The Government is putting the health system at risk by abdicating the leadership duties and responsibilities of its
Health Transition Unit to external business consultants. The Unit is based in the Prime Minister’s Department and is
responsible for the implementation of the Heather Simpson review of the health and disability system.
The leadership and shape of the unit is revealed in a very good Newsroom article by investigative journalist David Williams (12 March): https://www.newsroom.co.nz/cost-make-up-of-health-transition-unit-revealed?utm_source=Friends+of+the+Newsroom_campaign=bbaafd2235-Daily+Briefing+12.03.2021_medium=email_term=0_71de5c4b35-bbaafd2235-97923692Behind abdication
In considering its approach on what to do with the Simpson review the Government had two problems. First, its
understanding of what drives health systems (and New Zealand’s in particular) was weak. Second, it lacked confidence in
the Ministry of Health. The latter lack of confidence existed well before Ashley Bloomfield commenced as
Director-General of Health in June 2018. However, in the operational response to Covid-19, some serious lack of relevant
capabilities were exposed that have not helped.
Consequently the Government has turned to business consultants beginning with the appointment of Ernst & Young Consulting (EY) senior partner Stephen McKernan as the head of the transition unit following direct approaches
from Prime Minister Jacinda Ardern. McKernan’s stature with Government was sufficient to ensure two conditions he sought
were granted. First, unlike in 2018 when he became Acting Director-General, he wouldn’t be required to take leave of
absence as an EY senior partner. Second, he wouldn’t have to report to Simpson.
Such is his influence that there is a joke doing the rounds in the health sector that New Zealand has two
Director-Generals of Health – one who reports directly to the Prime Minister and one who reports directly to the
Minister of Health. No prizes for guessing which is which.
But there is more to this situation than McKernan’s appointment and role. Williams reveals that his unit comprises 25
people, 15 of whom are external business consultants and 11 of whom work for EY (including McKernan; not all full-time).
Williams enquiries about how McKernan’s 10 colleagues were appointed received an evasive response.Past history of business consultants
The history of external business consultants in the public health system going back to the 1990s hasn’t been glorious.
In technical areas such as IT for a fixed shorter period of time with a specific task they can useful especially if
district health boards (DHBs) lack the specific expertise required. EY itself is an example with their current work for
DHBs on the application of the Holidays Act to public holidays.
But when it comes to wider macro and micro health system issues especially when relevant to health services design,
configuration and delivery, despite bragging and bravado, they often flounder, expensively so for the taxpayer. They
often don’t know what they don’t know but believe or claim that they do. Often they write what whoever pays their
invoice wants to read. Scams is also a word that sometimes comes to mind.
Using external business consultants to implement the Simpson review might have something going for it if it was simply a
limited technical exercise (although there is much technical expertise already in the health sector). But the review is
not prescriptive with wide scope to how it might be implemented. Technical skills are not the most important skills
required for implementation.Stephen McKernan
I have had a long association Stephen McKernan. He’s intelligent and personable. When he worked in the public health
sector we had a respectful, at times robust, relationship characterised by some sharp differences but more so
collaborative common ground. He was a good chief executive at both Hutt Valley and Counties Manukau DHBs and similarly
as Director-General of Health (2006-10; also acting in the role for a few months in early to mid-2018).
Since 2010 he has been a business consultant first with his own company Health Partners which subsequently merged into
EY where he became a senior partner. He has a healthy respect for health professionals although this is more in their
diagnostic, clinical and population health roles than in wider systems leadership.
But, at heart, McKernan is managerialist and a bureaucratic centralist focussed more on desktop analysis than the
pivotal relational dynamic of health systems. His past decade in the private sector has clearly reinforced this but also
led to a behavioural shift that has ethically shaken the health sector.
There was shock at the use of EY led by McKernan to do a hatchet job on the former senior management team at Canterbury
DHB in part through either the disingenuous misuse or incompetent use of nurse staffing data https://democracyproject.nz/2021/02/09/ian-powell-when-business-consultants-are-commissioned-for-hatchet-jobs/. [There is more to be written on the background to this]. While no doubt McKernan is able to internally rationalise the
ethics of this conduct, many in the health sector can’t.What they Government should’ve done
While the Government’s wariness of the Ministry is understandable this didn’t justify abdicating Simpson implementation
to business consultants. The Ministry is full of hard-working competent people but there are capability deficiencies in
respect of how health systems operate. But there is a wealth of systems and operational experience in both our DHBs
(most of which have quite different population mixes) and non-government organisations of numerous types.
Despite claims to the contrary EY’s expertise in health systems is not high especially when you look beyond Stephen
McKernan himself. It’s performance in Canterbury was hardly reputational enhancing. The use of secondment from both,
plus the Ministry, would have produced a much more competent transition unit than the present one, one which better
understands data and how health systems work in practice, and one which is more likely to be prepared to advise
Government on things it might prefer not to hear (but hopefully would respect).
Seconding from the health sector would also mean a transition unit much less likely to have potential conflicts of
interests. Using business consultants to design a health system brings to mind words like panel beaters designing
traffic intersections.
There are two certain outcomes of a business consultant led health system design – it won’t address the serious
challenges facing the health system today and it will generate more profitable work of questionable value for business
consultants.
While external expertise can provide added value it has always been the insufficiently recognised fact that
overwhelmingly those who work in the health system know best how to improve it particularly when “those” includes health
professionals.