Major cuts to new Dunedin Hospital design as budget blows out

Some services have had to be cut from the design of Dunedin's new hospital to manage budget pressures due to rising construction costs and delays.

The project's facing a $200m budget blowout, and has gone through a value management exercise to get it under control.

The Government's announced $110m in additional funding for the $1.5b project, but there's still a shortfall of $90m, which has been made up through design changes.

“When developing a publicly funded building project of this size, it is important that we are fiscally responsible while still delivering a fit-for-purpose health facility,” said Te Whatu Ora's chief of infrastructure and investment, Jeremy Holman.

“We did this by focusing on how we could reduce any impact on key clinical services while considering design efficiencies,” said Holman.

The Association of Salaried Medical Specialists says the decision is short-sighted.

"What is being proposed now is not fit for purpose tomorrow, let alone for when our kids or our grandkids are needing care in that facility," said executive director Sarah Dalton.

"We understand that costs of building have really skyrocketed in the last year or two and every delay to a build costs more money, but this is a proposition for 50 to 60 years – it’s not a proposition just for the next couple of years."

Cabinet signed off on a final business case last year which included plans for 421 beds.

That number has been cut to 398 – 23 fewer than originally planned, which is the equivalent of a whole ward.

There will also be two fewer operating theatres and the region's first PET scanner will not be operating upon opening.

"Currently, there's only one in Christchurch - that's the only one in the South Island, so for people to require that kind of a scan, they're going to have to travel from Dunedin, Invercargill, Central up to Christchurch to have that scan," said Dalton.

More than 450 non-clinical workspaces have also been lost in the revised design.

"It's really frustrating for staff. They're going to have to undertake that work further away from their clinical work areas, so it's going to disperse the staff, it's going to limit those opportunities for collaboration; it's literally going to make the hospital unworkable for some people," said Dalton.

"One of our medical schools is in Dunedin. We should be making sure that there are premium facilities to enhance their training so we really should be investing in that."

Dunedin-based National MP Michael Woodhouse says the decision is clinically irresponsible.

"It's really cynical to be dropping this news on the people of the south just days out from Christmas and Andrew Little really is the Christmas Grinch. He's dressing up very bad news as a funding announcement. That’s wrong. That's dangerous."

Documents obtained by 1News reveal a report prepared by Te Whatu Ora Southern, PMO and Clinical Transformation Group raised concerns about the proposed cuts back in September.

"It's taken four years of careful planning to achieve the current design. Undoing this in as many months carries significant reputational, operational and clinical risk," it read,

The report strongly advised against any reduction in plans, and stated "short-term savings realised through redesign could unintentionally increase long-term, future operational costs".

It also revealed the likely result of loss of beds is chronic occupancy of over 100%, resulting in known patient harm and severe disruption to planned care.

"There are population predictions that say that the population of the Southern District is going to get older and that means more hospital admissions, lengthier stays, more complex patients," said Dalton.

"It's kind of a kick in the head to the work that our members and their healthcare colleagues are trying to do in the south to provide decent service to those people."

She added, "It means that the kinds of things that are already worrying people in the Southern District about the level of care that they can expect to receive may continue and that's horrible.

"It's another example of balance sheets beating the social benefits of this kind of investment in hospital based healthcare."

Dalton says the cuts will result in more surgeries getting postponed or cancelled, which will come at a cost.

"Every time a planned operation is cancelled, Southern District estimate it costs more than $9000. Southern District are already contracting out about 10% of their surgeries to private at a cost of about $12 million in the last financial year."

Te Whatu Ora's delivery, infrastructure and investment group director Monique Fouwler says consultation with Te Whatu Ora staff in the Southern District, community members and mana whenua during the design of the New Dunedin Hospital has been a key element of the process.

"The feedback the project team received in September was useful and constructive, and the points raised were mostly addressed during the design development stage," said Fouwler.

"The result of this approach will be the construction of a modern, fit for purpose and future-ready hospital that will enable Te Whatu Ora clinicians to deliver the best healthcare possible for the people of Southern region."

Dunedin mayor Jules Radich believes the new design is a reasonable compromise.

"I'm actually quite happy with the situation. It could be much much worse," he said.

The Association of Salaried Medical Specialists is concerned the underinvestment could set a precedent for other regions expecting new hospital builds, such as Hawke's Bay and Northland.

"This is a clear message that there's a lack of commitment to building fit for purpose facilities for New Zealanders so even if you don't live in the Southern District, you should see this as a warning sign," said Dalton.

"We saw this happen at Canterbury, we're seeing this happen in Dunedin. I'm really concerned that it will continue to happen elsewhere in the country as well and that's bad news for us all."

In a statement, Health Minister Andrew Little told 1News the new Dunedin hospital was "originally priced at just under $1.5 billion and that’s what we originally committed to”".

"As planning has continued, and as construction costs have escalated, the price has risen."

Little said he asked project managers for all projects across the country that are still in the planning stages to "look at costs and do what they can to keep them under control".

He said changes have been made to ensure all 410 beds will be delivered.

"Of the 410 beds, 398 will be available at the end of construction and the remaining 12 will be available later when a shelled section (which is an area where the walls are built but the area isn’t fitted out) is completed."

An additional 10 surgical theatres and two of the three planned MRI spaces will also be completed. A third shelled MRI space will be completed at a later date.

A non-clinical pavilion building will not go ahead as planned.

"The original objectives for additional clinical capacity remain intact. But they are delivered in the constrained circumstances we face today. They still require the Government to provide that additional funding of $110 million," Little said.

He said had the changes not been made, "other projects across our hospital network which are desperately needed would be delayed further".

"Other New Zealanders would miss out. But this is the juggling act you have to do after years and years of underfunding.

"The decisions on the new Dunedin hospital are the difficult decisions that have to be made when there is such huge demand after years of neglect. They are realistic, they leave the best interests of Otago and Southland patients intact and they take account of the future of health care down south."