaMentha is helping CALHN deliver better outcomes for patients and turn around the runaway train budget blowout left by the former Labor government,” he said.
“In the past year there has been a 29 per cent drop in ramping which compares to a 150 per cent increase in the final disastrous year of the then Labor government.”