Jobs and primary healthcare on the line as Govt stems $130m a month bleed

Tuesday, 23 July 2024

The Government has disbanded Health New Zealand’s board and signalled jobs are on the line, as the crown entity overspends by $130 million a month.

A commissioner is being appointed to oversee the national health agency, following Government’s loss of confidence in its governance and blaming the overspend on a “botched” merger of the District Health Boards (DHBs) begun under Labour.

“The previous Government simply took the old DHBs and sought to smash them into one organisation by adding massive layers of management over the top,” PM Christopher Luxon said last night.

“Frankly, it was appalling implementation from a government with a pattern of mismanagement and non-delivery.”

But Labour pointed the finger back at the Government for a financial problem which has only recently emerged. Labour leader Chris Hipkins said the Government had failed to sufficiently fund Health NZ in its May Budget, and Luxon’s spin was “desperate”.

“This year's Budget didn't contain enough funding for health, the consequences of that are now becoming evident.”

University of Auckland professor of health systems Dr Tim Tenbensel said the overspending was a complex issue and difficult to solve given several “slow-moving crises” that had been building for some time, like the workforce shortage, and which became a self perpetuating cycle.

It cost money to solve problems that were due to historical underfunding, he said, and the healthcare system was already run “on the smell of an oily rag”. The other part of it was the sheer complexity of the restructure.

“When the health system is financially restricted and it’s trying to catch up to previous cycles of restriction, then the challenges are pretty monumental.”

Cost-cutting, he predicted, “will have some consequences for health services in the community, particularly primary care and NGO mental health services, because traditionally, back in the DHB days, that’s the only thing they saw as discretionary spending.”

Health Minister Dr Shane Reti has appointed Professor Lester Levy as commissioner of Health NZ, having appointed him chair of the troubled board in May. Levy, a medical doctor, is a professor of digital health leadership at the Auckland University of Technology.

His appointment came after Reti appointed a Crown observer to Health NZ in December, the resignation of the previous board chair Dame Karen Poutasi in April, and recently the resignation of board members Naomi Ferguson, Jeff Lowe and former National MP Amy Adams.

Reti said it was apparent that core parts of the health reforms had led to governance issues at Health New Zealand that were far worse than the Government first thought.

“No-one has been adequately watching, and no-one has been adequately monitoring the Government's single biggest Crown entity.”

Reti blamed the overspending on so-called “back office” and outsourced staff, and an increase in full time staff, which “eludes me”.

But the government’s overspending claims were “rubbish”, according to one Canterbury health leader.

Dr Phil Bagshaw, founder of the Canterbury Charity Hospital, said health had been underfunded for decades, notably since the 1990s, and was shocked by yesterday’s announcement.

“There's been unnecessary and inappropriate reductions in investment in health which needs to be reversed and the notion that one person will be equipped to address all of these massive problems is beyond my belief.

“They've got to change the philosophy from one of cost, to one of investment.'

“Unfortunately those dividends normally take longer than any government term and most governments aren't worried about what happens once their term is over.”

He cautioned against introducing further change to the system. “In the end you reach a system where the system has no further way of responding to change and then you get chaos.”

Sarah Dalton, executive director of the Association of Salaried Medical Specialists (ASMS), said the “poorly resourced and underfunded industry” needed more funding, not cuts.

“Any department in New Zealand suffers from a lack of clinicians, staff who can’t access leave, staff who can't provide patients with timely care they need,” she said.

“First disestablishing Te Aka Whai Ora (Māori Health Authority), then dismissing the board of Te Whatu Ora leaving a single commissioner with a cost saving agenda, does not look like a health system with equity of access and health outcomes at its heart.”

The appointment of a commissioner, which Reti described as the “strongest intervention” he could take, concentrates the Government’s authority over Health NZ.

Levy has been tasked with a “turnaround plan” to eliminate the $1.4 billion expected annual deficit and to reduce the 14 “layers” of management between frontline health staff and the Health NZ executive down to six layers.

Reti said Health NZ would also be “regionalised”, or internally divided into four regions to make better decisions about spending and the delivery of care.

At stake are 2500 to 3000 back office jobs. Reti was “uncertain” how many might go.

Neither Luxon nor Reti would express confidence in Health NZ chief executive Margie Apa and her executive team, saying it was for them to have confidence in Levy.

Additional reporting: Kelly Dennett, Tatiana Gibbs