GUEST BLOG: Ian Powell - Newsflash Nicola: Diagnosis Comes Before Treatment, Not After

Despite the health system being one of the major and most electorally sensitive issues of public (and voter) concern in Aotearoa New Zealand, when Prime Minister Christopher Luxon gave his recent annual state of the nation address he barely mentioned it.

However this was not the case a few days earlier when his Finance Minister Nicola Willis gave an address on the forthcoming 2026 Budget. She had a sharp emphasis on health as reported by NZ Herald Political Editor Thomas Coughlan (17 January, paywalled): Changing funding system promoted.

Coughlan reports Willis as coming for the key budgetary part of Labour’s health reforms, with changes possible as soon as this year.”

Nicola Willis’ solution to Health New Zealand’s woes!!!

She pointed her finger the former Labour government’s change of the health budgetary system from annual to multi-year guaranteed funding.

The objective of that change was to give Health New Zealand (Te Whatu Ora) guaranteed funding over three-year periods to provide sufficient long-term financial security in order to plan how best to deploy its resources.

However, the finance minister took an opposite view. In her words:

Quite famously, Health NZ had a bit of a disaster … It didn’t stick to its budgets at all, which undermined what we were trying to achieve with its forward funding approach.

With the current three-year budget ending this year the Government is looking to go back to a system of annual funding “… to restore discipline.”

Willis noted that “We are contemplating the question of should we be giving ourselves more discretion to direct that more surgically in the future.”

Indictment on Health New Zealand governance

There are two things that stand out about Nicola Willis’ critique. The first it is that it is an explicit criticism of the top leadership of Health New Zealand as one could make without being explicitly explicit. It is an expression of zero confidence.

Lester Levy’s leadership indirectly slammed by Finance Minister despite her government appointing him

The irony is that it is her government, in which she is a key player, that appointed Health New Zealand’s governing body.

For 12 months it replaced its board and appointed Lester Levy as Commissioner. It reestablished the board in July 2025 with Levy as its Chair.

Much can be said about Levy’s leadership history in the health system (and much as been said including by me). Suffice to say it isn’t flattering among those with health system experience.

In summary, the new national bureaucracy’s leadership culture has become top down ‘command and control’. Inevitably this leads to viewing issues through a narrow lens in which much of the complexity of health is disregarded or misunderstood.

The establishment of Health New Zealand led to a highly vertically centralised health system with much decision-making removed from where most healthcare is provided.

Shane Reti promoted devolution as way forward but hasn’t yet been delivered

Former health minister Dr Shane Reti recognised the risks this restructuring created. His solution was two-fold – avoid further restructuring and devolve decision-making closer to where most healthcare was provided.

Although much more was required Reti’s approach announced in 2024 was a step in the right direction. However, Levy’s leadership has not been able to achieve this objective.

Four regional deputy chief executive positions were established in July 2024. These have now been renamed ‘regional executive directors’.

The failure to implement the delegations necessary as the starting point for devolution was highlighted at a recent meeting between Levy and the four regional incumbents. Levy reportedly blamed them for failing to progress delegations.

A retort quickly came back asking whether they were responsible for not delegating things that had not yet been delegated to them! I understand the atmospherics migrated from anger to frostiness.

Failure to diagnose

However, it is the second standout observation of Nicola Willis’ strident address that is decisive. This is her failure to diagnose before proceeding to treatment (as she previously did in her handling of the interisland ferries debacle).

If doctors did this with their patients then patient harm or deaths would be the inevitable outcome.

Does Nicola Willis’s handling of the economy give confidence in her assessment of the health system? (Yeo, ODT)

Blaming the performance of Health New Zealand on the shift to multi-year guaranteed funding without providing evidence is lazy scapegoating. The worsening problems facing Health New Zealand were already well in place long before this decision was made.

In fact, given the complexities and scope of the health system, multi-year funding may well have been a good thing beginning with the advantages of certainty and enabling better planning.

However, the surrounding political and bureaucratic leadership driven chaos in the health system means that its potential benefits could not be realised.

What the diagnosis should have been

The diagnosis of the performance of Health New Zealand has to start with the following factors:

poorly thought-out restructuring by the former government in which Health New Zealand’s establishment was analogous to designing a plane while flying it;
the inevitable ‘command and control’ leadership culture that occurs when a health system is vertically centralised (much further away from where most healthcare is provided);
seeing health funding through a fiscal liability rather than an investment lens that benefits both the accessibility and quality of healthcare and economic performance;
consequentially the failure to develop an organisation-wide culture based on pro-active engagement with the health professional workforce recognising that this workforce is best placed to know how to improve health system performance at multiple levels;

Rising acute patient demand increasing at a higher rate than population growth

rising acute patient demand rising at a higher rate than population growth since 2011 thereby causing hospital inpatient ‘bed-blocking’ and overcrowded emergency departments;
government failure to address external social determinants of health, such as low incomes and housing, that drive this rising acute patient demand; and
longstanding neglect of severe workforce shortages of virtually all health professional occupations that lead to both fatigue (and burnout) and seriously damaging delayed diagnosis and treatment.

Time to bring in Samuel Sheen

This is the starting point which unfortunately Nicola Willis misses completely. If they were addressed Health New Zealand would achieve its desperately needed turnaround.

More than this, however; we would have a much more vibrant, responsive and cost-effective health system and a much healthier population.

Samuel Shem, an eminent psychiatrist possessing much wisdom

Samuel Shem is the pen name of the American psychiatrist Stephen Joseph Bergman. Under this pen name, in 1978 he published a satirical novel, The House of God.

Among many other pearls of wisdom he said “If you don’t take a temperature, you can’t find a fever”.

We need a government and health system leadership that does take the temperature of the health system in order to first find the fever and then treat it.

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.