Health New Zealand Restructuring Threatens Health Localities

Wednesday, 12 April 2023, 8:43 pm
Opinion: Ian Powell

Following his sacking as the Chair of Health New Zealand (HNZ – Te Whatu Ora), Rob Campbell threw a hand grenade into his former organisation by revealing that it was planning a full restructuring of “overhead roles” which would lead to hundreds of disestablished positions (redundancies).

On 13 March BusinessDesk published my assessment of the implications of his revelation: Hand grenade lobbed at Health NZ. There are conflicting views on Campbell’s action. It certainly threw his former organisation into a right ‘tiz’. But it also served to bring into the open what was happening behind the scenes.

My BusinessDesk opinion piece covered the following aspects:

• what is Te Whatu Ora (what does it comprise);
• what these “overhead roles” are;
• complexity of payroll;
• repeating devaluing history;
• why the restructuring will fail; and
• the misplaced obsession of FTE staffing growth sitting behind the restructuring.

“Overhead roles”

Despite outing it, Campbell supports the restructuring. He argues it will save “hundreds of millions of dollars” which could then be spent on the clinical frontline. The target is what he calls “overhead roles”. These are non-clinical staff, often misleadingly truncated to mean ‘management and administration’.

Te Whatu Ora was created out of two organisations. The first, and much smallest, is former Ministry of Health staff responsible for the planning and funding of health services. The second is the entire staff formerly employed by the abolished district health boards.

The “overhead roles” of the former DHBs are primarily what the restructuring is about. As a ballpark figure they comprise 18% or so (in the vicinity of 15,000) of Te Whatu Ora’s total workforce. This is where Campbell’s hundreds of millions of dollars is to come from.

The justification for the restructuring is that the absorption of the DHBs into Health New Zealand should remove duplication thereby freeing up more funding for clinical services. However, many of these “overhead roles” are not duplicative. Instead they are integrated with clinical services who depend on them to function.

The roles include booking staff and schedulers for operating theatres and outpatient clinics and secretarial and other administrative staff that doctors and nurses depend on. There are also essential organisation-wide functions such as information technology and payroll systems; both already fragile support services.

Announcement

On 31 March Te Whatu Ora announced its decision for around 1,600 positions to be “potentially impacted” in a media release in the name of Chief Executive Fepulea’i Margie Apa. In her words the restructuring:

…. This contributes to the reforms by unifying, simplifying and integrating its team of teams for the benefit of whānau and communities….

Most of the proposed changes will impact people who are in management and leadership roles and/or teams in back-office functions.

…. The first areas to go through the change process are Commissioning, Finance, Service Improvement and Innovation and the National Public Health Service.

Each of these four ‘change processes’ will only run for two months. Affected staff will be ‘consulted’ over a mere four weeks during April. During May Te Whatu Ora’s leadership to determine its position. From early June implementation of its decisions will commence. Business consultants have been engaged to handle these ‘consultation’ processes.

In other words, consultation will be tight – short, restrictive, and formal rather than substantive; ie, largely predetermined. But there is an ‘upside’. The big winners will be business consultant; surprise, surprise!

They were the big winners in the original implementation of the Government’s health restructuring through its Implementation. Didn’t that work well! While history doesn’t always repeat itself, folly frequently does.

Consultation documents

Four identified HNZ units consultation documents have been released to affected staff. They include both new and disestablished positions. Also included are “potentially impacted” positions which are described as changes in reporting lines only.

In her media statement Margie Apa also used the term “potentially impacted”. This was confusing because it was taken then to mean about 1,600 potential job losses.

For the National Public Health Service, led by a respected former DHB chief executive, it recommends around 152 new positions be created. Some of these are part-time (0.2 or 0.5). Somewhat surprising given the emphasis on increased centralisation, 56 are regional positions based in the former DHBs.

In contrast, the disestablished positions are much lower – 37. Of this number, 22 are from the former DHBs and the remaining 15 appear to have been previously employed by the Ministry of Health. The net gain for this unit is 115 positions.

The Service Improvement and Innovation unit, again led by a respected former DHB chief executive, is another net gainer. The number of new positions is 91 while the number of disestablished positions is about 53 (net gain 38). All of the disestablished positions are from the former DHBs. This suggests increased centralisation.

So, with these two units generating a net gain of 153 positions, where are the savings coming from? It is certainly not the Finance unit.

Led by a former respected DHB chief finance officer, there are 19 new positions recommended (all apparently national) for this unit. There is a net loss of 12 positions with 31 recommended for disestablishment. These disestablished positions are all from the former DHBs and their shared services agencies, including chief finance officers and their deputies.

Commissioning ‘shock therapy’

It is the Commissioning unit where the savings ‘shock therapy’ is being applied. This is significant given the Government’s expressed importance attached to the development of localities as a key function of commissioning.

Whereas the recommended new positions are 81, the recommended disestablished positions are a massive 530 (a small number are fixed term appointments that will terminate on their expiry date).

Around 200 of these disestablished positions were transferred across from the Health Ministry. The remainder are from the former DHBs. Largely they are roles directly or indirectly responsible for either the funding or planning health services, including in primary care. Particularly those employed by the DHBs, they were required to know their geographically defined populations well.

The table below summarises the numbers in respect of new and disestablished positions in each of the four units:

Significance of the commissioning downsizing

The irony is that the term ‘commissioning’ is at the centre of what Health New Zealand is supposed to do. Commissioning is a misunderstood term primarily used in the National Health Service in England which simply put means funding and planning. Over decades it has gone in and out of fashion.

Central to commissioning is the creating of around 80 geographically based localities focussed on community healthcare by July 2024. To date, Te Whatu Ora is well behind. Only 12 have been approved.

Those working in community healthcare have been frustrated in their endeavours to find useful information about how these localities will work. Now we know why.

Those in the Commissioning unit have been distracted by the uncertainty of their employment. Further, they themselves have had a lack of clarity on localities because their leadership has also been distracted by restructuring.

The Government made the incompetent decision to restructure the whole health system in the midst of the pandemic instead of working to fix the key pressures on the health system (largely due to widespread severe workforce shortages).

Compounding the chaos, the key organisation established to lead the health system continues to be distracted by the consequential further internal restructuring.

As a result localities are threatened by the removal of many positions that are important for the development and effectiveness of the localities. While there is some duplication in the Finance unit, proportionately it is much less in the Commissioning unit.

The outcome is increasing the high likelihood of localities being determined by top-down centralised decisions with consultation at best tokenistic. Whatever the potential for localities might be (this is unknown) the ability to realise it is resultingly compromised.

Learnings from Health New Zealand’s restructuring

The bind for Te Whatu Ora (and government) is that the level of duplication is likely to be way short of achieving the claimed level of savings without putting existing clinical services under stress.

The restrictive consultation process, reinforced by a ludicrous time-frame, only means a high level of top-down driven pre-determination that most likely will ensure the wrong decisions are made at the expense of both clinical and fiscal responsibility.

Savings from the net ‘management’ loss of just over 300 positions in these units are difficult to estimate. My rough guestimate is between $20 to $30 million; hardly the hundreds of millions cited by Rob Campbell and well-short of what is needed to achieve the claimed objective of shifting funding to clinical services if that was where they actually did end up.

This suggests that the announced restructuring by Margie Apa is to be followed by more. Her media statement also suggests this. Don’t be surprised if the consultative processes are top-down and largely predetermined with business consultants again the big winners.

In a nutshell

The most apt, and depressing, description of the state of affairs in the health system, with particular relevance to the threatened localities, was made recently by a chief executive of a Primary Care Organisation.

In a paywalled New Zealand Doctor interview (11 April) Dr Jacqueline Schmidt-Busby, Chief Executive of Comprehensive Care, which covers 40 practices in the former Waitematā DHB and another eight in Northland, nails it: Health leader embarrassed to be part of health system.

Schmidt-Busby correctly observes that PHOs are integral to community health outcomes but this is being ignored. She criticises Te Whatu Ora for reforming the system “on the fly” and failing to consider the evidence from primary healthcare projects. “They want to run but haven’t looked at where the path is leading or what the impact will be…”

Further, “There is a lot of knowledge in primary care but few [in the field] are asked to the decision-making table to talk.” She is not wrong.

In respect of localities, in my view the ongoing uncertainty and lack of understanding within Health New Zealand is made worse by the distracting preoccupation of risky internal restructuring.

This suggests more than the absence of an invitation to engage at a “decision-making table”. It raises doubt over the actual existence of such a table.

© Scoop Media

Ian Powell

Otaihanga Second Opinion is a regular health systems blog in New Zealand.

Ian Powell is the editor of the health systems blog 'Otaihanga Second Opinion.' He is also a columnist for New Zealand Doctor, occasional columnist for the Sunday Star Times, and contributor to the Victoria University hosted Democracy Project. For over 30 years , until December 2019, he was the Executive Director of Association of Salaried Medical Specialists, the union representing senior doctors and dentists in New Zealand.

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