Q&As - Funding and Costs

That depends of which option and which site we choose.  If we opt for one of the sites where we build from scratch, it will cost up to $3 million for land purchase and development, before we build. We haven’t done full figures for the cost of the actual building yet.

We can service some of the costs of building from our operating revenues.  Regarding raising money for land purchase and construction, we are first focusing on funding options from national and regional philanthropic and charity sources.  However we do need to demonstrate local community support and some of that is coming from the funds we will free up from the three separate partners.  We have already had expressions of interest from local people who want to invest or donate money - but we are always looking for more!

Golden Bay deserves to have good quality health care and it is affordable because we will have the most efficient possible service and will be able to deal with future health needs.  We need to replace both the medical centre and rest home and so this is the most efficient way of doing that.

Yes money is very important in all of this and it is one of the things on which the project group focuses a great deal of time.  We know we will have to reach some compromises over what we can afford but the aim of this facility is to make the best possible use of every dollar.  While we can’t say exactly how much the facility will cost yet because we have yet to make decisions on site, and the final scope of the building, we have done some business planning and various calculations based on different scenarios.  What we can say is that for any of the site options, we will need to raise only a proportion of the costs from fund-raising although this will be significantly less if the Community Hospital site is chosen.  Some of the money will come from selling existing assets and some will be covered by a mortgage that we can service from our income.

It is proposed that the Golden Bay Community Health - Te Hauora o Mohua is run by a local trust, with all the current health funding received by the three separate facilities being channelled into the integrated service. The Nelson-based primary health organisation would employ the staff.  A draft trust deed has been developed but not yet registered, with proposed trustees to include representatives of Tasman District Council, Manawhenua ki Mohua, the District Health Board, the Community Board, the community and co-opted members with specialist skills.  Staff would transfer on the basis of current rates of pay.  Doctors would become salaried employees, rather than running their own business.  There would be some staff savings because of efficiencies.

It is envisaged that each of the providers will cover any obligations relating to their staff in accordance with the change management provisions in their employment agreements.

Doctors will become salaried, on their request, to Nelson Bays Primary Health.  As the employer of all the staff NBPH would contract with the trust to provide the health services. The key thing to remember here is that the trust would be run locally and that all of the government health money that currently comes into Golden Bay will continue to come into Golden Bay. A not for profit trust was chosen as it provides a way that all the parties which provide health services can be represented.  This includes both District Health Board and local community representatives.  Some have suggested the DHB should own and run the integrated health service but it is not the DHB’s role to run either GP or rest home services.  Local representation is also a key to the long-term success of the service.

The DHB will continue to put as much money as it currently does into providing health services in Golden Bay.  The responsibilities of the Trustees are outlined in the Trust deed and include “to ensure its funds are used as effectively as possible to achieve the Objects of the Trust and to demonstrate to those bodies and agencies which fund and support the Trust's activities that the funding and support provided is being effectively applied and utilised”

Integration provides opportunities for efficiency and cost saving.  Savings can be made on staff numbers as well as through needing only one phone system, one computer system and one kitchen.  Efficiencies can also be achieved in a number of other areas including with cleaning, maintenance, reception, and the purchase of supplies.

We can service some of the mortgage costs from our operating revenues but we aim to keep those lower by fund raising for some of the costs of building. 
Integration provides opportunities for efficiency and cost saving.  A key aim of integration is to make each dollar to stretch a bit further and, for example, make it viable to have a small rest home facility because of the ability to spread overheads and some staffing across the different areas.  We need to replace both the medical centre and rest home and so this is the most efficient way of doing that.

Savings can be made on staff numbers as well as through needing only one phone system, one computer system and one kitchen.  Efficiencies can also be achieved in a number of other areas including with cleaning, maintenance, reception, and the purchase of supplies.

All of the government money that currently comes into Golden Bay will continue to do so.  A key aim of integration is to enable each dollar to stretch a bit further and, for example, make it viable to have a small rest home facility because of the ability to spread overheads and some staffing across the different areas.  There are no guarantees about what may happen with government funding in the future whether or not we go ahead with integration.  Remember government agencies such as the DHB are proposed to have representation on the trust and will not want the new structure to fail so it has to pick up the pieces.

Integrated health management is designed to make both more efficient and effective use of staff time.  It will streamline some of the processes and reduce rework.  It also will put more focus on prevention so that there should be less acute and emergency care.

The Medical Centre Trust is represented on the IMG.  The Tasman District Council owns the site and has previously indicated to the Golden Bay community that it will make some allocation of the proceeds of the sale of the medical centre to the integration project, so long as there is community support for integration.

No.  Criteria for increasing GP fees are enforced by the Ministry of Health and DHB.

No decision on a site has been made.  A new development provides the most design-flexibility.

Yes - the DHB is committed to supporting health services in the Bay and has responsibility for health service provision.

The organisation has not been finalised yet.  The staffing structure that has been presented is a basis for discussion and analysis. However it is normal for an organisation of this size to have a general manager to provide organisational leadership for the organisation and be accountable for its performance to the trustees.

We don’t know yet how much the facility will cost, as it will depend on models of care, which site we opt for and a number of other factors.  Only a part of that sum will need to be raised.  Some of the money will come from the sale of assets and some will be covered by a mortgage with interest paid from revenues received

We are still working through the costs of this project as it will depend on which option we go for and what the final building actually looks like in terms of size and facilities so we don’t know the total.  However we have deliberately not even given ranges because we want to ensure that any tender process is not prejudiced by price estimates. 

Because upgrading the facilities for each service separately does not solve the problems that integration seeks to achieve.  We still need to find ways to keep rest home facilities here, to attract and retain professional staff and to make our primary health care work in the best way possible.  This can only be achieved through integration. 

No.  We have done some exploratory work as to potential funding options but until we have a clearer idea of what the project will look like, where it will be sited and how much it might cost we can’t really go to any potential funding or investors with a firm proposition.

No.  We’re not yet ready to approach any funding options.  We’re not ruling out any potential source but our initial research indicates the Morrison fund is likely to consider our proposal as too small.  It is also a commercially based investor of infrastructure projects and we are hoping to raise a good chunk of the money we need from charitable and other sources.

We don’t know that yet, but the current interim business cases do show that revenues are sufficient to service some debt.

We can’t be specific on that yet as it will depend on which option we choose.

The key sensitivity analysis that has been done is around the cost of borrowing because outside of staff costs this is the largest single cost, and risk, to the organisation.

The current business case would suggest that the efficiencies from integration make the income go further.  Coping with inflation is a challenge all organisations face in every sector of the economy.

It will not save any money.  It will continue to put as much money as it currently does into providing health services in Golden Bay.

The business case is based on the DHB continuing to spend the same amount of money in providing health services as it does now.

The draft organisation design proposes an additional registered nurse for 8 hours a day to provide a second level nurse triage service thereby reducing the pressure on GPs for after hours services

No.  Models of care are based on paying staff on the same basis as now.

Utility costs represent less that 2% of the overall budget for the new organisation and vehicle costs approximately 0.5% and as such are unlikely to have a significant impact on the business case.  Furthermore, it should be noted that oil prices are now back down around $76 per barrel

The trustees are responsible for conducting the business and activities of the Trust, ensuring its funds are used as effectively as possible to achieve the Objects of the Trust and demonstrating that the funding is being effectively applied and utilised. In doing this the draft Trust Deed requires they act prudently.

The benefits of integration are outlined in question 5 which is why the group that has been working together over the past few years are proposing integration, rather than maintaining separate facilities.  The DHB will continue to spend what it is currently spending in providing health services for Golden Bay.  This is not about saving money but about providing better health services.

The assets are actually owned by the Tasman District Council which made a decision some time ago to sell the Medical Centre and some of the other nearby assets and to donate a substantial portion of the sale funds to 'a medical facility in Golden Bay' as recognition of the huge contribution the community made to establish the GB Medical Centre. Nothing has changed; the GB Medical Centre will be sold along with some of the other assets the Council owns in that area and a considerable portion of the sale funds donated to the integrated project. The medical centre, along with Joan Whiting Memorial Trust and the DHB have committed in-principle the assets they manage, subject to a number of caveats including signing off on key stages of the project, models of care, building design and governance, and following community consultation, ministerial approval etc.

That is what we want to find out from the consultation process.

Negotiations are underway

This facility will be unique

Staff discretion will continue. 

Revenue for the service will remain in the Bay and all income for the Bay will be used in the Bay.

See above.  Revenue for the service will remain in the Bay and all income for the Bay will be used in the Bay.

We are only too aware of the need to maximise the value of every dollar spent on health care, which is why we see integration as the best way of doing so.  These are issues faced by each of the current health providers.  We expect integration will enable us to share the load and spread health dollars further by reducing overheads and the rework and wastage that inevitably happens when services are not well coordinated or integrated.

An amount has been included for the replacement of plant and equipment each year.