Statement of Intent 2020 2024 - Incorporating the Statement of Performance for 2020-2001 - HealthSource
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Statement of Intent
2020 – 2024
Incorporating the Statement of Performance for 2020-2001
Presented to the House of Representatives pursuant to sections 149 and 149(L) of the Crown Entities Act 2004.
Contents
Message from the CEO……………………………………………………………………………………….…...3
Our Business………………………………………………………………………………………………….………..5
Covid-19 Impact…………………………………………………………………………………………...6
Finance………………………………………………………………………………………………………….7
Procurement…………………………………………………………………………………………….…..7
Supply Chain………………………………………………………………….……………………………..8
Strategy, Planning and Intelligence…………………………………………………………….…8
Staff Service Centre (Payroll)…………………………………………………………….…………..8
Our Environment……………………………………………………………………………………………………..9
Our Strategic Priorities………………………………………………………………………………..…………12
Delivering on Government and Sector expectations……………………………..…….13
Our Strategic Impacts………………………………………………………………………….………14
Our Outputs………………………………………………………………….…………………………….16
Our five-year roadmap………………………………………………………………………………..17
Our External Focus Areas……………………………………………………………………….………………18
Our Organisation……………………………………………………………………………………………………23
Our Responsibilities……………………………………………………………………………………….………24
Our Governance and Accountability………………………………………….…………………………..26
Our People…………………………………………………………………………………………………………….27
Our Stakeholder Engagement……………………………………………………………..…………………30
Our Statement of Performance……………………………………………………………………………..33
Our Financial Forecast……………………………………………………………………………...…….…….37
Statement of Significant Accounting Policies………………………………………………….………43
Page 1 HealthSource New Zealand Limited Statement of Intent 2020-2024
Introduction This Statement of Intent (SOI) 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 strategic direction for the next four years, 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 Statement of Intent. 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 Rosalie Percival Board Chair Director HealthSource New Zealand Limited Board HealthSource New Zealand Limited Board Date Date 14 August 2020 14 August 2020 Page 2 HealthSource New Zealand Limited Statement of Intent 2020-2024
Message from the CEO
Clare Thompson
CEO HealthSource
When I look back over the past few years, it is At the end of June HealthSource officially
clear that one thing is inevitable – change. Our separated from healthAlliance N.Z. Limited and is
region is constantly growing and evolving and, as now owned directly by the four Northern Region
an organisation, I am proud to say that we have DHB’s. The change of shareholding was endorsed
met this change with enthusiasm and drive. by the Regional Governance Group, Northern
The Northern Region is home to more than one Region Chief Financial Officers and the
third of New Zealand’s population, and is HealthSource and healthAlliance Boards in 2019,
expected to grow by 30% in the next 20 years. and was subsequently approved by the Boards of
Our region is rich in diversity and demographics; our partner DHBs. This is a very exciting phase for
however, we are also reflective of wide socio- HealthSource as we look to deliver our regional
economic inequality. This puts immense pressure strategic plan.
on our health services, which we can only expect Our business plan and priorities, aside from the
to increase. current health crisis, are geared towards
As a shared service organisation, our value lies in identifying and realising efficiencies in services,
how we apply our expertise to alleviate some of and working collaboratively with external
these pressures, so our 29 hospitals and 28,550 stakeholders to deliver an ambitious programme
hospital staff can focus on what they do best – of work for the Region, including the Holidays Act
providing uncompromised healthcare. remediation and implementation of FPIM.
Over the last 18 months, HealthSource welcomed Our Value
a number of new additions to our service We deliver value to health through the right
portfolio, including Financial Services in January service at the right time with no fuss.
2019 (which provides accounts payable, accounts How we do it
receivable and eligibility services), the shared
service Payroll function in October 2019 and We deliver the right mix of services in the
Mailroom services at Auckland DHB in January right way
2020. We will build on our shared service
In March of 2020, it rapidly became apparent approach
that HealthSource would be a key contributor to We grow effective strategic relationships
the Northern Region Covid-19 response. We drive organisational excellence
HealthSource, and indeed the wider healthcare We will work collaboratively as a region to
community, have risen simultaneously to the deliver a framework of processes, systems and
challenge of keeping our communities well and services that allow for a standardised and
safe, and to spring-boarding improvements to regionalised approach, while meeting our DHB
our processes and services which have and will partners’ individual needs.
continue to benefit the Region greatly in future
years.
Page 3 HealthSource New Zealand Limited Statement of Intent 2020-2024
Our Business
Our Business The Northern Region is New Zealand’s largest and fastest growing region with a population of 1.9 million that is demographically, geographically and ethnically diverse. HealthSource supports the Northern Region District Health Boards (DHBs) to achieve their individual and regional outcomes by providing an end-to-end finance, procurement and supply chain shared service. In Financial Year 18/19 we delivered $21.2m in procurement benefits, and delivered in excess of 1.7m order lines to over 2,100 locations. We work alongside our customers, collaborating to ensure that statutory obligations are met and that informed decisions are made to support the region. Page 5 HealthSource New Zealand Limited Statement of Intent 2020-2024
Covid-19 Impact Despite New Zealand’s successful progression through National Alert Levels, the impact of Covid-19 on the global supply chain and manufacturing of medical products remains significant. While difficult to predict the length of time this disruption will continue for, New Zealand’s DHBs are establishing protocols that will support them through the next six to eighteen months. HealthSource has continuously managed product shortages for many years but the requirement to manage substitute products has increased significantly and has heightened the need for an agile supply chain, whilst ensuring quality standards are met. HealthSource has responded to the disruption of the global supply chain by redirecting business as usual work effort to focus on managing at risk products. There is a potential requirement for the further redirection of business as usual effort, depending on the length and severity of Covid-19 impacts. Page 6 HealthSource New Zealand Limited Statement of Intent 2020-2024
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:
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.
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.
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.
Procurement
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 procurement 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 or 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; and
Provide consolidated reporting of all benefit across all national procurement agencies for
the Northern Region.
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 7 HealthSource New Zealand Limited Statement of Intent 2020-2024
Supply Chain
Supply Chain is responsible for purchasing, receipting and delivery of goods to over 1,900 locations
across the four Northern Region DHBs. Our teams ensure that items ranging from bandages to skin
grafts and bone for surgery, are available when and where required.
We are continually working with our DHB partners to deliver a standardised, efficient and effective
supply chain distribution model that is scalable to meet the future needs of the health sector in the
Northern Region.
Strategy, Planning and Intelligence
The Strategy, Planning and 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 team supports our strategic and operational planning, working in collaboration with our health
sector customers.
Our Catalogue and Master Data team manages all data related to products, locations and vendors to
ensure that products are in the correct location, 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 – ensuring that DHBs can control the products they want to purchase.
Faster ordering and replenishment – electronic communication with vendors makes
ordering, receiving and paying for product automatic, fast and efficient.
Lower cost – understanding total purchasing allows procurement to negotiate on behalf
of the DHBs for the best possible prices based on volume.
Staff Service Centre (Payroll)
The Staff Service Centre (SSC) transitioned from healthAlliance N.Z. Limited to HealthSource in
October 2019. The 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.
Staff Service Centre: managing payroll and personnel requests and incidents.
Payroll Analysis: reporting and ad-hoc analysis.
Master Data Management: manage and maintain 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 Statement of Intent 2020-2024
Our Environment
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 (total population of 1.9m,
expected to grow by 30% in the next 20 years). The region 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:
1.9m people (over 1/3 of New Zealand’s population)
28,550 DHB staff
29 hospitals, including:
o Four major hospitals
o Nine community based hospitals
o Three facilities dedicated to elective surgery
o Thirteen Specialist mental health services
Six hospital emergency departments
81 operating theatres across the region
3,100 hospital beds
The Northern Region DHBs also provide a range of national and regional services to patients, which
include a range of specialist, tertiary and rehabilitation services. The region also accesses services
provided by primary and community medical care services (circa 1400 General practitioners), across
385 medical practices; as well as a large number of Primary Health Organisations (PHOs) and
community-based organisations.
Page 9 HealthSource New Zealand Limited Statement of Intent 2020-2024Our customers HealthSource’s customers are primarily the four Northern Region DHBs and organisations within the health sector. During the term of this Statement of Intent, it is HealthSource’s intent to continue to evolve and implement, in collaboration with DHBs, the end-to-end finance, procurement and supply chain service that supports the region’s models of care. The focus for the next five years will be on delivering the right service at the right time with no fuss across a range of services. This will be achieved through a focus on developing regional frameworks, processes and systems that are predictable and reduce unwarranted variations. Information and intelligence is integral in understanding our customers, gathered through various mediums such as customer satisfaction surveys and improvement plans, and the collaborative evolution of service performance metrics. HealthSource will be 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. Strengthening engagement with DHB Executives and Management is paramount, as is the evolution of transparent customer related reporting. In addition, the gathering 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. Across the five years, HealthSource is seeking to build scalable models to enable an expansion of service delivery for the Northern Region DHBs. Page 10 HealthSource New Zealand Limited Statement of Intent 2020-2024
Our Strategic Priorities Page 11 HealthSource New Zealand Limited Statement of Intent 2020-2024
Our Strategic Priorities HealthSource’s strategic priorities have been decided and 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 two of our five-year plan. Page 12 HealthSource New Zealand Limited Statement of Intent 2020-2024
Delivering on Government and Sector expectations
The Minister of Health’s Letter of Expectations and the revised 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 DHBs to deliver on these expectations.
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
Health Sector performance, 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
Improving child wellbeing
Improving mental wellbeing
Improving wellbeing through prevention
Health Sector
Better population health outcomes supported by a strong and
Priorities
equitable public health and disability system
Better population health outcomes supported by primary health
care
Northern Region HealthSource supports the Northern Region DHBs by operating efficient and
Shared Service effective shared services that support delivery of health sector priorities
Provider whilst 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 economies of scale and better value for money.
What we are aiming Facilitating Northern Region commercial aggregation of
for (Impacts on procurement to optimise benefits for the Northern Region across all
Northern Region) national procurement agencies.
Releasing clinical time to care, and delivering operational
efficiencies through shared service process improvements.
Regional Shared Services
Enabling the Northern Region DHBs through the provision of efficient and
effective shared services.
HealthSource
(Outputs) 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.
Page 13 HealthSource New Zealand Limited Statement of Intent 2020-2024Regional 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.
HealthSource Deliver the right mix of services in the right way
Strategic Build on our shared service approach
Priorities Grow effective strategic relationships
Drive organisational excellence
Our Strategic Impacts
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.
HealthSource intends to deliver impacts in the following areas:
Delivering cost effective services for the Northern Region DHBs through economies of
scale and better value for money.
Facilitating Northern Region commercial aggregation of procurement to optimise benefits
for the Northern Region across all national procurement agencies.
Releasing clinical time to care, and delivering operational efficiencies through shared
service process improvements.
Page 14 HealthSource New Zealand Limited Statement of Intent 2020-2024For this Statement of Intent HealthSource New Zealand Limited will be measuring impacts in the
following areas:
Current Measure Measure
Impact Area
Measure (Medium term) (Long term)
Delivering cost Delivery of shared Delivery of shared Delivery of shared
effective services services within services within services within agreed
for the Northern agreed funding agreed funding balanced scorecard.
Region DHBs envelope. envelope.
through
economies of
scale and better
value for money.
Facilitating 5.2:1 return or better 7:1 return or better 9:1 return or better on
Northern Region on procurement on procurement procurement funding
commercial funding cost. funding cost. cost within agreed
aggregation of balanced scorecard.
procurement to
optimise benefits
for the Northern
Region across all
national
procurement
agencies.
Releasing time to Maintain Availability Maintain Availability Maintain Availability
clinical and of Oracle Inventory of Oracle Inventory of Oracle Inventory
operational Managed Surgical Managed Surgical Managed Surgical
functions within Devices and Devices and Devices and
the DHBs, and Consumables = Consumables = Consumables =
delivering average 98% or average 98% or average 98% or better
operational better. better. within an agreed cost
efficiencies to serve model.
through system Establish optimal
and process level for percentage Maintain inventory
improvements. of inventory managed managed on Oracle
via Oracle Managed Inventory at
Managed Inventory optimal level.
(OMI).
Increase the level of
Establish measures process efficiency.
for process efficiency.
Page 15 HealthSource New Zealand Limited Statement of Intent 2020-2024Our Outputs
HealthSource enables the Northern Region DHBs to deliver high quality clinical services. HealthSource
has three significant classes of outputs:
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.
Linking inputs and enablers to customer requirements
The following diagram explains the linkages between enablers/inputs, output classes and output
measures.
Definitions and measures to achieve success in these output areas are defined in HealthSource’s
Statement of Performance.
Note: Shared Service Delivery Output Class is the operation of Finance Services, Procurement Services and Supply
Chain Services.
*We exceeded our target (8:1) in FY19/20, delivering an overall Return on Investment of 9:1. However, Covid-19 has
led to a disruption in worldwide supply chains, and an uncertain economic outlook. As a result, the focus of
HealthSource and the Procurement team has moved to Covid-19 recovery and not only the mitigation of cost
increases, but an intense focus on personal protective equipment, at risk product sourcing and contract and risk
management. These activities have meant that the ability to realise OPEX cost reduction benefits has been
compromised.
Page 16 HealthSource New Zealand Limited Statement of Intent 2020-2024Our five-year roadmap Page 17 HealthSource New Zealand Limited Statement of Intent 2020-2024
Our external focus areas HealthSource’s maturity pathway sets out how we will transform towards world-class in the next five years. We are currently in year two of the five-year plan. These shifts build on our foundations since establishment and support us to drive improved performance within our service delivery to the Northern Region DHBs. We are at the ‘Growing’ stage and will follow this pathway to develop our capability. Page 18 HealthSource New Zealand Limited Statement of Intent 2020-2024
Deliver the right mix of services in the right way
The Northern Region DHBs and patients depend on us to ensure that products and
services are available when required with no fuss.
We ensure
When a nurse or doctor needs a product it is within easy reach.
A patient’s surgery is never cancelled because the hospital did not have the
right product available when it was needed.
End-to-end processing of orders through to payment is smooth for DHBs
and suppliers.
Why this Supply Chain disruption of products and services are managed to limit or
matters remove any impact on a hospital service or a patient.
Patient services such as eligibility assessment and invoicing are managed in
an efficient way that keeps the patient informed.
Strong management of suppliers to deliver procurement benefits to the
DHBs.
Careful management of product on boarding processes to ensure they
meet clinical demands and patient safety.
There is robust data and insights to inform our decision making.
Smooth running of shared services functions and processes to limit the
demands on DHB staff time.
Years 1-2 [Growing] Years 2-4 [Enhancing] Years 5+ [Optimised]
Deliver Financial Excellence: Automate: minimise Alignment with
focus on being commercial manual effort and redeploy Models of Care: ability
business partners, delivering to value add activities. to flex the scale of
savings to DHBs and strong SLA service delivery to
Wise use of technology:
metrics performance. meet operational and
leverage planned
clinical needs.
Grow our Services technology developments
[Procurement, Supply Chain, to move towards Integrated Service
What Other]: greater levels of integration of systems Delivery: improved
success will sourcing, supplier relationship and tools [FPIM / service delivery
look like management and inventory Procurement Systems]. through greater
under management. New integration of
services aligned to systems and tools.
strategic direction.
Establish one source of the
Truth which is Accessible to
all Users: improve the quality
of data and analysis and
create a BI environment that
allows easy sharing of data.
Page 19 HealthSource New Zealand Limited Statement of Intent 2020-2024Build our shared service approach
Delivering high quality and low cost shared services within a complex health
system requires a focused and comprehensive set of processes, frameworks and
methodologies.
We ensure
That to help shape what we do, we are well informed about Northern
Region DHB and patient needs.
Seamless service delivery between us and our partners by ensuring there
Why this are well understood processes and systems.
matters We design and deliver systems which are adaptable within the diversity of
the Northern Region DHBs while still ensuring focus on end-to-end process
flows which are predictable and reduce unwarranted variations.
Our operating approach provides a more responsive and agile way to adapt
our service delivery to future challenges, including evolving health care
systems, changing patient needs and emerging areas of focus.
Our leaders, staff and stakeholders have a common understanding and
appreciation of how and why we make decisions on the mix of services we
deliver.
Years 1-2 [Growing] Years 2-4 [Enhancing] Years 5+ [Optimised]
Freedom in a Framework New Models of Business: Repeatable and
[Standardise]: through lead in the development Adaptable Service
identifying best practice and of new models of Models: providing
unifying our DHBs’ business. Link to centres of excellence
requirements. developments from the across a range of
Health and Disability health shared
Align Business Models: focus
What sector review and services.
on reduced duplication,
success will Regional Information
improved processes and
look like Systems Strategic Plan.
ensuring benefits are realised
New services delivered
through rolling out Supply
within agreed models.
Chain Operating Model and
adapting the Procurement
Operating model for the
changing national landscape.
Page 20 HealthSource New Zealand Limited Statement of Intent 2020-2024Grow effective strategic relationships
Strong partnerships with strategic stakeholders are vital to our success in
delivering shared services to the Northern Region DHBs.
We ensure
The needs and interests of Northern Region DHBs and patients sit at the
heart of how we partner with all stakeholders.
Northern Region DHBs, suppliers, government agencies and other
organisations see us as an honest broker that is able to facilitate enduring
Why this
partnerships.
matters
A joined-up approach is taken to the end-to-end processing of orders
through to payment across all parties involved in a transaction.
Our relationship with government agencies will strengthen our work to take
an end-to-end view of shared service support arrangements.
Developing partnerships will help solve common system, process and
capability problems.
Our people are seen as Subject Matter Experts who bring their knowledge
and expertise.
Years 1-2 [Growing] Years 2-4 [Enhancing] Years 5+ [Optimised]
Develop a Culture of Leveraging Relationships Trusted Partner for
Customer Service and and Knowledge: to be DHBs: work in
What
Knowledge Sharing: to deliver seen as the Subject partnership with
success will
superior customer service, to Matter Experts. NRDHBs to co-design
look like
continuously grow and to be future services.
energised by innovation.
Page 21 HealthSource New Zealand Limited Statement of Intent 2020-2024Drive organisational excellence
Our people are critical to our success in becoming recognised experts in health
shared service delivery.
We ensure
We are a good employer, with healthy and safe working environments for
our people that are inclusive, flexible and supportive.
We work as one connected organisation that is part of the Northern Region
health care system.
Why this
We have a holistic approach to leadership that provides a strong
matters
organisational culture to ensure our people feel engaged, connected and
valued.
Our leaders harness the unique skills and expertise of our people.
The right people are in the right place at the right time to translate our
strategy into action and support Northern Region DHB priorities.
We have the required flexibility to align our people capability to the
opportunities and challenges that are present as the Northern Region
health care environment evolves.
Years 1-2 [Growing] Years 2-4 [Enhancing] Years 5+ [Optimised]
Develop Our People and Engaged and Capable Recognised as
Our Leadership Capability: Workforce: Attracting industry experts: in
Develop a high performance and retaining the optimal health shared service
culture within a mix of talent to support delivery.
What competency framework. our strategy and
success will Develop a holistic approach operating model.
look like to leadership.
Establish Company
Identity: to ensure we have
the structure we need to
deliver our strategy.
Page 22 HealthSource New Zealand Limited Statement of Intent 2020-2024Our Organisation Page 23 HealthSource New Zealand Limited Statement of Intent 2020-2024
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 (in so far 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 Statement of Intent 2020-2024Statutory 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 DHBs health profiles, please refer
to their Statements of Intent.
Page 25 HealthSource New Zealand Limited Statement of Intent 2020-2024Our 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 Statement of
Intent, 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 Statement of Intent 2020-2024Our people
Our values
Our Values underpin our success as an organisation, and are what defines us within a complex
environment. Continuing to identify opportunities to embed these into all phases of the employee
lifecycle ensures they remain ‘live’ and complement those of our stakeholders.
People and Culture strategy
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:
Organisational Development
Learning, development and growth
Leadership and Management capability building
Recognition and reward
Strategic Workforce Design
Employee Value Proposition
Talent attraction and selection
Business Partnering for Performance Excellence
Our workforce is diverse, and our ability to meaningfully connect with and grow its capability is
dependent on an agile and comprehensive framework that supports participation at every level.
Maintaining a subject matter expertise in the fields of Employment and Industrial Relations,
relevant legislation market and industry trends ensures that the organisation functions smoothly.
Health, Safety and Wellbeing
More than just staying physically safe in the workplace, a holistic approach to employee wellness is
recognised as a key driver for engagement.
Accessibility and Empowerment
Ensuring our people have access to the right knowledge, insight and frameworks; this is about getting
the basics right, streamlining people processes and creating valuable space to focus on the customer.
Good employer
The Crown Entities Act 2004 Section 118, places a requirement on all Crown Entities to be good
employers by ensuring processes and procedures are in place for the fair and proper treatment of all
employees. HealthSource takes its responsibility as a good employer very seriously and is committed
to promoting and maintaining the health, safety and wellbeing of its staff in the workplace. We
acknowledge our responsibilities under Health & Safety employment legislation. Health & Safety
representatives have been appointed and trained, policies are in place and health, safety and
wellbeing services are available to staff.
Page 27 HealthSource New Zealand Limited Statement of Intent 2020-2024Equal employment opportunities
HealthSource promotes and encourages equal employment opportunities. HealthSource is proud of
the diversity of its workforce and is committed to ensuring there is awareness of the need to provide
fair and equitable opportunities for all employees and potential employees.
Immigration New Zealand accreditation
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.
Our structure
The Board appoints the Chief Executive Officer (CEO) who is responsible for the day-to-day operations
of HealthSource. The CEO is supported by an Executive Leadership Team who are accountable to the
CEO in assisting with the overall management of HealthSource as a company and leading their
functional responsibilities.
Organisational structure at 30 June 2020
Chief Executive
Clare Thompson
GM Commercial Chief Operating Head of People,
GM Finance GM SPI GM Payroll
Services Officer Culture & Wellness
Richard Aldous Reinard Cox Anna Sefuiva
Stephen Coombe TBC Sarah Le Verne
OUR ‘Full Time Equivalent’ (FTE) Numbers
Current FTEs and future forecasted FTE below are based on
information known at 30 April 2020:
For the year ended 2019 2020 2021 2022 2023 2024
30 June Actual Forecast Budget Forecast Forecast Forecast
Total HealthSource 263 319 348 348 348 348
New Zealand Limited
Page 28 HealthSource New Zealand Limited Statement of Intent 2020-2024Finance Commercial Supply Strategy, People, Payroll
services chain planning and culture and
intelligence wellness
Richard Stephen Chief Reinard Cox Sarah Le Verne Anna Sefuiva
Aldous Coombe Operating
Officer
Managing Providing Managing the Supporting the We are proud to Providing
the Finance procurement purchasing, business to have a highly Payroll
Services for support for receipting achieve their motivated and services to
the Northern clinical and delivery results by engaged Counties
region. consumables, of goods to investigating and workforce that Manukau
equipment 1,900 initiating ideas for goes the extra Health,
and services. locations operational mile for our Waitematā
Non-clinical across the improvement, customers and DHB,
consumables, four Northern guidance and the Northern
equipment region analysis communities Regional
and services. District they serve. Alliance, New
ICT Health Zealand
equipment Boards Health
and services. Partnerships
and
healthAlliance
N.Z.
Financial Setting the Inventory Business Organisational Payroll
Control. procurement Management. Intelligence. Development processing.
strategy.
Management Supply Performance. Legislative Staff Service
Accounting Planning distribution. compliance Centre.
Master Data and
and procurement
Clinical EDI. Employment / Payroll
Reporting. initiatives.
Product Industrial Analysis.
Catalogue.
Accounts Managing Coordination. Relations
Master Data
Payable, sourcing. Procurement
Service Health & Safety Management.
Benefits Quality
Accounts Supplier and Delivery.
Assurance. Governance, Self Service
Receivable. contract
Support Systems, Policies Kiosk.
management. Project
Eligibility Services. and Process
Management. HRMS payroll
Supplier Talent reporting.
Supply
performance Acquisition
Optimisation.
management.
Communications
Page 29 HealthSource New Zealand Limited Statement of Intent 2020-2024Our 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
PHARMAC
Ministry of Business, Innovation and Employment (MBIE)
Treasury
Ministry of Health
Audit NZ
The Statement of Intent 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
Compliancy 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 30 HealthSource New Zealand Limited Statement of Intent 2020-2024Northern 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 Committee
Regional CFO Governance Group
Regional Capital Committee
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 31 HealthSource New Zealand Limited Statement of Intent 2020-2024Our Statement of Performance
Priorities
Page 32 HealthSource New Zealand Limited Statement of Intent 2020-2024Our Statement of Performance
Our Statement of Performance summarises the impacts HealthSource wants to make in FY20/21 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 33 HealthSource New Zealand Limited Statement of Intent 2020-2024Delivering our plan
Our Statement of Performance 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
Delivery of approved HealthSource operating
Enabling the services
budget within +/- $200k.
Northern Region within
Procurement Capability Index [PCI] score of 3.2 or
DHBs through the agreed
better.
provision of funding
Average Regional Accounts Receivable collection
efficient and envelope
days (calendar days from invoicing to receipt of
effective shared
payment) of 35 days or less.
services.
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
Regional
Deliver Measure =
Procurement
annualised
Aggregator $4.5 million annualised OPEX savings in FY20/21
OPEX
contributing to an overall return on investment of
Leveraging the savings to
5.2:1* or better on procurement funding cost.
combined the
volumes of Northern
Northern Region Region DHBs
DHBs for best and an
quality, service, overall
technology and return on
price in investment. *We exceeded our target (8:1) in FY19/20, delivering an overall
consumables, Return on Investment of 9:1. However, Covid-19 has led to a
disruption in worldwide supply chains, and an uncertain
capital items, and economic outlook. As a result, the focus of HealthSource and the
services; ensuring Procurement team has moved to Covid-19 recovery and not only
operational the mitigation of cost increases, but an intense focus on personal
efficiencies in the protective equipment, at risk product sourcing and contract and
procurement of risk management. These activities have meant that the ability to
goods and realise OPEX cost reduction benefits has been compromised.
services.
Page 34 HealthSource New Zealand Limited Statement of Intent 2020-2024Regional Supply Availability of Measure > 98% availability
Chain Oracle
inventory
Leveraging
managed
systems and
surgical
processes to
devices and
provide
consumables
efficiencies in the
supply chain and
managing
inventory, to
provide on-time
availability with
reduced held
stock.
Page 35 HealthSource New Zealand Limited Statement of Intent 2020-2024Our Financial Forecast Page 36 HealthSource New Zealand Limited Statement of Intent 2020-2024
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 2024 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. However, the financial forecasts reflect
the transition of the Finance services function from healthAlliance N.Z. to HealthSource New Zealand
Limited effective 1 January 2019; and the transfer of the payroll function from healthAlliance N.Z. to
HealthSource effective 1 October 2019.
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 do 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 is negotiated directly with Northern Region DHBs.
Funding is provided directly from DHB shareholders in accordance with the Shareholders Agreement.
Consequently, HealthSource sources all funding from Shareholders on an ‘as required’ basis and does
not operate with a standby banking facility.
Page 37 HealthSource New Zealand Limited Statement of Intent 2020-2024You can also read
