In 2003 Dr Peter Roberts published a book titled Snakes and Ladders: The Pursuit of a Safety Culture in New Zealand Public Hospitals. At the time Dr Roberts; an intensivist and physician, was completing his term as President of the Association of Salaried Specialists.
His focus was on enhancing human performance to establish a safety culture in public hospitals in order to manage human error. It was based on a survey of intensive care units in New Zealand. While intrigued by the subject matter, what registered most in my mind was a simple sentence – that bad policy is more harmful to patients than flesh-eating bugs.
These bugs, called dermestids (derived from the Greek word meaning ‘skin’) are described as nature’s forensic scientists. This is because they eat the flesh off carcasses in a process called skeletonisation (some apparently focus on male genitalia; very rare I might add) .
At the time Dr Roberts was writing his book there had been much media coverage of these bugs in hospitals including operating theatres. His eye-catching turn-of-phrase has stuck with me ever since.
A tale of two business consultancy projects
What could be a better introduction to the use of external business consultants and contractors by district health boards (DHBs) than flesh-eating bugs!
My overall experience is that business consultants have been a very poor utilisation of health funding especially in the areas of service improvement, provision and delivery. It is not just that they don’t have the right expertise; they don’t know they don’t have it. The expertise resides within the health workforce that DHBs employ.
My first recollection of their use was in the mid-1990s when, in an inane short-lived market experiment, public hospitals were run by state-owned companies called crown health enterprises (CHEs).
In Whanganui the CHE was called Good Health Whanganui (due to various mishaps it became known as Good Grief Whanganui). Management decided to bring in external consultants. In their wisdom, when looking at the anaesthesia department, they concluded that there were too many anaesthetists and consequently recommended reduced numbers.
This led to panic because the reviewers failed to realise that in addition to providing anaesthesia for surgery patients, anaesthetists also ran the intensive care unit.
If the recommendation had been adopted then Good Grief Whanganui would not have an intensive care unit to provide post-operative care and therefore could not do surgery. Once this bungle was forcefully identified the recommendation was ignored. But, as is the way, the business consultants still got paid.
Jump forward to 2020. As part of an agenda to topple the engagement-orientated senior management of Canterbury District Health Board (CDHB), Ernst & Young (EY) consultants were engaged to do what amounted to a ‘hatchet job’.
Senior management was too close to CDHB’s health professionals which, over several years, had brought it into increasing conflict with the arbitrary top-down leadership culture of the Ministry of Health, largely over the response to the 2011 earthquake devastation (including rebuilding).
EY’s ‘hatchet job’ was to attack the credibility of CDHB’s financial management. To achieve this objective EY misrepresented national staffing data to claim that CDHB employed too many nurses (a laughable claim given today’s nursing workforce crisis in DHBs). The misrepresentation included ignoring the fact that CDHB employed extra permanent nurses to reduce the more expensive option of employing agency nurses.
This is discussed further in my February 2021 article published by the Democracy Project Hatchet job.
So what was worse; Whanganui’s business consultants in the mid-1990s or EY’s work in Canterbury. I go for the latter. The former was incompetence; the latter was disingenuous.
DHB business consultants costs, 2016-19
Now intrepid Radio New Zealand journalist Phil Pennington has uncovered a published (July 2021), but not previously reported, article by Adeel Akmall, Robin Gauld and Erin Penno, from Otago University, in the International Journal of Health Policy and Management.
Their article discusses DHBs annual reporting on the use of business consultants and contractors to Parliament’s Health Select Committee. It covers the financial years from 2016 to 2019 (under both National and Labour led governments) is revealing.
Among the noteworthy conclusions are:
- DHB spending had increased substantially from an upward level of around $60 million annually in 2016 to well over $160 million annually in 2019 (nearly 170%).
- The total expenditure over these three years was $429,606,262 with the highest DHB being $173,506,937 (unfortunately DHBs are anonymised).
- The biggest specified category of expenditure was ‘medical supplies’ ($177,206,812) although much of this was in one DHB ($145,692,684). This is largely around privatisation suggesting that the DHB was Capital & Coast (laboratory privatisation).
- The second biggest specified category of expenditure was ‘service improvement’ ($36,577,682) although there was also a miscellaneous category of over $100,000,00). Other specified categories were IT, human resources and business management.
- The information about this work and the transparency its reporting was uneven, often poor (sometimes incomplete).
Akmall, Robin Gauld and Erin Penno have done the health system a favour for their revealing research. It is an important red flag for decision-makers.
Unfortunately the poor quality of the information provided to them does not allow the researchers to differentiate between whether the work was commissioned on a DHB’s own initiative or whether a DHB was required to commission it by the Health Ministry (but still paid for by the DHB). The latter was certainly the case with EY’s work at Canterbury.
What the research could not consider was the quality of projects undertaken by business consultants and contractors. I know from what I’ve seen and, more important, what medical specialists have told me for over 30 years, that overwhelmingly the quality of their work is underwhelming to put it as politely as I can.
The exception was short-term well-defined technical work which a DHB could not reasonably be expected to possess the required capabilities.
The experience and expertise for much of these commissioned projects, where they were justified, resided within DHBs own workforces. Most of the $429,606,262 was wasted funding that could have been on supporting under-resourced health professionals and improving patient services.
McKernan says it all
Pennington’s work on the article featured in RNZ’s Morning Report earlier this week (21 March) Morning Report
One of the concerns raised in Morning Report was the likelihood of increased dependency of both the current health restructuring and the new health system commencing in July on business consultants and contractors. In my view this is as likely as night follows day.
This was effectively confirmed by the following written statement provided by the Government’s Transition Unit to Morning Report:
The Health Reform Transition Unit says there is a genuine need for contractors and consultants It says ensuring accurate and transparent reporting back is already a priority in the public sector and a centralised system will support standardised approaches.
Who led EY’s hatchet job in Canterbury DHB – EY senior partner Stephen McKernan; who heads the Transition Unit – EY senior partner Stephen McKernan; who is picking up much of the high level of business consultancy work of the Transition Unit – EY; whose work for individual DHBs is increasing significantly – EY.
Is there a pattern here? Is there a smell of conflict of interest? The reader can be the judge of that. But one thing is certain. Business consultants are more harmful to patients and health systems than flesh-eating bugs.
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