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Green Cross says govt will need to pay more for community health after pay legislation

Tuesday 31st July 2018

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Private healthcare provider Green Cross Health's chair says it will increase what it charges the government for community health services as a result of recent pay equity and guaranteed hours legislation.

At the company's annual meeting in Auckland this afternoon, chair Peter Merton said the government had told it that pay equity and guaranteed hours changes would be fully funded but "this has proven to be untrue and has cost us many millions last year", according to a transcript published to the NZX.

In the latest financial year, Green Cross' revenue from its Access community health service rose 11.4 percent to $128.9 million, with its Access client numbers up 7 percent to 21,400. In the segment, operating profit dropped 6.8 percent to $2.8 million.

"The impact of this legislation means that as Access contracts rollover we can but increase our tender rates to reflect our increased costs," Merton said. "Unless the various government departments are going to cease paying for various activities, they will have to pay more for personal care services." 

In the year ended March 31, Green Cross Health's net profit attributable to shareholders was $16.8 million, down from $19.6 million a year earlier, as it increased its staff leave liability by $1.9 million as a result of the government's pay equity deal for 55,000 workers. Stripping that out, along with a year-earlier gain that wasn't repeated, its underlying earnings rose 11 percent to $18.7 million on a 7.2 percent revenue gain to $522.9 million.

Alison Van Wyk, Green Cross' chief executive of community health, said the staff leave liability was "challenging" and "home based support and care continues to be plagued by sustainability issues and will need a considerable funding uplift."

"This underfunding seems to be at odds with the Health and Independence report 2017 released by the Ministry of Health in July 2018 where it notes an increase in those needing care more than daily may increase by 200 percent for Maori and about 75 percent for non Maori by 2026," Van Wyk said.

"The margin pressure highlights the need to develop a more sustainable funding model with existing and new contracts," Green Cross' presentation said. "We are focussed on ensuring a financially sustainable business and this involves driving growth in key areas coupled with securing viable contracts and advocating for improved funding uplifts for current contracts."


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