GUEST BLOG: Ian Powell – Bureaucratic centralism rules supreme in New Zealand health system restructuring

This morning Minister of Health Andrew Little announced the Labour Government’s response to the Heather Simpson review of New Zealand’s health and disability system.

I didn’t see the decision to abolish all 20 district health boards (DHBs) coming. In mitigation nor didn’t almost everyone else. Last Sunday the Minister penned an article downplaying structural change being part of his forthcoming announcement.

I made the mistake in my previous Otaihanga Second Opinion posting of taking the Minister at face value; I was wrong. His announcement focused on structure when it should have been on system culture. However, I qualified it by adding that if his announcement was opposite to the tone of his article then the latter would be mere weasel words; and that’s what they turned out to be.

Purpose of DHBs

DHBs shouldn’t just be seen as structures. More important is their statutory purpose. Primarily they are responsible for the full spectrum of the health of defined geographic populations from community (mainly primary but also aged care) to hospital. This is a tremendous strength that compares favourably with public health systems internationally. Further, it naturally leads on to the integration of health services for patients between community and hospital.

This integration was well pioneered by Canterbury DHB with the development of clinically designed and led health pathways through the continuum of care between community and hospital. The outcome was improving the quality of patient care to the extent that the rate of increased acute hospital admissions declined. The benefit to patients is self-obvious but because acute admissions are a big cost driver in DHBs the financial savings were also significant.

The purpose requires DHBs to know their populations well in order to better integrate this continuum of care. Abolishing DHBs amounts to the abolition of this purpose. Little’s restructuring doesn’t address this purpose; it’s jettisoned thereby further fragmenting the continuum. The abolition of this responsibility for geographically defined populations can’t be compensated for by a new national bureaucracy in Wellington supplemented by four regional offices presumably in Auckland, Hamilton, Wellington and Christchurch. Little’s decision will set the health system back many years at least.

The abolition of this responsibility will also make it much more difficult for two other changes to be effective (both of which I support) – the Maori Health Authority and locality networks (in the context of a much more bureaucratic centralist health system that Little and his Ernst & Young business consultants seek to create, the latter will become window dressing).

Integrity challenge

Minister Little’s announcement raises a serious integrity issue. Previously the Government’s position was that last year’s election result gave it a mandate to implement the Simpson review recommendations. This was duplicitous because the opportunity for consultation over its recommendations was denied.

The Government also argued that there was an opportunity to consult over an earlier interim report. Yes, there was that opportunity but, in respect of restructuring, the interim report didn’t propose recommendations or even discuss restructuring.

Where the Government goes beyond duplicity is the decision to abolish all the DHBs. This was never signalled in the Simpson review and never formed part of its recommendations. It has all the hallmarks of business consultants who make up a huge part of the Government’s transition implement unit headed up by Ernst & Young senior partner Stephen McKernan. Any claim that the Government has a mandate to abolish DHBs would be dishonest.

In a nutshell

Andrew Little claimed that his restructuring would end postcode of access to health serves. This is false. The lottery (based on where one lives) would remain but the abolition of DHBs would make it more difficult to identify because the boundaries would be bigger (either one nationally or four regionally). Fudging data through greater aggregation doesn’t mean the lottery disappears; its just harder to find.

He also claimed that the restructuring follows the United Kingdom health system known as the National Health Service (NHS). His business consultants have poorly advised him. The NHS is not the model to follow as it is in a mess and was so before Covid-19. Further, there are attempts to reform the NHS by moving to new ‘integrated care systems’ which have strong similarities with our DHBs. The British government is presently looking to introduce legislation to give effect to this. As New Zealand moves closer to the UK system, the UK moves closer to ours!

The Government is going down the path of basing health decision-making on increased centralised bureaucracy. This further removes communities and health professionals in DHBs from decision-making. Instead decision-making will become more top-down from Wellington (sometimes via the four regional branches) and consequently more wrong decisions made. In this context local innovation will be a casualty. Canterbury DHB’s successfully health pathways between community and hospital would not have got off the ground in Little’s new system.

Abolition of DHBs will not lead to a reduction of bureaucracy. It will just reposition it. The Health Ministry will be downsized to policy but two new bureaucracies also requiring their own policy brains will be established. Hospitals will still require management structures. In the absence of DHBs locality networks will also require some level of management support.

This top-down decision-making will be responsible for developing a national hospital plan. In principle having such a plan is good but only if you have DHBs who know the health needs and status of their defined populations. If you take this voice out of the equation decisions will be made remotely and, with the prevailing centralist ideology, a natural tendency to reduce services in many hospitals will be detrimentally influential.

In hindsight it is now clear that the Government was complicit in the Health Ministry and Ernst & Young’s hatchet job on Canterbury DHB last year and that this heralds the kind of leadership culture that we can expect from the restructured system. It would not be surprising if the word Stalinist becomes used to describe its decision-making over time.

The biggest beneficiaries of the abolition of DHBs will be bureaucratic centralists, business consultants who stand to make a killing, and the National Party who have been given a potential electoral game-changer. The biggest losers are patients with a new structure conducive to enabling service reduction, health professionals more likely to be further marginalised, a fatigued workforce with a further removed decision-making process, and local innovation.

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.