Kevin Hague

Outsourcing Health No Solution

by Kevin Hague

While the Government intends to increase DHB contracting with the private sector, we should instead first assess what capacity we have in the public sector; with proper logistics planning the public hospitals can do more work.

Neither the Minister of Health nor the Ministry of Health has been able, under questioning at the Health Select Committee, to say how well the current operating theatres in New Zealand’s public hospitals are being utilised. For that reason I have written directly to all DHBs to ask.

I am aware, from my own experience as chief executive of a DHB and familiarity with many hospitals around the country, that many of these operating theatres stand unused for significant amounts of time. For example, they’re almost all unused at weekends; most hospitals would have at least one theatre “on standby” to deal with emergencies; and often theatres aren’t being used because there are insufficient staff in key roles, or because the staff and the patients aren’t both available at the same time that the theatre is free. It seems to me that we should have considered this information before Mr. Ryall committed to building another 20 operating theatres around the country and funding the private sector to deliver more surgery.

The practical effect of the change will be an increase in the uptake of private health insurance, representing a significant rollback of the Government in funding healthcare.

Of course it is legitimate to debate how much of the cost of healthcare should be shouldered by the State, and how much by you and me personally. But Health Minister Tony Ryall has not bothered with such debate, instead opting to substantially shift these costs without hearing others views.

This year’s Budget, while providing for increased Health costs in the current year, signals intent to decrease spending in future years. For those people who have been paying attention, this will have struck an ominous chord, as the need for health services continues to increase, and indeed to accelerate, due to an aging population, development of new (and more expensive) ways to treat, and epidemics of long term conditions such as diabetes and heart disease.

One way of managing the increasing need is to increase investment in programmes aimed at improving health in the long term. That is clearly not the Government’s strategy, as it has instead chosen to take the axe to exactly such programmes. For example, the substantial investment in Healthy Eating, Healthy Activity programmes by the previous Government has been decimated by the new regime. There is no evidence to support this decision; it is purely ideological. Unfortunately these were programmes aimed at producing gains in the long term, and their loss won’t be felt until well beyond the tenure of this Government.

At the same time, it has become apparent that Government instead plans to deal with the problem of increasing demand for health services by making more of us take out private health insurance.

Government has put pressure on district health boards to contract out more surgery to the private sector, as if this will enable the overall system to produce more operations. However, there is a fixed number of professionals in the system, and the Government’s decision won’t create any more – it will simply shift professionals from the public system to the private sector (where pay rates are substantially better). There isn’t a bunch of surgeons, anaesthetists and members of theatre teams standing around idle in the private sector waiting to do more.

This approach will further reduce the capacity of public hospitals, creating more and more hole, and increasing reliance on the private sector. Some cost in the public sector will fall although not as much as Government might think, as many of the costs are sunk in underutilised buildings and equipment.  Just enough however to enable the Government to meet its promises of decreased expenditure, while more and more of us are forced to take out private health insurance and thus perpetuate a vicious spiral.

Of course there is another theory: Tony Ryall doesn’t understand the system well enough to realise the consequences of his decisions. Perhaps there is not yet evidence to support this theory, but when the Surgical Hospitals Association presented to the Health Select Committee recently calling for more public contracting to private hospitals, and more Government encouragement for people to take out private health insurance, was some kind of debt was being called in?  Certainly this would explain the Budget.

There is no doubt that it will be more and more challenging for the sector to meet the increasing need for elective surgery. But there is another way: no attempt has been made to match up people in need and specialist skills against our existing theatre capacity.  Instead the system is saddled with the inefficiency of 21 separate queues. With collaboration, we could extract more efficiencies from the publicly-provided health sector in New Zealand before we give up and shove the cost burden back on to individual citizens.

Published in Environment & Resource Management by Kevin Hague on Sat, July 25th, 2009   

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