Statement of Intent

Transcription

1 Statement of Intent healthalliance N.Z. Ltd healthalliance (FPSC) Ltd

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3 Our Vision We are 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 procurement savings, automated processes, efficiencies and standardisation Our Purpose To be right behind better healthcare: providing non clinical services to the Northern Region DHBs for Information Technology, Staff Services (Payroll and HR Administration), Regional Internal Audit and to the DHB Sector in Finance, Procurement, and Supply Chain (FPSC). Our Principles

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5 Contents Introduction... 1 About healthalliance... 2 Our Environment... 2 Our Focus... 3 The Role of healthalliance... 4 Our Performance Expectations... 6 Our Regional Service Outputs... 7 Our National Service Outputs... 9 Stakeholder Engagement Governance and Accountability Organisation Business and Statutory Policies Financial Forecast Statement of Responsibility Forecast Financial Statements Statement of Significant Accounting Policies... 29

6 Introduction This Statement of Intent (SOI) has been prepared by healthalliance N.Z. Limited in accordance with Part 4 of the Crown Entities Act 2004 on behalf of healthalliance N.Z. Limited and its subsidiary healthalliance (FPSC) Limited. For the purposes of this document healthalliance is used to refer to both entities and, unless specifically identified, content applies to both companies. 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, 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 Service Performance has been appended to this document. healthalliance is responsible for the Prospective Financial Statements and Statement of Forecast Service Performance contained in this document, including the appropriateness of the assumptions underlying them. Signed on behalf of healthalliance: David Clarke Chair healthalliance Board Paul Harper Director healthalliance Board Date: 17 August 2015 Date: 17 August 2015 Page 1 healthalliance Statement of Intent

7 About healthalliance BACKGROUND healthalliance N.Z. Limited is a stand-alone company established in July 2000 by Counties Manukau District Health Board (now Counties Manukau Health) and Waitemata District Health Board to provide shared services to both shareholders. In March 2011 Auckland and Northland District Health Boards, and Health Benefits Limited 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 which advises of the termination of its shares in healthalliance. From 1 July 2015 healthalliance will be owned by the four Northern Region DHBs with a 25% shareholding each. healthalliance (FPSC) Limited is a wholly owned subsidiary of healthalliance N.Z. Limited, and like healthalliance N.Z. it is a crown entity under the Crown Entities Act Incorporated in September 2013 in response to requirements from the health sector, 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 healthalliance (FPSC) Limited began providing National Procurement Services to New Zealand DHBs. The National Solution Build (Oracle) is currently subject to a business case and the Finance and Supply Chain elements of the FPSC Programme are currently paused and will be subject to further business cases in the future. STATUS AS AN ENTITY healthalliance N.Z. Limited is a Crown entity multi-parent subsidiary in terms of the Crown Entities Act 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. Both healthalliance entities are public benefit entities. They are domiciled in New Zealand, as defined under NZ IAS 1 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 (DHBs), and their subsidiaries, with this year s funding envelope and the out-year assumptions to help prepare 2015/16 Annual Plans (December 2014). In this letter the Government acknowledges both fiscal constraints and the existence of compelling drivers to make new funding available for the improvement of health services. Most available funding will be directed to DHBs to ensure the demands of a growing and aging population can be met. 1. DHBs will maintain core services for their local population and ensure continued electives growth, consistent with the Government s policy. This must be demonstrated in Annual Plans 2. DHBs should discuss any intended changes to levels of access with the NHB, and adhere to the Service Change Protocols, in the preparation of the Annual Plan 3. As noted above DHBs must manage within the funding available and reduce deficits where they currently exist. Page 2 healthalliance Statement of Intent

8 Our Focus Our role is to provide services that deliver benefits to our customers and support the objectives of DHBs which are informed from: Government Health & Disability Sector Outcomes + National Priorities for 2015/16 in the Minister of Health's "Letter of Expectations" + National Outcomes from the New Zealand Health and Disability Act National Strategies published by the Ministry of Health (MoH) Longer Term Outcomes + DHBs Health Plan and Annual Plans + Shared Services Plan + Regional Health Plan Page 3 healthalliance Statement of Intent

9 The Role of healthalliance Our Vision: We are the recognised experts in making the health dollar go further. 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 and reduce deficits where they exist. Our 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: providing non clinical services to the Northern Region DHBs and to the National DHB Sector in Finance and Supply Chain (FPSC) outlines how we support our customers in their delivery of value aligned with the Government s priorities around having a Better Public Service and the Health Minister s priorities for Health. Streamlining and uniting processes, consistent application and shared service platforms will minimise the resources required to drive those processes. healthalliance enables DHBs in their clinical service delivery through: + Information Services that enable clinicians to collaborate in their delivery of safe and reliable services + Regional Procurement and National Finance & Supply Chain Services (through healthalliance (FPSC) Limited) to achieve savings and efficiency gains in addition to necessary disciplines and shared service structures. + Finance and Strategy, which maintain the necessary financial disciplines, governance and risk management + 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. 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 outputs provided by healthalliance can be summarised as follows: = Finance = Information Services = Procurement = Regional Internal Audit1 (RIA) = Staff Service Centre (Payroll and HR Administration) = Supply Chain KEY PRIORITIES In order to meet our stated objectives (Our Purpose), and our deliverables, our key strategic priorities for the period of this Statement of Intent will include: 1. A focus on Clinical / Customer / Stakeholder needs = Focusing on the provision of quality performance through an agreed SLA and strong performance management = Providing consistent service through single customer service contact points and cohesive leadership = Improving programme and project management capabilities to deliver projects on time, and within budget, to enable the realisation of business benefits = Building stronger relationships with key stakeholders by engaging with them regularly, and understanding their needs 2. The building up of efficient and effective processes = Through standardising, streamlining and automating processes to enable greater productivity, fewer errors and no duplication = Stretching performance measures and targets for all services to ensure consistent quality and delivery = Continuing to develop programmes to ensure that key business processes are regularly reviewed and improved = Growing common processes and shared systems, reducing the costs to support and maintain our systems 3. Financial accountability and sound governance = By leveraging our size to generate sustainable procurement savings nationally = Strengthening our business intelligence capability to provide more transparent, and high quality, information for decision 1 The RIA function is situated administratively within healthalliance, however it primarily reports to the Northern Region DHBs Risk and Audit Committees. Page 4 healthalliance Statement of Intent

10 making = Providing environments that enable our people to plan and manage their budgets; and report their financial performance = Emphasising sound governance and risk management frameworks to identify, and manage, risks that matter = Growing commercial operating models that are underpinned by pricing structures, and efficiencies 4. A safe and high performing environment = Boosting a culture that supports the importance of health, safety and wellness in the workplace = Recognising employees who exemplify high performance = Supporting the development of Employees through a well-defined performance and development framework We will build stronger relationships with key stakeholders through appropriate governance models; growing our people to develop a highly performing staff culture and resilient leaders; 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. Page 5 healthalliance Statement of Intent

11 Our Performance Expectations Our forecast service performance is based on agreed targets with our DHB shareholders and customers. The following pages outline our forecast, aligned to key performance areas of customer benefits and service quality. Performance targets are based on the assumption that the targets have been agreed and appropriately resourced. healthalliance as an organisation, in addition to customer benefits and service quality measures, measures itself on the achievement of our Business Plan and Statement of Intent, which are approved and signed off by the healthalliance Board and Shareholders. Reporting against commitments, together with major service projects, is discussed on a regular basis by the Executive Team and Board with reporting on the SOI is sent to Shareholders. Note (1): Where measures are given separately for Northern Region and National the following meanings apply: = Northern Region: for services that are outside the scope of the national programme or have yet to transfer to the National programme. = National: for services that are in scope and have transferred into the National FPSC programme. OUTPUT CLASSES healthalliance measures its performance through the following output classes: 1 Finance: 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/clinical data analysis and reporting. 2 Information Technology: Provision and development of a Northern Region infrastructure; effective clinical and patient information systems for those working at the front line. 3 Procurement: Leveraging the combined volumes of national DHBs for best quality, service, technology and price in consumables, capital items, and services; ensuring operational efficiencies in the procurement of goods and services. 4 Regional Internal Audit: Provision of internal audit services to the Northern Region DHBs and primarily reports to the Northern Region DHBs' Risk and Audit Committees. 5 Staff Service Centre: Payroll and HR Administration Services for Counties Manukau Health and Waitemata DHB, healthalliance and Health Benefits Limited. 6 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. Note: 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. ORGANISATIONAL PERFORMANCE Our organisation will focus on achieving the following org-wide key customer deliverables: Measure of Success + healthalliance Customer/Stakeholder Satisfaction Deliverables = 85% of customers satisfied with service measured through surveys with defined customer representatives + Key Programme Delivery = 75% milestones recorded in key projects/ programs achieved in the planned time-frame based on their baseline Page 6 healthalliance Statement of Intent

12 Our Regional Service Outputs FINANCE Finance internal controls will demonstrate improvements in service provision without increasing costs. Finance aims to deliver stable, maturing, business processes - ensuring the needs of our Customers are met. Our people actively seek opportunities to achieve efficiencies whilst effectively managing our risk and compliance requirements. Key programmes to be Single Front Door, Economic Model, Smarter Service Delivery. Finance will focus on achieving healthalliance s strategic goals through the following key deliverables: Measure of Success Deliverables + Single Front Door = Communication with ha is easy and simple, # direct contact with MSC + Economic Model = Full Service Catalogue, SLA and Pricing Model available + Smarter Service Delivery = Customer/Stakeholder Relationship Model developed (satisfaction survey) = Aligning and building efficiencies in our Finance Services to our Customers requirements INFORMATION TECHNOLOGY (IT) IT increases their focus on reducing risk and improving 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 and capital budgets. Key programmes of work are: = IT will be completing a full ha Board Governance activity around Capital Funding& Planning towards ha Operations costs and procedures to meet DHB commitments: = Northern Region Migration Programme (NRMP) linking into the National Infrastructure Programme (NIP) = Mitigating the back end infrastructure into a fit for purpose hosted data centre, upgrading systems and applications to be fully supported and designed to meet SLAs. = Scale and improve project delivery, building service delivery capability = Harmonisation of IT structure: the right logical groups and physical locations In partnership with the Regional IT Leadership Group, IT will focus on achieving healthalliance s strategic goals through the following key deliverables: Measure of Success Deliverables + SLA Adherence = Improved SLA adherence (SLAs and accountability to be further defined) + NRMP Infrastructure to meet SLAs = List is defined 60% over 3 year period + Project Delivery Programme = 75% of milestones as recorded in all IT projects/ programs that have been achieved in the planned time-frame based on their baseline (difficult to measure) + Harmonisation Project = Customer/Stakeholder Relationship Model developed (satisfaction survey) Page 7 healthalliance Statement of Intent

13 REGIONAL INTERNAL AUDIT (RIA) Regional Internal Audit (RIA) provides internal audit services primarily to the Northern Region District Health Board s Risk and Audit Committees. Increasing the use, and implementation, of recognised external process and methodologies such as CAATTs (Computer Assisted Auditing Tools and Techniques), Control Self Assessments (CSA) and Continuous Controls Monitoring (CCM) RIA provides functional reporting to the Audit Chair of each DHB in the Northern Region and administrative reporting to the CEO of healthalliance. RIA will focus their efforts on supporting the following key deliverables: Measure of Success + Consistency of audit process and outcomes with external standards Deliverables = 85% CAATTs (Computer Assisted Auditing Tools and Techniques) Implementation of Control Self Assessments (CSA) and Continuous Controls Monitoring (CCM). STAFF SERVICE CENTRE (SSC) The Staff Service Centre will further its work on the delivery of cost effective payroll and HR Administration processing through the next stage of payroll automation and growing standardisation in their processes. Reducing rework and increasing customer satisfaction by way of staged improvements to the customer experience; employees and managers will increasingly be able to access self-service and efficiencies in customer support. Two key pieces of work: (1) Engaging with Counties Manukau Health to further enhance use of Kiosk. Activity focused on two key areas: Work Related Expenses (WRE) and My People. (2) Stage 2 Kiosk Programme with Waitemata DHB deploying (i) WRE claims electronically to reduce paper, and (ii) to measure and report on L&D and mandatory training, (iii) deployment of new HR reporting model with an opportunity to develop an HR dashboard. Staff Service Centre will focus on achieving healthalliance s strategic goals through the following key deliverables: Measure of Success Deliverables + CMH Kiosk Improvement Programme = % of users logging in through Kiosk for WRE = % of My People activities through Kiosk + WDHB Stage 2 Kiosk Improvement programme = 20% reduction on requests for information from WDHB in year one SUPPLY CHAIN Supply Chain will progress the delivery of a consistent operating model that delivers significant, visible results to our customers. Improvements in efficiencies and cost effectiveness, on-going business stabilisation and continued implementation of agreed Supply Chain improvement projects will support and deliver regional requirements. In addition to maintaining and enhancing the base services set over the last two years, Supply Chain this year will also focus on enabling customers to make the most of procurement opportunities where Procurement originates the contract; Supply Chain will complete the process with successful supply and focus on achieving healthalliance s strategic goals through selecting the following key deliverable as its prime focus: Measure of Success Deliverables + Speed and Completeness = Time from (i) issue of implementation pack to (ii) price changed and product available for purchase from Regional Catalogue. Reduced by 25% (improvement on current performance of 25 working days) + Inventory availability = 99.0% of inventory items available on the shelf, working inventory Page 8 healthalliance Statement of Intent

14 Our National Service Outputs PROCUREMENT Four service objectives covering Benefits, Risk Mitigation, Stakeholder Satisfaction and Quality come together to build on the existing foundation. Underpinned by a rigorous service review, the focus is on achieving the correct performance measures as follows: Results will be visible in Procurement benefits and will focus on the following key deliverables: Measure of Success Deliverables + Benefits realised = National $22.1 million budgetary /$ 21.5 million non-budgetary + Risk Mitigation = Clean action report to appropriate timelines, monthly + Stakeholder Satisfaction = Customer, staff, supplier, other to 85%, annually + Quality = Completeness and accuracy of benefits register, monthly Page 9 healthalliance Statement of Intent

15 Stakeholder Engagement A key element for success is successful partnerships with DHBs, and other health organisations to support the delivery of benefits and savings. healthalliance s overall engagement framework is designed to raise awareness of our services at the appropriate level within each DHB. Key stakeholders are the business and clinical advocates for the service changes that we propose, particularly the implementation of Procurement and Information Services initiatives. healthalliance employees engage at all levels in the DHB including: + National Advisory Groups including Interim Shared Services Council and Clinical Counsel + Regional Governance Groups, including Northern CIO Group, Regional CFO Group and CEO/CMO Forum + DHB Boards + DHB Executive team members + DHB management and team members healthalliance is building strong relationships with other key stakeholders including MoH, MBIE, National Health Board, National Health IT Board, PHARMAC, other Service Providers, health agencies, suppliers and unions. NATIONAL COLLABORATION healthalliance has a role in the future provision of national shared services. To provide a clearer accountability and funding mechanism, healthalliance has created a wholly owned subsidiary, healthalliance (FPSC) Limited, to manage the agreement for future shared services. healthalliance (FPSC) Limited has commenced national services for Procurement and Hutt Valley Finance services. Finance and Supply Chain future shared services are paused and a business case for the National Oracle solution build is currently underway with DHBs. Until June 2015 Health Benefits Limited has held the role of Integrator for the National Shared Services Programme and Programme Owner for a number of other key programmes that healthalliance has a role in. The Minister of Health has advised that Health Benefits Limited will cease trading from 30 June A replacement organisation New Zealand Health Partnerships Limited will trade from 1 July 2015 and it is anticipated that the mandate of the new organisation will reflect Integrator status and will continue to deliver the key health Sector programme. New Zealand Health Partnerships Limited will be owned by the National DHBs. The key Programmes that healthalliance is involved in on are the National Infrastructure Platform (NIP) project (on behalf of the 4 Northern Region DHBs) and the National Oracle Solution Build Programme (currently under revision with national DHBs). As part of our National Procurement Service we are engaging, and forming relationships, with the Clinical Council, Interim Shared Service Councils, PHARMAC and MBIE to ensure that our Procurement activities meet the needs of the sector. Page 10 healthalliance Statement of Intent

16 NATIONAL HEALTH IT BOARD AND NATIONAL HEALTH BOARD healthalliance has also formed strong links with the National Health IT Board to ensure that the regional and national IT priorities are aligned. All capital IS investment over $500k is endorsed by the National Health IT Board to ensure appropriate governance is in place to guide decisions that are aligned both regionally and nationally. Annually, the National Health IT Board sets out its expectations for how Health IT should be progressed. This guidance informs the Regional IS Implementation Plan and the IS Capital Programme. While healthalliance is 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; particularly with the supply of information required for collaborative decision making, and integrated national and regional IT solutions to simplify clinical processes. Page 11 healthalliance Statement of Intent

17 NORTHERN REGION COLLABORATION The shape of healthalliance is evidence of collaboration between the Northern Region DHBs. healthalliance is enthusiastic about the opportunities to work collaboratively with other organisations that are willing to consider the shared service opportunities healthalliance N.Z. Limited can make available. Northern Region DHBs initiated the establishment of regional governance groups to support regional decision-making related to Information Services and Payroll. These governance groups include the: = Northern Region CIO Group = Regional CFO Governance Group They provide strategic direction and alignment to regional planning and 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. The Northern Region Health Plan (NRHP) The four Northern Region District Health Boards (DHBs) have worked together to develop the First Draft Northern Region Health Plan (NRHP) 2015/16. The NRHP encompasses the five objectives identified in The Ministry of Health s Planning Priorities for Regional Service Plans, a number of objectives carried forward , and some regionally agreed priorities. Initiatives in the plan will consider a systems level approach, including DHBs, PHOs, NGOs and other community and intersectoral organisations as appropriate, and identify opportunities to address inequities within the activity undertaken. healthalliance is closely aligned with the Northern Regional Agency (NRA) in working with the Northern Region DHBs to assist with the on-going development of the Northern Region Health Plan and its implementation. Understanding the financial and functional pressures on the region, greater efficiencies and economies of scale are sought through identifying regional work services that could be conducted from one organisation, rather than being replicated by the each DHB. Northern Region Migration Programme The Northern Region Migration (NRM) Programme has been formed to manage the migration of the Northern Region s ICT (Information Communications Technology) infrastructure to the National Platform. In February, the Northern Region (NR) DHBs approved the Health Benefits Limited (HBL) Business Case for a National Infrastructure Platform (NIP), on the proviso of several conditions being cleared; this acceptance has triggered the NR DHBs move to NIP, agreeing to migrate a significant portion of their ICT infrastructure to an IBM data centre within the next four years. healthalliance (ha) has been charged with implementing the successful migration to the NIP, this is a long term programme of work on behalf of the NR DHBs, migrations to the new service will begin towards the end of 2015 and continue in waved deployments across the following years. The decision to move to an Infrastructure as a Service Provider has wider implications, for both ha and the NR DHBs, beyond moving infrastructure components from existing DHB data centres to IBM. The way in which ha deliver services to the DHBs will need to change. In addition to ha service model changes, the move provides an opportunity to realise further benefits by addressing some of the technology issues ha are faced with and removing some high risks from the environment. The Programme will consist of three discrete streams with the Migration Stream being the main interface with the NIP Programme. The following is a quick view of each stream: = Migration Manage the transition of in-scope Northern Region Infrastructure to NIP to ensure business case benefits realised = Business Change Identify and proactively manage impacts to the healthalliance business model and service delivery processes = Technology Roadmap Identify and implement opportunities for further benefits through economies of scale, platform upgrades and emerging technology Page 12 healthalliance Statement of Intent

18 Governance and Accountability CORPORATE The Board of healthalliance is appointed by its shareholders and has an independent Chair. In turn, healthalliance (NZ) appoints the Board of healthalliance (FPSC). The Board meets monthly, the Audit and Risk Committee quarterly. 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 business plans. These mechanisms are supported by the Minister s Letter of Expectation to the shareholders. The company s performance is monitored by the Boards and then by the Northern Region Regional Governance Group (comprising Northern Region Chairs, CEOs and CMOs), and New Zealand Health Partnerships Limited with respect to the contracts that they hold with healthalliance. 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; + Process routine Ministerial correspondence; and + Process Select Committee inquiries. healthalliance is required to comply with the provisions of the Official Information Act. Page 13 healthalliance Statement of Intent

19 Organisation CAPABILITY healthalliance is a focused and efficient organisation which continues to evolve over time to meet the service delivery expectations of our customers. The healthalliance s core workforce will be permanent employees supported, as required, by resources contracted where there is a need for additional capacity or capabilty to support the service delivery. In order to successfully deliver our services, our team will need the skills and capability in the following areas = Leadership ability to lead large teams through change across multiple locations and customers. To set direction, review opportunities, set priorities, drive the business, lead transformational change and engage with the sector and other stakeholders; = Service Delivery - to manage the delivery of in-sourced support services, which will be budgeted for, and added to, the structure on an as-required basis; = Risk Management - assurance that risks that could prevent healthalliance from achieving its objectives are identified, assessed; mitigated and monitored; that good management principles are applied, and risks are managed in a consistent, proactive manner. = Business acumen knowing our market and our customers and providing the best the marketplace has to offer in functional expertise, efficiency and service quality across all our services. = Customer Service understanding the importance of customer service in the delivery of service. Striving to create an environment where excellent service delivery can be achieved and customer service is accepted as essential to the management and delivery of our services. STRUCTURE The Board appoints the Chief Executive who is responsible for the day to day operations of both companies. The Chief Executive is supported by a senior executive team who each manage a key service area and support the internal organisation. In May 2015 the healthalliance Board announced their intent to separate the two companies to create greater transparency between the companies and allow increased focus on services provided by each. The initial consequence of this decision is to engage a CEO for each company. Any structural changes below this level will be by agreement between the CEOs and the Boards of the Companies. The structure to 30 June 2015 is included for context with FTEs as the detail of levels below CEO after July 2015 are not yet confirmed. Organisational Structure to 30 June 2015 Chief Executive FTE 9 Chief Advisor GM Finance & Strategy FTE 97.1 Chief Information Officer FTE GM Procurement FTE 64.5 GM Supply Chain FTE GM Human Resources FTE 10 GM Clinical & Customer Services FTE 47 Head of Staff Service Centre FTE 38.8 Head of Internal Audit FTE 7.8 Unconfirmed Future Structure from 1 July 2015 healthalliance N.Z. Limited healthalliance (FPSC) Limited Board Board Chief Executive Chief Executive To be confirmed To be confirmed Page 14 healthalliance Statement of Intent

20 FTE NUMBERS Current FTEs and future forecasted FTE are as follows: given the unknown detail of any structural changes the following table contains an assumption that healthalliance (FPSC) consists primarily of Procurement Services Audited Forecast Forecast Forecast Forecast Forecast healthalliance N.Z. Limited healthalliance (FPSC) Limited 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 and acknowledges its responsibilities under Health and Safety in Employment legislation. Health and Safety representatives have been appointed and trained, policies are in place and health, safety and wellbeing services are available to staff. healthalliance People Strategy 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 include: = An articulated high performance culture demonstrated by the leadership team = A change ready engaged work force capable of current and future delivery = A scalable people/hr infrastructure = Future state organisational design and workforce planning Resources and capability are assessed as part of the process of developing the Business Plan each year. Staff are regularly involved in a Performance Development Review to ensure their KPIs are in line with those of the organisation and to identify opportunities for augmenting their skill base and competencies. Training is provided, when appropriate, based on a performance development review. healthalliance promotes and encourages equal employment opportunities to managers in healthalliance to ensure there is awareness of the need to provide fair and equitable opportunities for all employees and potential employees. Page 15 healthalliance Statement of Intent

21 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; and + 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 will establish mechanisms to ensure it meets its legal compliance obligations. Of note, in the last year, compliance requirements were intensified by the introduction of the MBIE Rules of Sourcing which applied to our Procurement function and upcoming 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. healthalliance also conducts itself under National Shared Service polices as part of the National Shared Service Programme. 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 national DHBs. For information about the populations those DHBs serve and the DHBs health profile, refer to their Statements of Intent. Page 16 healthalliance Statement of Intent

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23 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 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 In the opinion of healthalliance, the forecast financial statements fairly reflect the financial position and operations of healthalliance NZ Ltd, healthalliance FPSC Ltd and healthalliance Group. Forecast Financial Statements The forecast financial statements for the four years ending 30 June 2019 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 shareholding DHBs and is effectively a not-for-profit organisation with the shareholding DHBs carrying the budget risk. During the 14/15 financial year healthalliance commenced delivering National Procurement services and some financial services to Hutt Valley DHB. Financial forecasts (including FTE forecasts on page 14) are based on the current services healthalliance provides to its current customers. Assumptions about unconfirmed services for future delivery of FPSC programmes have not been included. 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 No assumptions of additional revenue that may be generated out of the Government s decisions surrounding the closure of Health Benefits Limited and the commencement of New Zealand Health Partnerships Limited as there has been no indication that healthalliance will receive addition programmes of work to engage in. Inflation factors have been applied as considered relevant. healthalliance FPSC entered into obligations to support the successful delivery of the FPSC programme. Due to changing circumstances healthalliance FPSC are faced with significant unpaid debtors from the sector as a result of ongoing contractual obligations for premises fit-out and software licences. The financial forecasts in this SOI assume the current outstanding debts due from HBL and the FPSC programme of $340,000 will be paid and that healthalliance FPSC will receive the following revenue from "all DHBs" and healthalliance FPSC continue to be in discussion with HBL and the HBL Transition Governance Group regarding how these additional costs are met by the whole sector. We have used the assumption of payment of the disputed liabilities, to create a breakeven financial result. If this assumption fails then there will be service reduction and benefit reduction within healthalliance FPSC. The table below indicates the unpaid liabilities. 2015/16 ($) 2016/17 ($) 2017/18 ($) 2018/19 ($) Premises 769, , , ,052 Cherwell licence 126, ,000 63,000 0 Total 895, , , ,052 healthalliance earns revenue by charging DHBs, and other customers for services provided. Currently all customers of healthalliance are District Health Boards (DHBs) 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 and healthalliance (FPSC ) Limited is negotiated through the Shared Services Council. The classes of output healthalliance expects to supply are detailed on pages 6-9. 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). Page 18 healthalliance Statement of Intent

24 FORECAST STATEMENT OF OUTPUTS For the year ended 30 June ($000's) ($000's) ($000's) ($000's) ($000's) ($000's) Audited Forecast Forecast Forecast Forecast Forecast healthalliance N.Z. Limited Regional Internal Audit 1, ,369 1,368 1,377 1,385 Finance 4,304 6,827 5,990 5,988 6,024 6,061 Information Technology 80,482 90,611 99, , , ,932 Supply Chain 11,808 9,543 9,486 9,482 9,540 9,598 Procurement 2 5,794 2,068 2,352 2,351 2,365 2,380 Staff Service Centre 4,526 4,443 4,019 4,018 4,042 4,067 Total ha N.Z. Limited Outputs 108, , , , , ,423 healthalliance (FPSC) Limited Finance 1, Supply Chain ,514 1,524 1,533 1,542 Procurement 14,355 10,265 10,328 10,391 10,454 Total ha (FPSC) Limited Outputs 1,243 15,047 12,202 12,276 12,351 12,427 healthalliance Group Regional Internal Audit 1, ,369 1,368 1,377 1,385 Finance 5,547 7,473 6,413 6,413 6,452 6,491 Information Technology 80,482 90,611 99, , , ,932 Supply Chain 11,808 9,589 11,001 11,006 11,073 11,141 Procurement 5,794 16,423 12,617 12,679 12,756 12,834 Staff Service Centre 4,526 4,443 4,019 4,018 4,042 4,067 Total ha Group Outputs 109, , , , , ,850 2 healthalliance NZ Procurement relates to Out of Scope Procurement (e.g. IT) 3 National Catalogue and Data Hub initiative included in Supply Chain FPSC output Page 19 healthalliance Statement of Intent

25 FORECAST STATEMENT OF EXPENDITURE FOR OUTPUTS For the year ended 30 June 2016 Personnel IT Telecom Depreciation Amortisation Software Other Operating Expenses Total value of services healthalliance N.Z. Limited ($000's) ($000's) ($000's) ($000's) ($000's) ($000's) ($000's) Regional Internal Audit ,369 Finance 5, ,990 Information Technology 34,638 28,955 4,944 10,478 18,080 2,760 99,854 Supply Chain 8, ,486 Procurement 1, ,352 Staff Service Centre 2, ,019 Total Outputs 54,398 30,188 5,088 10,496 18,109 4, ,072 healthalliance (FPSC) Limited Finance Supply Chain 1, ,514 Procurement 7, ,210 10,265 Total Outputs 8, ,633 12,202 healthalliance Group Regional Internal Audit ,369 Finance 5, ,413 Information Technology 34,638 28,955 4,944 10,478 18,080 2,760 99,854 Supply Chain 9, ,001 Procurement 9, ,511 12,617 Staff Service Centre 2, ,019 Total ha Group Outputs 63,034 30,570 5,192 10,944 18,109 7, ,274 Page 20 healthalliance Statement of Intent

26 FORECAST STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June ($000's) ($000's) ($000's) ($000's) ($000's) ($000's) Audited Forecast Forecast Forecast Forecast Forecast healthalliance N.Z. Limited Revenue Revenue from Shareholders 98, , , , , ,453 Other Revenue 9,981 11,223 12,736 14,316 14,360 14,405 Total Revenue 108, , , , , ,858 Expenses Personnel 51,805 53,928 54,398 54,729 55,063 55,399 IT 26,357 25,711 30,188 30,372 30,557 30,744 Telecom 3,949 4,670 5,088 5,119 5,150 5,182 Depreciation 10,830 10,725 10,496 23,219 23,330 23,442 Amortisation Software 9,219 14,298 18,109 14,062 14,136 14,210 Other Operating Expenses 6,075 5,026 4,794 4,823 4,852 4,882 Total Expenses 108, , , , , ,858 Total Comprehensive Income healthalliance (FPSC) Limited Revenue from Shareholders 1,241 13, Other Revenue 3 1,523 12,202 12,276 12,351 12,427 Total Revenue 1,244 15,047 12,202 12,276 12,351 12,427 Expenses Personnel 574 9,031 8,636 8,689 8,742 8,795 IT Telecom Depreciation Amortisation Software Other Operating Expenses 521 4,689 2,633 2,649 2,665 2,681 Total Expenses 1,243 15,047 12,202 12,276 12,351 12,427 Total Comprehensive Income healthalliance Group Revenue Revenue from Shareholders 99, , , , , ,453 Other Income 9,984 12,746 24,938 26,592 26,712 26,832 Total Revenue 109, , , , , ,285 Expenses Personnel 52,379 62,959 63,034 63,418 63,805 64,194 Information Technology 26,357 26,286 30,570 30,756 30,944 31,133 Telecommunication Costs 3,950 4,775 5,192 5,223 5,255 5,287 Depreciation 10,977 11,373 10,944 23,669 23,783 23,898 Software Amortisation 9,219 14,298 18,109 14,062 14,136 14,210 General Operating Expenses 6,597 9,715 7,426 7,472 7,517 7,563 Total Expenses 109, , , , , ,285 Total Comprehensive Income Page 21 healthalliance Statement of Intent

27 FORECAST STATEMENT OF MOVEMENTS IN EQUITY For the year ended 30 June Audited Forecast Forecast Forecast Forecast healthalliance N.Z. Limited Equity at Beginning of Year 77,054 95, , , ,904 Net Surplus for Year Paid Up Shares Issued 18,190 6,976 20,796 10, Equity at End of Year 95, , , , ,437 healthalliance (FPSC) Limited Equity at Beginning of Year Net Surplus for Year Paid Up Shares Issued Equity at End of Year healthalliance Group Equity at Beginning of Year 77,054 95, , , ,905 Net Surplus for Year Paid Up Shares Issued 18,190 6,976 20,796 10, Equity at End of Year 4 95, , , , ,438 4 Reduction in Equity for 2015 from prior SOI as greater assumption of Capital injection than actual Page 22 healthalliance Statement of Intent

28 REVENUE PER SHAREHOLDER For the year ended 30 June ($000's) ($000's) ($000's) ($000's) ($000's) ($000's) Audited Forecast Forecast Forecast Forecast Forecast healthalliance N.Z. Limited Revenue from DHB Shareholders Northland DHB 9,377 9,466 10,114 10,817 10,883 10,950 Waitemata DHB 25,665 26,682 28,428 30,405 30,590 30,777 Auckland DHB 36,441 39,647 42,740 45,712 45,991 46,271 Counties Manukau Health 26,940 27,341 29,054 31,075 31,264 31,455 Total Revenue from DHB Shareholders 98, , , , , ,453 healthalliance (FPSC) Limited Revenue from Shareholder (HBL) 1,241 13, Total Revenue from Shareholder 1,241 13, healthalliance Group Revenue from DHB Shareholders Northland DHB 9,377 9,466 10,114 10,817 10,883 10,950 Waitemata DHB 25,665 26,682 28,428 30,405 30,590 30,777 Auckland DHB 36,441 39,647 42,740 45,712 45,991 46,271 Counties Manukau Health 26,940 27,341 29,054 31,075 31,264 31,455 5 Health Benefits Limited 1,241 13, Total Revenue from Shareholders 99, , , , , ,453 5 Until June 2015, Health Benefits Limited was a Shareholder in healthalliance NZ Limited. Continuing contractual revenue for services provided by NZ Health Partnerships Limited is included in Forecast Statement of Comprehensive Income (Other Revenue). Page 23 healthalliance Statement of Intent