Matthew Hooton: Health NZ reform - why it could mean hospital closures

OPINION:

The Government has patted itself on the back for having "delivered" its health reforms. It has, of course, done no such thing.

So far, the Government has passed some legislation, appointed some boards, moved around a few Wellington mandarins, published an aspirational Interim Government Policy Statement on Health through to 2024 and rebranded the District Health Boards (DHBs).

Thus, what was the Auckland DHB is now Te Whatu Ora Te Toka Tumai Auckland — and so forth, throughout the country.

Over the top of all the district Te Whatu Ora is the national Te Whatu Ora, or Health New Zealand, plus Te Aka Whai Ora, the more controversial Māori Health Authority.

All this, we are told, will cost around $500 million. The same Government which once claimed to be the most open and transparent in history is opaque about where it has gone, except that it has not been spent on health services.

The Government says "it is difficult to estimate the total expected benefit of the changes" but only because "they are expected to improve performance across the entire system".

Back in October, it thought the reforms would save about $1.4 billion a year by 2033/34. More recently, it thinks the savings will be $3.865b over 10 years. It does warn us not to rely on such numbers, which it says are "indicative estimate[s] for the purpose of illustrating a potential benefit". But it does think its numbers are "conservative".

The numbers are in fact trivial compared with the Government boasting that it now spends $24b a year on health, up 43 per cent since 2017.

But that quarter of a trillion dollars this decade is only the start.

Treasury says that the ageing population, increasing demand for healthcare by people of all ages and rising health-sector prices and wages will drive the annual health budget to $36b a year by the end of this decade and $75b by 2045.

Annual health spending is picked to pass $150b in the late 2050s, or over 10 per cent of GDP.

If politicians, the media and voters continue to measure success by increased cost, all future governments will get to crow that they have increased health spending by 50 per cent every few years.

Although it warns that the extent is uncertain, Treasury says the new health system "provides an opportunity to improve fiscal sustainability over the long-term through enhanced productivity and efficiency".

Health Minister Andrew Little waxes lyrical about the health reforms being about "improving access to healthcare on the basis of need for all New Zealanders, no matter who they are, their ethnicity or gender, or whether they're urban or rural". In reality, the changes are driven by the need to save money.

The necessary savings won't happen because DHB directors have been replaced by Wellington bureaucrats, or because managers now have Te Whatu Ora Te Toka Tumai Auckland rather than Auckland DHB on their business cards.

Instead, the idea is to devolve primary healthcare to providers that are genuinely closer to communities, like Te Whānau O Waipareira Trust, and to reduce the cost of more advanced care by closing smaller hospitals and centralising services into centres of excellence, like the Starship children's hospital in Auckland and its Starship national air ambulance service.

Most likely, the Māori Health Authority will become just another pointless Wellington bureaucracy, providing employment for sociology graduates to have coffee with one another and earn AirPoints through consultation exercises that avoid conclusions.

But, you never know, maybe it will do what it is meant to do, and identify and arrange funding for genuinely innovative iwi and other Māori public and primary health programmes that improve the health status of their stakeholders. That would create pressure for Health New Zealand to do something similar for the rest of the population.

If so, the much-derided Māori Health Authority will end up being the best part of the health reforms. That this amounts to a further privatisation of primary health services, when the Government initially considered nationalising general practices, will be overlooked. The mainly Pākehā Grey Lynn and Wadestown liberal elites are too paternalistic, neo-colonial and plain stupid to recognise Māori as part of the private sector.

National tried a similar combination of devolution and centralisation with its health reforms in the early 1990s. The main difference is that while National wanted to use price signals to distribute information through the system and drive decisions, Labour prefers to use bureaucratic analysis.

National's reforms collapsed, mainly because the Government lost its social licence by accepting the advice of then free-market radical now climate-change ultra Rod Carr to charge people for using public hospitals. But some provincial hospitals were successfully closed and the resources centralised into more sustainable regional or national institutions, like Starship.

The current Government will only truly be reforming the health system if it allows that process to resume. As Little told the boards of Health New Zealand and the Māori Health Authority this week, "your principal task is to make the system perform to its best with the resources you've got". That can't be achieved merely by rebranding the status quo.

In Rob Campbell, the Government has appointed a Health New Zealand chairman known for his compassion and connection with the disadvantaged, but also for his ruthless financial management. It might be the right combination.

Health NZ chairman Rob Campbell has the right combination of compassion and hard-nosed financial skills, but will the Government let him make politically unpopular changes? Photo / Michael Craig

The true test will come when Campbell complies with the much-abused no-surprises rule by advising the Government that a particular service is to be centralised or closed. Will the Beehive similarly comply with the original intention of that rule by letting it happen? Or will it intervene to stop it? What if it is election year? And what will Campbell do if the Beehive starts overruling or frustrating Health New Zealand's decisions?

The answers are important.

If the Beehive doesn't let the centralisation process unfold, then the reforms will deliver nothing to anyone, except to the management consultants and branding people who have moved around the deckchairs and given the Titanic a new lick of paint.

If it is prepared to accept the short-term political costs, then the reforms might yet deliver more excellent and more equitable services and save the taxpayer some cash.

- Matthew Hooton is an Auckland-based public relations consultant.