GUEST BLOG: Ian Powell – The Third Coming of Lester Levy – a process glued together by hypocrisy: Part Two

The first and second comings of Dr Lester Levy were discussed in Part One of this two-part blog series:

The purpose of this blog series is to discuss how divergent agendas and personalities can come together in a manner that impacts on a health system including its leadership culture. In this case it was to deal to a senior management team that overall was much more responsive to workforce engagement and distributed clinical leadership than those in other district health boards (DHBs).

The effect of this engagement was to increase the preparedness of that DHB to question and challenge top-down national decision-making and pressure, particularly but not only from the Ministry of Health. More than anything else it was conflicted between opposing leadership cultures into a full-on clash that included highly questionable tactics.

The more the senior management team engaged with its own health professional workforce the more it brought itself into conflict with the Health Ministry leadership’s top-down arbitrary direction; and the more the relationship deteriorated.

Over time this situation escalated from being an annoying nuisance to agendas from within central government to being untenable. The process in which this happened lent itself to biblical references and was bound together by the powerful glue of hypocrisy.

Developing an exit strategy

Had Labour’s health spokesperson (and former health minister) Annette King not decided to retire from politics in 2017 she would have been the Health Minister instead of David Clark in the new Labour led government. In opposition she had been open about her intention, should she became minister after the election later in the year.

She was also acutely aware of the increasing tension between the more workforce engagement orientated Canterbury DHB (CDHB) and the top-down Health Ministry. Further, she identified the latter as the culprit. In discussions with me she also singled out Canterbury’s David Meates as a DHB chief executive who had impressed her.

Although King was strongly critical and focused on the Health Ministry, particularly then Director-General Chai Chuah, she also had serious concerns about some of the government appointed DHB Chairs. Consequently, as health minister, she would have required all DHB Chairs to forward letters of resignation.

Then King would have decided which resignations to accept and which not to. Dr Lester Levy was the Chair of the Waitemata, Auckland and Counties Manukau DHBs. Her views on his leadership style were firm. His resignation (and some others) would have been accepted.

However, incoming Health Minister David Clark took a different approach. He was aware of serious concerns with Levy’s leadership of the three Auckland DHBs. This included plummeting workforce morale at Counties Manukau in 2017 (quite extraordinary given he had been appointed as recently as December 2016).

Clark’s way of resolving the problem was to successfully encourage Levy to join a small group, chaired by Sir Brian Roche, which had been established to review the Health Ministry’s relationships, particularly with DHBs. But, in exchange, Levy was required to stand down from all three of his DHB Chair positions.

It has been suggested that prior to Clark’s initiative, Levy requested the Minister to enable a statutory amendment allowing Levy to continue as Waitemata Chair beyond the limit of three terms but that this was rejected.

Levy was on his way out through what is often called a ‘managed exit’, albeit a rather cumbersome one. But his luck changed because he was seen useful for a different agenda; to discredit the senior management team of Canterbury DHB. This followed his success in ensuring the departure of each of the chief executives at Waitemata, Auckland and Counties Manukau DHBs.

It required Labour to do a u-turn in its approach to the Health Ministry-CDHB relationship and siding with the Ministry. This involved reversing Labour’s position when Andrew Little was its leader and Annette King its health spokesperson.

In June 2019 Health Minister David Clark appointed Levy Crown Monitor for CDHB. In February this year Health Minister Andrew Little reappointed him thereby endorsing his adversarial behaviour (opposite to his position when Labour leader).

What are crown monitors

Crown Monitors aren’t formal Board members but are required to observe, assist the Board in understanding government wishes and policies, and to advise the Minister on what he or she is observing.

Crown monitors are generally appointed on the recommendation of the Health Ministry to DHBs that have serious financial performance concerns. Currently there are crown monitors at Waikato, Canterbury and Southern DHBs. Subject to the attributes of the appointee, crown monitors can play and have played a good role.

Clark’s decision to appoint Levy as CDHB crown monitor came as a big surprise for many in the health system. In an earlier phone conversation I had with the Minister on unrelated matters Clark indicated that he wouldn’t be appointing Levy to any further positions. He may have been influenced by reports that Levy hadn’t rated high on the assiduous scale when on the Roche chaired review group.

Why was Levy appointed

Consequently Clark’s change of position was puzzling. However, it is now widely understood by many in health system leadership that the recommendation to Clark to appoint Levy crown monitor was developed by Director-General Ashley Bloomfield and Ernst & Young (EY) consultancy senior partner Stephen McKernan.

As discussed below, EY (including McKernan) was engaged to rewrite why CDHB was facing financial difficulty by shifting blame to its senior management team. Subsequently McKernan was appointed head of the transition implementation unit for the latest version of ‘health reforms’ reporting directly to the Prime Minister.

When McKernan was Director-General of Health Bloomfield had been a senior official in the Health Ministry. They had a close collegial relationship that continued for several years until recently. If McKernan wasn’t a mentor of Bloomfield he was certainly mentor-like.

McKernan was probably the greater influencer in developing the recommendation of Levy as crown monitor but Bloomfield can’t escape responsibility. As the most politically inexperienced health minister for several decades Clark would have found it difficult to reject a recommendation from two people he trusted and respected.

Rewriting history

It is clear that Levy wasn’t appointed crown monitor for his financial acumen. Rather he was appointed to deal with a clash of leadership cultures between Canterbury DHB (health professional engagement) and central government (top-down managerialism). In this context Levy was a brilliant appointment (see https://democracyproject.nz/2021/05/19/ian-powell-a-very-bureaucratic-coup-part-two/ for a fuller discussion).

Levy’s role was to change the accepted understanding, arising out of a series of external reviews and assessments, that CDHB’s difficult financial position leading to its increasing operational funding deficits was the result of the aftermath of the 2010 and 2011 earthquake devastation and delayed hospital rebuilds that were under Health Ministry project management.

Consequently he attacked the financial acumen of CDHB Chief Executive David Meates and his senior colleagues. But extra help was required. EY was engaged to do what amounted to a hatchet job by shifting the blame from earthquake recovery and delayed Ministry hospital rebuilds.

In summary, EY claimed that the senior management team was responsible for CDHB employing too many nurses. To justify this EY misused national staffing data held by the Health Ministry (see ).

Revenge factor

Those responsible for recommending Levy as crown monitor would have also known of his bitterness towards Canterbury DHB’s senior management team. He held them responsible for the failure of two national business cases for privately run DHB food and laundry services which he actively promoted when deputy chair of Health Benefits Ltd, a short-lived hierarchical national shared services agency for non-clinical DHB services.

The analysis of Canterbury’s senior management team was that their DHB would be significantly financially worse off. HBL could not provide any data to disprove this assessment. Most other DHBs concurred with Canterbury’s assessment and the business cases were not accepted by almost all of them outside the three Auckland DHBs where Levy’s influence was strongest. This is discussed further in Part One.

Learning from it all

Lester Levy was lucky to have the attributes that made him an asset to promote the National government’s market experiment with the health system in the 1990s but his luck was running out towards the end of that decade.

His luck returned with the election of the National led government in 2008. By late 2017 a ‘managed exit’ was underway but luck had a third coming when he fitted an agenda to remove the pro-workforce engagement senior management team at CDHB made easier by a gullible government.

The issue is not Levy himself. Instead it highlights how vulnerable health systems are to, and the consequential damage that can be done by, certain personality-types when stars align by fitting the purpose of other dubious agendas. They require something called hypocrisy to bind them tightly together.

New Zealand needs its health system to be much more robust. It needs to recognise that developing a strong workforce engagement leadership culture, along with significantly enhancing workforce capacity and capabilities, is much more important than the interests of bureaucratic factions and vested interests. Jesus may have only achieved one coming but I’m sure he would agree.

In the meantime, will Lester Levy’s extraordinary luck continue when Health Minister Andrew Little starts making appointments to leadership positions in his new health system restructuring? It is hard to tell as it will depend on whether Levy’s style fits Little’s and EY’s agendas.

Will it depend on God’s will? I don’t think so!

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.