Page 1 healthalliance (FPSC) Limited Statement of Intent

Transcription

1 Page 1 healthalliance (FPSC) Limited Statement of Intent

2 Page 1 healthalliance (FPSC) Limited Statement of Intent

3 Contents Message from the CEO... 4 About healthalliance (FPSC)... 5 Our Environment and Role... 5 Our Stakeholder Engagement... 9 Our Strategic Priorities Our Organisation Our Governance and Accountability Business and Statutory Policies Our Statement of Performance Financial Statement of Responsibility Financial Statements Statement of Significant Accounting Policies General Accounting Policies Basis of Preparation Page 1 healthalliance (FPSC) Limited Statement of Intent

4 Page 1 healthalliance (FPSC) Limited Statement of Intent

5 Introduction This Statement of Intent (SOI) has been prepared by healthalliance (FPSC) Limited (healthalliance FPSC) in accordance with Part 4 of the Crown Entities Act This document sets out the organisation s strategic direction for the next four years, taking into account the priorities of Central Government (including the New Zealand Health Strategy) and Northern Region District Health Board (DHB) priorities. These, along with legislative compliance and public sector accountability, have been considered and reflected in this Statement of Intent. The Statement of Performance expectations has been included in this document. healthalliance FPSC is responsible for the Prospective Financial Statements and Statement of Service Performance contained in this document, including the appropriateness of the assumptions underlying them. Signed on behalf of healthalliance (FPSC) Limited: Paul Harper Board Chairperson healthalliance (FPSC) Limited Board Meng Chong Cheong Director healthalliance (FPSC) Limited Board Date : 30 October 2017 Date : 30 October 2017 Page 3 healthalliance (FPSC) Limited Statement of Intent

6 Message from the CEO Clare Thompson, Chief Executive Officer healthalliance (FPSC) Limited The northern region is New Zealand s largest and fastest growing health region with a changing demographic mix, characterised by an ageing population, 41 percent of residents born outside New Zealand and high rates of chronic disease. In addition to this, Statistics New Zealand estimates that approximately 540,000 extra people will be living in the northern region in the next 20 years, which equates to 64 per cent of the country s population growth. These factors, together with the move towards technically optimised healthcare, means the health landscape is complex and generates increased demand on health care services. This poses a challenge for the northern region District Health Boards (DHBs). The northern region DHBs place a strong commitment on achieving improved outcomes for the individual, the population, and the health system. Our role is to support the DHBs to achieve their outcomes within their allocated funding and to support this we are undertaking a transformation programme to deliver one integrated procurement and supply chain service for the region. In May 2017 healthalliance FPSC stood up a northern region procurement function. On 1 July 2017 the northern region supply chain function transitioned from healthalliance NZ Limited to healthalliance FPSC. As a result healthalliance FPSC is able to establish a regional procurement and supply chain service for the region. The transformation programme is delivering a new integrated service for the northern region DHBs to optimise the specialist procurement and supply chain expertise available to deliver value to our customers. Following the establishment of the northern region procurement function, the Regional Governance Group (RGG) endorsed healthalliance FPSC as Aggregator for the region. In this role healthalliance FPSC will ensure the regional coordination and visibility of all procurement and supply chain activity for the northern region DHBs to optimise all potential opportunities available. This decision underpins our strategy for the medium term. In June 2017, the healthalliance FPSC Board endorsed the three year Vision and Strategy and the Five Strategic Goals that will measure the success against the Vision and Strategy. Our three year Vision and Strategy aligns with the Northern Region Health Plan and supports us to deliver on our organisational mission; OUR MISSION We are a specialist procurement and supply chain service adding value for our customers to support the delivery of Health Care The procurement and supply chain transformation programme aims to execute on the healthalliance FPSC Five Strategic Goals; Our FIVE STRATEGIC GOALS Our Customers Trust Us To Deliver On Our Promises Live Within Our Means Deliver Commercial Value To Health Passionate Professionals Safe And Engaged At Work Optimise Inventory Investment We continue to work collaboratively with the northern region DHBs to progress the new service that will deliver the agreed targeted outcomes. Page 4 healthalliance (FPSC) Limited Statement of Intent

7 About healthalliance FPSC 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 became additional shareholders. As of 1 July 2017, 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 healthalliance FPSC provides procurement and supply chain services to the northern region DHBs (and other associated parties). Our Environment and Role DELIVERING ON GOVERNMENT AND SECTOR EXPECTATIONS: The Minister of Health s Letter of Expectations and the revised New Zealand Health Strategy provides the District Health Boards, and their subsidiaries, with clear direction on sector priorities. healthalliance FPSC s role is to support the DHBs to deliver on these expectations. The diagram below outlines the linkage between national strategies, regional impacts and healthalliance FPSC outputs. Government & Health Sector Outcomes (Sector Outcomes) All New Zealanders live well, stay well, in a system that is people-powered, provides services closer to home, is designed for value and high performance, and works as one team in a smart system. Helping a joined up northern region population to live well, stay well, get well healthalliance FPSC (Impacts on the northern region) Economies of scale and value for money by delivering more benefits and services for less cost for the region Facilitating commercial aggregation of procurement to optimise benefits for the northern region across all national procurement agencies Releasing clinical time to care through supply chain process improvements Connecting and enabling the northern region DHBs healthalliance FPSC (Outputs) Leveraging the combined volumes of the northern region DHBs for best quality, service, technology and price in consumables, capital items and services; ensuring operational efficiencies in the procurement of goods and services Leveraging systems and processes to provide efficiencies in the supply chain and managing inventory, to provide on-time availability with reduced held stock healthalliance FPSC (Strategic Priorities) Our customers trust us to deliver on our promises Live within our means Deliver commercial value to health Passionate professionals safe and engaged at work Optimise inventory investment Our Vision: We deliver on our promises by being innovative and agile. Our empowered employees are leading commercial excellence The nature of these linkages will be further explained in subsequent sections. Page 5 healthalliance (FPSC) Limited Statement of Intent

8 OUR REGION healthalliance FPSC contributes to supporting the northern region DHBs strategic focus on primary, secondary and community healthcare outcomes. The northern region is New Zealand s largest and fastest growing region (total population of 1.8m, expected to grow by 30% in the next 20 years). The region is reflective of national demographics, population diversity and socio-economic inequality. Health services in the northern region are delivered in a range of settings from hospitals to primary and community services. Together healthalliance NZ and healthalliance FPSC provide services that enable DHBs to support: + 1.8m people (over 1/3 of New Zealand s population) + 26,000 DHB staff + 14 hospitals, including: o Four major hospitals o Seven community based hospitals o Three facilities dedicated to elective surgery o Specialist mental health services + Six hospital emergency departments + 86 operating theatres across the region + 3,100 hospital beds The northern region DHBs also provide a range of national and regional services to patients which include a range of specialist, tertiary and rehabilitation services. The region also accesses services provided by primary and community medical care services (circa 1400 General practitioners, across 385 medical practices; as well as a large number of Primary Health Organisations (PHOs) and community based organisations). OUR CUSTOMERS healthalliance FPSC 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 FPSC s intent to continue to evolve and implement, in collaboration with DHBs, the end to end procurement and supply chain service that supports the region s Models of Care. Strengthening engagement with DHB Executives and management is paramount as is the evolution of transparent customer related reporting. Information and intelligence is integral in understanding our customers, gathered through various mediums such as customer satisfaction surveys and improvement plans, and the collaborative evolution of service performance metrics. healthalliance FPSC will be accountable for the measurement and reporting of customer outcomes, development of our customer strategies, and proposals for the evolution of services to meet the needs of our customers. In addition, the gathering and assessment of customer demands for healthalliance FPSC services will be integral for our services to be scaled correctly, and for end user satisfaction to be maintained. OUR STRATEGIC IMPACTS As a result of the outcomes of the Auckland Metropolitan DHB review of supply chain, the transition of national procurement to New Zealand Health Partnerships Limited (NZHP) and PHARMAC, and the evolving northern region priorities, healthalliance FPSC has reviewed its impact statements to better meet the priorities of the northern region DHBs. These impacts are informing the transformation programme and the implementation of healthalliance FPSC s strategic priorities. The objective for the upcoming year is to refine and baseline these measures with input from regional stakeholders. These impact statements will then form part of future healthalliance FPSC Statements of Intent and annual reporting. healthalliance FPSC intends to deliver impacts in the following areas: + Economies of scale and value for money by delivering more benefits and services for less cost regionally than is possible locally through innovative and regionally standardised frameworks and processes; + Facilitating northern region commercial aggregation of procurement to optimise benefits for the northern region across all national procurement agencies, for example, the Ministry of Business, Innovation and Employment (MBIE), PHARMAC, New Zealand Health Partnerships and healthalliance FPSC; and Page 6 healthalliance (FPSC) Limited Statement of Intent

9 + Releasing clinical time to care through supply chain process improvements. For this Statement of Intent healthalliance (FPSC) Limited will be measuring impacts in the following areas: Impact Area Economies of scale and value for money by delivering more benefits and services for less cost regionally than is possible locally through innovative and regionally standardised frameworks and processes Facilitating northern region commercial aggregation of procurement to optimise benefits for the northern region across all national procurement agencies, for example, MBIE, Pharmac, New Zealand Health Partnerships and healthalliance FPSC Releasing clinical time to care through supply chain process improvements Measure (Medium term) Delivery of shared services within agreed funding envelope Establish an amalgamated northern region procurement plan and increase budgetary procurement OPEX savings to $9m Establish optimal level for percentage of inventory managed via Oracle Managed Inventory (OMI) Measure (Long term) Delivery of shared services within agreed funding envelope Continue to exceed previous delivered benefits Maintain inventory managed on OMI at optimal level OUR OUTPUTS healthalliance FPSC enables the northern region DHBs to deliver high quality clinical services. healthalliance FPSC has two significant classes of outputs: 1) Procurement leveraging the combined volumes of the northern region DHBs for best quality, service, technology and price in consumables, capital items and services; ensuring operational efficiencies in the procurement of goods and services 2) Supply Chain leveraging systems and processes to provide efficiencies in the supply chain and managing inventory, to provide on-time availability with reduced held stock. Page 7 healthalliance (FPSC) Limited Statement of Intent

10 LINKING INPUTS AND ENABLERS TO CUSTOMER REQUIREMENTS The following diagram explains the linkages between enablers/inputs, output classes and output measures. Definitions and measures to achieve success in these output areas are defined in healthalliance FPSC s Statement of Service Performance on page 17. DHB Customer Requirements Procurement Procurement Deliver annualised OPEX budgetary savings to the northern region DHBs Resources: Ministerial and Government Expectations Operational and capital funding Regional assets (processes, applications & infrastructure) Supply Chain Supply Chain To continuously strive for optimal DIFOTIS Done In Full On Time In Specification Page 8 healthalliance (FPSC) Limited Statement of Intent

11 Our Stakeholder Engagement healthalliance FPSC operates in a large, complex and dynamic environment. There are multiple agencies operating in public health procurement, which increases the complexity of delivering effective outcomes to our shareholders. Critical to our success is the requirement that we build and maintain strong and effective relationships with key stakeholders, whilst ensuring compliance with statutory obligations. healthalliance FPSC 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 teams and DHB management + National advisory groups, including the Ministry of Health Services Commissioning Directorate + New Zealand Health Partnerships Limited + PHARMAC + Ministry of Business, Innovation and Employment (MBIE) + Treasury + Ministry of Health + Audit NZ The Statement of Intent highlights the priority of continuing to develop these relationships and the effectiveness of governance and decision making processes to support the northern region DHBs and health sector as a whole. It is the intention of healthalliance FPSC to further strengthen central agency engagement to facilitate regional consistency and alignment. STATUTORY OBLIGATIONS: There are a number of critical drivers, compliance, and statutory obligations that healthalliance FPSC must respond to as part of our day to day responsibilities. These include: Treasury: + Asset management processes are implemented + Compliance with required accounting standards Ministry of Health: + Governance, funding, and approval related processes Audit NZ: + Finance and reporting standards + Annual Audit outcomes Ministry of Business, Innovation and Employment + Government Rules of Sourcing Page 9 healthalliance (FPSC) Limited Statement of Intent

12 NORTHERN REGION COLLABORATION The transformation and shape of healthalliance FPSC is evidence of collaboration between the northern region DHBs. Northern region DHBs initiated the establishment of regional governance groups to support regional decision-making related to the delivery of shared services to the DHBs. These governance groups include the: + Northern Region Regional Governance Group + healthalliance FPSC Board + healthalliance FPSC Audit and Risk Committee + DHB Boards + DHB Audit and Risk Committee + Regional CFO Governance Group + Regional Capital Committee + Programme Leadership Team (PLT) The Central Agency groups provide strategic direction and alignment to regional planning prioritisation guided through: + DHB Annual Plans + Health sector efficiency programmes + National and regional plans including the Northern Region Health Plan and the Minister of Health s Letter of Expectations to DHBs Page 10 healthalliance (FPSC) Limited Statement of Intent

13 Our Strategic Priorities healthalliance FPSC s strategic priorities have been endorsed by the healthalliance FPSC Board. These will remain the focus up to the year Our Strategic Priorities describe how we will transform ourselves and contribute to the success of the northern region. OUR PURPOSE We are a specialist procurement and supply chain service adding value for our customers to support the delivery of Health Care OUR VISION We deliver on our promises by being innovative and agile. Our empowered employees are leading commercial excellence. KEY STRATEGIC PRIORITIES healthalliance FSPC has adopted five strategic goals. We are developing the work programme to achieve the goals. Our immediate focus in FY1718 is on delivering commercial value to the health sector and optimising inventory investment. This is captured in our Statement of Performance Expectations for FY1718. Page 11 healthalliance (FPSC) Limited Statement of Intent

14 Our Organisation OUR VALUES As part of our transformation programme we are working collaboratively with our staff throughout healthalliance FPSC to create our values. The timeline for rolling out our values is end March The values will support the kind of organisation we aim to be and what is important to us in how we work. These values will form part of how we interact with each other, our customers, and with our stakeholders. OUR CAPABILITY AND OPERATING MODEL As part of our transformation programme we are reviewing our Capability and Operating Model. PEOPLE & CULTURE PLANS Our people are at the centre of everything we do. As part of our transformation programme we are reviewing our People and Culture plans to ensure we have a workforce capable of delivering on current and future demands. We are creating a dedicated people plan that will support: + Leadership Capability expanding the capability and capacity of leaders within healthalliance FPSC to facilitate execution of our Five Strategic Goals. + Organisational Culture we put the customer at the centre of what we do, ensuring we have a change ready and highly engaged workforce + Health, Safety and Wellbeing our staff and customers are safe in the environments we provide. + Aligning people priorites to our performance KPIs. Resources and capability are assessed in 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) identify opportunities for augmenting their skill base and competencies. 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 FPSC takes its responsibility as a good employer very seriously and is committed to promoting and maintaining the health, safety and wellbeing of its staff in the workplace. We acknowledge our responsibilities under Health & Safety employment legislation. Health & Safety representatives have been appointed and trained, policies are in place and health, safety and wellbeing services are available to staff. EQUAL EMPLOYMENT OPPORTUNITIES healthalliance FPSC promotes and encourages equal employment opportunities. healthalliance FPSC is proud of the diversity of its workforce and is committed to ensuring there is awareness of the need to provide fair and equitable opportunities for all employees and potential employees. OUR STRUCTURE The Board appoints the Chief Executive Officer (CEO) who is responsible for the day to day operations of FPSC. The CEO is supported by an Executive Leadership Team who are accountable to the CEO in assisting with the overall management of healthalliance FPSC as a company and leading their functional responsibilities. Page 12 healthalliance (FPSC) Limited Statement of Intent

15 ORGANISATIONAL STRUCTURE AT 30 JUNE 2017 Chief Executive GM, Procurement GM, Supply Chain Manager, Strategy, Performance & Intelligence Communications Manager Organisational Change Manager OUR FULL TIME EQUIVALENT (FTE) NUMBERS Current FTEs and future forecasted FTE below are based on information known at 30 June 2017: For the year ended 30 June 2017 Actual healthalliance (FPSC) Limited Total Increase in FTE primarily relates to transition of Supply Chain to healthalliance FPSC, decrease in 2018 relates to transition of National Procurement to New Zealand Health Partnerships Ltd. Page 13 healthalliance (FPSC) Limited Statement of Intent

16 Our Governance and Accountability CORPORATE GOVERNANCE The Board of healthalliance N.Z. Limited is appointed by its shareholders and has an independent Chairperson. In turn, healthalliance N.Z. Limited appoints the Board of healthalliance FPSC. The healthalliance FPSC Board meets six times per year, and the Audit and Risk Committee four times per year. The functions and purpose of healthalliance (FPSC) Limited are set out in this Statement of Intent, which has been developed on the basis of Annual Plans. These mechanisms are supported by the Minister s Letter of Expectation to shareholding DHBs. Performance is monitored by the Board, and the Chairperson reports to the Northern Region s Regional Governance Group (comprising Northern Region Chairs, CEOs and CMOs). Furthermore, the DHB appointed Directors provide feedback to shareholder Boards. MINISTERIAL POWER TO DIRECT healthalliance FPSC will ensure that decision-making processes comply with all legislative requirements to consult with, or notify, the Minister of Health. There is no intention to routinely or regularly report matters to the Minister. Any Ministerial directions will generally be dealt with through the Board Chair, on behalf of the Board and shareholding DHBs. INFORMATION REQUIRED BY MINISTERS healthalliance FPSC commits to provide Ministers with information as required, to enable timely responses to: + Parliamentary questions + Routine Ministerial correspondence + Select Committee inquiries healthalliance FPSC is required to comply with the provisions of the Official Information Act. Business and Statutory Policies 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, as a subsidiary, 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 has provided its own Statement of Intent and Statement of Service Performance, as requested by the Minister of Health. This Statement of Intent covers healthalliance FPSC only. Both healthalliance companies are public benefit entities. They are domiciled in New Zealand, as defined under New Zealand International Accounting Standard 1 (IAS1) and incorporated in New Zealand. healthalliance FPSC 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 Group complies (in so far as they are relevant) with the objectives and functions set out in the New Zealand Public Health and Disability Act (NZPHDA) in respect to DHBs, and the Crown Entities Act in respect to Crown Entities and Crown Entity subsidiaries. Page 14 healthalliance (FPSC) Limited Statement of Intent

17 OPERATING RESPONSIBILITIES healthalliance FPSC operates in a sustainable manner so that its services benefit both current and future Customers. In order to meet this objective, we: + Maintain an appropriate business model that is sustainable, cost-effective and meets the on-going shared service needs of our stakeholders + Have a clear governance and decision-making framework in place which articulates the respective roles and responsibilities of healthalliance FPSC and our customers + Maintain effective relationships with stakeholders that are mutually supportive and productive + Provide high-quality shared services effectively and efficiently + Have a sustainable, competent and engaged workforce + Maintain effective systems to establish a baseline of performance and cost data for the measurement of gains to the sector + Maintain appropriate monitoring tools and performance issue resolution processes for initiatives as they are implemented + Develop and maintain policies appropriate for the business, including risk management policies 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 healthalliance FPSC has established mechanisms to ensure it meets its legal compliance obligations and the relevant Health and Safety legislation. OPERATIONAL PROCESSES healthalliance FPSC is required to operate within the functions, powers and constraints outlined above. Operational policies and procedures have been developed concerning the manner in which healthalliance FPSC conducts its operational processes. DIVIDEND POLICY healthalliance FPSC 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 FPSC will provide shared services to the population of the northern region, as served by the DHBs. For information about the populations those DHBs serve, and the DHBs health profiles, please refer to their Statements of Intent. Page 15 healthalliance (FPSC) Limited Statement of Intent

18 Page 1 healthalliance (FPSC) Limited Statement of Intent

19 Our Statement of Performance Our Statement of Performance summarises the impacts healthalliance FPSC wants to make in FY1718 and the results we expect to deliver for each of our output classes. In addition to these measures, healthalliance FPSC as an organisation also measures itself against its Annual Plan and the achievement of its Service Level Agreements with northern region DHB Customers, which are approved by the healthalliance FPSC Board and shareholders. Reporting against these commitments is discussed on a regular basis by the Executive Leadership Team, Board and Shareholders. OUTPUT CLASSES healthalliance FPSC measures its performance through two major output classes: 1) PROCUREMENT Leveraging the combined volumes of northern region DHBs for best quality, service, technology and price in consumables, capital items, and services; ensuring operational efficiencies in the procurement of goods and services. 2) SUPPLY CHAIN Leveraging systems and processes to provide efficiencies in the supply chain and managing inventory, to provide ontime availability with reduced held stock. Page 17 healthalliance (FPSC) Limited Statement of Intent

20 DELIVERING OUR PLAN Our Statement of Performance summarises the key focus areas for healthalliance FPSC and the results we intend to deliver. OUTPUT CLASS 1 PROCUREMENT Description + Annualised OPEX savings Measure Measure = $8 million in FY1718 Deliver annualised OPEX savings to the northern region DHBs OUTPUT CLASS 2 SUPPLY CHAIN Description Measure + DIFOTIS Done In Full On Time In Specification Measure = Increase by 0.5% in FY1718 Page 18 healthalliance (FPSC) Limited Statement of Intent

21 Page 1 healthalliance (FPSC) Limited Statement of Intent

22 Financial Statement of Responsibility The information contained in this Statement of Performance has been prepared in accordance with the Public Finance Act and the Crown Entities Act healthalliance FPSC 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 FPSC, the forecast financial statements fairly reflect the financial position and operations of healthalliance (FPSC) Limited. Financial Statements The forecast financial statements for the four years ending 30 June 2021 are included. healthalliance FPSC s main financial objective is to provide services within the agreed funding envelope. Revenue is planned to be equal to total expenses as healthalliance FPSC 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 13) are based on the continuation of existing services that healthalliance FPSC provides to its current customers. The financial forecasts also reflect a transition of Supply Chain and Northern Region Procurement services to healthalliance (FPSC) Limited from 1 July The Supply Chain and Northern Region Procurement functions have been under the effective management of healthalliance (FPSC) Limited from 1 July 2016 but reported in the healthalliance (NZ) Limited Parent company annual accounts. From 1 July 2017 these functions formally transferred to healthalliance (FPSC) Limited by resolution of the Board. For clarity, in the healthalliance (NZ) Limited Statement of Intent for the past year the results have been restated to reflect the transfer of these functions. For comparative purposes these functions are now shown in the healthalliance (FPSC) Limited Statement of Intent. The financial statements for 2016 and 2017 include the provision of National Procurement activities. These activities were formally transitioned to New Zealand Health Partnerships Limited (NZHP) effective 1 May The financial statements for 2016 include the Finance and Corporate Services output class. For 2017 and subsequent years, it is reported as part of the Supply Chain and Northern Region Procurement output class to align with the restatement presented above. 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 FPSC/DHB capital programmes. healthalliance FPSC earns revenue by charging DHBs and other customers for services provided. Currently all customers of healthalliance FPSC are District Health Boards or affiliated organisations. Funding sources and approvals for healthalliance FPSC is negotiated directly with northern region DHBs. Page 20 healthalliance (FPSC) Limited Statement of Intent

23 Funding is provided directly from DHB shareholders in accordance with the Shareholders Agreement. Consequently, healthalliance FPSC sources all funding from Shareholders on an as required basis and does not operate with a standby banking facility. The classes of output healthalliance FPSC expects to supply are detailed on page 18. 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 ($000's) ($000's) ($000's) ($000's) ($000's) ($000's) Audited healthalliance (FPSC) Limited Finance and Corporate services 3, Supply Chain 1,292 10,861 10,479 10,016 10,217 10,421 Procurement 8,148 9,313 4,702 5,018 5,118 5,220 Total Outputs 13,024 20,174 15,181 15,035 15,334 15,641 FORECAST STATEMENT OF EXPENDITURE FOR OUTPUTS For the year ended 30 June Personnel Information Technology Telecom Depreciation Amortisation Software Other Expenses Total value of services healthalliance (FPSC) Limited Supply Chain 9, ,479 Procurement 2, ,720 4,702 Total Outputs 12, ,620 15,181 Note: Total revenue is $0.6m lower than total expenditure for each output class, resulting in a $1.2m loss for the year ended 30 June FORECAST STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2016 Audited healthalliance (FPSC) Limited Revenue Revenue from Shareholders 9,816 13,470 13,736 14,029 14,329 Revenue from NZ Health Partnerships 12,809 11,120 Other Revenue ,299 1,306 1,312 Total Revenue 12,899 21,489 13,938 15,035 15,334 15,641 Expenses Personnel 8,247 16,442 12,384 12,234 12,479 12,728 Information Technology Telecommunication costs Depreciation Amortisation Software Other Operating Expenses 3,982 3,205 2,620 2,598 2,650 2,704 Total Expenses 13,024 20,174 15,181 15,035 15,334 15,641 Total Comprehensive Income (125) 1,315 (1,243) Note: The 2017 profit includes the New Zealand Health Partnerships transition payments and the 2018 loss is a result of organisational transition costs. Page 21 healthalliance (FPSC) Limited Statement of Intent

24 FORECAST STATEMENT OF MOVEMENTS IN EQUITY For the year ended 30 June 2016 Audited healthalliance (FPSC) Limited Equity at Beginning of Year (58) (183) 1,132 (111) (111) (111) Net Surplus for Year (125) 1,315 (1,243) Paid Up Shares Issued - - Equity at End of Year (183) 1,132 (111) (111) (111) (111) REVENUE PER RELATED PARTIES For the year ended 30 June 2016 Audited healthalliance (FPSC) Limited Revenue from Related Parties NZ Health Partnerships 12,809 11, Northern Region DHBs - 9,816 13,470 13,736 14,029 14,329 Total Revenue from Related Parties 12,809 20,936 13,470 13,736 14,029 14,329 Revenue received through healthalliance N.Z. Limited - 9, healthalliance (FPSC) Limited 12,809 11,120 13,470 13,736 14,029 14,329 Total Revenue from Related Parties 12,809 20,936 13,470 13,736 14,029 14,329 FORECAST OF FINANCIAL POSITION For the year ended 30 June 2016 Audited healthalliance (FPSC) Limited Current Assets Cash, Bank & Investments Trade & Other Receivables 92 1,559 2,136 2,182 2,228 2,275 Total Current Assets 107 2,384 2,472 2,573 2,674 2,776 Long-term Assets Property Plant & Equipment 2,763 2, Total Long-term Assets 2,763 2, Total Assets 2,870 4,779 2,637 2,683 2,729 2,776 Current Liabilities Provision & Accruals 928 2, Employee Entitlements Borrowings Total Current Liabilities 2,405 2,953 1,861 1,889 1,918 1,946 Long-term Liabilities Provision & Accruals Employee Entitlements Total Long-term Liabilities Total Liabilities 3,053 3,647 2,747 2,793 2,840 2,887 Net Assets (Liabilities) (183) 1,132 (111) (111) (111) (111) Shareholder Capital Retained Earnings (183) 1,132 (111) (111) (111) (111) Total Equity (183) 1,132 (111) (111) (111) (111) Page 22 healthalliance (FPSC) Limited Statement of Intent

25 FORECAST STATEMENT OF CASHFLOWS For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Cash Flows - Operating Activities Receipts from Services 11,529 10,096 14,189 13,736 14,029 14,329 Other Income ,297 1,304 1,310 Interest Received Total Revenue - Operating Activities 11,532 10,098 14,657 15,035 15,334 15,641 Payments to employees and suppliers 10,753 8,283 15,031 14,965 15,264 15,571 Interest Paid Total Expenses 10,809 8,313 15,046 14,980 15,279 15,586 Net Cash Flow - Operating Activities 723 1,785 (389) Cash Flows Investing Activities Purchase of Assets (100) Net Cash Flow - Investing Activities - - (100) Cash Flows Financing Activities Borrowings (648) (975) Net Cash Flow - Financing Activities (648) (975) Movements in Cash Net Cash flow (489) Opening Cash (60) Closing Cash FORECAST CAPITAL SPEND For the year ended 30 June 2016 Audited healthalliance (FPSC) Limited Business Applications Premises & Vehicles Total Capital Spend Page 23 healthalliance (FPSC) Limited Statement of Intent

26 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 2015/16 Annual Report. General Accounting Policies REPORTING ENTITY healthalliance (FPSC) Limited is a company wholly-owned by healthalliance N.Z. Limited. healthalliance N.Z. Limited is jointly owned by Northland, Waitemata, Auckland and Counties Manukau Health District Health Boards. healthalliance FPSC s ultimate parent is the New Zealand Crown. healthalliance FPSC is a crown entity subsidiary in terms of the Crown Entities Act 2004, owned by the Crown and domiciled in New Zealand. healthalliance FPSC is a public benefit entity for financial reporting purposes as defined under NZ IAS 1. The group financial statements include healthalliance (FPSC) Limited and its parent, healthalliance N.Z. Limited. 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 FPSC 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. healthalliance FPSC is required under the Crown Entities Act 2004 to present forecast financial statements for the next 4 years as part of its Statement of Intent and forecast financial statements for the 30 June 2018 financial year as part of the Statement of Performance. healthalliance FPSC 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 healthalliance FPSC 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: Page 24 healthalliance (FPSC) Limited Statement of Intent

27 REVENUE RECOGNITION Revenue is recognised on receipt or delivery of service, whichever is the earlier. 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 FPSC invests as part of its day-to-day cash management. Operating activities include cash received from all income sources of healthalliance FPSC 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: 12% 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. Page 25 healthalliance (FPSC) Limited Statement of Intent

28 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. Page 26 healthalliance (FPSC) Limited Statement of Intent

29

30

31 Page 1 healthalliance (FPSC) Limited Statement of Intent

32 Page 36 healthalliance Statement Page 1 healthalliance of Intent (FPSC) Limited Statement of Intent