CONFIDENTIAL TO BOARD MEMBERS ONLY
NEW ZEALAND BLOOD SERVICE
Minutes – NZBS Board Teleconference
Minutes of the NZBS Board
Teleconference held at:
New Zealand Blood Service
71 Great South Road, Epsom, Auckland
In attendance by phone:
Mr David Chamberlain (Chairman)
Dr Jackie Blue (Deputy Chair)
Dr Bart Baker
Ms Fiona Pimm
Ms Cathryn Lancaster
Dr Paula Martin
Mr Ray Lind
Apologies:
None
Management:
Ms Sam Cliffe (CEO)
Mr John Harrison (Director Finance)
Board Secretariat:
Vanessa Siddins (Board Secretary)
Date:
30 January 2020
The teleconference commenced at 9.30am with no conflicts of interest acknowledged for any items on the agenda.
ITEM 1.0 APOLOGIES
There were no apologies for this meeting.
ITEM 2.0 CEO REPORT
S Cliffe noted that the year had started strongly, Christmas, New Year and January were strong on col ections and demand
remains challenging. The senior team is cognisant of the competing chal enges over the coming year.
The Exec team are entering into the year at ful strength. Doug Gal agher, the new Director Donor Services is settling in
real y wel from a people perspective and has taken control of plasma metrics which wil be a regular item on the Board
agenda. S Clif e advised that she was happy to take feedback outside the meeting on anything else that the Board would
like to see the Exec team tracking in relation to plasma.
At the meeting with Minister Henare back in October 2019, he had suggested we provide a scene set ing document to
promote the critical nature of NZBS now and for the next 20 years, to future proof our service. The outline within the CEO
report has a lot more detail in it. After feedback from the Board, this wil come back to the February Board meeting.
IgO is the electronic approval system for management of access to immunoglobulin. Peter Flanagan, Sarah Morley and
the clinical team are having ongoing conversations around usage. The graphs within the report are being used to educate
clinical teams.
The work around transferring the heart valves bank is progressing wel . However, in order to provide this service, our
organisation requires the correct funding and a Memorandum of Understanding from Auckland DHB.
1
CONFIDENTIAL TO BOARD MEMBERS ONLY
There was a Working Group meeting on 17 January with Luke Williams and Stephen McKernan from Ernst and Young
(EY) on the potential approach for set ing up the National Agency for Organ Donation. Thanks to P Martin for put ing a
frame work together and to those members of the Working Group who at ended that meeting. The notes from that meeting
were circulated to the Board by email on 21 January 2020.
D Chamberlain thanked S Clif e for the report. There was further discussion on the paper for Cabinet and if it should
include a request for a capital injection? S Cliffe is interested to get feedback over the next week or two on this.
P Martin queried the paper for the Minister/Cabinet, she reiterated that is was a fantastic opportunity to produce this paper,
however she felt we need more discussion on strategy, tactics and timing. The budget paper in the Board pack assumes
we get first tranche of money in February 2021. P Martin wil put further comments in writing.
F Pimm queried if we had a response from the Ministry about the capital charge and do we mention this within the strategic
paper? S Clif e advised that we have had no response yet on this noting Minister Clarke was reviewing Capital Charges
for the whole Health sector.
Discussion fol owed on the Coronavirus and S Clif e advised the Board that there was currently no test available in New
Zealand. We already have a deferral for China and most of South East Asia of 28 days. We can update this if necessary,
although WHO is currently recommending 21 days. Sarah Morley, has linked in to IPAC Europe, and we are linked into
APBN and the WHO team. We feel our current deferral is suf icient and do have to rely on self-deferral, our col ection staf
wil be given reminders of the need to use the travel app. We are contemplating adding other Asian countries to four
weeks deferral on the travel app. S Cliffe noted that we have a number of staf in China, some who have been in Hubei
Province. We are working with the Ministry pandemic planners for a return to work plan. From our perspective we have
good protocols in place and good experience from SARS and H1N1.
The Chair received and noted the Chief Executive’s report.
ITEM 3.0 DIRECTOR FINANCE’S REPORT for the 6 MONTHS TO 31 DECEMBER 2019
J Harrison took the report as read and noted that overal NZBS was travelling well in terms of the six month performance
in large part a consequence of the strong growth. As of this morning the revenue forecast for January was at $11.2m which
is a good level for January and slightly ahead of budget. We are expecting some reduction in the Ig growth curve from
17% to around 14-15%. The recent strengthening of the New Zealand dol ar triggered a number of buy orders lifting the
AUD forward cover position to near 18 months cover of the CSL Tol Fractionation agreement.
J Blue queried if we passed on costs for skin used in the Whakaari/White Island disaster? J Harrison confirmed NZBS
takes a fixed 12% margin on all skin issues with the pricing set on a batch by batch basis to mitigate the USD currency
risk. This was an agreement reached with the burns unit at Middlemore hospital some five years ago.
Discussion fol owed on production recovery dif erences between whole blood and plasma. J Harrison explained that there
was more value created from a whole blood col ection than from a plasmapheresis col ection with the second half of the
year forecasting an increase in plasmapheresis col ections.
ITEM 4.0 2020/21 INITIAL BUGET WITH 3 YEAR FORECAST TO 30 JUNE 2024
S Cliffe and J Harrison noted that this had been the most chal enging budget they had worked on since they joined the
organisation incorporating the plasma strategy, site infrastructure changes and a capital injection requirement. This budget
is looking forward, not just to next year but a longer 4- 5 year horizon. The budget also needs to align with the messaging
to the Minister and Cabinet. The capital injection reflects a huge amount of work, however J Harrison is comfortable with
where the budget is subject to the refresh planned in February.
S Cliffe thanked J Harrison and the Finance team for their mammoth ef ort over the Christmas period. It was a great deal
of work to get it to the Board in a timely fashion.
J Harrison noted that it was dif icult to get the budget into a shape that made sense in the financial set ing. He worked hard
to incorporate the plasma strategy, the ISBT 128 implementation project, the site infrastructure requirements and also
taking into account the various vacate premises notices from landlords. The budget has worked to ensure al these strategic
objectives can be fit ed into the existing frameworks and financials guidelines currently with a 45% debt cap. Based on
calculations for two potential additional plasma only sites to ensure the addition of future capacity is suf icient to meet a
2
CONFIDENTIAL TO BOARD MEMBERS ONLY
12% growth Ig curve. The equity injection is a key element underpinning this budget and is currently assumed at $15.0m
phased over four years. It has been assumed the initial injection would be received in February 2021 to meet the cost of
the Waikato relocation with a target move target no later than June 2021.
A 1% levy for ISBT 128 has not been applied and can be delivered within budget. The dif erence when the levy was
discussed last October was the then forecasting of modest growth for Ig and no demand growth for fresh product. The
MOCL funding reduction commitment wil likely need to extended to June 2023 from June 2021. This shift would be
consistent with the redevelopment completion timeline and also provide an element of flexibility over a very high capital
investment period. It would also af ord a lit le flexibility dependent on when the initial equity injection occurred.
J Harrison welcomed feedback from the Board on (1) the DHB forecast weighted price increase of 5.58% for the 2020/21
financial year (2) seeking an extension of the MOCL term from June 2021 to June 2023 and (3) whether a 1% levy the
ISBT 128 project should be instigated.
R Lind noted that he was impressed by the clarity of writing and had no problems with what was proposed by the draft
2020/21 Budget.
F Pimm observed that this budget was a complex balancing act and commended the team on what they had produced.
She queried page 30, with regards to increased volume driving cost efficiencies? Why did the cost per kilo go up a lot? J
Harrison explained that this was weighted plasma being a mix of by-product of whole blood collections and ful y costed
plasmapheresis collections. Over the last few years, whole blood collections have dropped which meant an increase in
plasmapheresis (AHF) collections. Over time, the increased AHF col ections brings in in higher costs into the overal source
plasma cost mix. Factoring in the percentage of AHF source plasma, we are seeing a dramatic increase in costs associated
with source plasma. Plasma fractionation is a fixed price arrangement and cost is governed by how much we get out of
each pool.
F Pimm raised the projected 12% increase in Ig demand and asked if we had identified trigger points if the growth slowed
from its projected trend, could we slow our capacity build out? S Clif e responded that the plasma strategy was based on
that premise, at any point we can scale staff up and down, which is easy with staf turnover in the large sites. The
investment in bricks and mortar is more dif icult, for example if growth slowed dramatical y half way through a major
investment program. There is going to be growth, as there has been over last 20 years. The unknown is, do we build
another site in Auckland, for example a plasma only centre on the North Shore? That wil be a stop/go point on the best
information we have at the time. We feel comfortable that the investment planned for the next three year period is right. F
Pimm noted that she is looking for points when we have to invest, and those when we don’t, ie investment in another
centre in Auckland. S Clif e responded that this is based on what we know now, if things changed then our thinking may
wel change. The formal decision points are at Board level.
B Baker felt the set ings were liberal on the IgO app and he was interested in how the use of this app progresses. S Cliffe
commented Dr Sarah Morley felt the same on the current set ings. She also believes the Australians were liberal issuers.
Dr Morley was keen to work with clinicians to manage issues down. We have never had this level of detailed reporting
before and going forward the app provide useful information we can measure along with our plasma metrics. It will help us
moderate and mitigate the Ig demand growth.
B Baker queried the timing of the first two tranches of the capital injection, would we use the MOCL on the understanding
these would come later? J Har ison responded that he assumed that we should build this into our forecast now, indicating
realistic timelines and spend pat erns. He doesn’t have any sense of how the capital injection request would be received
and managed. If we don’t get money until 2022, then leaving the MOCL at $14m until at least 2022 would give us the
liquidity to pay for the Waikato relocation pre any equity injection.
There was further discussion on needing to clarify the timing and process for any capital injection. S Clif e advised that J
Harrison can give our account manager at the Ministry a cal and discuss how an equity request is best dealt with. P
Martin commented that we need to be clear about future proofing the Service and consequences if we don’t receive the
funding. S Clif e noted that this is an opportunity for the Government to invest in a critical part of the Health Sector for the
next 20 years.
There was discussion around what would happen if we don’t get the capital for this budget when we need it, or not at al .
J Harrison advised that he had tested the budget without a capital injection and it is possible with a $14m MOCL and
3
CONFIDENTIAL TO BOARD MEMBERS ONLY
elevated price set ings. However, it puts the organisation wel outside its debt equity ratio and was deemed as not a prudent
approach. Inevitably there would be some things currently planned that we could not do.
There was general consensus that we need to frame up the paper for the equity injection. S Clif e noted that the Minster
was very clear that we start with a paper that informs the Ministry what a great Service we provide before requesting an
equity injection. Then we can be clear about alternatives and implications of not get ing it.
P Martin queried if we should signal new functions in this paper? S Clif e noted that we could signal that this is coming,
however we would be looking for Ministerial approval for new functions in the area of organ donation.
C Lancaster endorsed what F Pimm raised regarding levers to scale up and back on col ections. She also agreed with P
Martin regarding the need to understand process around the capital injection and what happens if we don’t get it and is
nervous about the about length of time it wil take. Would there be a Board resolution to increase the MOCL?
C Lancaster queried the increase of intangible assets on page 54? J Harrison explained that the increase was due to the
replacement of the existing DRM system as it is a sunset piece of software and as such is classified as an intangible asset.
S Clif e added that this is a critical part of the business and NZBS are the only remaining client in the world using our
current DRM system. It is also increasingly unsupported. There wil be a business case on a new DRM system in the
future.
D Chamberlain noted that the 5.5% DHB price increase for next year is high and should be pitched to the DHBs as driven
by IVIg and the expected 12% growth. He expects that the IgO app wil give us bet er information going forward. Assuming
we do get the IVIg growth, are DHBs real y going to be doubling their spend on IVIg in four or five years?
S Clif e commented that if the capital injection is not forthcoming, the other option is stay at a lower level and increase
reliance on commercial product. The Australians are reliant 50/50 on commercial product, although they have been raising
concerns for about this for 20 years. Pointing out alternatives to Government about this wil be real y important.
D Chamberlain noted the Board’s support for the direction of the budget and thanked J Harrison, his team and S
Cliffe for al the work that had gone into it. It was also noted that extending the MOCL and request for a capital injection
should be progressed ASAP.
S Cliffe noted the increase to DHBs is elevated this year and wil meet soon with Rosemary Clements, our lead DHB CEO
to discuss the NZBS operating environment and the drivers behind the proposed increase. S Cliffe will always of er to
meet the DHB CEOs to explain the increase, if required.
General Business
C Lancaster raised the letter from the Director General of Health, Ashley Bloomfield regarding the transfer of ODNZ staf
within the Health Transfers Act. S Clif e advised that she had talked to our lawyers Buddle Findlay straight away and they
felt that it certainly wasn’t what was expected and they are questioning the validity of the interpretation of the Act.
Buddle Findlay are talking to Health Legal at the MoH and hopeful y Auckland DHB lawyers as well. S Cliffe noted that
we don’t have a problem with the Act, and that there would be a lot of negotiation with Auckland DHB. NZBS would also
be making it clear where any Holidays Act liability sat i.e. with ADHB. Ongoing employment disputes are not an issue,
however we are keen to understand the general liability on collective bargaining. Staf would be transferred on existing
conditions and when those staf leave, new employees would be employed on the same terms and conditions as our staf .
This only applies to donor co-ordinators and administrators, the doctors are under ASMS as are the NZBS doctors.
J Blue queried when the 2018 Haemovigilance Annual Report would be available? J Harrison noted it should be published
on the NZBS website by the end of February 2020.
4
CONFIDENTIAL TO BOARD MEMBERS ONLY
ITEM 5.0 NEXT MEETING
The next Board meeting wil be on 27 February 2020 at National Of ice, 71 Great South Road, Epsom, Auckland.
Close of Meeting: The meeting closed at 11.20am.
Certified as a true and correct record:
________________________________
David Chamberlain – Board Chairman
5
