HOSPITAL FINANCE

Dominion, Volume 14, Issue 245, 11 July 1921, Page 6

HOSPITAL FINANCE

ALLOCATING THE BURDEN NEW SYSTEM OF SUBSIDY PROPOSED HELPING POORER DISTRICTS The chief task of the Hospitals Commission, which has now presented its report to the Government, was ,to recommend an improved system of hospital finance, particularly in relation to subsidies paid from the public funds. The report deals with both capital charges and maintenance expenditure, and the most important feature of the recommendations is that subsidies should be graduated according to the needs of the districts, the higher rates of subsidy being paid to the districts with the heaviest rating burden. Capital Expenditure. Dealing first with capital expenditure, tho report states that little difficulty was experienced by the commission in arriving at a conclusion as to the extent to which tho Government should contribute towards the capital requirements of hospital boards. Tlw Minister of Health gave it,as his opinion that the Government should contribute one-half of the capital requirements, and this view was generally adopted by the representatives of the various hospital boards who gave evidence. In the Hospitals Act, 1885, the policy was laid down that the Government should contribute a subsidy in respect of capital expenditure of'one pound for every pound levied by a hospital board from contributor}' local authorities, and this policy was continued in the Hospitals and Charitable Institutions Act. 1969. The commission, therefore. recommends accordingly, and further is of opinion that the Minister should freely exercise his power to refuse the payment of subsidy upon any capital expenditure, which in his opinion, is beyond the reasonable requirements of the district, or would involve an excessive rate of lew by the board. The commission proposes that the basis of the Government’s capital contribution shall be a flat rate subsidy of Ji for „-C on capital expenditure. This proposal applies also to interest on loan moneys expended on laud or buildings. . Raising Money. Ono of tho questions referred to tho commission was "the test means of meeting the heavy cost of proposed capital expenditure.” Dealing with this point, the report recommends that hospital boards shall be permitted to raise money on loan for capital expenditure on either buildings or land, which, having regard to each board s financial standing and resources, would be deemed to be a large expenditure. Such capital expenditure should be limited to the erection of, addition to, and alteration of buildings, and the purchase of land, whether required for -buildings, farming, or other purposes. In all other cases, including small capital expenditure on buildings and land, all expenditure on plant, equipment, water supply, drainage, etc., the right to raise loans should be refused, and such expenditure should be met by levy and subsidy or donations and subsidy. The commission urges that every encouragement should bo given to boards to raise as much ns possible towards such expenditure by public subscriptions. "Apart from the material advantage in the increased facilities for the cure and comfort of patients," says the commission, "such appeals are of great benefit in fostering public interest, in the hospitals and evoking sympathy with those suffering from sickness. Some not-ta-ble instances which camo before your commission showed what could be <lone by well-organised appeals to the public for support for some branch of hospital usefulness. "The existing system of Government subsidy and hospital control, in effect, makes loans to hospital boards State guaranteed, and your commission, viewing it from that aspect, recommends that the Government provide lor loans to hospital boards being obtained direct from oi* through a Government Department. It is considered unwise that Hospital boards should be permitted to raise loans on the open market, as necessarily they would bo unable to obtain such terms as State-guaranteed loans should command, and the Government, in directly contributing one-half oi tlio intecest payments, would be paying an excessive amount.” The period of the loans should be short, provision being made for repayment within ten years iu the case of wooden buildings. Maintenance. Turning to the question of maintenance. the commission recommends that the Government, as intended under the present law should pay one-half of the Dominion uet maintenance requirements of hospital boards, and that the other half should be raised by levy upon the contribulow local authorities. The basis of allocation is discussed at some length. Tho existing scale of subsidies admittedly operates inequitably, since it has given wealthy districts, whose hospital requirements could be met by a small rate, a larger subsidy than poorer districts requiring to strike a heavy rate. As an illustration: Stratford, with a rate of levy on its contributory local authorities of 0.098 d. in the Ji. was receiving i under the scale 20s. in the X Government subsidy; white Westland, with a rate of levy of 1.136 d. in the £, received only 19s. 3d. in the ffi; and Waika-to. with a rate of .122 d received 12s. 3d. in the Ji. Apportioning Subsidies. The commission considers that a graduated scale of subsidies based on the average annual cost per hospital bed or on the fees collected, Mould bo unfair, sineit would penalise those hospitals far removed from the centre of supplies or those primarily treating the necessitous poor. 'I ho commission considers Unit the flat rate system for the payment of the Government's contribution would be inequitable. It would not be reasonable that a district whoso cost of hospital maintenance was met with a one-tenth penny in the .£ rate of levy, should participate in the distribution of the Government suhbidv equally with a district burdened with a' rate of levy of. considerably over a penny in the 41 for hospital maintenance. The evidence overwhelmingly di»closed the. unfairness of such equal participation. After considering all the proposals, ths commission has decided to endorse tire principle of "the heavier the burden oi a board’s requirements on the rateable capital value, the higher the subsidy.” It is further of opinion that the Minister should-have full power to refuse the I payment of tho subsidy upon maintenance expenditure estimates, which, his opinion, are extravagant, unnecee- I sary, or beyond the means of the board I contemplating such expenditure. Tire ; scheme set out in the proposed amending j Bill of 1920 contained a scale of subsidy ; with a maximum of 30s. for _C, and a j minimum of 10a. in the and a margin I for actuarial purposes of 2s. at both the maximum and minimum. Tire commission considers this scale too extended, and recommends that the minimum be Its- and the maximum 265., without a margin in any year.