by Kevin Hague
Last week brought the news of the resignation of Ken Whelan, Chief Executive of the Capital and Coast District Health Board. Coming hot on the heels of Stephen McKernon’s departure as Director-General of Health, with no replacement in sight, Whelan’s departure was initially spun as “personal reasons”. Then an email he had sent staff surfaced, indicating that his real reason for resigning was that he couldn’t see any way of meeting the Minister’s financial targets without cutting needed health services.
This is what I have been saying for some time: while there are always more efficient ways of doing things, with resultant savings, the likelihood is that after years of looking for such efficiencies and implementing those that are found, the law of diminishing returns kicks in, and the potential for significant gains becomes small and then negligible.
Tony Ryall has played a major part in creating the impression that health services are bloated bureaucracies in which a few clinical staff struggle valiantly to deliver actual patient care. The whole “moving resources from the backroom to the frontline” rhetoric fed on this impression he had created, deluding (at least for a while) many into thinking that more health services would be possible without more resources. This myth has been pervasive. I met with a group of concerned West Coast residents recently who had clearly been led to believe that there were legions of administrative staff employed locally to implement a long list of centrally-driven strategies that nobody had ever heard of. In fact it’s probably about 2 in the DHB and another couple in the PHO.
The idea that there is substantial “fat” in the system, just waiting to be trimmed away, is not a new one. When I was at the West Coast DHB there was an annual dance between us and the Ministry of Health with the following steps:
1. DHB submits annual plan, which shows a deficit budget.
2. Ministry responds, reminding us that the Minister regards deficits as unacceptable.
3. DHB replies that the budget reflects the actual and minimum cost of providing health services. If the Minister requires a break-even financial performance, this will require substantial service closures (e.g. health services in Reefton or Westport, closure of rural health clinics).
4. Silence for a bit. Then Ministry announces review of DHB’s services in threatening terms. Review team works away for some months, identifying some small changes (I well remember the year when the only possible savings they found were from a proposal that the DHB should no longer provide free lunches for the people working on the surgical bus when it visited Westport).
5. Deficit budget is signed off.
A couple of months ago the Minister made his annual appearance at the Health Select Committee to answer questions about the Budget allocation for Health. This year Government has allocated an extra $512million, which it trumpets as the biggest increase in Vote Health as a proportion of GDP ever. But here’s the rub: a significant part of the $512M is earmarked for new initiatives, while the calculation by the Association of Salaried Medical Specialists (the senior doctors’ union) and the CTU was that an extra $555M had been needed just for health services to stand still. Against that target the sector is probably around $150M short. Even Tony Ryall’s own statement on Budget day appeared to concede that not enough had been allocated, saying that the Budget would “help protect” health services from real terms increases in costs. At the Select Committee, though, he continued to give bland assurances that he believed that enough had been allocated. As he spoke a smile played around his eyes. He knew that the likelihood was that no journalists would have the time to dig below his assurances to check their veracity. He was right too: so far as I can see there has been no real public scrutiny of his claims, beyond printing my contention, and those of ASMS, Labour and CTU (for which, don’t get me wrong, I’m grateful. But don’t the New Zealand public deserve more?) At the Select Committee hearing I asked the Minister what had been wrong with the analysis that had led ASMS and CTU to conclude that $555M would have been needed for the system to “stand still”. He answered that he didn’t have his counter-analysis with him, but he would be happy to provide it to the Committee. “Yes please” we said. Two months on, nothing at all has been received.
So this is the situation in which not only Ken Whelan, but every other DHB CEO and conscientious person in the system finds themself: a sector that had no fat left has had its funding cut still further. It is not possible to meet the Minister’s expectation of break-even results without cutting back and in some cases entirely discontinuing health services. It is unethical and dishonest to pretend otherwise. I have previously blogged and spoken about this Minister’s focus within the sector on secondary care services and on the most highly specialised services in particular. These are also the easiest services to “count”, making service cuts very visible. The pressure will instead be on those services that are hardest to count: public health, primary care, and other community-based services, such as home-based support. There have already been many reports of cuts in these areas. The double tragedy here is that these services not only return the best health results, by dealing with problems early and thus minimising the effects of ill health, but are also, as Gareth Morgan notes, the best value for money of health spending.
Thus the Minister’s approach is a recipe for worse health status and higher costs – but in the future. In the meantime we will see a further exodus of talented and ethical clinicians and administrators, so that we will be all the worse equipped to handle the crisis as it develops. Cue the Minister’s plan for more private sector.
Published in Featured | Health & Wellbeing | Society & Culture by Kevin Hague on Sun, August 8th, 2010
Tags: Budget 2010, health cuts, healthcare, Kevin Hague, primary health, tony ryall
More posts by Kevin Hague | more about Kevin Hague
on the trolls and those who are unable to keep on topic
Once Health Services have been cut – those Specialists and Doctors we need have moved on – most often overseas where the money is.
Throwing funds at the system just hasn’t worked.
What amazes me is the huge Beauracracy that is embedded in our Health System.
They are there (from what I can see) wholly devoted to absolving their institutions from any accountability resulting from mistakes and negligence.
As such they are not concerned with ‘the truth’ in any matter – it is an insulating layer to ward off litigation.
Frontline services should not be made until this mass of inertia is addressed.
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Lift the economy and lift the health care to match.
A first world economy is one that is self sustaining. New Zealand’s economy is not self sustaining.
So expect a third world health care system until New Zealand has a sustainable first world economy.
Fact of life (or death if you need first world medical help).
It simply is not going to get any better until the economy is first world.
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It was not so long ago that this Government were gloating about being cash rich, and having fended off the recession with ease and comfort.
With the New GST set to go this can only improve – there are in fact, no excuses for our shoddy Public Services.
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Gerrit, what country has a sustainable economy? Even before factoring in environmental externalities, I don’t see many. Once you factor those in, there are few indeed. In the meantime, we make choices. We don’t have to do what Ryall is doing. You might acknowledge this at least.
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Mark did you read the entirety of the blog post you just commented on? Or even the title of the blog post?
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BTW Greens up to 8.5% in the Polls !
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Last line of my 4:12 post should read
“Cutbacks in Frontline Services….”
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Dont those much admired scandanavian countries have sustainable economies?
Sweden, Norway, Denmark, etc?
Let me place it in another context.
How much does New Zealand have to increase the tax take by to achieve a desireable health system?
Can we as a nation afford that tax take?
————————-
Quote from Sue Kedley acknowledging some sort of problem that should be addressed
http://www.greens.org.nz/speeches/green-partys-health-policy
Maybe Stephen McKernon should have read Sue Kedleys speech and started cutting administrative costs.
Mind you, by resigning he has started that saving.
More money for doctors and nurses, less for bean counters.
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This is going off topic a quite a bit, but given the above comments on bureaucracy and administration, I think some of you might appreciate this:
http://www.slideshare.net/venkatreddyhr/the-ant-1638078
Sometimes bureaucracy develops by itself, but I also sometimes cynically wonder if some governments deliberately introduce extra layers of bureaucracy and administration into public services in order to justify privatisation, because the private sector is “so much more efficient”.
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Samiuela, bureaucracies formed long before privatisation became popular – the problem is that a state entity has no incentive to be efficient; if they make cost savings, then that money is taken away from them in the next budget. On the other hand in the private sector if you make cost savings, then not only do you still have the money to play around with, but you will probably get a bonus too.
The only way you are going to get an efficient public sector is if they are not incentivised to waste money every year to make sure that they don’t come in under budget – the problem is of course that unlike the private company, the public sector would face pressure to give the money back to the population (in saying that though, could a “dividend” scheme possibly work? If the government comes in under budget for the year, then the surplus could go back to the population).
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Very Nice Samuela: the only additions I would make from my time in the Public Service would be the 14th floor, where a whole covenant of Lawyers were employed full-time to deny, deflect and obfuscate the unholy wrongs that our large, clumsy and careless organization visited upon the public at large.
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3,000 accidental or wrongfull deaths in NZ Hospitals p.a.
I wonder what our coterie of denyers make of this?
Small wonder but – they are heartless and hopeless.
Denial is the primary symptom of a deep-seated problem.
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Valis,
This is what an unsustainable economy looks like
http://www.stuff.co.nz/national/politics/4003372/Warning-of-50b-bill-on-welfare
Health will never improve until the elephant in the room is reduced from jumbo to mini.
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There is no correlation in OECD countries between either the size of the economy (as measured by GDP), tax take, or health spend with health outcomes. The USA with the largest economy, and highest health spend has most of the worst heath outcomes including life expectancy, infant mortality, obesity rates etc. There is, therefore, no evidence that concentrating on economic growth will lead to improved healthcare, although this is a common neoliberal myth.
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I did not say anything about economic growth.
Valis asked which countries has SUSTAINABLE economies.
New Zealand does not have one (a sustainabler economy does not have to be a growing one) so where will the extra health care funding come from but a decrease in spending in other areas.
SO what, where and by how much will something else be cut to increase the health budget?
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Mark,
I’ve seen statistics, in a university course context, on accidental injury rates in New Zealand hospitals. They’re not great, but they’re comparable or a bit better than the default standard from “To Err is Human”, which was 10% of admissions.
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Gerrit,
The world is changing pretty fast.. which First World are you talking about?
Health not being my subject I tend to fall back upon its development rubric in NZ, the gaining of hospital-oriented care (perhaps specialism says it better) from vote General Practice, but am I correct in assuming from above commenters that that orientation has passed to bureaucrats rather than be retained by the medical profession.? And if so, someome kindly tell how this came about.. under whose political guidance and so on..
Go on, there’s opportunity for polemicists if ever there was one..
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jc2; to fail to admit one has erred is also human
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tomfarmer,
It really is of no concern how the idiotic situation opccurred (except to learn from mistakes).
What is far more relevant is the fixes.
We start by standardising all the DHB business practises and major purchases.
For example who did the Hawkes Bay District Health Board requuire to find M$50 for a computer system. Surely the IT functions of ALL DHB’s should be standardised, accessable by all DHB for Nationwide patient care.
That IT purchase for hard and software, system training and imprementation, etc. should be done centrally to get the best deal.
Nationwide consistancy and uniformity of the national health system IT network would have been achieved.
More here
http://www.thestandard.org.nz/the-hawkes-bay-dhb-report/
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Hey gerrit,
you read like you want probs.. to respond, typo-ridden, to.
so. okay, first I have gotten over this seemingly intrinsic commenters’ error — time being so important for thee and thine accomplices! — to find a single question occupying my top cells..
namely, DHB, whose idea was this (were they).? where’s the merit in a computer age with heaps of local bureaus when enzed could just have one (or two, or one for each island).? hey, howse that for standardization..?
too hard..? or what.?
Power – Vote Health! – to the people.
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oh, and gerrit,
next time you put up a link kindly advise its age and relevance.. the H.B. DHB doo-dah was always political theater for the then Opposition wannabe..
Opposition’s do that.. and, finding leverage, allow the players that surface carry on.. along what they percieve a dumb due process. because why? because the voting public cannot be seen to have been shorted.
You want to sell me short here.. try harder. But remember, I’m hardened. And do it better than you.
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tomfarmer,
for some reason the comment went straight into moderation and was not available for editing.
Love the ego!!
You dont know nothing about me so your self opinion at to being “better” then me is worthless.
“better” at what?
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Q.E.D.
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Hi, If there is a need to cut spending in the Health area it might best be achieved by full employment, warm dry housing, eating mostly locally grown organic food and getting excercise growing a good organic garden and cutting firewood to keep the house warm and dry in the winter. We also do quite a bit of cooking on our flat top fire and such a fire can also greatly contribute to providing hot water. In hard times people need to form communities to help each other. This could help to keep temporally unemployed people doing something to help themselves and others. People who are happily gainfully occupied helping others are usually much healthier and happier. Health happy people don’t need much help from the health system. Most of my life I have used herbs and homoeopathy when not well and have a certificate in remedial massage which is very helpful for friends and family. I am Seventy years old and have not spent more than a few weeks in hospital in that time.
Savings in the health budget needs to be driven from the bottom up rather than top down.
With best wishes,
Peter.
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