statement of intent - healthalliance · page 1 healthalliance statement of intent 2016-2020 ontents...

Statement of Intent healthAlliance N.Z. Ltd

Incorporating the Statement of Performance Expectations

2016-2020

healthAlliance Statement of Intent 2016-2020

Contents Message from the CEO ......................................................................................................................................... 4

About healthAlliance............................................................................................................................................. 6

Our Environment .................................................................................................................................................. 8

Our Role ................................................................................................................................................................ 9

Our Strategic Priorities ........................................................................................................................................ 10

Our Stakeholder Engagement ............................................................................................................................. 13

Our Customers .................................................................................................................................................... 14

Our Governance and Accountability ................................................................................................................... 15

Our Organisation ................................................................................................................................................. 16

Business and Statutory Policies .......................................................................................................................... 19

Our Statement of Performance Expectations ..................................................................................................... 21

Financial Forecast ............................................................................................................................................... 27

Statement of Responsibility ............................................................................................................................ 27

Forecast Financial Statements ........................................................................................................................ 27

Statement of Significant Accounting Policies ..................................................................................................... 34

General Accounting Policies ........................................................................................................................... 34

Basis of Preparation ........................................................................................................................................ 34


Introduction This Statement of Intent (SOI) has been prepared by healthAlliance N.Z. Limited (healthAlliance) in accordance with Part 4 of the Crown Entities Act 2004.

This document sets out the organisation’s strategic direction for the next four years, taking into account the current economic environment of increasing financial restraint. Government expectations (including the New Zealand Health Strategy), District Health Board (DHB) priorities, health sector efficiency programmes, legislative compliance and public sector accountability, have all been considered and reflected in this Statement of Intent. The Statement of Performance Expectations has been included in this document.

healthAlliance is responsible for the Prospective Financial Statements and Statement Service Performance contained in this document, including the appropriateness of the assumptions underlying them.

Signed on behalf of healthAlliance:

David Clarke Anthony Norman

Board Chairperson Director

healthAlliance N.Z. Ltd Board healthAlliance N.Z. Ltd Board

Date

01/07/16

Date

01/07/16


Message from the CEO

This is my first Statement of Intent as the Chief Executive of healthAlliance N.Z. Ltd. It is presented at a time of considerable and exciting change for the health sector.

It is apparent that healthAlliance, an agent for the Northern Region DHBs in the delivery and implementation of technology, finance and payroll, plays an important role in supporting DHBs by enabling them to reach their goals and aspirations.

RESPONDING TO GOVERNMENT AND NORTHERN REGION HEALTH PRIORITIES

healthAlliance contributes to supporting the Northern Region DHBs strategic focus on primary, secondary, and community health care models and outcomes. There are a number of key programmes of work that healthAlliance has, and will, continue to support and upgrade over the immediate future. Coupled with this will be the strategic replacement of the underpinning infrastructure; to support stabilisation initiatives and the uptake of mandated All of Government Services.

healthAlliance will enable DHBs to meet their agreed Ministerial goals (including delivery of the New Zealand Health Strategy) and also interact more easily through the use of self service and digital related outcomes. healthAlliance will work with Central Agencies, such as Ministry of Business, Innovation and Employment (MBIE), Department of Internal Affairs (DIA), and Ministry of Health (MoH), to support the implementation of agreed DHB outcomes. We are working within tight fiscal constraints, and will be looking closely at all of our work to identify where we can improve efficiency and continue to deliver savings.

There are a number of critical drivers, compliance, and statutory obligations that healthAlliance must respond to as part of our day to day responsibilities. These include:

Department of Internal Affairs:

= Technology risks are regularly reviewed and reported on

= Security standards for data and systems are maintained, including regular reviews of publicly accessible systems to ensure compliance

= Information and Communications Technology (ICT) assurance programmes are implemented into project methodologies

= The uptake of All of Government mandated services are planned for

= Privacy standards and requirements are built into frameworks and reported on

Treasury:

= Asset management processes are implemented

= Investor Confidence Ratings are assessed and matured

= Gateway reviews are built into project and programme related methodologies

= Compliancy with required accounting standards

Ministry of Health:

= Governance, funding, and approval related processes

= Alignment of Northern Region technology direction to mandated national outcomes

Audit NZ:

= Finance and reporting standards

= Annual audit outcomes


TRANSFORMING THE WAY WE WORK

While supporting the DHBs in their transformations, it is critical that healthAlliance also transforms the way it works, to enable delivery of objectives set out in our strategic priorities. healthAlliance has had unprecedented growth in demand from the Northern Region DHBs over the previous financial year in project and programme related work. There are also increasing expectations that healthAlliance will significantly improve year-on-year service performance.

It is important that healthAlliance evolves its operating model to one that is more sensitive to changing demand and sustainably transforming the technology of the Northern Region DHBs. We will, over the coming years, review the operating model and develop a set of targeted initiatives that will ensure healthAlliance has the capabilities, tools and practices that make the goals and aspirations of Northern Region DHBs a reality.

We will also need to access a range of different capabilities to help us implement these changes. In some cases, these capabilities will be sourced from outside healthAlliance, which will allow the healthAlliance workforce to focus on leadership. We will engage with a wide range of potential private sector health organisations and suppliers, so they have an understanding of the opportunities and challenges involved with the changes that our DHB customers may propose. This will help ensure that we can source the capabilities we need.

JOINING UP THE NORTHERN REGION INFORMATION SYSTEMS:

Our key focus will be on developing the Information Systems Strategic Plan (ISSP) during the 2016/17 year. This Plan will provide a road map to join up the Northern Region DHB’s information systems.

IMPROVING OUR SERVICE DELIVERY

The Government, the Ministry of Health, the Department of Internal Affairs, Treasury, and our Northern Region DHBs expect us to provide better, smarter, and lower cost services. A key part of our response is to make it easier for customers to access our services, provide consistent and predictable service outcomes, and end-to-end transparency, while also ensuring we have the right professional support to deliver our agreed services. We will continue to develop these initiatives to deliver an improved customer experience and better value for money.

Leading the technology related delivery of information systems and digital outcomes with the Northern Region DHBs is paramount. This will support DHBs to deliver on their priority outcomes. We will be working in collaboration with the Northern Region DHBs on a range of initiatives to improve services to customers. These will include information sharing and digital disrupter opportunities.

PROGRESS SINCE THE PREVIOUS STATEMENT OF INTENT

During the past year healthAlliance:

+ Increased project throughput related delivery by an unprecedented 40% + Supported Northern Region DHBs introducing new technologies and services such as ePrescribing, wireless

foundational technologies and services, and mobile services. These have helped increase the uptake of clinical-related e-services and enabled stakeholders to interact with DHBs more seamlessly

+ Agreed Service Level Agreement (SLA) measures with our customers and we are delivering to them + Increased our core network capacity, completed internet upgrades and embarked on continuous replacement of the

desktop fleet + Enabled wireless internet into Northern Region hospitals, ensuring coverage for visitors and patients in each of the

hospital sites

CONCLUSION

In the first year as Chief Executive of healthAlliance, I am proud to be leading a company that is integral to the success of Northern Region DHBs. There is a great sense of pride within healthAlliance and a true belief in the health outcomes that our DHB customers are striving to achieve. I am confident that healthAlliance will continue to deliver services that meet Ministry of Health goals, and those of our DHB customers, and I am excited about the journey we are embarking on.


About healthAlliance

BACKGROUND

healthAlliance N.Z. Limited is a stand-alone company established in July 2000 by Counties Manukau (now Counties Manukau Health) and Waitemata District Health Boards to provide shared services to both shareholders. In March 2011 Auckland and Northland District Health Boards, and Health Benefits Limited (now NZ Health Partnerships) became additional shareholders - resulting in the five organisations each holding a 20% shareholding in the Company. In June 2015, Health Benefits Limited provided healthAlliance with an exit notice advising the termination of its shareholding in healthAlliance from 30 June 2015. As of 1 July 2015, each of the four Northern Region DHBs have a 25% shareholding.

healthAlliance (FPSC) Limited is a wholly owned subsidiary of healthAlliance N.Z. Limited, incorporated in September 2013 in response to requirements from the health sector at the time. healthAlliance (FPSC) Limited began operations in February 2014, and was intended to be the vehicle for delivery of national Finance, Procurement and Supply Chain services to DHBs (and associated parties). In July 2014, there was a partial commencement of the national programme services when healthAlliance (FPSC) Limited began providing National Procurement Services to New Zealand DHBs. The remaining national programme service model was paused, and further advancement is subject to additional business cases.

From June 2015 healthAlliance (FPSC) Limited became an autonomous company with its own Chief Executive Officer, and in December 2015 healthAlliance’s Supply Chain functions were moved to healthAlliance (FPSC).

HISTORY ROAD MAP


STATUS AS AN ENTITY

healthAlliance N.Z. Limited is a Crown entity multi-parent subsidiary in terms of the Crown Entities Act 2004.

healthAlliance (FPSC) Limited is a wholly owned subsidiary of healthAlliance N.Z. Limited, and as such is also a Crown entity subsidiary in terms of the Crown Entities Act 2004, owned by a Crown entity and subsequently parented by multiple Crown entities. From 2016, it provides its own Statement of Intent, and Statement of Service Performance, as requested by the Minister of Health. This Statement of Intent covers healthAlliance N.Z. Limited and components of healthAlliance (FPSC) only where it relates to healthAlliance group activities.

Both healthAlliance companies are public benefit entities. They are domiciled in New Zealand, as defined under NZ International Accounting Standard 1 (IAS1) and incorporated in New Zealand. healthAlliance’s primary objective is to provide shared services to its DHB customers; where appropriate these services are also provided for approved external organisations. As Crown Entities operating within the public health sector, the healthAlliance companies comply (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.


Our Environment

THE MINISTER OF HEALTH’S EXPECTATION OF DHBS:

The Minister of Health’s Letter of Expectations has provided District Health Boards, and their subsidiaries, with this year’s funding envelope and the out-year assumptions to help prepare 2016/17 annual plans. In this letter, the Government acknowledges fiscal constraints, and the existence of compelling drivers, to make new funding available for the improvement of health services. The Government released the revised New Zealand Health Strategy in April 2016. The DHBs are required to drive change from the following five themes of the refreshed strategy:

1. People powered 2. Closer to home 3. Value and high performance 4. One team 5. Smart systems

Additionally DHBs are required to focus on the following:

+ Living within their means + Working across Government + Achieving National Health Targets + Tackling obesity + Shifting and Integrating Primary health Services + Supporting the Health IT Programme 2015-2020 + Delivering requirements from the Minister’s Enduring Letter of Expectations + Thinking beyond narrow definitions of health and collaborating with others to achieve wellbeing

healthAlliance has developed a set of strategic priorities which link to national and regional strategies. The nature of these linkages will be further explained in subsequent sections.


Our Role

healthAlliance is a recognised partner to support DHBs improve health outcomes for New Zealand populations.

It is important that funding is used efficiently and effectively by the sector to improve health services for all New Zealanders. The Government expects the health sector will continue to manage within available funding structures. healthAlliance activities, therefore, may be subject to agreement with our DHB shareholders around funding and the prioritisation of resources.

healthAlliance’s Purpose of being ‘right behind better healthcare’ by providing non clinical services to the Northern Region DHBs, outlines how we support our Customers in their delivery of value which is aligned with the Government’s priorities around Better Public Services and the Minister of Health’s priorities.

Streamlining and uniting processes - together with consistent application and shared service platforms - will minimise the resources required to drive those processes.

healthAlliance enables DHBs in their clinical service delivery through:

+ Supporting and maintaining information services that enable clinicians to collaborate in their delivery of safe and reliable services while also supporting DHBs to implement new technology solutions. The focus of the upcoming year is assisting the Northern Region DHBs to create an Information Systems Strategic Plan (ISSP) that will detail the Information Technology direction, and out year investment required to support health goals and aspirations.

+ Finance, which maintain the necessary financial disciplines, governance and risk management (including supporting DHBs to achieve their statutory and regulatory requirements)

+ Staff Service Centre which provides Payroll and HR Administration services to support Northern Regional Alliance, Counties Manukau Health and Waitemata DHB staff in the Northern Region.

+ Regional Internal Audit which assesses DHB process and governance, providing assurance to tax payers of New Zealand.

NATURE OF ACTIVITIES AND SCOPE

This Statement of Intent describes how healthAlliance will support its DHB Customers to achieve their objectives over the next four financial years. The Customer outputs provided by healthAlliance can be summarised as follows:

+ Finance + Information Technology + Regional Internal Audit

1 (RIA)

+ Staff Service Centre (Payroll and HR Administration)

Definitions and measures to achieve success in these output areas are defined in healthAlliance’s Statement of Service Performance on pages 21-24.

1 The RIA function is situated administratively within healthAlliance, however it primarily reports to the Northern Region DHBs Risk and Audit Committees.


Our Strategic Priorities

healthAlliance’s Strategic Priorities are centred on assisting our DHB customers to deliver their agreed health goals and aspirations. Through our people there is a core mission to deliver sustainable cost savings, drive efficiencies, and deliver professional, standardised, and customer centric services to DHBs. This enables us to realise our Purpose – right behind better healthcare and our Vision – to be the recognised experts in making the healthcare dollar go further.

OUR PURPOSE

Right behind better healthcare

Providing non clinical services to the Northern Region DHBs for Finance, Information Technology, Staff Services (Payroll and HR Administration) and Regional Internal Audit.

OUR VISION

To be the recognised experts in making the health dollar go further

We will assist the health sector to spend wisely, enabling DHBs to direct money to frontline clinical services by providing savings, automated processes, efficiencies and standardisation.

KEY STRATEGIC PRIORITIES

healthAlliance has evolved its three year strategy to reflect the changing health landscape and DHB priorities. Our strategy revolves around the following three Strategic Priorities:

CULTURE

+ A professional services company that puts our Customers at the centre of what we do. Through great leadership we will support and develop our people to be the best they can.

DELIVERY EXCELLENCE

+ Professional and consistent delivery of services that make our Customers successful. We make it easy for our Customers to engage; we are transparent, and actively lower the cost of operating.

TRANSFORMATION

+ Continuing the evolution of the operating model, workforce and capability that supports a professional service delivery company and customer centric organisation.

+ Transforming the way our Customers do business through the use of technology.


THREE YEAR STRATEGIC PLAN

Our strategy revolves around the following three Strategic Priorities:

STRATEGIC PRIORITY - CULTURE

We are:

+ A professional services company that puts our Customers first. Through great leadership we will support and develop our people to be the best they can.

We will:

= Demonstrate a culture that supports the importance of health, safety and wellness in the workplace

= Recognise employees who exemplify high performance and customer focus

= Support the development of employees through a well-defined performance and development framework focusing on succession planning, workforce development opportunities, and training our people to the right levels

= Attract and maintain staff with a credible and proven employee value proposition

= Focus on leadership to lift performance, engagement, and customer satisfaction

= Emphasise sound financial and risk management frameworks to identify, and manage the risks that matter

= Grow commercial operating models that are underpinned by pricing structures, and efficiencies, and focus on the provision of quality performance through an agreed SLA and strong performance management

= Introduce leadership disciplines that better commercially manage professional third party health and technology organisations

= Build stronger relationships with key stakeholders by engaging with them regularly, and understanding their needs

STRATEGIC PRIORITY - DELIVERY EXCELLENCE

Our priority is:

+ Professional and consistent delivery of services that make our Customers successful. We make it easy for our Customers to engage; we are transparent, and actively lower the costs of operating.

We will:

= Provide stable information systems

= Standardise, streamline and automate processes to enable greater productivity, fewer errors and no duplication

= Develop programmes to regularly review and improve key business processes

= Streamline and unite commercial, financial, and information system planning processes with our DHB Customers

= Implement a Cost to Serve model with full cost and driver transparency

= Operate to agreed benchmarks that have year-on-year efficiency and effectiveness targets


STRATEGIC PRIORITY – TRANSFORMATION

Our priority is to:

+ Evolve our operating model, workforce and capability to support a professional service delivery organisation.

+ Transforming the way our Customers do business through the use of information systems.

Internal Transformation - We will :

= Grow common processes and shared systems, reducing the costs to support and maintain our systems

= Introduce clear channel strategies and customer care models

= Demonstrate clear and sound fiscal and commercial related disciplines that support healthAlliance realising effective investment decisions

= Introducing enterprise ITIL methodologies to better manage the Information Technology landscape

= Mature our project and programme delivery frameworks that grows our Investor Confidence Rating

= Strengthening our capabilities including business intelligence, enterprise architecture, and vendor management to provide high quality, information for decisions and lowering the costs of operating

External Transformation - We will:

= Streamline governance processes, decision rights, and approval mechanisms

= Commoditise the DHB Infrastructure and transition to All of Government Infrastructure and Telecommunication related services

= Join up Northern Region data and information to enable effective decision making

= Develop and implement a regional Northern Region Information Systems Strategic Plan (ISSP)


Our Stakeholder Engagement

A key success criteria, in operating as an agent of the DHBs, is the requirement to build and maintain stronger relationships with key stakeholders through appropriate stakeholder management models; clear channels and methods of engagement, operating off the the same fact base, growing our people to develop a highly performing staff culture and resilient leadership; and through collaboration on the right funding model.

We expect our service leaders to actively maintain safe and high performing environments. We enable our people to be the best that they can be in their delivery of positive customer experiences.

healthAlliance engages at a number of levels within the overall health and Central Government environment including:

+ Regional Governance Groups and supporting sub governance groups + DHB Boards including Audit and Finance Committees + DHB Executive Team, DHB Management + National Advisory Groups including the MoH Services Commissioning Directorate + Government Chief Information Officer and team + Government Chief Privacy Officer

The Statement of Intent highlights the priority of assisting in the development of sound governance and clarity in decision making to both support the Northern Region and Sector as a whole. It is the intention of healthAlliance to further strengthen Central Agency engagement and ensure alignment.

NATIONAL COLLABORATION

healthAlliance provides services to DHBs outside the Northern Region in Finance and Information Technology. Each service is governed by a Contract for Services. healthAlliance is enthusiastic about the opportunities to work collaboratively with other organisations that are willing to consider the shared service opportunities healthAlliance can enable.

MINISTRY OF HEALTH TECHNOLOGY & DIGITAL SERVICES DIRECTORATE, & MINISTRY OF HEALTH SERVICES COMMISSIONING DIRECTORATE

healthAlliance will be forming relationships with the newly formed MoH Technology & Digital Services Directorate to ensure that regional and national IT priorities are aligned. Annually, the Technology & Digital Services Directorate will set out its expectations for how health IT should be progressed. This guidance informs the Regional Information Systems Capital Programme that is managed through the Northern Region Alliance (NRA). healthAlliance supports this process and ensures plans are synchronised.

While healthAlliance is for the most part not directly involved in the delivery of services that impact on the national health targets, healthAlliance does play an important role in supporting the DHBs to improve performance, and implement upgrades and new information system solutions.

NORTHERN REGION COLLABORATION

The shape of healthAlliance 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 Information Technology and Finance. These governance groups include the:

+ Northern Region Infomatics Governance Group + Regional CFO Governance Group + Regional Capital Committee + Northern Region, Regional Governance Group

The Central Agency groups provide strategic direction and alignment to regional planning/prioritisation guided through:

+ District Strategic/Annual Plans for our shareholder DHBs + Health sector efficiency programmes


+ National and Regional Plans including the National Health IT Plan, the Northern Region Health Plan and the Minister of Health’s Letter of Expectations to DHBs

Our Customers

healthAlliance’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 healthAlliance’s intent to continue to evolve and implement, in collaboration with DHBs, proven customer care and channel strategies that will support healthAlliance to effectively engage with its Customers. This will include the development of stakeholder management strategies, account executive engagement and management with DHBs executives, the standardisation of customer reporting, and the development of relevant meeting structures.

Information and intelligence is integral in understanding our Customers, as will the drive of customer satisfaction surveys, improvement plans, and the evolution of the service metrics. healthAlliance will be accountable for the measurement and reporting of customer outcomes, development of customer strategies, and proposals for the evolution of services to meet the needs of our Customers.

In addition; the compilation and assessment of customer demand for healthAlliance services will be integral for Information Technology to be scaled correctly, and for end user satisfaction to be maintained.

LINKING INPUTS AND ENABLERS TO CUSTOMER REQUIREMENTS


Our Governance and Accountability

CORPORATE

The Board of healthAlliance N.Z. is appointed by its shareholders and has an independent Chairperson. In turn, healthAlliance N.Z. appoints the Board of healthAlliance (FPSC). The Board meets ten times per year, and the Audit and Risk Committee four times per year.

The functions and purpose of the companies are set out in this Statement of Intent which has been developed on the basis of the Company’s annual plans. These mechanisms are supported by the Minister’s Letter of Expectation to shareholding DHBs.

The Company’s 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

healthAlliance 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 Chairperson, on behalf of the Board and shareholding DHBs.

INFORMATION REQUIRED BY MINISTERS

healthAlliance commits to provide Ministers with information as required, to enable timely responses to:

+ Parliamentary questions + Routine Ministerial correspondence + Select Committee inquiries

healthAlliance is required to comply with the provisions of the Official Information Act.


Our Organisation

OUR PRINCIPLES

healthAlliance celebrates employees who, by demonstrating our five PRIDE Principles, make great things happen in our organisations every day. Our people regularly go above and beyond to make things happen for our Customers. We recognise our employee’s contributions, and celebrate their outstanding achievements every month, and quarter, based on nominations by internal and external Customers.

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. healthAlliance takes its responsibility as a good employer very seriously. healthAlliance is committed to promoting and maintaining the health, safety and wellbeing of its staff in the workplace. We acknowledge our responsibilities under Health & Safety in employment legislation. Health & Safety representatives have been appointed and trained, policies are in place; and health, safety and wellbeing services are available to staff.

OUR CAPABILITY

healthAlliance continues to work towards implementation of our people strategy. healthAlliance believes our journey towards a service driven; commercially orientated organisation, will require a move towards more innovative approaches to people drivers. Key components of the healthAlliance people strategy are centred around the need to:

+ Operate a high performance culture demonstrated by the Leadership Team + Build a change ready, and highly engaged, work force capable of current and future delivery. One that can flex with

the utilisation of third party and scalable infrastructure services + Focus on a ‘future state’ organisational design and workforce planning

Resources and capability are assessed as part of the process of developing the Annual Plan each year. Staff are regularly involved in performance development reviews to a) ensure their KPIs are in line with those of the organisation and b) to identify opportunities for augmenting their skill base and competencies. healthAlliance promotes and encourages equal employment opportunities in healthAlliance to ensure there is awareness of the need to provide fair and equitable opportunities for all employees and potential employees.


PEOPLE STRATEGY

Our people are at the centre of everything we do. For the 2016/17 year we have chosen to focus on innovative approaches to:

+ Organisational Culture + Talent Management + Leadership Development + Health, Safety and Wellbeing

healthAlliance is a focused and efficient organisation which continues to evolve over time to meet the service delivery expectations of our Customers. healthAlliance’s workforce will be empowered to flex to meet requirements. This is important, and will be a growing trend, as healthAllinace moves toward an operating model that requires it to be more flexible and agile - in particular to technology related disciplines.

With the requirement to uptake All of Government services, planning will continue for the uptake of commodity Information Technology services. The move to ‘Infrastructure as a Service’ models will mean that the shape of our workforce will evolve to one that manages commercially orientated commodity service outcomes.

The impending development of the ISSP will detail the necessary supporting roadmap.

In order to successfully deliver our services, our teams will have competency in the following areas:

+ Ability to lead healthAlliance workforce in tandem with leading private company resourcing solutions that enable healthAlliance to readily flex resourcing needs, access intellectual property, and experience

+ Commercial and finance related leadership experience and skills + Strategic Leadership to develop and set direction, manage a complex stakeholder environment, develop road maps

and commercial options + Management of Ambiguity arising from healthAlliance’s transformation, and our role in assisting Northern Region

DHBs to transform. Any transformation has elements of ambiguity whereby leaders are dealing with incomplete information, new operating models, and the need to take people on a direction of change.

+ Customer Service - demonstrable understanding of customer service and the evolution of models to align with agreed customer care models and channel strategies. Leaders will be required to self-assess their services to ensure they are designed to meet the agreed Customer needs, to ensure that continual improvement is part of the fabric of their day to day routine, and to ensure that costs operate to benchmark with annual cost savings realised.

+ Service Delivery - to manage the delivery support services as part of end-to-end standardised processes. These will be budgeted for, and added to, the structure in an agreed and sequenced way

+ Risk Management - assurance that risks with the potential to prevent healthAlliance from achieving its objectives are identified, assessed, mitigated and monitored. This includes the application of good risk management practices and principles, to ensure risks are managed in a consistent and proactive manner.

+ Business Acumen - knowing our market and our Customers. Providing the best the marketplace has to offer in functional expertise, efficiency and service quality across all our services.


Chief Executive

CFO / GM Finance & Corporate Services GM Customer Services

GM Project & Programme

Services

CIO & GM Technology Services

Regional Internal Audit Manager

OUR STRUCTURE

The Board appoints the Chief Executive Officer (CEO) who is responsible for the day to day operations of healthAlliance. The CEO is supported by an Executive Leadership Team who are accountable to the CEO in assisting with the overall management of healthAlliance as a company and leading their functional responsibilities.

ORGANISATIONAL STRUCTURE AT 30 JUNE 2016

OUR FTE NUMBERS

Current FTEs and future forecasted FTE are as follows based on information known at 30 June 2016:

For the year ended 30 June 2015 Actual

2016 Forecast

2017 Forecast

2018 Forecast

2019 Forecast

2020 Forecast

healthAlliance N.Z. Limited

Total hA N.Z. Limited2 672.0 713.5 531.4 531.4 531.4 531.4

healthAlliance Group

Total hA Group 726.0 768.6 746.8 746.8 746.8 746.8

2 Reduction in FTE primarily relates to transition of Procurement & Supply Chain to healthAlliance (FPSC) Limited


Business and Statutory Policies

OPERATING RESPONSIBILITIES

The Company operates in a sustainable manner so that its services benefit both current and future customers. In order to meet this objective, the Company:

+ Maintains an appropriate business model that is sustainable, cost-effective and meets the on-going shared service needs of its stakeholders

+ Has a clear governance and decision-making framework in place which articulates the respective roles and responsibilities of healthAlliance and our Customers

+ Maintains effective relationships with stakeholders that are mutually supportive and productive + Provides high-quality shared services effectively and efficiently + Has a sustainable, competent and engaged workforce + Maintains effective systems to establish a baseline of performance and cost data for the measurement of gains to the

sector + Maintains appropriate monitoring tools and performance issue resolution processes for initiatives as they are

implemented + Develops and maintains policies appropriate for the business, including risk management policies

STATUTORY 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

The Company has established mechanisms to ensure it meets its legal compliance obligations including establishment of a General Counsel position. Of note, in the last year, compliance requirements were intensified by the introduction of changes in the Health and Safety legislation.

healthAlliance is committed to achieve the highest level of compliance with these changes. We acknowledge, however, that within this sector there are substantial and related compliance costs.

OPERATIONAL PROCESSES

healthAlliance is required to operate within the functions, powers and constraints outlined above. Comprehensive operational policies and procedures have been developed concerning the manner in which healthAlliance conducts its operational processes.

DIVIDEND POLICY

The Company’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

healthAlliance 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.


Our Statement of Performance Expectations

Our forecast Statement of Performance Expectations is based on our Service Level Agreement with our DHB Shareholders and Customers. The following pages outline our forecast, aligned to key performance areas of customer benefits and service quality.

healthAlliance as an organisation, in addition to customer benefits and service quality measures, measures itself on the achievement of our Annual Plan and Statement of Intent, which are approved by the healthAlliance Board and shareholders. Reporting against commitments, together with major service projects, is discussed on a regular basis by the Executive Leadership Team, Board and shareholders.

OUTPUT CLASSES

healthAlliance measures its performance through the following customer facing output classes:

1 FINANCE

Finance will be accountable for reviewing, assessing, and reporting on the financial and non-financial performance of healthAlliance for executive related forums, and the healthAlliance Board. Finance will also develop Cost to Serve models, and introduce effectiveness and efficiency metrics, to demonstrate our value for money.

Finance internal controls will demonstrate improvements in service provision without increasing costs. Proven controls will be in place that are aligned to legislative and regulatory disciplines. Planning processes will be aligned and united with DHBs, and national planning requirements.

Finance aims to deliver stable, maturing, business processes - ensuring the needs of our Customers are met. Our people actively seek opportunities to achieve efficiencies while effectively managing our risk and compliance requirements. Outputs are:

+ Effective financial management practices for healthAlliance + Full Accounts Receivable/Payable functions + General and Debtors’ Ledger maintenance + Debt collection (ACC and non-NZ residents) + Eligibility monitoring + Financial data analysis and reporting

2 INFORMATION TECHNOLOGY (IT)

Keeping the “lights on” and - in the event the system fails - that they are restored quickly, is a primary outcome for the IT team. With the move toward electronic records, and sharing of data between DHBs, the priority of ensuring that DHB information systems and data remains safe is critical. This will remain a key focus for the immediate future.

IT increases their focus on reducing risk, and improving stabilisation and service performance; delivering on our customer commitments, and agreed SLA’s, through efficient processes designed to reduce duplication. IT looks to established industry standards and governance to meet operational requirements. Proven, and industry accepted practices, will be in place. These are aligned to ITIL disciplines. Planning processes will also be aligned and united with DHB and national planning requirements.

IT will ensure there is a mapping of information systems software (across the architectural domains) to ensure it is licensed and compliant, current, consolidated where duplication exists, and cost can be removed annually to lower the cost of operating and further de-risk the environment.


Key Outputs for IT are:

+ Keeping the DHB information systems and data safe from cyber related attacks + Implementation of stabilisation programmes of work for DHB core (Tier 1) clinical and enterprise information

systems + Management of risk through a DHB Information Technology heat map + The introduction of quarterly Information Technology SLA status against agreed SLA’s and assessment of

those against customer satisfaction + Lowering the costs of doing business + Scale and improvements to project delivery, building service delivery and technical capability + Successfully supporting and delivering DHB transformation related programmes of work + National Oracle Solutions programme

IT prioritises activities under the guidance of the Regional Infometrics Governance Groups. Its outputs are the provision and development of a Northern Region infrastructure, and effective clinical and patient information systems for those working at the “front line”.

3 REGIONAL INTERNAL AUDIT (RIA)3

Regional Internal Audit (RIA) represents the third Line of defence in the organisation's Risk Management Strategy. Their role is to provide independent assurance that risk-mitigating actions by DHB Management are effective. To achieve this, RIA prepares an Internal Audit Plan each year that is approved by the Audit Risk and Finance Committee. This plan addresses high risk areas, based on the Audit Manager's risk assessment. Performance is measured on how well the audit plan has been achieved.

4 STAFF SERVICE CENTRE (SSC)

The Staff Service Centre aims to provide accuracy and timeliness in payroll services. Ensuring high customer satisfaction with their service, SSC performs incremental and staged improvements to the customer experience. Employees and managers are able to rely on accurate payroll and efficiency in customer support. The Staff Service Centre’s outputs are the provision of payroll and HR administration services for Waitemata DHB, Counties Manukau Health, healthAlliance companies, NZ Health Partnerships Limited and Northern Regional Alliance.

3 Regional Internal Audit provides measures to be reported through this document. Measures are generally set by the Customer DHB Audit and Risk Committees to maintain independence of the internal audit function.


DELIVERING OUR PLAN

To support consistent delivery of outputs, as part of our internal transformation programme, healthAlliance will be focusing on improving our project and programme disciplines. We will be maturing our programme management frameworks to ensure ‘industry best practice’ (including P3M3 & ITIL) and we will be adopting a ‘multimodal’ approach to project delivery 1) faster and more agile methods for tactical improvements 2) structured waterfall approaches for the delivery of major capital and strategic projects.

STRATEGIC PRIORITY - CULTURE

Ensure our Customers are at the centre of what we do

+ Develop and implement a ‘multi year’ Customer Care Programme

Customer Care Programme Output map

Customer Satisfaction measure

Measure = develop new survey, establish baseline (1st

half of year) and exceed baseline (2nd

half of year, target >80% customer satisfaction)

Develop and advance our Organisational Development Programme

+ Evolve the Organisation’s Operating Model

+ Leadership Development Programme

Organisational Development Programme Output map

Culture & People Plan Measure = Culture & People Plan approved and key programme milestones met

Engagement Measure = Engagement increased by 5%

Retention Of Talent Measure = 80% retention on identified talent

Loss Time Injury Frequency Rate Measure= Approve and implement the Health & Safety Plan Measure = Service lines to exceed applicable industry benchmarks

STRATEGIC PRIORITY – DELIVERY EXCELLENCE

Operational Improvement Programme

+ Delivery of Service Level Agreeement (SLA) expectations

+ Delivery of consistent services

Operational Improvement programme Output map

Delivery of SLA Expectations Measure= Meet SLA (defined metrics)

Information Technology services Improvement Programme

+ Stabilisation of core DHB systems (Tier 1, clinical and critical area enterprise systems)

+ Develop and implement a Cyber Strategy to minimise the threat risk to systems and data

+ Fully implement any improvements required as a result of the privacy maturity report

ICT Improvement Programme Output Map

Stabilisation of Tier 1 (critical) ICT Systems Measure= ICT plan approved and key milestones met Measure= Reduction in the number of SLA incidents

Implementation of Cyber and Privacy Plans Measure = Cyber and Privacy Plan approved. Key programme milestones met


STRATEGIC PRIORITY – DELIVERY EXCELLENCE

Financial Improvement Programme

+ Maturing of fiscal disciplines

Financial Improvement Programme Output Map

Delivery of Operational & Capital Budgets Measure= Variance to Budget (Operational & Capital)

Regional Internal Audit Utilisation of Audit Service relative to Individual DHB funding Measure= Deliver the Audit Plan within the agreed timeframes and budget

STRATEGIC PRIORITY – TRANSFORMATION

Develop and advance our Internal transformation programme

+ Design and implement the future Operating Model for healthAlliance

+ Improve project & programme delivery frameworks (capability and outcomes)

Internal transformation programme Output map

Operating Model Measure= hA future operating model approved and programme for change milestones met

Improved Project & Programme Delivery Frameworks (Capability and Outcomes): Measure= hA project delivery capability model approved and programme for change milestones met

Develop and advance our External transformation programme

+ Transform the way our Customers do business thorugh the use of information technology

+ Initiate the Information Systems Strategic Plan (ISSP) programme of work

+ Develop information systems Roadmaps

External transformation programme Output map

Delivery of Information Systems Strategic Plan (ISSP) and Associated Roadmaps Measure= ISSP programme approved and key programme milestones met


Financial Forecast

Statement of Responsibility The information contained in this Statement of Performance Expectations has been prepared in accordance with the Public Finance Act and the Crown Entities Act 2004.

healthAlliance 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 accord 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 healthAlliance, the forecast financial statements fairly reflect the financial position and operations of healthAlliance NZ Ltd and healthAlliance Group.

Forecast Financial Statements The forecast financial statements for the four years ending 30 June 2020 are included.

healthAlliance’s main financial objective is to provide services within the agreed funding envelope. Revenue is planned to be equal to total expenses as healthAlliance only charges net expenses to its shareholder DHBs and is effectively a not-for-profit organisation with the shareholding DHBs carrying the budget risk.

Financial forecasts (including FTE forecasts on page 16) are based on the continuation of existing services that healthAlliance provides to its current Customers. However, the financial forecasts reflect a transition of Supply Chain and Procurement services to healthAlliance (FPSC) Limited from 1 July 2016.

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 healthAlliance/DHB capital programmes.

healthAlliance earns revenue by charging DHBs, and other Customers for services provided. Currently all Customers of healthAlliance are District Health Boards or affiliated organisations, however the funding sources and approvals for healthAlliance N.Z. Limited and healthAlliance (FPSC) Limited are different. healthAlliance N.Z. Limited is negotiated directly with Northern Region DHBs, whereas some of healthAlliance (FPSC) Limited is negotiated through NZ Health Partnerships Limited.

Funding is provided directly from DHB shareholders in accordance with the Shareholders Agreement. Consequently, healthAlliance sources all funding from Shareholders on an ‘as required’ basis and does not operate with a standby banking facility.

The classes of output healthAlliance expects to supply are detailed on pages 21-22.

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

For the year ended 30 June 2015 ($000's) Audited

2016 ($000's) Forecast






Regional Internal Audit 1,160 1,176 1,129 1,140 1,150 1,160

Customer services 4,414 9,702 8,124 8,170 8,220 8,270

Finance and Corporate services 11,750 18,050 17,920 18,030 18,140 18,250

Project and Programme services - 9,951 9,335 9,390 9,450 9,510

Technology services 80,787 87,764 100,187 109,740 120,180 126,630

Supply Chain 9,988 8,974 - - - -

Procurement 2,210 1,592 - - - -

Total hA N.Z. Limited Outputs 110,309 137,208 136,695 146,470 157,140 163,820


Regional Internal Audit 1,160 1,176 1,129 1,140 1,150 1,160

Customer services 4,414 9,702 8,124 8,170 8,220 8,270

Finance and Corporate services 12,187 16,212 17,920 18,030 18,140 18,250

Project and Programme services - 9,951 9,335 9,390 9,450 9,510

Technology services 80,787 87,764 100,187 109,740 120,180 126,630

Supply Chain 9,988 8,974 8,377 8,430 8,480 8,530

Procurement 14,914 12,465 8,477 8,530 8,580 8,630

Total hA Group Outputs 123,450 146,243 153,549 163,430 174,200 180,980

FORECAST STATEMENT OF EXPENDITURE FOR OUTPUTS

For the year ended 30 June 2016 Personnel ($000’s)

Information Technology

($000’s)

Telecom ($000’s)

Depreciation ($000’s)

Amortisation Software

($000’s)

Other Expenses

($000’s)

Total value of services

($000’s)


Regional Internal Audit 799 20 7 - - 303 1,129

Customer services 6,816 672 69 - - 567 8,124

Finance and Corporate services 9,737 54 57 365 117 7,589 17,920

Project and Programme services 4,433 - 33 - - 4,869 9,335

Technology services 23,318 30,156 4,875 12,649 23,507 5,682 100,187

Total Outputs 45,210 30,901 5,042 13,013 23,624 19,010 136,695


Regional Internal Audit 799 20 7 - - 303 1,129

Customer services 6,816 672 69 - - 567 8,124

Finance and Corporate services 9,737 54 57 365 117 7,589 17,920

Project and Programme services 4,433 - 33 - - 4,869 9,335

Technology services 23,318 30,156 4,875 12,649 23,507 5,682 100,187

Supply Chain 7,710 4 67 17 - 578 8,377

Procurement 6,828 284 121 453 - 790 8,477

Total hA Group Outputs 59,642 31,190 5,231 13,484 23,624 20,378 153,549


FORECAST STATEMENT OF COMPREHENSIVE INCOME


2016 ($000's)

Forecast






Revenue

Revenue from Shareholders 103,136 110,336 110,842 120,860 131,370 137,890

Other Revenue 7,195 26,222 25,854 26,010 26,170 26,330

Total Revenue 110,331 136,557 136,695 146,870 157,540 164,220

Expenses

Personnel 44,508 52,570 45,104 45,380 45,660 45,940

Information Technology 24,933 29,044 30,901 31,090 31,280 31,470

Telecommunication costs 4,675 4,339 5,042 5,070 5,100 5,130

Depreciation 10,788 12,207 13,013 26,982 35,243 41,599

Amortisation Software 14,274 16,406 23,624 19,003 20,514 19,871

Other Operating Expenses 11,131 22,643 19,010 19,346 19,744 20,209

Total Expenses 110,309 137,208 136,695 146,870 157,540 164,220

Total Comprehensive Income 22 (651) - - - -


Revenue

Revenue from Shareholders 103,136 110,336 120,650 130,730 141,300 147,880

Revenue from NZ Health Partnership 12,918 11,814 8,554 8,610 8,660 8,710

Other Income 7,359 23,315 24,345 24,490 24,640 24,790

Total Revenue 123,413 145,464 153,549 163,830 174,600 181,380

Expenses

Personnel 50,546 57,810 59,642 60,010 60,380 60,750

Information Technology 25,457 29,460 31,190 31,380 31,570 31,760

Telecommunication costs 4,753 4,418 5,231 5,260 5,290 5,320

Depreciation 11,222 12,655 13,484 27,435 35,681 41,954

Software Amortisation 14,274 16,406 23,624 19,003 20,514 19,871

Other Operating Expenses 17,198 25,494 20,378 20,743 21,166 21,724

Total Expenses 123,450 146,243 153,549 163,830 174,600 181,380

Total Comprehensive Income (37) (779) - - - -


FORECAST STATEMENT OF MOVEMENTS IN EQUITY








Equity at Beginning of Year 95,413 101,954 131,847 156,247 172,047 179,047

Net Surplus for Year 22 (651) - - - -

Paid Up Shares Issued 6,519 30,544 24,400 15,800 7,000 7,000

Equity at End of Year 101,954 131,847 156,247 172,047 179,047 186,047


Equity at Beginning of Year 95,414 101,896 131,660 156,060 171,860 178,860

Net Surplus for Year (37) (779) - - - -

Paid Up Shares Issued 6,519 30,544 24,400 15,800 7,000 7,000

Equity at End of Year 101,896 131,660 156,060 171,860 178,860 185,860

REVENUE PER RELATED PARTIES








Revenue from DHB Shareholders

Northland DHB 9,466 10,114 11,597 12,570 13,590 14,220

Waitemata DHB 26,682 28,428 30,949 33,530 36,240 37,930

Auckland DHB 39,647 42,740 46,333 50,200 54,260 56,790

Counties Manukau Health 27,341 29,054 31,771 34,430 37,210 38,940

Total Revenue from DHB Shareholders 103,136 110,336 120,650 130,730 141,300 147,880

Revenue received through

healthAlliance N.Z. Limited 103,136 110,336 110,842 120,860 131,370 137,890

healthAlliance (FPSC) Limited - - 9,808 9,870 9,930 9,990

Total Revenue from DHB Shareholders 103,136 110,336 120,650 130,730 141,300 147,880


Revenue from Related Parties

Northland DHB 9,466 10,114 11,597 12,570 13,590 14,220

Waitemata DHB 26,682 28,428 30,949 33,530 36,240 37,930

Auckland DHB 39,647 42,740 46,333 50,200 54,260 56,790

Counties Manukau Health 27,341 29,054 31,771 34,430 37,210 38,940

NZ Health Partnership 12,918 11,814 8,554 8,610 8,660 8,710

Total Revenue from Related Parties 116,054 122,150 129,204 139,340 149,960 156,590


FORECAST OF FINANCIAL POSITION








Current Assets

Cash, Bank & Investments 6,538 7,500 2,349 2,248 3,125 5,725

Trade & Other Receivables 11,170 12,800 11,580 11,590 11,610 11,620

Total Current Assets 17,708 20,300 13,929 13,838 14,735 17,345

Long-term Assets

Property Plant & Equipment 37,631 62,068 100,368 118,481 128,330 134,737

Software 65,451 69,189 60,380 58,287 54,683 52,814

Non-current prepayments 93 90 90 90 90 90

Total Long-term Assets 103,175 131,347 160,838 176,859 183,102 187,642

Total Assets 120,883 151,647 174,767 190,697 197,837 204,987

Current Liabilities

Provision & Accruals 10,547 12,050 9,160 9,250 9,350 9,470

Employee Entitlements 5,976 4,250 5,860 5,900 5,940 5,970

Total Current Liabilities 16,523 16,300 15,020 15,150 15,290 15,440

Long-term Liabilities

Provision & Accruals - 900 900 900 900 900


Total Long-term Liabilities 2,406 3,500 3,500 3,500 3,500 3,500

Total Liabilities 18,929 19,800 18,520 18,650 18,790 18,940

Net Assets (Liabilities) 101,954 131,847 156,247 172,047 179,047 186,047

Shareholder Capital 101,664 132,208 156,608 172,408 179,408 186,408

Retained Earnings 290 (361) (361) (361) (361) (361)

Total Equity 101,954 131,847 156,247 172,047 179,047 186,047


Current Assets

Cash, Bank & Investments 6,478 7,530 2,518 2,890 4,215 7,210

Trade & Other Receivables 11,611 12,475 11,460 11,470 11,490 11,500

Total Current Assets 18,089 20,005 13,978 14,360 15,705 18,710

Long-term Assets

Property Plant & Equipment 40,842 64,831 102,682 120,342 129,752 135,805

Software 65,451 69,189 60,380 58,287 54,683 52,814

Non-current prepayments 93 90 90 90 90 90

Total Long-term Assets 106,386 134,110 163,152 178,720 184,525 188,710

Total Assets 124,475 154,115 177,130 193,080 200,230 207,420

Current Liabilities

Provision & Accruals 11,011 13,408 9,640 9,740 9,840 9,980


Borrowings 1,623 697 - - - -

Total Current Liabilities 19,288 18,775 17,390 17,540 17,690 17,880

Long-term Liabilities

Provision & Accruals 709 900 900 900 900 900


Total Long-term Liabilities 3,291 3,680 3,680 3,680 3,680 3,680

Total Liabilities 22,579 22,455 21,000 21,160 21,300 21,490

Net Assets (Liabilities) 101,896 131,660 156,060 171,860 178,860 185,860

Shareholder Capital 101,664 132,208 156,608 172,408 179,408 186,408

Retained Earnings 232 (547) (547) (547) (547) (547)

Total Equity 101,896 131,660 156,060 171,860 178,860 185,860


FORECAST STATEMENT OF CASHFLOWS








Cash Flows - Operating Activities

Receipts from Services 109,094 110,395 110,842 120,860 131,370 137,890

Other Income 4,408 6,497 26,974 25,900 26,050 26,220

Interest Received 168 152 100 100 100 100

Total Revenue - Operating Activities 113,670 117,044 137,915 146,860 157,520 164,210

Payments to employees 46,930 54,102 43,494 45,340 45,620 45,910

Payments to suppliers 35,868 38,015 57,843 55,416 56,024 56,689

Interest Paid - - - - - -

Total Expenses 82,798 92,117 101,337 100,756 101,644 102,599

Net Cash Flow - Operating Activities 30,872 24,927 36,578 46,104 55,876 61,611

Cash Flows – Investing Activities

Purchase of Assets (37,407) (47,155) (59,129) (55,005) (55,000) (59,010)

Net Cash Flow - Investing Activities (37,407) (47,155) (59,129) (55,005) (55,000) (59,010)

Cash Flows – Financing Activities

Shareholder Capital Funding 6,519 23,190 17,400 8,800 - -

Net Cash Flow - Financing Activities 6,519 23,190 17,400 8,800 - -

Movements in Cash

Net Cash flow (16) 962 (5,151) (101) 876 2,601

Opening Cash 6,554 6,538 7,500 2,349 2,248 3,125

Closing Cash 6,538 2,500 2,349 2,248 3,125 5,725


Cash Flows - Operating Activities

Receipts from Services 122,456 120,853 129,139 139,340 149,960 156,590

Other Income 3,511 3,731 25,325 24,380 24,520 24,680

Interest Received 172 154 100 100 100 100

Total Revenue - Operating Activities 126,139 124,738 154,564 163,820 174,580 181,370

Payments to employees 53,242 59,596 56,562 59,960 60,330 60,700

Payments to suppliers 41,297 39,212 60,523 57,278 57,921 58,659

Interest Paid 94 57 65 5 5 5

Total Expenses 94,633 98,865 117,150 117,243 118,256 119,364

Net Cash Flow - Operating Activities 31,506 25,873 37,414 46,577 56,324 62,006

Cash Flows – Investing Activities

Purchase of Assets (37,643) (47,155) (59,129) (55,005) (55,000) (59,010)

Net Cash Flow - Investing Activities (37,643) (47,155) (59,129) (55,005) (55,000) (59,010)

Cash Flows – Financing Activities

Borrowings (627) (856) (697) - - -

Shareholder Capital Funding 6,519 23,190 17,400 8,800 - -

Net Cash Flow - Financing Activities 5,892 22,334 16,703 8,800 - -

Movements in Cash

Net Cash flow (245) 1,052 (5,012) 372 1,324 2,996

Opening Cash 6,723 6,478 7,530 2,518 2,890 4,215

Closing Cash 6,478 7,530 2,518 2,890 4,215 7,210


FORECAST CAPITAL SPEND








Applications 20,012 18,139 12,906 15,001 15,000 16,094

Infrastructure 17,395 27,736 43,579 40,004 40,000 42,916

Premises - 1,280 2,645 - - -

Total Forecast Capital Spend 37,407 47,155 59,129 55,005 55,000 59,010


Applications 20,012 18,139 12,906 15,001 15,000 16,094

Infrastructure 17,395 27,736 43,579 40,004 40,000 42,916

Premises 236 1,280 2,645 - - -

Total Forecast Capital Spend 37,643 47,155 59,129 55,005 55,000 59,010

NOTE:

The FY16/17 Capital Investment Programme will be focusing on application development and upgrades (clinical and infrastructure applications) and ICT Infrastructure investment (asset replacement, preventative maintenance, developing future solutions). The objectives for capital investment are outlined in the sections on Strategic Priorities and the Statement of Performance Expectations.

At the time of writing, the Capital Investment Programme is still subject to regional approval. healthAlliance is actively working with this group to prioritise the overall Capital Programme assessing the risk, benefit and affordability of the proposed programme. Therefore the Capital Programme reflected in this Statement of Intent is subject to change as prioritisations may move within available funding levels. The outcomes of the Information Systems Strategic Plan (ISSP) will also inform the future investment roadmap. For the Capital Programme, business cases will be developed - and only once approved - will the capital expenditure be incurred.


Statement of Significant Accounting Policies

The following is a summarised description of the accounting policies used in preparation of the Statement of Intent. A full description of the accounting policies used by the group can be found in the 2014/15 Annual Report.

General Accounting Policies

REPORTING ENTITY

healthAlliance N.Z. Limited (“hA”) is a company jointly owned by the Northland, Waitemata, Auckland and Counties Manukau Health District Health Boards. healthAlliance’s ultimate parent is the New Zealand Crown. healthAlliance is a crown entity subsidiary in terms of the Crown Entities Act 2004, owned by the Crown and domiciled in New Zealand. healthAlliance is a public benefit entity for financial reporting purposes as defined under NZ IAS 1.

The group financial statements include healthAlliance and its wholly-owned subsidiary, healthAlliance (FPSC) Limited (“hA FPSC”).

Basis of Preparation

STATEMENT OF COMPLIANCE

The financial statements have been prepared in accordance with the requirements of the Crown Entities Act 2004 and the Financial Reporting Act 1993 which include the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP). The financial statements have been prepared in accordance with Tier 1 Public Benefit Entity accounting standards.

FUNCTIONAL AND PRESENTATION CURRENCY

The financial statements are presented in New Zealand Dollars (NZD), rounded to the nearest thousand. The functional currency of healthAlliance is NZD.

MEASUREMENT BASE

The financial statements are prepared on the historical cost basis.

FORECAST FINANCIAL INFORMATION

The forecast financial statements have been prepared in accordance with Public Benefit Entity Financial Reporting Standard 42, Prospective Financial Statements. The Company is required under the Crown Entities Act 2002 to present forecast financial statements as part of its Statement of Intent.

The Company is responsible for the forecast financial statements presented, including the assumptions underlying statements and all other disclosures. The forecast statements have been prepared on the basis of best estimates as to future events which the Company expects to take place. The Company has considered factors that may lead to a material difference between information in the forecast financial statements and actual results.

Particular Accounting Policies

The following particular accounting policies which materially affect the measurement of results and financial position are applied:


BASIS OF CONSOLIDATION

The consolidated forecast financial statements are prepared by adding together like items of assets, liabilities, equity, income and expenses on a line by line basis. All intragroup balances, transactions, income and expenses are eliminated in full on consolidation. healthAlliance consolidates into the financial statements all entities where they have the capacity to control the financing and operating policies so as to obtain benefits from the activities of the subsidiary.

REVENUE RECOGNITION

Revenue is recognised on receipt or delivery of service, whichever is the earlier.

TAXATION

The Group entities are exempt from income tax under section CW38 of the Income Tax 2007.

RECEIVABLES AND PREPAYMENTS

Receivables and Prepayments are stated at expected realisable value after providing for doubtful debts.

STATEMENT OF CASH FLOWS

Cash balances on hand, held in bank accounts, demand deposits and other highly liquid investments in which healthAlliance invests as part of its day-to-day cash management.

Operating activities include cash received from all income sources of healthAlliance and records the cash payments made for the supply of goods and services.

CHANGES IN ACCOUNTING POLICIES

There have been no changes in accounting policy.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are included at cost less depreciation to date.

DEPRECIATION

Depreciation is provided on a straight-line basis on all tangible property, plant and equipment at rates calculated to allocate the cost, less estimated residual value, over their estimated useful lives.

Major depreciation rates are:

IT equipment: 20% to 33%

Other equipment: 10% to 20%

Leasehold Improvements: 11% to 33%

INTANGIBLE ASSETS

Software acquired by the Group is stated at cost less accumulated depreciation and impairment losses. Where software is developed or modified internally, the cost of internal staff time is added to the value of the software where future economic benefits will flow to the Group.

AMORTISATION

Amortisation is recognised in the surplus or deficit on a straight line basis over the estimated useful lives of intangible assets. Major amortisation rates are:

Software: 12 to 33%


LEASES

Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are recognised as expenses in the periods in which they are incurred.

PAYABLES TO SHAREHOLDERS

Payables to shareholders are advances payable on demand and are interest free.

EMPLOYEE ENTITLEMENTS

Employee benefits that are due to be settled within the next 12 months are measured at nominal values based on entitlements at current rates. The value of benefits that will be settled beyond 12 months - after the end of the period in which the employee renders the related service - have been calculated on an actuarial basis. This takes into account the likelihood that staff will reach the point of entitlement, their years of service, and the present value of estimated future cash flows.


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