Health NZ commissioner welcomes mission to find $1.4b in savings

Tuesday, 23 July 2024

Health NZ’s chair Lester Levy, who has been appointed as commissioner of the agency on a 12-month basis, has welcomed the task of finding $1.4b in savings.

Health Minister Dr Shane Reti announced on Monday he would replace Heath NZ’s board with Levy as commissioner “in response to serious concerns around oversight, overspend and a significant deterioration in financial outlook”.

Levy has been asked to cut down on what Reti described as $130m worth of overspend a month, reduce staffing layers from 14 to about six, and axe between 2500 and 3000 “back office” staff from August 1.

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Levy said on Tuesday that Health NZ was spending more than it should and wasn’t delivering the standard of healthcare New Zealanders expected.

“At the moment, people are having to wait too long for care, and we must do everything within our power to change this,” he said.

“We want to deliver the kind of outcomes that New Zealanders expect from the health system and be assured that we are living within the taxpayer resources we are gifted.”

Levy said Health NZ was a big organisation that was “totally bloated” with bureaucracy, and that needed to change to meet budget constraints.

“People get their budgets, they learn to live within their budgets and they learn to do more,” he said. “This can be done, but it does require a different paradigm, a different approach.”

Reti said on Monday that Health NZ first reported a deteriorating financial position in March, “despite earlier repeated assurances by the organisation that it was on target to make savings in 2023/24”.

He put the “financial challenges” down to the Labour government’s “botched health reforms” which replaced the district health board system with a centralised agency.

“The issues at Health NZ stem from the previous government’s mismanaged health reforms, which resulted in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems which were unable to identify risks until it was too late,” he said.

Levy said on Tuesday: “Our reset will ensure we bring our decision-making closer to the communities where care is being provided. We will achieve this by establishing regional leadership that will have the required level of autonomy to arrange their resources.”

Labour rejected Reti’s assessment of a bleak financial situation and said the Government had not put enough of its budget towards health to account for population growth and inflation.

“This is a somewhat brazen and desperate attempt to pin responsibility for this Government’s decisions on the last government. This year’s budget didn’t contain enough funding for health. The consequences of that are now becoming evident,” leader Chris Hipkins said.

Following the announcement, the Nurses Organisation accused Reti of having an “unreal” view of the health system, and the union representing senior doctors said morale had never been so low.

“It certainly won’t fill nurses with any hope at all in the hospital sector, we know that they have been working under significant budgetary constraints and this is going to be the hard face of it,” Nurses Organisation chief executive Paul Goulter said.

“Our position would be that so-called overspend is in fact necessary investment into what any New Zealander would say is a health system that is really under the pump and not serving us.”

Reti said Levy had assured him there would be no adverse impacts on the delivery of healthcare in New Zealand during the process of finding the $1.4b in savings.