Annual Plan 2021/2022 Incorpora ng the Statement of Performance Expecta ons - HealthSource - Northern Regional Alliance
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HealthSource
New Zealand
Limited
Annual Plan
2021/2022
Incorpora�ng the Statement of Performance Expecta�ons
Presented to the House of Representa�ves pursuant to sec�ons 149 and 149(L) of the Crown En��es Act 2004
Contents Introduction ...................................................................................................................................... 2 Message from the Leadership Team .................................................................................................. 3 About HealthSource .......................................................................................................................... 5 Our Business ..................................................................................................................................... 6 Finance .......................................................................................................................................... 6 Operations .................................................................................................................................... 6 -Commercial Services..................................................................................................................... 6 -Operations ................................................................................................................................... 7 -Product Management................................................................................................................... 7 Planning and Intelligence ............................................................................................................... 8 Staff Service Centre (Payroll) ......................................................................................................... 8 People, Culture and Wellness ........................................................................................................ 9 Governance and Strategy............................................................................................................... 9 Our Environment and Role .............................................................................................................. 11 Our Region .................................................................................................................................. 11 Our Customers ............................................................................................................................ 12 Our Strategic Priorities .................................................................................................................... 14 Our 5 Year Roadmap.................................................................................................................... 15 Key Priorities for the next year..................................................................................................... 16 Significant Programmes of work .................................................................................................. 17 Our Impact Areas......................................................................................................................... 20 Delivering on Government and Sector Expectations..................................................................... 21 Our Responsibilities ......................................................................................................................... 24 Our Governance and Accountability ................................................................................................ 26 Our Stakeholder Engagement .......................................................................................................... 27 Our Statement of Performance Expectations ................................................................................... 30 Our Financial Forecast ..................................................................................................................... 34 Statement of Significant Accounting Policies ................................................................................... 40 Page 1 HealthSource New Zealand Limited Annual Plan 2021-2022
Introduction This Annual Plan has been prepared by HealthSource New Zealand Limited in accordance with Part 4 of the Crown Entities Act 2004. In November 2019 healthAlliance FPSC Limited formally registered a change of name with the Companies Office to rebrand as HealthSource New Zealand Limited. All references in this document to HealthSource should (if applied historically) be understood to mean healthAlliance FPSC. On 30 June 2020 healthAlliance N.Z. sold its shares in HealthSource to the Northern Region District Health Boards based on a percentage that approximated their crown funding. References to shareholders should now be read as the District Health Boards directly. This document sets out the organisation’s planned activities as per the strategic plan, taking into account the priorities of Central Government (including the New Zealand Health Strategy) and Northern Region District Health Board (DHB) priorities. These, along with legislative compliance and public sector accountability, have been considered and reflected in this Annual Plan. The Statement of Performance expectations have been included in this document. HealthSource New Zealand Limited is responsible for the Prospective Financial Statements and Statement of Performance contained in this document, including the appropriateness of the assumptions underlying them. Signed on behalf of HealthSource New Zealand Limited: Paul Harper Margaret White Board Chair Director HealthSource New Zealand Limited Board HealthSource New Zealand Limited Board Date Date 24 June 2021 24 June 2021 Page 2 HealthSource New Zealand Limited Annual Plan 2021-2022
Message from the Leadership Team
Ian Dodson Richard Aldous
Chief Operations Officer Chief Financial Officer
Kia ora
The Northern Region is New Zealand’s largest and fastest growing health region. Population growth
and demographic changes continue to increase the demand for health services in our Region.
Despite the disruption to business brought on by COVID-19, HealthSource continues to see success
across our business units and greater collaboration between HealthSource and key stakeholders. New
methodologies and processes have evolved to support improved ways of working and collaboration
between the newly established Product Management function and the Northern Region DHBs ensuring
that we continue to offer an integrated product management service.
As we look to the year ahead, in addition to increased levels of BAU HealthSource have several
significant programmes of work that are expected to continue for the next 1-2 years. These include:
FPIM and National Catalogue
The planning and implementation of FPIM is in progress for the Northern Region. In addition to being
users of the new FPIM Oracle and Health System Catalogue solutions, HealthSource plays a key role in
ensuring these are implemented seamlessly and consistently throughout the region; aiming to achieve
the highest possible level of standardisation in the way they are implemented and used once in place.
The National Health System Catalogue project started at the end of 2020 and has been established to
give visibility to products across all DHBs throughout New Zealand. The initial scope of the project will
include all medical devices. It is planned that the Catalogue will be available to early adopter DHBs by
the end of 2021.
Product Management
The HealthSource COVID-19 response resulted in the formation of a dedicated Product Management
business function which ensures continued focus on how HealthSource manage products and supply
chain disruptions.
The Product Management function is responsible for the management of products including risk
assessment, prioritisation, planning, sourcing, optimisation and onboarding of products and suppliers.
The function is structured to allow flexibility of approach and the agility to adapt to the constantly
changing demands of the post-COVID environment.
Page 3 HealthSource New Zealand Limited Annual Plan 2021-2022
Supply Chain Optimisation Order and Inventory Management In November 2019 the Board approved a newly developed Supply Chain Roadmap for HealthSource. The Northern Region Supply Chain Roadmap is focused on building standardised and reproducible on- site logistics activities across the Northern Region DHBs. Holidays Act Compliance HealthSource is working to ensure compliance with the Holidays Act 2003. HealthSource’s role in the Holidays Act Project includes configuring the payroll system to ensure compliance with the Act, and to support our payroll services customers and the vendor with remediation calculations. This is a significant national project which will span 18 months to 2 years. PRIDE Principles Partnership, Respect, Integrity, Delivering Results and being Energised by Innovation. Our PRIDE principles continue to underpin the work that we do. Our success throughout 2020/21 is a testament to our dedicated staff who have enabled us to continue delivering a high standard of shared services to the region and we are looking forward to another successful year ahead. The Health and Disability Sector Review As part of the recently announced health sector reforms, the current DHB system will be disestablished and replaced by three new agencies: a new national entity called Health New Zealand, a Māori Health Authority and a Public Health Agency. The reforms have a firm focus on improving health equity and health outcomes for all New Zealanders. It is a significant change for health and an opportunity for Aotearoa. As an experienced and trusted Northern Region shared service, we have a unique opportunity to shape the future of the New Zealand health system. The reforms will come into effect in July 2022; in the meantime, we have an important role in the region, delivering excellent services to our DHB partners. We look forward to supporting this transition. We have grown from strength to strength as an organisation, and we look forward to contributing from a position of strength. Conclusion We are confident that HealthSource will continue to support, evolve, and deliver quality shared services to our Northern Region customers. We are committed to putting our customers at the centre of everything we do as we work alongside the Northern Region DHBs to support the communities they serve. Ngā mihi Page 4 HealthSource New Zealand Limited Annual Plan 2021-2022
About HealthSource
HealthSource New Zealand Limited is a stand-alone company established in September 2013.
HealthSource is owned by the four Northern Region District Health Boards.
HealthSource is a shared service provider, supporting the four Northern Region District Health Boards
(DHBs) to achieve their individual and regional outcomes by providing end-to-end finance,
procurement and supply chain services. In addition, HealthSource provides Payroll and Human
Resource Management System (HRMS) shared services to Waitematā DHB, Counties Manukau Health,
Northern Regional Alliance, New Zealand Health Partnerships and healthAlliance N.Z.
We work alongside our customers, collaborating to ensure that statutory obligations are met and that
informed decisions are made to support the region.
Annually FY 19/20 and YTD
580,000+ invoices paid by Consistently above 98% target
Accounts Payable and 47,000+ FY20/21 for availability of Oracle
invoices processed by Procurement benefits Inventory Managed Surgical
Accounts Receivable Forecast $30.3 million Devices and Consumables
3 Specialist product hubs
focusing on managing 550 At Risk items are actively
products, particularly those monitored with daily stock on
required to meet the demands hand, usage and days cover
of surges and disruptions reporting
The Staff Service Centre
processes 442,000 normal Over 400,000 records analysed
pays and 39,000 adjustments SRM to produce daily and weekly
and back pays to over 19,000 8000+ Critical Products reporting for the Northern
employees across the Across 270 Suppliers Region and Ministry of Health
Auckland Region per annum 206 Suppliers engaged in SRM
Page 5 HealthSource New Zealand Limited Annual Plan 2021-2022
Our Business
Finance
Finance is responsible for managing the large volume financial processing functions for the Northern
Region. We are working with our DHB partners to ensure a seamless and consistent financial control
environment. Our finance scope includes:
Financial Control: managing the accounting processes and systems for the DHBs. This includes
areas such as fixed assets, cash flow, payroll accounting and general accounting. Managing
year-end audit processes and year-end financial statements.
Accounts Payable: managing the process of paying our suppliers. Working with the purchasing
teams, DHBs and staff to help ensure that Purchase Orders are raised prior to goods and
services being purchased. Managing a range of queries in relation to supplier payments.
Accounts Receivable: managing the invoicing for services by the DHBs. Collection of money
from customers including other DHBs, patients who are not eligible for free health care and
other companies. Managing a range of queries in relation to receivables.
Eligibility: managing the assessment of patients to determine those who are ineligible to
receive free health care. Liaising with patients and clinical staff on eligibility questions and
working with Accounts Receivable on the billing for ineligible patients.
Operations
In response to COVID-19 HealthSource evolved the way we operate with the appointment of a Chief
Operating Officer and the establishment of an operations function that includes Commercial Services,
On-site Logistics and Product Management.
-Commercial Services
HealthSource provides procurement support for consumables, capital items, services and IT to its
Northern Region DHB shareholders and healthAlliance N.Z. Limited, to enable DHBs to deliver clinical
and business outcomes. Our scope includes:
Setting the spending strategy for each category within our sphere of service, including annual
procurement planning.
Planning the procurement initiative (i.e. Requests for Proposal) and developing supporting
documentation.
Managing the sourcing process from release to market, to recommendation and award.
Secondary procurement activity.
Undertaking analysis of outputs from a procurement initiative (such as panel arrangements
from the Ministry of Business Innovation and Employment (MBIE) and PHARMAC to identify the
best approach for the DHBs.
The strategic management of the supplier contract to ensure the contract terms are being met.
Implementation of existing HealthSource, PHARMAC, New Zealand Health Partnerships Limited
and MBIE contracts by DHBs to realise benefit.
Providing visibility of annual procurement planning across all procurement agencies.
Provide consolidated reporting of all benefit across all national procurement agencies.
Working with the Northern Region DHBs to create and implement a sustainable procurement
framework to enable the reporting of broader outcomes to support wider social, economic and
environmental outcomes that go beyond the immediate purchase of goods and services.
Page 6 HealthSource New Zealand Limited Annual Plan 2021-2022
-Operations
The Operations team is responsible for providing a strategic overview for HealthSource in terms of the
regional operating model provided to Northern Region District Health Boards (DHBs) and associated
Northern Regional entities. The Operations team, which includes onsite logistics, support services,
purchasing and the Third Party Logistics, ensures a multi-layered oversight of the supply chain
functions, that ensures a cohesive, customer orientated operating model is in place. The Operations
team engages with the DHBs and other health provider partners to ensure a positive return on
investment and enable improved delivery of care and ultimately improved patient outcomes.
-Product Management
The Product Management team is responsible for the management of products from identifying risk
and prioritisation to planning, sourcing, optimisation, onboarding and other tasks related to the
maintenance and addition of products and suppliers. Product management is possible through
collaboration between HealthSource, DHB and Supplier teams as well as the accessing of multiple data
sets, business systems, and processes. This collaborative approach allows HealthSource to offer our
business partner District Health Boards an integrated product management service where HealthSource
is relied upon for proactive, knowledgeable and trusted product support.
The team is made up of Product Managers, Clinical Product Coordinators, Product Specialists,
Catalogue and Master Data analysts, Inventory Planners and Product Change Specialists which enables
the team to collaborate and share knowledge across a range of skillsets. The team relies on an agile
approach to adapt to change and continuously improve. We manage products within an ever-changing
business and global logistics climate.
Our Catalogue and Master Data team manages all data related to products, locations and vendors to
ensure that products arrive at the correct location, in the correct quantity and are from the appropriate
supplier. The team works proactively with businesses and vendors to deliver the benefits of master
data management such as:
Improved control ensures that the DHBs can control the products they want to purchase.
Faster ordering and replenishment via electronic communication with vendors makes
ordering, receiving and paying for product automatic, fast and efficient.
By understanding total purchasing allows procurement to negotiate on behalf of the DHBs
for the best possible prices based on volume.
Page 7 HealthSource New Zealand Limited Annual Plan 2021-2022
Planning and Intelligence
The Planning and Intelligence function supports our strategic and operational planning, working in
collaboration with our health sector customers. The function supports all areas of the business with
intelligent analytics.
The Business Intelligence Team promotes effective and efficient use of the Northern Region’s
information to provide our customers and shareholders with robust and actionable business
information.
The Project Management Office supports successful business change through the provision of
consistent project delivery services and an established Project Framework and Organisational
Change methodologies.
The Planning & Intelligence Information Strategy builds on our QLIK capability with the focus on
providing data integration and user-driven business intelligence.
Staff Service Centre (Payroll)
The HealthSource Staff Service Centre provides payroll services to Waitematā DHB, Counties Manukau
Health, Northern Regional Alliance, New Zealand Health Partnerships, healthAlliance N.Z. and
HealthSource. The team also provides a Human Resource Management System (HRMS) and customer
support services.
Given the complex nature of health sector employment and contract arrangements, this is both a
challenging and highly rewarding part of our business and one we are extremely proud to deliver to our
staff and customers.
Payroll Processing: salary payments, management of deductions and disbursements, off cycle
payments.
MECA Implementations.
Staff Service Centre: managing payroll and personnel requests and incidents.
Payroll Analysis: reporting and ad-hoc analysis.
Master Data Management: managing and maintaining payroll, HR and personnel records.
Self Service Kiosk: managing the staff system for accessing leave and payroll information.
HRMS – payroll system reporting.
Page 8 HealthSource New Zealand Limited Annual Plan 2021-2022
People, Culture and Wellness
We recognise that our people, their capability and engagement is at the centre of everything we do.
The People Strategy focusses and sequences our activity to build maturity in the following areas:
Learning, development and growth
Leadership and Management capability building
Recognition and reward
Strategic Workforce Design
Employee Value Proposition
Talent attraction and selection
HealthSource maintains subject matter expertise in the fields of Employment and Industrial Relations,
relevant legislation market and industry trends, ensuring that the organisation functions smoothly.
The HealthSource Health, Safety and Wellbeing plan is about more than just staying physically safe in
the workplace. We adopt a holistic approach to employee wellness that is recognised as a key driver for
engagement.
HealthSource is an Immigration New Zealand Accredited Employer. This enables us to employ workers
from overseas and can also strengthen the path to residency for HealthSource Employees.
Governance and Strategy
The Governance and Strategy team work to create and execute a clear vision and strategy for managing
corporate governance and commercial advisory services; and ensures that HealthSource business plans
align with the Statement of Intent, Annual Plan and strategic direction of the business. The function
manages the organisational risk profile and coordinates the risk mitigation programmes.
Page 9 HealthSource New Zealand Limited Annual Plan 2021-2022International Women’s Day 2021
#choosetochallenge
Sign Language Week 2021Our Environment and Role
Our Region
HealthSource contributes to supporting the Northern Region DHBs’ strategic focus on primary,
secondary and community healthcare outcomes. The Northern Region is New Zealand’s largest and
fastest growing region, it is rich in diversity and demographics, but also highly represented in socio-
economic inequality.
Health services in the Northern Region are delivered in a range of settings from hospitals to primary
and community services. HealthSource provides services that enable DHBs to support:
• 193,000 NDHB • 49% European • 2% Middle Eastern,
1.9m people • 629,000 WDHB • 12.5% Maori La�n American or African
in our region • 494,000 ADHB • 13% Pacific Peoples • 1% Other
• 579,000 CMH • 22.5% Asian
4 DHBs & 3 support agencies
STOME
U R CU RS
O 14 Hospitals & 6 Emergency Departments
18,683km2
of NZ covered
NORTHLAND
• 155,000
81 Opera�ng Theatres Procedures p.a.
WAITEMATĀ
AUCKLAND
COUNTIES MANUKAU
• 1.1 Million hospital bed days p.a.
OU 3,100 beds • 5 days is the average length of
R REGIO N hospital stay
29,730 DHB staff
• 5 full-service diagnos�c labs
360+ Community Health & Dental sites • 5 radiology clinics
• Numerous other outpa�ent &
community facili�es
Page 11 HealthSource New Zealand Limited Annual Plan 2021-2022Our Customers HealthSource’s customers are primarily the four Northern Region DHBs and organisations within the health sector which we provide finance, procurement, supply chain and payroll services to. HealthSource is committed to putting our customers at the centre of what we do, and we work alongside the Northern Region DHBs to deliver commercial value to health. HealthSource continues to evolve and implement, in collaboration with our DHB shareholders, the end-to-end finance, procurement, supply chain and payroll services that support the Northern Region’s models of care. An engaged and committed relationship with DHB executives and management is paramount to ensure alignment of strategy and that service delivery meets the needs of our customers, supported by transparent customer reporting. HealthSource is accountable for the measurement and reporting of customer outcomes, development of our customer strategies, and proposals for the evolution of services to meet the needs of our customers. In addition, gathering information and intelligence, and assessment of customer demands for HealthSource services will be integral for our services to be scaled correctly and for end user satisfaction to be maintained. Page 12 HealthSource New Zealand Limited Annual Plan 2021-2022
Our Strategic Priorities
Our Strategic Priorities HealthSource’s strategic priorities have been endorsed by the HealthSource Board. These will remain the focus up to the year 2024. Our Strategic Priorities describe how we will transform ourselves and contribute to the success of the Northern Region. We are currently in year three of our five-year plan. Page 14 HealthSource New Zealand Limited Annual Plan 2021-2022
19 20 21 22 23
Page 15
20 21 22 23 24
DELIVER FINANCIAL SAVINGS DELIVER FINANCIAL SAVINGS DELIVER FINANCIAL SAVINGS DELIVER FINANCIAL SAVINGS
Delivering savings to DHBs and strong Delivering savings to DHBs and strong Delivering savings to DHBs and strong Delivering savings to DHBs and strong
SLA metrics performance. SLA metrics performance. SLA metrics performance. SLA metrics performance.
GROW OUR SERVICES NEW WAREHOUSE
Greater levels of sourcing, supplier relationship management and inventory under Volume growth leads to 4PL logistic provider expanding
management. New services aligned to strategic direction. warehousing. Aligned with Models of
Care
Our 5 Year Roadmap
ADDITIONAL SCOPE ADDITIONAL SCOPE ADDITIONAL SCOPE ADDITIONAL SCOPE
Greater breadth and depth of services. Greater breadth and depth of services. Greater breadth and depth of services. Greater breadth and depth of services.
in the right way
WISE USE OF TECHNOLOGY Integrated Service
Digitalisation of data. Contract Management System. FPIM [Finance, Procurement, Information Management] Delivery
Deliver the right mix of services
RIGHT FIRST TIME DATA Oracle Replacement.
Improve the quality of data and analysis and create a BI
environment that allows easy sharing of data.
AUTOMATION
Minimise manual effort and redeploy to value add activities.
FREEDOM IN A FRAMEWORK
Standardisation – Developing frameworks/processes/systems with no unwanted variations. Repeatable and
Processes are refined with measurable improvements and outcomes. Adaptable Service
Models
ALIGN BUSINESS MODELS ALIGN BUSINESS MODELS
Rolling out Supply Chain Operating Rolling out Supply Chain Operating NEW MODELS OF BUSINESS
service approach
Model and adapting the Procurement Model and adapting the Procurement Lead in the development of new models of business.
Operating model. Operating model.
HealthSource New Zealand Limited Annual Plan 2021-2022
DEVELOP A CULTURE OF CUSTOMER SERVICE
LEVERAGING RELATIONSHIPS AND KNOWLEDGE
AND KNOWLEDGE SHARING Trusted Partner
Seen as Subject Matter Experts.
Grow
Superior customer service and energised by innovation.
effective Build on our shared
strategic
relationships
PEOPLE AND LEADERSHIP CAPABILITY ENGAGED AND CAPABLE WORKFORCE Recognised as
Delivering of Leadership Program, Strategic Recruitment, Competency Frameworks. Attracting and Retaining Talent. Industry Experts
Drive
COMPANY IDENTITY
Excellence
Ensure we have the structure we need to
organisational
deliver our strategy.Key Priorities for the next year
HealthSource has four key priorities for the year. The priorities are aligned with the strategic objectives
of the Five Year Roadmap (published in the 2020-2024 Statement of Intent), taking into account the
requirement to deliver on mandatory commitments and the need to adapt to the changing global
environment as a result of COVID-19.
Payroll 2021 2022
Holiday Act Compliance ADDITIONAL SCOPE
Leave Manager Upgrade Greater breadth and depth of services
FPIM Integration
Workforce Central/Dimension
GROW OUR SERVICES
Greater levels of sourcing, supplier relationship management and inventory
under management. New services aligned to strategic direction.
Optimisation
NEW WAREHOUSE
Volume Growth leads to 4PL logistics provider expanding warehousing.
FPIM & National Catalogue
New Warehouse
Supply Chain Optimisation WISE USE OF TECHNOLOGY Digitalisation of Data, Contract Management
System, FPIM [Finance, Procurement, Information Management] Oracle
Oracle Stabilisation
Replacement.
Contract Management Automation to minimise manual effort and redeploy to value add services
BI Information Strategy
NEW MODELS OF BUSINESS
Lead in the development of new models of business
FREEDOM IN A FRAMEWORK
Service Delivery Standardisation, reducing unwanted variations, refining processes
Product Management
Commercial Optimisation DELIVER FINANCIAL EXCELLENCE
Customer Relationship Delivering savings to DHBs and strong SLA metrics performance
LEVERAGING RELATIONSHIPS AND KNOWLEDGE
Seen as subject matter experts
Organisational
Excellence ENGAGED AND CAPABLE WORKFORCE
Attracting and retaining talent to support our strategy and operating model
People and Culture Strategy
Page 16 HealthSource New Zealand Limited Annual Plan 2021-2022Significant Programmes of work
Response to COVID-19
COVID-19 has challenged the New Zealand public health system. For HealthSource, the effects of
COVID-19 are being experienced in terms of the globally impacted supply chain and constraints on
many product lines. The supply chain disruptions are expected to continue for the next 12-18 months.
In response to COVID-19, HealthSource has evolved the way we operate to bring closer alignment with
our DHB partners. The establishment of a variety of forums has facilitated closer collaboration and
partnership between the Northern Region DHBs, enabling greater regional alignment, integration, and
decision making, thus avoiding duplicated effort.
These newly established forums, led by HealthSource, include the Northern Region DHBs Clinical
Supplies Advisory Group, Northern Region DHBs Clinical Supplies Governance Group, Northern Region
Sustainable Supply Chain Working Group, Northern Region DHBs Supply Chain Advisory Group and the
Northern Region DHBs Supply Chain Governance Group.
The HealthSource COVID-19 response and associated activities have been integrated into our Business
as Usual processes and structures with the formation of a dedicated Product Management business
function which will ensure continued focus on how HealthSource manage products, particularly those
required to meet the demands of surges and disruptions e.g. Whakaari White Island, Measles outbreak,
COVID-19.
In addition, HealthSource has an increased focus on risk identification, mitigation planning and business
continuity planning.
Supply Chain Optimisation - Order and Inventory Management
The Supply Chain function is working to establish an Order Management tool in order to create clear
supplier expectations, enable supply chain operational SRM improvement, create order visibility across
the Northern Region and act as a basis for good inventory management. Inventory Management
policies will be developed that seek to standardise and optimise the delivery of Oracle Inventory
Management by increasing reliability and cost to serve.
Work streams include:
The implementation of a tool to manage supplier lead-times and get expected time of arrival if
the supplier cannot meet the required lead-times. This will allow us to give order visibility for
the entire northern region and act promptly on any significant supplier under performance.
A proposal for an Inventory model alignment policy that is based on an outcome managed
approach which will create significant opportunities for HealthSource to improve overall
reliability and costs through: Optimal EOQ (order quantities), decreased order lines numbers,
more cost effective inventory methods and optimal frequency of counts. The project features
future opportunity to implement the inventory policy in combination with FPIM.
Standardisation of Supply Chain Fundamentals: SOP’s and Roles and Responsibilities that
provide an end to end value chain view and clear aligned R&R’s which are key to maintaining
an effective and efficient supply chain.
Benefits of the programme of work include an increase in on-shelf availability, staff time savings, a
reduction of OMI order lines, cost savings through optimal order quantities and point of sourcing and
increased data integrity for reporting and forecasting.
Page 17 HealthSource New Zealand Limited Annual Plan 2021-2022Holidays Act Compliance
HealthSource is working to ensure compliance with the Holidays Act 2003. As part of our National DHB
Holidays Act Compliance Project, HealthSource commissioned Ernst & Young to undertake an
independent review of all relevant payrolls processed by HealthSource. The review was performed in
line with the Memorandum of Understanding and the national standard baseline document.
HealthSource’s role in the Holidays Act Project includes configuring the payroll system to ensure
compliance with the Act, and to support the DHBs, 4 subsidiaries and the vendor with remediation
calculations.
There will be a requirement to develop new processes across all organisations to ensure future
compliance, and a prerequisite for the Holidays Act rectification will be the implementation of a new
version of the payroll system, due to be completed in October 2021.
Key HealthSource activities include:
The selection of a vendor to support rectification and remediation.
Implementation of solutions to the breaches.
Reconfiguration of the payroll system.
Calculation of remediation payments.
This is a significant national project which will span 18 months to 2 years.
FPIM and the National Health System Catalogue
FPIM is the Health ‘Finance, Procurement and Information Management System’, formerly known as
the National Oracle Solution (NOS). Its main purpose is to: address risks from end-of-life systems;
provide a foundation to enable procurement and other savings; and support process improvement and
efficiencies.
The FPIM Programme encompasses the implementation of two main highly interlinked components:
the national FPIM Oracle solution (10 DHBs in scope, including HealthSource, the Northern Region
DHBs and their subsidiaries) and the national Health System Catalogue (all DHBs in scope).
The planning and implementation of FPIM is in progress for the Northern Region. In addition to being
users of the new FPIM Oracle and Health System Catalogue solutions, HealthSource will play a key role
ensuring these are implemented seamlessly and consistently throughout the region; aiming to achieve
the highest possible level of standardisation in the way they are implemented and used once in place.
The National Health System Catalogue project started at the end of last year and has been established
to give visibility to products across all DHBs throughout New Zealand. The initial scope of the project
will include all medical devices. It is planned that the Catalogue will be available to early adopter DHBs
by the end of 2021.
Page 18 HealthSource New Zealand Limited Annual Plan 2021-2022Pink Shirt Day 2021
#jointhemovementOur Impact Areas For this Annual Plan HealthSource New Zealand Limited will be measuring impacts in the following areas. Detailed definitions and measures to achieve success in these output areas are defined in HealthSource’s Statement of Performance Expectations included in this Annual Plan. Impact Area Current Measure Delivering cost effective services for the Northern Delivery of shared services within agreed Region DHBs through economies of scale and funding envelope. better value for money. Facilitating Northern Region commercial 6.7:1 return or better on procurement aggregation of procurement to optimise benefits funding cost. for the Northern Region across all national procurement agencies. Releasing time to clinical and operational functions Maintain availability of Oracle Managed within the DHBs, and delivering operational Inventory Surgical Devices and efficiencies through system and process Consumables = average 98% or better. improvements.* *Refer to Significant Programmes of Work Measures will be established as HealthSource develop the supply chain operating model in conjunction with our DHB partners. For example: optimal level for percentage of inventory managed via Oracle, measures for process efficiency and order and inventory management policies*. Page 20 HealthSource New Zealand Limited Annual Plan 2021-2022
Delivering on Government and Sector Expectations
The Minister of Health’s Letter of Expectations (2021/22) and the New Zealand Health Strategy
provides the District Health Boards, and their subsidiaries, with clear direction on sector priorities.
HealthSource’s role is to support the Northern Region DHBs to deliver on these expectations.
In developing its impact statements HealthSource has taken into account the long term investment
plans of the region, Northern Region DHB strategies, the evolving Northern Region Priorities and their
impact on service delivery.
Government Health
Pae-Ora – Healthy Futures
System Vision
All New Zealanders live well, stay well, in a system that is people-powered,
provides services closer to home, is designed for value and high performance,
Health Sector and works as one team in a smart system.
Outcomes We live longer in good health
We have improved quality of life
We have health equity for Māori and other groups
Giving practical effect to Whakamaua: the Māori Health Action Plan
2020-2025
Improving Sustainability
Improving child wellbeing
Improving mental wellbeing including a focus on the transformational
direction for our approach to mental health and addiction through the
Minister of Health’s agreed actions from the Mental Health and Addiction Inquiry
Priorities Improving wellbeing through prevention
Better population health outcomes supported by a strong and equitable
public health and disability system
Better population health outcomes supported by primary health care
Strong fiscal management including breakeven financial targets
Northern Region HealthSource supports the Northern Region DHBs by operating efficient and
Shared Service effective shared services that support delivery of health sector priorities whilst
Provider assisting the region to live within its means.
We deliver value to health through the right service at the right time with no
Our Purpose
fuss.
Delivering cost effective services for the Northern Region DHBs through
HealthSource (Impacts economies of scale and better value for money.
on Northern Region) Facilitating Northern Region commercial aggregation of procurement to
optimise benefits for the Northern Region across all national
procurement agencies.
Page 21 HealthSource New Zealand Limited Annual Plan 2021-2022 Releasing clinical time to care, and delivering operational efficiencies
through shared service process improvements.
Advocating for best use of available resources across the Northern
Region as a whole.
Working together to promote greater collaboration, standardisation and
integrated working.
Minimising and making transparent critical stock shortages and outages
and working to find suitable clinical alternatives to ensure continuity of
service at the DHBs.
Analysing available national contracts to maximise opportunities for the
Northern Region.
Regional Shared Services
Enabling the Northern Region DHBs through the provision of efficient and
effective shared services.
Regional Procurement Aggregator
HealthSource Leveraging the combined volumes of Northern Region DHBs for best quality,
(Outputs) service, technology and price in consumables, capital items, and services;
ensuring operational efficiencies in the procurement of goods and services.
Regional Supply Chain
Leveraging systems and processes to provide efficiencies in the supply chain
and managing inventory, to provide on-time availability with reduced held
stock.
Deliver the right mix of services in the right way
HealthSource Strategic Build on our shared service approach
Priorities Grow effective strategic relationships
Drive organisational excellence
Page 22 HealthSource New Zealand Limited Annual Plan 2021-2022Our Organisation
Our Responsibilities
Status as an Entity
HealthSource New Zealand Limited is a Crown entity multi-parent subsidiary in terms of the Crown
Entities Act 2004, with each of the four Northern Region DHBs holding shares as follows:
- Auckland DHB 40% - Counties Manukau Health 25%
- Northland DHB 10% - Waitematā DHB 25%
HealthSource New Zealand Limited was incorporated in September 2013 as healthAlliance (FPSC)
Limited and was a wholly owned subsidiary of healthAlliance N.Z. Limited. The company underwent a
name change in November 2019 and is now known as HealthSource New Zealand Limited. In June
2020, the shareholding of the Company was transferred from healthAlliance N.Z. Limited to the four
Northern Region District Health Boards. HealthSource provides finance, procurement, supply chain and
payroll services to the Northern Region DHBs (and other associated parties).
HealthSource New Zealand Limited is a public benefit entity, domiciled in New Zealand, as defined
under N.Z. International Accounting Standard 1 (IAS1) and incorporated in New Zealand.
HealthSource’s primary objective is to provide shared services to its DHB Customers; where
appropriate, these services are also provided for approved external organisations. As a Crown Entity
operating within the public health sector, HealthSource complies (insofar as they are relevant) with the
objectives and functions set out in the New Zealand Public Health and Disability Act (NZPHDA) in
respect to DHBs, and the Crown Entities Act in respect to Crown Entities and Crown Entity subsidiaries.
Operating responsibilities
HealthSource operates in a sustainable manner so that its services benefit both current and future
customers. In order to meet this objective, we:
Maintain an appropriate business model that is sustainable, cost-effective and meets the
ongoing shared service needs of its stakeholders.
Have a clear governance and decision-making framework in place which articulates the
respective roles and responsibilities of HealthSource and our customers.
Maintain effective relationships with stakeholders that are mutually supportive and
productive.
Provide high-quality shared services effectively and efficiently.
Have a sustainable, competent and engaged workforce.
Maintain effective systems to establish a baseline of performance and cost data for the
measurement of gains to the sector.
Maintain appropriate monitoring tools and performance issue resolution processes for
initiatives as they are implemented.
Develop and maintain policies appropriate for the business, including risk management
policies.
Page 24 HealthSource New Zealand Limited Annual Plan 2021-2022Statutory and compliance requirements
As a Crown Entity subsidiary, the Company is required to comply with a variety of legislation including
the:
Companies Act
New Zealand Public Health and Disability Act
Crown Entities Act
Public Finance Act
Official Information Act
HealthSource has established mechanisms to ensure it meets its legal compliance obligations and the
relevant Health and Safety legislation.
Operational processes
HealthSource is required to operate within the functions, powers and constraints outlined above.
Operational policies and procedures have been developed concerning the manner in which
HealthSource conducts its operational processes.
Dividend policy
HealthSource’s objective is to break even each financial year. Any surplus generated is returned to its
DHB Customers through reduced service charges.
Treaty of Waitangi
HealthSource will provide shared services to the population of New Zealand, as served by the DHBs. For
information about the populations those DHBs serve, and the DHB’s health profiles, please refer to
their Statements of Intent.
Page 25 HealthSource New Zealand Limited Annual Plan 2021-2022Our Governance and Accountability
Corporate governance
The Board of HealthSource New Zealand Limited is appointed by its shareholders and has an
independent Chairperson. The HealthSource Board meets six times per year, and the Audit and Risk
Committee three times per year.
The functions and purpose of HealthSource New Zealand Limited are set out in this Annual Plan, which
has been developed on the basis of Annual Plans. These mechanisms are supported by the Minister’s
Letter of Expectations to shareholding DHBs.
Performance is monitored by the Board, and the Chairperson reports to the Northern Region’s Regional
Governance Group (comprising Northern Region Chairs, CEOs and CMOs). Furthermore, the DHB
appointed Directors provide feedback to shareholder Boards.
Ministerial power to direct
HealthSource will ensure that decision-making processes comply with all legislative requirements to
consult with, or notify, the Minister of Health. There is no intention to routinely or regularly report
matters to the Minister. Any Ministerial directions will generally be dealt with through the Board Chair,
on behalf of the Board and shareholding DHBs.
Information required by Ministers
HealthSource commits to provide Ministers with information as required, to enable timely responses
to:
Parliamentary questions
Routine Ministerial correspondence
Select Committee inquiries
HealthSource is required to comply with the provisions of the Official Information Act.
Page 26 HealthSource New Zealand Limited Annual Plan 2021-2022Our Stakeholder Engagement
HealthSource operates in a large, complex and dynamic environment. Critical to our success is the
requirement that we build and maintain strong and effective relationships with key stakeholders, whilst
ensuring compliance with statutory obligations. HealthSource engages at a number of levels within the
overall health and central government environments including:
Regional governance groups and supporting sub governance groups
DHB boards, including audit and finance committees
DHB executive teams & DHB management
National advisory groups including the Ministry of Health Services Commissioning Directorate
New Zealand Health Partnerships Limited
Northern Regional Alliance
healthAlliance N.Z.
PHARMAC
Ministry of Business, Innovation and Employment (MBIE)
Treasury
Ministry of Health
Audit NZ
The Annual Plan highlights the priority of continuing to develop these relationships and the
effectiveness of governance and decision making processes to support the Northern Region DHBs and
health sector as a whole. It is the intention of HealthSource to further strengthen central agency
engagement to facilitate regional consistency and alignment.
Statutory obligations
There are a number of critical drivers, compliance, and statutory obligations that HealthSource must
respond to as part of our day-to-day responsibilities. These include:
Treasury
Asset management processes are implemented
Compliance with required accounting standards
Ministry of Health
Governance, funding, and approval related processes
Audit NZ
Finance and reporting standards
Annual Audit outcomes
Ministry of Business, Innovation and Employment
Government Rules of Sourcing
Page 27 HealthSource New Zealand Limited Annual Plan 2021-2022Northern Region Collaboration
The transformation and shape of HealthSource is evidence of collaboration between the Northern
Region DHBs. Northern Region DHBs initiated the establishment of regional governance groups to
support regional decision-making related to the delivery of shared services to the DHBs. These
governance groups include the:
Northern Region Regional Governance Group
HealthSource Board
HealthSource Audit and Risk Committee
DHB Boards
DHB Audit and Risk Committees
Regional CFO Governance Group
Regional Capital Committee
Northern Region Clinical Supplies Governance Group
Northern Region Supply Chain Governance Group
The Central Agency groups provide strategic direction and alignment to regional planning/prioritisation
guided through:
DHB Annual Plans
Health sector efficiency programmes
National and Regional plans including the Northern Region Health Plan and the Minister of
Health’s ‘Letter of Expectations’ to DHBs.
Page 28 HealthSource New Zealand Limited Annual Plan 2021-2022Our Statement of Performance Expectations
Our Statement of Performance
Expectations
Our Statement of Performance Expectations summarises the impact HealthSource wants to make in
FY21/22 and the results we expect to deliver for each of our output classes.
In addition to these measures, HealthSource as an organisation also measures itself against its Annual
Plan and the achievement of its Service Level Agreements with Northern Region DHB Customers, which
are approved by the HealthSource Board and Shareholders. Reporting against these commitments is
discussed on a regular basis by the Executive Leadership Team, Board and Shareholders.
Output classes
HealthSource measures its performance through three major output classes:
Regional Shared Services
Enabling the Northern Region DHBs through the provision of efficient and effective shared
services.
Regional Procurement Aggregator
Leveraging the combined volumes of Northern Region DHBs for best quality, service,
technology and price in consumables, capital items and services; ensuring operational
efficiencies in the procurement of goods and services.
Regional Supply Chain
Leveraging systems and processes to provide efficiencies in the supply chain and managing
inventory, to provide on-time availability with reduced held stock.
Page 30 HealthSource New Zealand Limited Annual Plan 2021-2022Delivering our plan
Our Statement of Performance Expectations summarises the key focus areas for HealthSource and the
results we intend to deliver.
Output Class Description Measure
Regional Shared Delivery of Measure =
Services shared services
Delivery of approved HealthSource operating budget
within agreed
Enabling the within +/- $200k.
funding
Northern Region
envelope Procurement Capability Index [PCI] score of 3.3 or
DHBs through the
better.
provision of efficient
and effective shared Average Regional Accounts Receivable collection days
services. (calendar days from invoicing to receipt of payment) of
35 days or less.
Average Regional Accounts Payable cycle time (calendar
days from invoice received date to payment date) of 30
days or less.
DIFOT (Delivery in Full on Time) for managed inventory
held at 93.8%.
Payroll Service requests completed within resolution
times >85%.
Critical 8.5 hours / 1 day
High 34 hours / 3 days
Medium 68 hours / 8 days
Low 170 hours/ 20 days
Page 31 HealthSource New Zealand Limited Annual Plan 2021-2022Regional Deliver Measure =
Procurement annualised
$9 million annualised OPEX savings in FY21/22
Aggregator OPEX savings
contributing to an overall return on investment of
to the
Leveraging the 6.7:1* or better on procurement funding cost.
Northern
combined volumes
Region DHBs
of Northern Region
and an overall
DHBs for best
return on
quality, service,
investment.
technology and price
in consumables,
capital items, and
services; ensuring
operational * The Statement of Intent 2020-2024 presented an
efficiencies in the indicative ROI of 7:1. This is under review in light of the
procurement of ongoing impacts of COVID- and the focus on minimising
goods and services. supply shortages and sourcing suitable clinical
alternatives to ensure continuity of service at the DHBs.
Regional Supply Availability of Measure > 98% availability
Chain Oracle
Managed
Leveraging systems
Inventory
and processes to
(OMI) surgical
provide efficiencies
devices and
in the supply chain
consumables
and managing
inventory, to provide
on-time availability
with reduced held
stock.
Page 32 HealthSource New Zealand Limited Annual Plan 2021-2022Our Financial Forecast
Our Financial Forecast
Statement of Responsibility
The information contained in this Statement of Performance has been prepared in accordance with the
Public Finance Act and the Crown Entities Act 2004.
HealthSource is responsible for:
The preparation of the financial statement and the judgements herein.
Establishing and maintaining a system of internal control designed to provide reasonable
assurance on the integrity and reliability of the financial reporting.
These financial statements are prepared in accordance with the statement of concepts and consistent
use of accounting principles from period to period is implicit.
These financial statements have been prepared on the basis that the organisation is a going concern
and expects to continue operations for the foreseeable future.
In the opinion of HealthSource, the forecast financial statements fairly reflect the financial position and
operations of HealthSource New Zealand Limited.
Forecast Financial Statements
The forecast financial statements for the four years ending 30 June 2025 are included.
HealthSource’s main financial objective is to provide services within the agreed funding envelope.
Revenue is planned to be equal to total expenses as HealthSource only charges net expenses to its
shareholder DHBs and is effectively a not-for-profit organisation with the shareholding DHBs carrying
the budget risk. It is expected that HealthSource will remain fully funded in all outer years forecast.
Financial forecasts (including FTE forecasts on page 28) are based on the continuation of existing
services that HealthSource provides to its current customers.
Where shareholder DHBs request us to develop new services - or expand current services through
approved business cases - budgets and FTE numbers will flex accordingly.
If new opportunities to provide additional services arise, they will only be undertaken if the related
additional revenue is forecast to be equal to (or greater than) any additional expenditure. It is
anticipated, at this stage, that any significant changes in revenue generation and expense forecasts will
be as a result of changes in HealthSource /DHB capital programmes.
HealthSource earns revenue by charging DHBs, and other customers for services provided. Currently all
customers of HealthSource are District Health Boards or affiliated organisations. Funding sources and
approvals for HealthSource are negotiated directly with Northern Region DHBs.
Funding is provided directly from DHB shareholders in accordance with the Shareholders Agreement.
HealthSource participates in the Health Sector Banking Arrangements managed by New Zealand Health
Partnerships and therefore has access to short term facilities to manage cash flows.
Page 34 HealthSource New Zealand Limited Annual Plan 2021-2022The forecast financial statements do not assume a material impact on financial performance and position as a result of COVID-19. The expected revenue to be earned and expenses to be incurred for each class of outputs are as follows (i.e. revenue is equal to expenditure for all classes of outputs). Forecast Statement of Outputs Forecast statement of Expenditure for Outputs Page 35 HealthSource New Zealand Limited Annual Plan 2021-2022
Forecast Statement of Comprehensive Income Forecast Statement of Movements in Equity Revenue from Related Parties Page 36 HealthSource New Zealand Limited Annual Plan 2021-2022
Forecast Statement of Financial Position Page 37 HealthSource New Zealand Limited Annual Plan 2021-2022
Forecast Statement of Cash Flows Forecast capital spend Full Time Equivalent (FTE) Numbers Page 38 HealthSource New Zealand Limited Annual Plan 2021-2022
Purpose and disclosures
The SPE financial forecasts have been prepared to indicate the likely impact of implementing
HealthSource’s strategic direction, and to enable stakeholders to participate in setting expectations for
outputs. The purpose of the financial statements is to assist the Northern Region DHBs consideration
of funding, and also serves to provide a base against which the Company’s actual performance can be
assessed.
It should be noted that:
The information disclosed is indicative only and may not be appropriate for any other purpose.
Actual results are likely to vary from the information presented here and the variations may be
material.
The forecast financial statements have been prepared based on actual events, transactions and
financial results up to February 2021 and assumptions about future events that are reasonably
expected to occur. It is reasonable to assume that these forecasts may change significantly
should the Company engage in expansion opportunities, or should there be any significant
changes to the environment in which we transact. It is not intended that this published
material will be updated for additional changes or unexpected future events.
Notes and assumptions:
While there are some implicit assumptions included around the forecasts, the Company has considered
factors that may lead to a material difference between information in the forecast financial statements
and actual results.
These factors include:
In the 2019/20 year Staff Service Centre / Payroll services was transferred from healthAlliance N.Z. Ltd
to HealthSource New Zealand Limited effective 1 October 2019. This added forecasted costs of
$2.759m. Full year impact in 2020 of $3.678m.
Personnel costs forecast to be up to 2% increase in 2020-2021 and in 2021-2022 and outyears is
forecast at 1.9% p.a subject to Government policy on salaries over $100k.
Other costs – Based on CPI inflation at 1.9% p.a.
Any cost savings measures and efficiency gains arising out of strategic priorities have been fully
incorporated into the financial forecasts.
All forecast costs to be fully funded across the forecast period 2022-2025.
Source of Funds - In FY20/21 capital funds will be fully sourced from internal cash reserves, and then as
we move to later years funding will move on a pro-rata basis to a depreciation funded model.
Page 39 HealthSource New Zealand Limited Annual Plan 2021-2022You can also read
