GUEST BLOG: Ian Powell – Health system at risk by Government abdicating leadership of Simpson review implementation to business consultants

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The Government is putting the health system at risk by abdicating the leadership duties and responsibilities of its Health Transition Unit to external business consultants. The Unit is based in the Prime Minister’s Department and is responsible for the implementation of the Heather Simpson review of the health and disability system.

The leadership and shape of the unit is revealed in a very good Newsroom article by investigative journalist David Williams (12 March): 

Behind abdication

In considering its approach on what to do with the Simpson review the Government had two problems. First, its understanding of what drives health systems (and New Zealand’s in particular) was weak. Second, it lacked confidence in the Ministry of Health. The latter lack of confidence existed well before Ashley Bloomfield commenced as Director-General of Health in June 2018. However, in the operational response to Covid-19, some serious lack of relevant capabilities were exposed that have not helped.

Consequently the Government has turned to business consultants beginning with the appointment of Ernst & Young Consulting (EY) senior partner Stephen McKernan as the head of the transition unit following direct approaches from Prime Minister Jacinda Ardern. McKernan’s stature with Government was sufficient to ensure two conditions he sought were granted. First, unlike in 2018 when he became Acting Director-General, he wouldn’t be required to take leave of absence as an EY senior partner. Second, he wouldn’t have to report to Simpson.

Such is his influence that there is a joke doing the rounds in the health sector that New Zealand has two Director-Generals of Health – one who reports directly to the Prime Minister and one who reports directly to the Minister of Health. No prizes for guessing which is which.

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But there is more to this situation than McKernan’s appointment and role. Williams reveals that his unit comprises 25 people, 15 of whom are external business consultants and 11 of whom work for EY (including McKernan; not all full-time). Williams enquiries about how McKernan’s 10 colleagues were appointed received an evasive response.

Past history of business consultants

The history of external business consultants in the public health system going back to the 1990s hasn’t been glorious. In technical areas such as IT for a fixed shorter period of time with a specific task they can useful especially if district health boards (DHBs) lack the specific expertise required. EY itself is an example with their current work for DHBs on the application of the Holidays Act to public holidays.

But when it comes to wider macro and micro health system issues especially when relevant to health services design, configuration and delivery, despite bragging and bravado, they often flounder, expensively so for the taxpayer. They often don’t know what they don’t know but believe or claim that they do. Often they write what whoever pays their invoice wants to read. Scams is also a word that sometimes comes to mind.

Using external business consultants to implement the Simpson review might have something going for it if it was simply a limited technical exercise (although there is much technical expertise already in the health sector). But the review is not prescriptive with wide scope to how it might be implemented. Technical skills are not the most important skills required for implementation.

Stephen McKernan

I have had a long association Stephen McKernan. He’s intelligent and personable. When he worked in the public health sector we had a respectful, at times robust, relationship characterised by some sharp differences but more so collaborative common ground. He was a good chief executive at both Hutt Valley and Counties Manukau DHBs and similarly as Director-General of Health (2006-10; also acting in the role for a few months in early to mid-2018).

Since 2010 he has been a business consultant first with his own company Health Partners which subsequently merged into EY where he became a senior partner. He has a healthy respect for health professionals although this is more in their diagnostic, clinical and population health roles than in wider systems leadership.

But, at heart, McKernan is managerialist and a bureaucratic centralist focussed more on desktop analysis than the pivotal relational dynamic of health systems. His past decade in the private sector has clearly reinforced this but also led to a behavioural shift that has ethically shaken the health sector.

There was shock at the use of EY led by McKernan to do a hatchet job on the former senior management team at Canterbury DHB in part through either the disingenuous misuse or incompetent use of nurse staffing data . [There is more to be written on the background to this]. While no doubt McKernan is able to internally rationalise the ethics of this conduct, many in the health sector can’t.

What they Government should’ve done

While the Government’s wariness of the Ministry is understandable this didn’t justify abdicating Simpson implementation to business consultants. The Ministry is full of hard-working competent people but there are capability deficiencies in respect of how health systems operate. But there is a wealth of systems and operational experience in both our DHBs (most of which have quite different population mixes) and non-government organisations of numerous types.

Despite claims to the contrary EY’s expertise in health systems is not high especially when you look beyond Stephen McKernan himself. It’s performance in Canterbury was hardly reputational enhancing. The use of secondment from both, plus the Ministry, would have produced a much more competent transition unit than the present one, one which better understands data and how health systems work in practice, and one which is more likely to be prepared to advise Government on things it might prefer not to hear (but hopefully would respect).

Seconding from the health sector would also mean a transition unit much less likely to have potential conflicts of interests. Using business consultants to design a health system brings to mind words like panel beaters designing traffic intersections.

There are two certain outcomes of a business consultant led health system design – it won’t address the serious challenges facing the health system today and it will generate more profitable work of questionable value for business consultants.

While external expertise can provide added value it has always been the insufficiently recognised fact that overwhelmingly those who work in the health system know best how to improve it particularly when “those” includes health professionals.

Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Otaihanga Second Opinion.


  1. ‘…. despite bragging and bravado, they often flounder, expensively so for the taxpayer. They often don’t know what they don’t know but believe or claim that they do. Often they write what whoever pays their invoice wants to read. Scams is also a word that sometimes comes to mind.’

    That’s what governance means in NZ these day: paying consultants who don’t know what they are talking to to write bullshit reports the neoliberal bureaucrats and politicians want to hear.

    The really clever part is the make public consultation a complete travesty, and then declare later that the public agreed to the bullshit.

    We are about to get the same on the most crucial issue of all time: Planetary Meltdown. The so-called Climate Commission consists of NO atmospheric chemists, and is headed by an economist-lawyer with no understanding of the matters involved. But he will present a report that banks, corporations, opportunists and politicians will want to hear.

    • Where to begin eh?.
      As someone who doesn’t owe nobody nuttin, other than a student debt – resulting from the state breaching its “social contract” with me, minimal at that, I have the luxury of sitting back with a load of popcorn and watching. Except that I don’t really like popcorn that much.
      I think (or should i say, “my reckons are”) that things are going to have to get worse before they can get better, AND, that we get what we deserve. I hope it comes sooner rather than later.

      The managerialists are at play , right throughout our administrative gummental agencies. In some ways I watch, and see them as neo-colonialists, puffed up with an over-confidence that – if pressed – they’d be hard pressed to justify; at other rimes I see them as strugglers doing their best to justify their existence, bullshitting and spinning for all they’re worth – left right and centre; and at other times I see them as rather scared little bullshit artists worried about how they’re going to have to justify their existence (in this space, going forward).
      As an aside, I heard Chris Hipkins the other day resurrecting the idea of Kaizen. Sorry to say I might have MIS-judged becuase I’d considered him to be one of the more competent amongst the teacher’s pets.

      All the right learnings. All the right polly-speak. All the right comms and marketing mantra.
      @Ian: I admire your magnanimous estimation of McK. (He’s probably got his various mortgages or high living debts on his mind – or maybe not – perhaps even some millenial kuds jeopardising the SUV’s insurance policy)
      Unfortunately the “issues” (or Isss- Yoooos – as Kathryn Ryan would say) are really only going to jump up and bite our elected representatives on the bum when it starts to hurt them personally.
      They need a shock – and if not 2023, it’ll certainly come shortly after. That’s the sad part because they actually have a mandate to do stuff now. But …. so be it. Sooner the better

      I mean – we’re talking about the obvious shortcomings in health on this thread. As you’ll know, there are others
      It’s not that different from the Isss Yoos we see elsewhere though – in education, in housing, in transport and un-frastrucha, in local gummint, in exploitation (SOMETHING a Labour gummint should be at the forefront of), in fawn policy, in public service media. Shit that should seem obvious problems to a progressive Labour party.
      Here is a Labour gummint that has really let us down, given their mandate and the possibilities that allowed them power. They ARE the least worst option but they have that option and mandate to make things better.
      They’ve been captured, and under JA they’ve opted for status quo/non-progressive options.
      We could go through things sector by sector (And by that I mean Health, Education, Housing, etc).
      Hopefully though, we all know by now that the bullshit artists hold power, and that they’re afraid because their status quos are under threat.
      To me, some things seem bleeding bloody obvious.
      Paul Buchanan (for example) knows more about security intelligence than most people in the apparatus will probably ever know.
      There are Children’s Commissioners and various others that are better informed than most.
      There are Spoonley’s and others that’d be better options to head Immigration and Refugee policies and the agencies that administer them than the muppets currently in charge. (There are REAL bloody muppets in that neck of the woods)
      There are very many people that could give the current muppets in charge of Labour exploitation some learnings in that space going forward.
      There are people in academia, and elsewhere that have solutions to the demise of the 4th Estate and how best to resurrect and preserve it.

      Thank Christ my debts are minimal and I have an exit strategy. The thought of having to go through any more year-long Inquiries, and White or Blue or Green or Pink Papers before Something Must Be Done is actually quite dperessing. And it’ll all be academic anyway when the demographics of the voting public change in the next few years

  2. Good article. Of course the consultants aren’t doctors and Nurses. and so for the most part won’t be looking at the simple practicalities of putting more resources into the system which starts with more of everything. What they do is try and make the present systems fit the current budget. Of course that won’t work but we will take several years to come to that conclusion that we already know. Unless this Government commits to massively increasing resources to the health system they shouldn’t waste our money with these consultants who for the most part won’t be front line heath professionals. In my opinion.

  3. Indépendant commentary is why people read the daily blog because mainstream media is useless at anything real.

    Food for thought. Will read the Newsroom article.


  4. Thanks for this. A very informative post.

    I have wondered why genderism, self ID, gender identity etc has infiltrated the Labour Party and so many NZ organisations without a lot of public discussion.

    But here we see that EY is majorly involved in promoting the global neoliberal, top-down, corporate-led incorporation of the current LGBT+ gender ID-dominated agenda. And maybe having influence of our Ministry of Health and Labour government via McKernan.

  5. Ian Powell has written really good articles which explain many of the problems within the health system, he gives the impression of being too intelligent to want to be a politician although I suspect he would be at an age where he is looking to enjoy life now as well which is a pity as he seems to be someone I could trust to be in charge of the health system.
    A common theme seems to run through modern management which reminds me of the children’s story (from about 55 years ago) about the king being sold special material that only smart people could see. As one of the earlier comments so eloquently put it, “bullshit” and greed seem to be all we are fed while any important decisions are avoided.

  6. Neoliberalism reduces virtually any human activity to the status of a transaction-few more obviously, and sometimes cruelly than in public health.

    I trust Ian’s take on this with his vast experience. It is tricky to negotiate the system for us ordinary “service users”, from the Wilson carpark parasites, to your caring doctor pissing off in the afternoon to work in the private sector! to departments funding being contestable with other departments.

    It seems inconceivable that people from the for profit sector are going to transform the DHBs usefully, let alone implement even some of the Simpson Report.

  7. The health system is stuffed I had to sit for more than 6 hours at the Hutt Hospital A & E last week with my very sick brother who was sent home and had to return as he was so sick. I told them ‘I am not leaving till he gets admitted’ and asked them who sent my brother home to die, not good enough we, Maori are still being let down. In the meantime we need to carefully look at the impact of immigration too many people and we just don’t currently have the infrastructural resources. To make matters worse everyday we see and hear of people wanting to bring in whanau members.

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