Whatever your view of current health funding, the Counties Manukau DHB's failure to sound the alarm is a dereliction of duty. What's more, there is a solution to the funding issues

The media in recent weeks has been full of articles about the state of Middlemore Hospital. On one side of the argument, you have a new government claiming the state of the hospital as evidence of under-funding by its pre-decesssor. 

On the other side, the previous government's ministers say the process of governing always involves issues coming out of the woodwork. The money is there to fund these contingencies.

But regardless of your view, some elements of the story are very surprising.

First, the previous Minister of Health, Jonathan Coleman, has stated publicly that he was not made aware of the state of the Middlemore hospital buildings. The new Minister of Health, David Clark, had not been advised of the problem either until the media stories started to appear. Further, the Counties Manukau DHB had not raised the matter with the local MP or the local body leadership in its area.

If the buildings are so bad, the failure to bring the matter to the attention of the authorities looks like a complete dereliction of duty by the DHB.

Second, at the same time we are hearing stories of rapidly rising estimates of DHB deficits. They have jumped by $50 million in a few months. Figures jumping like that sounds like there is more guesswork than analysis going on. Again, each side blames the other.

Deficits are just a way for DHBs to spend more than they were officially appropriated. DHB deficits have risen and fallen over the years, but they are not new. At some level they have been part of the sector since DHBs were introduced in 2001. In theory the health system should operate without deficits.

The fact that deficit funding has occurred on such a scale is a weakness of the DHB structure, but far from the only one. Funding non-hospital services through hospital funding agencies creates a strong incentive for more expenditure on hospital services at the expense of non-hospital community services. The excesses of the former CEO at Waikato indicates the risk in spreading oversight of quite major public services so thinly.

As a former Minister of Health I have some experience in the area. The reality is that money will always be short in Vote: Health. There will never be enough to do everything everyone wants to do. The only way through for a Minister is to use the always large annual increases in the vote, combined with a continuing emphasis on getting more value for the spending in Vote: Health to maximise services for the public.

In Health, cost pressures are unavoidable. Growth in the economy and population drives up the costs. The aging population increases the proportion of people who require services and drives up costs. New medical technologies and new pharmaceuticals are coming on the scene all the time, and Kiwis will expect to access to similar levels of service as Australians. So what happens over the ditch will be influential.

Waiting lists for elective services will remain politically sensitive with more and more people requiring services as time goes on. For sometime there has been a sense there we need to have more emphasis on mental health services. From the reports that have made it into the public arena, there has been weak departmental leadership – the Ministry of Health needs to be strong and competent to deliver what the public needs. Keeping the bureaucracy strong involves cost.

In my view, the system is too decentralised. Everyone supports Pharmac which is the centralised purchasing of pharmaceuticals. Done well, this more centralised structure will give more value for money. Hospitals could then focus more on the management of the ‘repair factory’ side of Health which is what hospitals do.

The regional health boards could then focus on advancing regional views pointing out where the priorities should lie in each region.

We are a small country, the size of a moderate city overseas. We need a system focused on delivering as much service for people as we can do as efficiently and effectively as it can.

Comments (7)

by Cam Slater on April 15, 2018
Cam Slater

You used to be a former Minister of Health? Really?

[Ed: Small posting error ... Wyatt Creech - a real former Minister of Health - authored the piece.]

by James Green on April 15, 2018
James Green

"As a former Minister of Health I have some experience in the area."

How the hell did you write that!?

[Ed: The author was not the same as the person responsible for posting the piece ... error fixed now.]

by Charlie on April 15, 2018

If the only tool you have is a hammer then everything becomes a nail: Just because Pharmac works as a centralised purchasing doesn't mean that infrastructure management works in a similar manner.

In fact I would think it's just the opposite: There is need for skills and experience on site

From personal professional experience of projects within DHBs, I can tell you that the main issue is their inability to manage their own engineering projects. Hospitals are complex beasts and I have spent the last year sorting out problems with recently completed projects done badly by a couple of DHBs.

In fact it's absolutely nothing to do with politics or funding. 



by Moz on April 15, 2018

I got the impression this was more a case of "I was never told (quick, destroy the evidence)" than actual lack of information.

But regardless, it is the Minister's job to know this stuff, and they are the one ultimately responsible for what happens in their department. If their staff aren't telling them critical things, and they're not able to find staff who will, then they need to become, as you put it, a "former minister of health" and pronto. Ideally they'd become a former MP as well, with the stain of "fired for incompetance" (if not "lost seat by reason of conviction").

by william blake on April 15, 2018
william blake

On the one hand you can blame the previous government for nine years of underfunding on the other hand you can blame the cropping up 'surprising contingencies' on nine years of underfunding, a pretty blatant false dichotomy. Then it's the DHB's own fault for not making an issue out of infrastructure decrepitude, even though its arguably just cropped up as a surprising contingency,due to underfunding while running an underfunded hospital with stressed underpayed employees, blaming the victims..then I gave up the will to read on.

by barry on April 16, 2018

The basic problem is that people expect more services than we are prepared to pay taxes for.

The previous government put targets in place for provision of service (number of operations etc), but none for basic infrastructure.  and sacked boards that couldn't keep the deficits down.  That is a recipe for hiding infastructural deficits.

Yes, the system is too decentralised.  Basically the needs of people are the same whether in Auckland or Southland.  However, the real problem is not governance of the boards, but provision of resources commenserate with the services demanded.

by Wyatt Creech on April 22, 2018
Wyatt Creech

Charlie - thx for the comment. I most certainly don’t think there does not need to be local input - there must be. But Barry makes a good point too. The needs of people are pretty similar wherever - the decentralisation needs to be balanced. The regional input is more about community needs than hospitals. the aim is to run them well. 

My point is that the DHBs move responsibility for hugely important decisions to a structure not robust enough to manage it. They also dilute Ministerial acccountability.

Moz - I suspect it was miscommunication. DHBs put in multipage detailed business cases for capital works - I doubt Ministers see those. I remain suprised the DHB didn’t directly tell a Minister about the major problems recently highlighted in the media. So I agree with your point William.

It worth remembering too that what we do get is really good - we have a good health service. The role of the systen is to maximise what we offer.  

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