Health NZ board sacked: Steps absolutely needed to be taken – Shane Reti

THREE KEY FACTS

• The Government sacked the Health NZ board and appointed Lester Levy as the sole commissioner for 12 months.
• Health Minister Shane Reti said Health NZ was overspending by $130m a month - Levy will be required to implement a savings drive of $1.4b.
• Health NZ reported a deficit of $1b in its first full year of operation (2022/23) but this was put down to one-off events including the pay equity agreement for nurses and Covid-19 costs.

Dr Shane Reti is the Health Minister. He is a qualified medical doctor and previously served three terms on the board of the Northland DHB.

OPINION

Recent decisions to address the performance of our publicly-funded health sector may have been tough but they were steps which absolutely needed to be taken.

Appointing Professor Lester Levy as commissioner for Health New Zealand Te Whatu Ora reflected the balance I’ve had to strike between taking action now to remedy the issues caused by the failure of successive Governments, and remaining focused on driving long-term, structural change to ultimately achieve better health outcomes for New Zealanders.

From a fiscal perspective, New Zealanders now know what I know about the precarious position the health reforms have placed us in.

Professor Lester Levy has been appointed as commissioner in place of the Health NZ board.

Health New Zealand is overspending at a rate of $130 million per month.

If that wasn’t enough for our biggest Crown agency, the financial blowout is putting huge pressure on other parts of our health sector as well.

On Friday, I had the privilege of speaking to my colleagues at the Conference for General Practice 2024 in Wellington, and acknowledged the frustrations I know GPs are feeling around the current 4% capitation offer.

For an alternative viewpoint: Health reform shouldn’t be this bad or hard – Andrew Little

I assured them the Government is working as hard as it can to support hard-working GPs in a constrained fiscal environment and that I’m committed to being alongside them to make improvements to a sector I know has been under immense strain. Recognising the short seven months we have been in Government, I thank them for their understanding.

Sadly, I also had to point out that despite a record investment of $16.7 billion across three Budgets and spending more on health than any Government in history (around $30b a year), Health NZ’s overspend will inevitably mean less to go around if we don’t call a halt now.

For example, just 11 days of Health New Zealand’s overspending almost equals the proposed annual 4% increase in capitation to GPs. I reassured them that poorly performing hospitals should not be subsidised by general practice.

An overspend of that magnitude hurts everyone in health and prevents me from putting more resource into general practice. Getting the Health NZ budget under control will ultimately be a big help to family doctors up and down New Zealand.

There can be no doubt the previous Government’s botched reforms have created significant financial challenges that, without our urgent action, will lead to an estimated deficit of $1.4b by the end of 2024/25.

Even under that pressure, appointing a commissioner was certainly not undertaken lightly. It’s the strongest ministerial intervention available under the Pae Ora Act, however the magnitude of the issue required such action.

Prime Minister Christopher Luxon and Health Minster Dr Shane Reti deliver the post-cabinet press conference at the Theatrette in the Beehive, Parliament Building, Wellington. Photo / Mark Mitchell

During my time as minister, it’s become increasingly clear to me that the issues at Health NZ have been substantively contributed to by the previous Government’s mismanaged health reforms, resulting in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems unable to identify risks until it was too late. Importantly, the front line was disconnected from decision-making.

Professor Levy is now tasked with implementing a turnaround plan to ensure financial balance, take actions to strengthen governance and management and reconnect with frontline staff and patients.

While operational responsibility for the turnaround plan sits with the commissioner, I’ve made it very clear that it needs to focus on cost efficiencies in areas such as any back-office bureaucracy, which has blown out as a result of the damaging and mismanaged reforms.

Moving to appoint a commissioner was just one of several steps our Government has been forced to take over the past eight months due to concerns about the governance of Health NZ and resulting performance issues, including health workforce and hospital wait times.

I had already appointed a Crown observer, a new chair and a board member with financial expertise. It’s only through those measures that we have been able to identify long-standing issues with the existing governance and operating model.

In terms of the future plan, Professor Levy has assured me there will be no adverse impacts on delivery of care during its implementation – rather, he and Health NZ will be bringing the front line closer to decision-making and putting staff and patients first.

He’s also made it clear that this is not a case of underfunding, but overspending.

Christopher Luxon (left) and Shane Reti speak to media at the Manukau SuperClinic. Photo / Ben Dickens

I can’t emphasise strongly enough that none of the steps to overhaul Health NZ reflect on the work of frontline staff in our hospitals and healthcare facilities.

At the time of writing, the Prime Minister and I had recently completed a visit to the infusion centre at the Manukau SuperClinic in South Auckland. It was our privilege to speak with cancer patients there and with the staff who are helping treat and get them through a very difficult time. They were very excited and preparing for the first round of the Government’s $604m cancer drugs to come online later in the year.

It was our privilege to be reminded of where and how we as a Government can make a real difference to the lives of Kiwis.

As always, our Government thanks Health NZ staff for their professionalism. I want to reassure them that I am taking these steps to secure a better future for health in New Zealand.