GUEST BLOG: Ian Powell – The not-‘seize the time’ health budget

In the lead-up to finance minister Grant Robertson’s fifth Budget, the messaging was that health, along with climate change, would be the big winner. Robertson and his colleagues were briming with confidence that this would be seen to be so.

Such was the associated hype that it called to mind a slogan popularised in the 1960s and early 1970s in the United States by Black Panther leader Bobby Seale. His slogan “seize the time” has remained in my consciousness ever since.

Seale was inspired by Malcolm X and, after leaving the Panthers in the mid-1970s, was an Afro-American activist (and still is).

 

Was Robertson’s 19 May Budget a “seize the time” event for Aotearoa New Zealand’s overwhelmed and severely understaffed health system, both community and hospital?

Were there enough qualitative and quantitative measures that can be actioned in order to end this protracted crisis and ensure New Zealanders have timely access to comprehensive, quality diagnosis and treatment?

The answer lies not just in what is in the Budget. At least as important is whether strategies are currently in place or well in development – including leadership culture and capabilities and workforce capacity – to deliver on government’s aspirations and the public’s expectations.

Unhelpful spin

The Budget was surrounded by unhelpful, inevitable spin, with the statement that the DHBs’ deficits for operational costs (not major capital works) would be paid off, as if this were something new so that, on 1 July, Health New Zealand would start with a clean slate.

But these deficits are for a specific financial year’s operating expenses. They don’t carry over to the following year. If DHBs were continuing, on 1 July they would not be in deficit. In effect, these deficits were absorbed by central government and there is a budgeted contingency allocation for this purpose (although it is not always sufficiently estimated).

Labour’s current implication is that deficits are the fault of DHBs, including poor financial management. This is not what Labour said about deficits before becoming government; then they  defended the DHBs.

There are two main causes of DHB deficits. The first is underfunding, for which Labour, when in opposition, justifiably blamed the National-led Government.

The second cause of deficits is cost drivers. The most common of these is acute demand growing at a higher rate than population growth along with increasing chronic illnesses. This was occurring well before the Covid-19 pandemic added more pressure.

Social determinants drive health demand and costs

Social determinants of health, such as increasing poverty, low incomes and poor housing, are driving this increased acute and chronic illness health demand (another driver being an ageing population with more comorbidities).

Further, severe workforce shortages, including medical and nursing, are not allowing the sector to at least attempt to bend this upwards curve.

The ability to deal with rising acute demand and chronic illnesses depend on the Government acting to address social determinants. Its healthier homes requirements are a good move but, on the poverty and income side, its performance is patchy.

In the 2021 Budget came the announcement that benefit levels would increase by $20 a week. Initially, that appeared impressive. It turned out that, for many, the extra was only $15. Treasury was reported as advising (not recommending) that a $50 per week increase would be needed if poverty for beneficiary families was to end. The Government opted not to take this path.

In its first Budget, in 2018, the Government made useful adjustments to Working for Families. And, assuming legislation is adopted, fair pay agreements should help establish minimum industry remuneration rates that improve incomes of the low paid. But this will take time.

On the management of acute and chronic illness demand side of the equation, it is a very sorry picture. Despite railing against workforce shortages when in opposition and acknowledging they still exist while in government, Labour has not lifted a proactive finger to address them.

Depending on the occupational group, in community and hospital care we have shortages ranging between a fifth and a quarter of the workforce (sometimes higher). Labour’s only response has been reactive when faced with publicly supported strike action by nurses. But that dispute still remains unresolved not helped by snide attacks on the NZ Nurses Organisation by health minister Andrew Little..

After five Budgets, there is still no strategy to address the workforce shortages even though health is highly labour intensive. More than anything else, including technology, it is workforce that adds value to the accessibility and quality of patient care.

Diagnosis, treatment, innovation and systems improvement depend upon workforce. The current health workforce has the capabilities to ensure these but it is well short of sufficient capacity to deliver.

The Government’s lack of a practical workforce strategy has been compounded by its employment relations approach, which has negatively treated workforce as a cost rather than an asset. The approach Government has required DHBs to follow in collective bargaining with the health unions has been based on the narrowest possible lens.

The net result of this politically enforced negative approach is a highly devalued workforce. This is despite the fact that the Government, patients and families depend on the goodwill of the workforce to cope with the shortages and keep the health system going.

Leadership vacuum

The difficulty that will hamper operationalising the new Budget spending is the present leadership vacuum.

Restructuring the health system has been a big distraction preventing its various crises – workforce, major capital works and medicines access, in particular – from being addressed. This was made worse by the short time frame available for implementation, from April last year to July this year.

On 1 July, DHBs will be replaced by the new national monolith, Health New Zealand (HNZ). It will have health ministry staff transferred to it. But, apart from a chief executive (Fepulea’i Margie Apa), its permanent senior and regional leadership teams are largely unknown.

 

These HNZ leaderships comprise interim appointments who are predominantly DHB leaders who have opted not to leave New Zealand’s public health system at least for the moment.

The irony is that these are the people who those driving the restructuring  have implicitly blamed for the crisis confronting the health system. These drivers have been the government’s and business consultants scapegoats.

Doctors, nurses and other health professionals will, from 1 July, continue to do their best for those patients fortunate enough to access care. Through their expertise and commitment, these professionals will continue to try to keep the health system going. But they will be operating in the dysfunctional environment of a leadership vacuum.

Structure designed without ‘architects’

So how will the Budget’s new health spend be operationalised when we have “worker bees” trying to do their best in a new structure that is designed by business consultants instead of architects and largely comprises scaffolding?

Hefty injections will be made into the largely embryonic HNZ, of $1.8 billion and $1.3 billion in the first and second years respectively. But how can one be confident that, over these two years, it will be well spent?

Grant Robertson’s health budget more touch the moment rather than seize the time

Let’s look at primary care which is largely provided by general practices but also some community non-government organisations, more closely. Here the Budget provides the following new initiatives:

• $86 million over four years to extend general practice opening hours in high-need areas
• $102 million over three years to expand integrated primary care teams, and
• $76 million over four years to develop the health workforce, including in primary care.

How can we be confident that HNZ can spend these allocations effectively and within the time frames? Even the much-touted localities may not be fully functioning by the end of this period.

The Budget provides an additional $191 million over two years for Pharmac to purchase more medicines. This is a good increase, although on a low base and well short of what is needed to purchase the additional medicines we require.

Will the leadership dysfunction address the more immediate problem of the understaffed pharmacueticals regulator, MedSafe? This unit is located in the health ministry, which is experiencing its own leadership uncertainty as a consequence of the restructure.

MedSafe does a good job under these difficult circumstances. But, regardliess, Pharmac can’t negotiate the purchase of new medicines while still awaiting regulatory approval.

So did the finance minister seize the time for health in this Budget? No, partly through patchiness and partly because of the leadership vacuum the Government has created and the workforce crisis it inherited (but through neglect has worsened under its watch).

[This is an abridged version of an article published in New Zealand Doctor on 8 June]

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