Brown’s Surgery Puts Health System At Increased Risk

Friday, 14 March 2025, 8:39 am
Opinion: Ian Powell

Comment: On Friday March 7 the new health minister, Simeon Brown, made a major announcement. It included four interconnected standout points, one of which I give a quarter-tick, another a half-tick, and two I give crosses in bold.

The half-tick is the minister’s intention to shift decision-making within Health NZ to a local level. This is sensible given this is overwhelmingly where healthcare is provided, including general practices and local 24/7 hospitals.

However, if the leadership culture is unchanged from the current vertical ‘command-and-control’ to one based on strongly embedded engagement, it won’t succeed. Unfortunately there was nothing in Brown’s announcement suggesting this is likely.

The quarter-tick is for the establishment of a new independent infrastructure body within Health NZ. Of itself, it has merit. However, the minister’s statement is clear that its purpose includes pursuing public-private partnerships.

The track record of PPPs in health systems has been underwhelming and costly in the long-term. They provide opportunities for private investors to make big profits through influencing or determining how hospitals are designed, constructed and operated.

The first cross is that Brown’s five priorities for the health system (related to its targets) reflect a poor diagnosis. They are symptomatic rather than causal.

One of the causes is acute admissions increasing at a greater rate than population growth resulting in bed blocking in hospital wards and overcrowded emergency departments. Another cause is the severe workforce shortage across all the health professions. Neither of these are recognised in the five priorities.

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But it is the second bold cross that poses the greatest immediate threat to our health system. This is increasing the use of private hospitals for non-acute planned (elective) surgery, which would otherwise be done in public hospitals, through a form of privatisation called outsourcing.

This is not new to the health system. But though it has been intended as an unavoidable exception to the rule, with the focus being on maintaining and strengthening public hospital capacity, the minister’s announcement instead significantly shifts the paradigm to its normalisation.

The minister argues it makes no difference to patients whether their publicly funded procedure is done in a public or a private hospital. He is right, but that is not the point. The problem is what this will do to the health system and, consequentially, patients generally.

Increased reliance on outsourcing is a direct consequence of the rundown of public hospitals since at least the mid-2010s. This rundown is because of the viciously tight vice of increasing acute hospital admissions (not only more sick patients but also sicker patients) and increasingly severe workforce shortages.

Responsibility for deliberately neglecting and addressing the devastating impact of this vice rests with successive governments, regardless of political flavour. Normalising outsourcing enables the Government to perpetuate this continuing neglect thereby further running down public hospitals.

For a start, outsourcing is more expensive. In contrast with public hospitals, private hospitals are businesses that are required to be profitable to survive. This means they can’t do publicly funded operations at cost only. Further, private hospitals engage private sector surgeons as independent contractors on much higher rates than in public hospitals; perhaps by a factor of three to one, perhaps more.

There are consequences to normalising outsourcing, whether unintentional or not. It incentivises a move to a two-tier hospital system in which the harder and more stressful acute work is done publicly while the relatively easier, less complex (but attractively profitable) work is done privately. Running down public hospitals has pushed things too far in this direction; it should be going in the opposite direction.

This has the risk of upsetting the balance of surgeons’ work. Generally surgeons work best if they have a balance of acute and non-acute work. This is important for ensuring variety of work and helping safe clinical practice. It is also important for skill maintenance and enhancement, especially by being reinforced by team work. When you have this balance you see more things and learn more from them.

Another risk is the impact on the medical training of doctors. Institutionally public hospitals are well-placed to do this by virtue of the teaching and learning benefits of their highly integrated nature and by not being restricted by a profit-making requirement. This is not the same for private hospitals.

Brown fails to comprehend the highly integrated nature of public hospitals and the benefits for patients and cost-effectiveness that flow from it. They deal with the more complex cases that can’t be dealt with in primary or other community care. Integration is essential as all hospital services are interdependent on others.

Taking a chunk out of this integrated system reduces integration and increases fragmentation. If ever there was a lesson to be learned about this, the disastrous fragmenting privatisation of some hospital laboratories under Labour and National governments provides it.

Though Brown may be indifferent to these risks and realities, one obvious thing he has clearly missed is the surgical workforce. His approach depends on an unstated assumption that there is a parallel surgical workforce in the private sector readily available to pick up this additional work.

Quite simply: there is not. The existence of a parallel private surgical workforce is much less likely than the existence of a parallel universe.

A large majority of surgeons work in both the public and private systems. Of those who do work solely privately, most are towards the end of their careers. The wish to stop doing the more onerous acute care is a big factor for many.

The private health system adds limited workforce capacity, at least in respect of surgeons. In other words, much of the surgical workforce will be stretched further. Furthermore, the income benefits of increasing outsourcing will incentivise more surgeons to reduce their time in public and increase it in private. This is already occurring, and increasing it will further contribute to the rundown of public hospitals.

© 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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