An estimated 35,000 people marched against the Government's proposed hospital cuts in Dunedin in September. Photo / Ben Tomsett
An estimated 35,000 people marched against the Government's proposed hospital cuts in Dunedin in September. Photo / Ben Tomsett
Opinion by Pete Hodgson
Pete Hodgson is a former head of the new Dunedin Hospital governance group, former chairman of the Southern DHB and a former Labour MP and Health Minister.
Dunedin Hospital was always designed to be efficient: More day surgery, a planning and assessment unit alongside the emergency department, considerable digital enablement and more investment in primary and community health.
Bed numbers tell that story well. Back in 2018, planners estimated bed numbers would need toincrease 41% by 2043. Then some rather assertive assumptions of efficiency were applied and, hey presto, a 41% increase dropped to only 16%.
Think of the savings in capital. Better still, think of the savings in operational expenditure over the decades to come. And think especially of the savings in patient time – one of our main objectives.
We progressed a business plan which we knew would deliver a small, efficient, tertiary hospital of just over 400 beds serving 350,000 people in an area twice the size of Belgium, and as far from the next tertiary hospital as Auckland is from Waiouru.
Inflation has risen by 23% in the five years to the start of this year, and the equivalent figure for the construction sector is about 38%. Yet the cost of the Southern-region hospital has risen by 50% to about $2.1b. Why?
Facing steeply rising prices, Government sought to take out costs. But these were not always rational reviews that taxpayers might expect. Too often, they morphed into major redesigns that saved too little and cost too much. Architects and engineers have been paid to redesign, time and again.
Cuts can go too deep. Two years ago, pathology was reduced so much that it is now unworkable. A new pathology building must now, somehow, be built.
But the most egregiously foolish of these interventions occurred in September when Government ministers announced a budget cap of $1.88b, to be achieved either by lopping bits off the planned building until it fitted the budget, or by refurbishing the existing Ward Block.
Two days later, 35,000 people hit the streets of Dunedin, outraged.
Now we seem to have a Government that will contort a hospital project until it fits a pre-determined budget. This has implications for all of New Zealand’s new hospital projects, because at some point, a hospital becomes unsafe.
No matter how well-planned and refined, if a new hospital project exceeds budget due to rising prices, it is now in trouble. The project must be downsized. Integrity is sacrificed.
In the case of the Southern hospital, all this sound and fury is to save the difference between $1.88b and about $2.1b. Call it 12%. Given the costs of redesign, a net saving of 12% means making gross savings somewhat more than that. Ministers have recently started to cost the project at “towards $3b” - a figure they know to be misleading but which they repeat nonetheless.
Normally, governments will require a project to be efficiently designed to an agreed quality, will satisfy itself that an appropriate contracting model is used, that risks are shared explicitly, that appropriate innovations are deployed, that the various construction subsectors are sufficiently competitive, that legal redress is considered and so on. Then the market decides the final cost.
Imagine building a motorway against some fixed budget and stopping a couple of kilometres short because the cost of materials has increased in the meantime.
Sadly, things have recently become worse. The option receiving the most attention and enthusiasm right now is the refurbishment of the existing Ward Block.
Dunedin Hospital doctors and nurses joined the protest against the Government's funding cuts. Photo / Ben Tomsett
This means the Government is actively contemplating abandoning the Cadbury site, writing off $200 million in sunk costs as they go. This mostly represents five years of design – and redesign. But $50m has been spent demolishing the old chocolate factory and driving all the piles.
Refurbishing the Ward Block was initially attractive to someone like me; old enough to recall its construction in the late 1970s. But eight years ago, half a dozen expert reports all said: “Don’t.” In July 2017, Sir Bill English’s cabinet agreed.
The Ward Block has multiple future uses. But an inpatient facility isn’t one of them. The issues that drove the 2017 decision all remain, but others such as seismic strengthening have since arisen. And the write-off of $200m in this most Presbyterian corner of the land is met with slack-jawed disbelief.
Yet of all considerations, the effect on staff is the greatest.
If the Ward Block refurbishment were ever to proceed, the hospital would be a construction site, two floors at a time – for a decade.
The effect on patients can be imagined, for the three days or three weeks that they are admitted. But the effect on staff would last for a significant chunk of their careers. Imagine recruitment, retention, mental health and wellbeing over that 10-year period.
The fight for a new hospital in Dunedin will continue, unabated. Other regions, please take note. Dysfunction may soon be coming your way, too.
