Health NZ promises clinical services won’t get slashed after $1.4b overspend

Tuesday, 23 July 2024

Newly appointed Health NZ commissioner Lester Levy says clinical services won’t be cut back as he seeks to eliminate $1.4 billion in cost overruns, while improving wait times.

Levy was announced as commissioner of Health NZ by Prime Minister Christopher Luxon and Health Minister Dr Shane Reti on Monday, who blamed a “botched” merger of the District Health Boards under the prior Labour Government for the overspend.

The new commissioner has been tasked with cutting back $1.4b in spending to return Health NZ to its budget constraints. Speaking to reporters alongside Health NZ chief executive Fepulea’i Margie Apa in Auckland on Tuesday morning, Levy said the overspend was “entirely unacceptable” as more was being spent on healthcare than ever before.

But he said the primary focus needed to be doing better for patients. He also said Health NZ was “quite a bloated, bureaucratic organisation” that needed to be more productive for the patient.

“In my view, the shortest wait is the safest wait, and our most urgent and critical priority is to reduce waiting times,” Levy said.

He said that while there were wait times that get “a lot of public attention”, such as the Government’s target for reducing wait times at emergency departments, there were other waiting times such as seeing a GP or being discharged from hospital.

There were spending problems “all over the show”, including in clinical services but also in how the organisation had been sized.

“I know the scarcity and narrative of doom argument comes up a lot in healthcare. So we've got this year in excess of … 28 billion [in revenue]. We’ve got more than 25 billion of assets, we’ve got nearly 90,000 people. That sounds potentially, if you turn things around, that sounds like that could be an abundance issue.

“The pathway that we’re going down is not to make cuts in clinical workforce. But we just need to be careful when you say that, of course there could be some sort of administrative overlays there … if there’s waste of course we would [cut].”

Levy said Health NZ had been too focused on its “hardware”, or its institutional arrangements and structures, possibly due to the amalgamation, meaning it was “more top down then bottom up”.

He wanted to drive a “philosophical shift” to focus the organisation on the “software”, focusing on leadership, the culture, operating models and clinical engagement.

“Get the waiting times down, be more productive to give more services into the hands of patients, their families and communities, and make everything we do infused with the milk of human kindness, compassion, consideration, and empathy, and never forget that we are dealing with people when they vulnerable,” he said.

Levy said “right at the moment” he had confidence in Apa to continue running Health NZ, and he was impressed by her willingness to adjust her direction.

Apa said the organisation’s planned devolution, creating four regional organisations within Health NZ, would place decision making closer to frontline, where “they are best placed to use those resources wisely to meet those needs”.

This would take out management layers, which had been criticised by the Government.

Apa said a $1b deficit reported by Health NZ in its most recent annual report, for 2022/23, was a result of a number of “one-off” transactions, including a pay equity settlement for nurses.

This deficit had been criticised by Luxon as indicative of a financial problem at Health NZ, as he blamed Labour’s handling of the organisation.

Labour has instead pointed the finger at the Government, saying the problem has occurred under its watch, and is a result of underfunding Health NZ at the 2024 Budget, ignoring advice about the cost of inflation and population growth.