Health policy Q&A: Paul Hutchison

The Herald invited politicians to answer questions at a range of policy forums - so far we have covered tax and the economy, transport and education. Today we examine health.

Below are edited highlights of the 45-minute question and answer session with National spokesman Paul Hutchison.

We've had six years of the Labour Government. They seem to have done pretty well, haven't they, by changing the primary health system and keeping hospital waiting lists within bounds?

I wouldn't agree at all. I think they've done very poorly and that has been backed up both by the OECD and by the Treasury.

The OECD in July 2005 made the point that usually one would expect when you increase inputs you would get an increase in outputs, and in this case it's been absolutely the opposite.

In other words, a huge amount of money has gone in, in the order of $3.6 billion, with very little to show for it. As one doctor pointed out to the Herald, for the scale of spending that has occurred over the last five years, it's devastating to see how little effect it's had.

You haven't announced your health policy yet, but can you be as specific as possible on what you see as poor-quality health spending and what National would aim to reduce or get rid of?

We've seen this massive restructuring to a sector that has got restructuring fatigue - 15 years of it.

There was an admission by the minister in 2001 that when the $7 billion was divulged to the 21 DHBs that she would expect the Health Ministry bureaucracy to go down by 25 per cent. Instead it increased 25 per cent.

On top of that, for every DHB there are three sets of statutory bodies and, of course, the 79 PHOs vary in size from about 12 to 22 in terms of the numbers. So just there, there's an extra set of about 800 to 1000 bureaucrats.

Over and above that, we've been trying to drill down on the number of administrators and managers within the hospital system. We can't find accurately what it is. I suspect it's much, much higher.

So we've got this huge health sector that needs stabilising and a mantle of bureaucrats at every level - primary, secondary, tertiary and the ministry - that makes it very difficult to achieve productivity gains.

We see blocks all over the place.

I've had one professor of surgery say to me that in his department the hurdles created by the red tape are such that if he was given a bulk grant he could double the number of operations he does.

So what would you do?

In our first year we will obviously carry out intensive evaluation of what's going on. We've said we'd do that with the PHO system, for instance. We don't intend to make any changes without careful evaluation, without strong evidence, and then only gradually. We've got to look at where there's duplication; where there's fragmentation that's not working. We're pretty aware that that is the case, both in some of the DHBs and the PHOs. Example: Otago-Southland. Right now the Invercargill hospital is unable to hire any New Zealand-based house surgeons or registrars.

There is a concern that they may have to close their acute admitting from 5pm till 8am and send all the acute patients up to Dunedin.

Now there's huge sense in some rationalisation between Otago, which is a training school, and Invercargill, which is really not all that far away, and work out some system of rotation. That's the sort of sensible practical rationalisation that I can get into fairly fast.

How would you attack waiting lists?

We've said we want to get transparency into them and we want to get efficiency. We have a comprehensive package to announce in a few weeks' time. In principle, though, there are a variety of things. In the public sector, the idea of having innovations like bulk-funding within accountability parameters. Give the responsibility to the clinicians with accountability around it, and say 'Look, you go for it'. We've got a very well motivated professional workforce that feels hamstrung by changes and red tape and they'll respond.

On the other hand, we are keen to see strong public systems complemented by a strong private system.

We will expand public-private partnerships where we see it appropriate and contracting out to the public, private, NGO, religious sector based on quality and price. I think all those things give choice, quality, benchmarking, efficiency, help to keep prices down so you can get volumes increased.

How do you as a possible Minister of Health sitting in Wellington decide who is going to get this bulk-funding?

It will be a variable thing. Where appropriate and where there are people incentivised or keen to do that sort of thing, we'll be prepared to put out a pilot to see how it works.

It is important to have differences round the country, but what is also important is to remember things like the Hospital Health Task report of 1988, the so-called Gibbs report.

I say that really seriously because I believe the Labour Government has forgotten that. It was commissioned by a Labour Government. A year later the dysfunctional Auckland Health Board was fired by Helen Clark.

But what were the main points? That the New Zealand health system lacked accountability, lacked monitoring, lacked measuring of outputs.

Don't you need a lot more managers and information to ensure everything is accountable?

Right now we've got a very poorly fragmented national IT system. There was an initial thought to get what was called the Wave project going in about 1999-2000.

It's basically been put aside or postponed. With modern technology we can make things much more efficient than they have been, rather than have tons of bean-counters.

I was at the Wairarapa hospital and they have a whole building full of vague-looking people with notepads and pencils, wandering round and setting out like swarms of bees. It was just appalling to see.

Previous to that I'd been in Dannevirke. Where there was a 300-bed hospital in about 1996, there's now an eight-bed private medical centre contracted to the Midland DHB and it's the pride and joy of the town. It's got about three managers and works beautifully.

It's a classic example of where a town has gone from thinking this huge inefficient edifice full of beds was holding them together, to a modern, highly efficient, lean, effective technical system that's serving the people well.

How do we even up regional discrepancies in some operations? Take heart operations, for instance.

Heart operations is a classic one. One of the great difficulties is you can hardly get an elective heart operation in five of the main centres because they've been overwhelmed by the acute pressures.

We just have to work away systematically to sort out the bureaucracy, to sort out the fragmentation to ensure that we are able to carry out elective surgery without being interrupted with things like Auckland City Hospital's problems with central sterile supply or perpetual problems of acutes mucking up the list.

One of the very useful things done under National during the 1990s was to remove elective surgery out of Middlemore Hospital to the Super Clinic. There was dedicated staff there and they were able to carry out surgery on a continuous basis.

Auckland has just been plagued by acute surgery interrupting elective surgery. That's the sort of thing we've got to drill down and make sure that we don't get those sort of disruptions occurring. It will make vast differences.

You've talked about making it clear to people what operations they'll get and what they won't get under the public health system. So if they won't get it, should people then go private?

The point I made was that it is very important not to, as a Government, give inappropriate expectations of what can be achieved. Labour has done that. In 1999, as you know, the proposition was "We'll tax a bit more and we'll fix health and education".

The unfulfilled expectations have been substantial. We did the core health services debate in the 1990s. It wasn't done all that well. My view is that we should work gradually towards clarifying where the grey zones are.

For instance, IVF. We allow two cycles per year and that's very transparent. But when you get to heart transplants, kidney transplants, some of the plastic surgery operations, some of those difficult ones, then expectations can go up enormously.

It is important to work to clarify as best you can what the public service can do, but that will be dynamic because new technologies will make it change.

It's inappropriate, in my view, to give false expectations to the public of things that you just realistically cannot achieve. I think that's deceptive. It's very important that we do have a greater honesty in the system. Many of the common things in the last five years are just not being done in public hospitals: haemorrhoids, hernias, gallbladders, varicose veins.

What does happen to those who can't afford those operations? Do you have a safety net?

Of course you do. Right now they're queuing up and not being done.

We believe we could have a much more effective, efficient system.

But will people still get operations like hernias?

We want to make sure that the simple things are well done and are well-addressed. We see those simple things as keeping people out of work, of leading to situations whereby they are operated on, finally, far too late and recovery times are long.

And you'll spend less money?

Than Labour would.

Can you really trim that much fat out of the system?

We believe we can make the system much more efficient and effective.

In primary healthcare, what's right about the PHO system at the moment?

I don't think we know. There's only been two evaluative studies I know of. I don't think there's very much right at all so far, but we don't know how much is wrong.

People say they're popular because people have joined them. But they've been coerced into joining them by the offer of $400 million, otherwise your patients don't get subsidies, and that's gone up to $2.2 billion now.

We've seen concern about wastage and we've seen concern about small PHOs requiring propping up by extra management costs. Some of the small PHOs are doing pretty well. But on the whole it is the larger ones above the 30,000 that are much better served by having contracts through the IPAs [independent practice associations] to manage them.

The jury is out. We've committed to a full evaluation of the PHO system over the first year.

How do we keep our nurses and doctors here?

This is hugely relevant to National's aim to grow the economy. The biggest driver to retain and attract professionals, doctors, nurses, scientists, policemen, firemen, is to ensure that we get sustainable economic growth.

* Jargon explained

PHO: A primary health organisation. A group of GPs, nurses or other health professionals, funded by the Government through subsidies.

DHB: A district health board. Runs the hospitals and other public services in an area.

IPA: An independent practitioners association. Basically a group of doctors.