GUEST BLOG: Ian Powell – Baldrick’s ‘cunning plan’: A health restructuring transition unit without a transition plan

On 21 April 2021 Minister of Health Andrew Little announced a major restructuring of Aotearoa New Zealand’s health system involving three main changes to take effect on 1 July 2022. Better understanding the third of these changes is helped by drawing upon Baldrick of the Blackadder television comedy.

The first two changes are commendable; the establishment of the Maori Health Authority (MHA) and the new crown public health agency (located within the Ministry of Health). They both have the potential to sharpen the effectiveness of addressing the impact of external social determinants of health, wellbeing, and access to quality patient care treatment.

Establishing these two new entities does not of themselves disrupt or destabilise the health system. Both new entities could established without any other restructuring, aside from transferring some functions to them presently performed by the health ministry.

Removing the ‘point of connection’

But the third change does disrupt and destabilise the health system; the abolition of district health boards (DHBs). DHBs are the ‘point of connection’ between central government and healthcare provision and treatment both in communities and public hospitals.

It stands to reason that if this ‘point of connection’ is removed a new one should be developed to replace it. Further, it also stands to reason that there would be a transition plan from the current ‘point of connection’ (DHBs) to the new one (Health New Zealand – HNZ) to ensure a transparently smooth transition on 1 July. It was for this reason that the Government created a transition unit within the Prime Minister’s department.

This third change suffered from a severe democratic deficit. Abolishing DHBs was not recommended by the earlier review of the health and disability system led by Heather Simpson. It was not part of Labour’s election manifesto in 2020. There was no public discussion on the matter before it was announced just over a year ago.

The abolition decision was made in complete secrecy. DHB chief executives themselves only were informed on the day of Andrew Little’s public announcement. The effect was to exclude the considerable expertise within the health system from being engaged over whether abolishing DHBs was sound and what the unintended consequences might be.

 

Instead the Government looked to outside the health system, specifically business consultants and more specifically, Ernst & Young (EY). The risks of this reliance on business consultants is discussed in my article published by BusinessDesk (26 April): how not to build an aeroplane (or a health system).

Little’s rationale

The only rationale from Minister Little was his misleading claim that New Zealand had 20 different health systems. This is nonsense to those that have expertise in health systems (but not to business consultants).

Most health services are provided locally because it is common sense to do so; several are delivered regionally because it is common sense to do so; and a small number are provided nationally because it is common sense to do so. It is called subsidiarity. This is not rocket science. It is the ‘point of connection’ that is important.

The consequence of Little’s false accusation was to lead to a further one. He blamed DHBs for what is called ‘postcode lottery’ access to health services. In fact, the unique nature of DHBs as integrated organisations covering community and hospital healthcare for defined populations made ‘postcode lottery’ more transparent.

I discuss this further in my BusinessDesk article (16 March): Ditching DHBs because of what they reveal about postcode lottery.

How Labour became ‘easy meat’ for business consultants

So how did this happen? How did the Labour Party do a u-turn from supporting DHBs when in opposition to abolishing them when in government and without a mandate arising out of public consultation. Labour took office (in 2017 in coalition and 2020 with an absolute majority).

 

There were three factors that help provide the explanation. First, Labour believed that changing structures rather than leadership and workplace culture was the most effective way of achieving system improvement. Both history and the experience of many in the health system know this to be badly mistaken. But these were the people Labour chose to discount.

Second, Jacinda Ardern’s government is social liberal and technocratic (not left-wing as claimed by the political right). While social liberalism is laudable (as far as it goes) it can lead to elitism and has done so in Aotearoa.

Third, Labour had little or no confidence in the leadership of the health system. Initially it was thought that this applied to the health ministry but it became clear that this lack of confidence extended to DHBs. Consequently Ardern turned elsewhere.

The combination of these three factors meant that the Government became ‘easy meat’ for external business consultants with a ‘cunning plan’. Apart from shorter-term technical projects, this was despite the experience of business consultants engaged by DHBs ranging largely from mediocre at best to counter-productive at worst (but very expensive regardless).

A transition from DHBs without a transition plan

The consequence was that the Transition Unit (sitting in the Prime Minister’s department) responsible for developing a transition plan was business consultant dominated. This included appointing EY senior partner Stephen McKernan as the unit’s director (the Prime Minister made a direct approach to him to take up this role).

 

But there is a huge problem. With only 40workingdays to go those running DHBs have no more information on what will replace them on 1 July than they had on 21 April last year when the health minister announced their abolition back.

In other words, the organisation responsible for planning the transition from one ‘point of connection’ to another (ie, from DHBs to HNZ) has no plan. With 40 working days to go there is no understanding how this will happen. For example:

• DHBs are presently responsible for funding primary care in their geographically defined population. They disappear on 1 July. What happens next is unclear. Further, the mechanism for determining primary care funding is to be replaced sometime in the future but when and with what is unknown.
• Both HNZ and MHA have chief executives already employed. But few, if any, of the top leadership tiers will be on board by 1 July (it has been agreed, however, that a number of health ministry staff will transfer to the new entities on 1 July).
• Localities are supposed to be critical to the new system. There are to be 80 localities but only nine have been announced to date and these appear to be ‘prototypes’ at best (scaffoldings with little or nothing within them). Implementation of localities has been extended out to 2024.

Just when you thought it couldn’t get worse

But it gets worse. In his April 2021 announcement Andrew Little advised that HNZ would have four regional offices. Although not confirmed it had been assumed that these would be in Auckland, Hamilton, Wellington and Christchurch consistent with the current four regional groupings of DHBs.

But in the last three weeks there has been a strong kick-back by MHA and supported by HNZ (and observed by bemused DHB chief executives). MHA wants to increase the number of HNZ regional offices and appears to have latched onto around eight (in 2020 the Simpson review recommended that the number of DHBs be reduced from 20 to between 8 and 12).

The logic behind MHA’s initiative appears to be recognition that four regional offices will make it very difficult to connect with New Zealand’s diverse and geographically dispersed communities that are supposed to the basis of the new localities.

With HNZ’s support, MHA has a legitimate concern revealing a large failing in the restructuring. But it does not fit in with the level of centralisation sought by Transition Unit Director and EY’s McKernan who is strongly resisting the initiative. Tensions are high.

Hence, with a mere 40 working days to go, we have a behind-the-scenes scrap over how many HNZ regional offices there should be (and where they might be located). Either MHA/HNZ or McKernan will have to backdown, or the health minister will have to make a call.

Broken ‘golden rules’

At least Baldrick’s ‘cunning plans’ actually existing, as inept as they were. It is an extraordinary achievement to have outflanked Baldrick in ineptitude.

 

There have been several ‘golden rules’ broken in this debacle that go to the heart of political leadership competence (no doubt there are more):

• Before you allow business consultants to design a health system, first have a dummy run with panel beaters designing a traffic intersection.
• Focussing on structural change to achieve sustainable beneficial gains is likely to fail.
• Have more confidence in the experience and wisdom that exists within the health system. It knows not only what works but also what does not work.
• Don’t devalue and disrespect the workforce that is expected to keep the health system going post-restructure.
• Don’t replace what you have until you know what you will replace it with and are confident that it will do a better job.
• Never, never restructure a health system during a pandemic.

Just saying!

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