Challenges Facing The Public Health System In New Zealand
PAPER TO AUSTRALIAN MEDICAL ASSOCIATION INDUSTRIAL COORDINATION MEETING, CANBERRA, 10 DECEMBER 2002 Ian Powell Executive
Director
I welcome the opportunity to again report on developments in our public health system and some of the current challenges
that can be seen as either obstacles or opportunities depending on one’s approach. The observations below, which are not
necessarily an official Association assessment, are in the context of a health system whose secondary and tertiary care
is largely publicly funded and publicly provided and whose primary care is significantly publicly funded (also patient
co-payments) and largely privately provided.
Public funding is from general taxation while public provision is through the 21 district health boards set up by
statute that are responsible for both primary and secondary care.
This structure makes the New Zealand health system more integrated than Australia’s due to your primary and secondary
divide based on federal and state governments respectively. 1. Funding Public Hospital and Related Services
Fortunately the government has learnt much from the debacle last year associated with the 2001-2002 Budget, which was a
devastating blow for the public health system, specifically public hospitals.
In response to the critical negative exposure, including a no-confidence resolution from the ASMS’s National Executive,
of the numerous mirrors and gross deficiencies that that shocker statement on health funding contained, the government
adopted a much more sensible approach with its three-year additional funding package that commenced on 1 July 2002.
There are three significant components to this package of an additional $400m per annum that constitute important
advantages: it is a sizeable amount of money additional to what is already provided especially when the demographic
adjuster is considered; the three year time frame provides an important certainty factor for DHBs to plan service
provision and development; and it is baseline funding thereby abandoning the frustrating system adopted in the mid-1990s
of time-limited funding for initiatives such as waiting times. However, on the other side of the equation major problems
still remain for the funding of existing health services: much of the substantive increase specifically for public
hospitals is disproportionately in the second and third years; DHB deficits while disproportionately centred in the
Auckland DHB are significant and will absorb a sizeable share of this additional funding ($120m in the first year); and
it also includes new government policy initiatives in primary care including the creation of the Primary Health
Organisations. The government is investigating how deficits might be reduced through viewing issues such as the
calculation of depreciation but this has yet to come to fruition.
It is early days but the effect of this funding initiative is yet to be noticed at the front-line of health provision.
The general view of senior doctors is that they will believe it when they see practical day evidence of it in their
everyday life. 2. Primary Health Organisations Primary Health Organisations (PHOs) are delicately poised to either be a
major success story due the capacity to achieve a far greater integration of primary care that has been achieved to date
with consequential benefits that flow from that or to be an embarrassing Achilles Heel for the government.
PHOs will not work until they win the ‘hearts and minds’ of GPs and to date the messages are mixed.
There are at least five inter-related reasons behind this dilemma. First, despite the general leaning towards the
latter, there is still confusion over whether PHOs are providers of primary care or networks of providers.
Different people give different answers to the question and on occasions the same people give different answers.
Second, given their role, particularly as providers, PHOs do not rest comfortably with the independent contractor or
small business status of the majority of general practitioners who provide roughly 85% of primary care.
A key feature of PHOs is extending influence over governance beyond GPs.
But it is the GP who has built up their practice and business including the critical goodwill factor; it is the GP who
has made the commercial investment; and it is the GP that takes the risk.
And now they are faced with what they understandably regard as a threat because of either perceived shared governance
or actual increased external influence over governance that is compounded by the absence of the corollary of shared
risk. PHOs as they are currently emerging fit much more comfortably with the ‘not-for-profit’ wider organisation
structures found in services provided by Maori bodies, union health centres and the various forms of community trusts.
These structures play a valuable role providing quality care particularly in areas where the small business model falls
short in addressing access.
But despite their successful performance this so-called ‘third sector’ only provides a proportionately small amount of
primary care. Third, there is a serious risk of unnecessary parallel bureaucratic growth that will be influenced by the
extent to which PHOs are providers rather than networks of providers and by their relationship with DHBs.
The more they are providers, the more they penetrate into the approximately 85% of primary providers that are small
businesses, and the more they are structurally divorced from DHBs, the greater the likelihood that they will employ
their own staff with all the increased bureaucratic costs, including transaction, that flow as a consequence.
This poses a serious risk of the emergence of parallel bureaucracy and also privatisation under a different banner.
On the other hand, if DHBs are closely involved in the servicing of PHOs inclusive of resourcing and staffing, the
lesser the risk of an unnecessary parallel bureaucracy. Fourth, the government has developed a funding formula designed
to encourage the development of PHOs that involves increased and capitated funded for those PHOs whose population
catchment includes a majority who fall within a defined poverty category (deprivation index).
This is well received by those working in primary care in these catchment areas and should bring significant health
care benefits to many New Zealanders in need.
However, it creates an inequity for those who are in similar economic circumstances but who do not make up a majority
of the local population.
They are on the ‘wrong side of the railway line’ but there are too many ‘affluent’ neighbours on the other side. This
formula is linked to a transition that may take up to eight years.
Transitions to a better system that generate inequities on route may be acceptable provided that they are not prolonged
thereby avoiding the risk of becoming permanent.
However, this transition is too long and risks introducing a permanent and unfair inequity.
The government is negotiating an interim funding agreement that it hopes will reduce this inequity but a combination of
a successful outcome and shortened transition are important if this risk is to be prevented. Fifth, DHBs are now
responsible for both primary and secondary care which of itself is a good move better able to provide more effective
patient focused integration and coordination between the two fields.
But the experience of DHB management is largely derived from experience with secondary care which given the history of
New Zealand’s health system was always going to be inevitable.
Compounding the lack of experience of DHB management in primary care is the fact that the style, calibre and competence
of management in secondary care is so variable with the regrettable reality that the good work undertaken by the quality
management that does exist is invariably overshadowed by the behaviour of poor management. Some DHB managers are making
a good fist of trying to better understand and appreciate the needs of primary care (Hutt Valley is a case in point) but
others are struggling and at least in one instance (West Coast) appear to see PHOs as a means of cost shifting, not that
this will ever be acknowledged.
This mix of inexperience in primary care, poor managerial quality and inappropriate agendas is a difficult
under-estimated challenge to overcome. 3. District Health Board Roles: Funding and Providing Much of the market
ideology of the 1990s centred on the misplaced belief that there was a fundamental tension between funding and providing
and consequently special structures and processes were required to address this.
This belief still pervades among many in the health system today and it remains a serious problem that has not been
sufficiently addressed.
It has led to some undue separation and artificial barriers within DHBs including in some instances a lack of concern
or interest by the funding side, as the former separation between the Health Ministry and now disbanded Health Funding
Authority is being replicated within DHBs themselves.
This is an unnecessary and inefficient bureaucratic impediment to effective decision-making. While there is inevitably
some level of tension between funding and providing, its status has been overstated.
It is only one of several tensions within the health system and no more significant than any other.
The tension has much more to do with a house-keeping role demarcation and is best addressed by integrating and
coordinating them rather than constructing artificial walls.
The Health Minister has wisely warned DHBs about this exaggerated emphasis of the tension but it needs to be constantly
restated.
She risks being told what she expects to hear while being quietly but effectively ignored further down the ‘food
chain’. 4. Health Professional Empowerment If the health system is to advance from valuing cost to valuing value
itself then the most effective means of achieving this is the empowerment of health professionals.
This follows on from the Professionalism Conference co-hosted by the ASMS, Minister of Health and Health Ministry in
April this year.
This empowerment involves two broad components: ensuring that the values of health professionals are in the ‘engine
room’ of DHB decision-making and that they are central to the core DHB values; and what I loosely call “clinical
democracy.
In other words, DHBs having clinical boards whose clinical involvement is mandated by clinical staff through some
locally determined democratic and accountable means.
This would also include clinical leaders under their various local titles, heads of department and chief medical
advisers. Over a year ago the Minister of Health received a report from an advisory group that had significant health
professional representation that recommended an approach similar to that outlined above.
To her credit she publicly released it despite some opposition from officialdom.
However, nothing has happened since and it is important that it is given the political grunt and sanction in order to
progress it further. The ASMS will be making its own efforts to pursue this further with or without political support.
In brief: our Annual Conference authorised the ASMS National Executive to develop a strategy for the empowerment of
members at their workplace.
Inevitably a broad ‘clinical democracy’ will be at the core of what will be a major preoccupation for us next year; and
the ASMS will be initiating multi-DHB collective bargaining next year and part of this will include seeking the
provision of a contractual underpinning and ‘launching pad’ for this approach. 5. Time for Quality We have this
dichotomy in our health system between the relentless call for quality improvement of various forms and the relentless
determination of those who exercise operational power within DHBs to avoid providing the wherewithal to deliver quality
improvement. Given the nature of their work the greatest resource that doctors and dentists need is time; time for
quality.
This includes non-patient contract time both in relation to the care of an individual patient (eg, preparation and
research for diagnosis and treatment) and also activities not directly involved with the care of an individual patient
(supporting professional activities).
In the latter case the ASMS has made an assessment that a minimum of 30% of the time for routine duties and
responsibilities should be allocated for these duties (eg, teaching, clinical audit, peer review, departmental meetings
and journal reading).
To support this direction the ASMS has developed, following extensive consultation (including with members and
colleges), guidelines for job descriptions inclusive of the emphasis on non-patient contact time, which will be sent to
our members.
In effect these guidelines are an organising tool for members consistent with our approach to the empowerment of
members. This has become a recognised ‘industry standard’ that DHBs will now be assessed against with the Council of
Medical Colleges, comprising all the colleges in New Zealand, endorsing our job description guidelines inclusive of
non-patient contact time and the 30% minimum for non-clinical duties to support professional development. DHBs have
attempted to slow down our efforts to recognise the 30% minimum for non-clinical duties by arguing that this is a
national issue that should not be addressed at a DHB level.
This is a deliberate attempt to prevent us extending the standard from DHB to DHB.
However, they have ‘missed the boat’.
Several of our collective agreements now include our definition of ‘non-clinical duties’ excluding the reference to 30%
and also explicitly recognise these duties as part of job sizing.
The Council of Medical College’s endorsement of the 30% minimum has made this exclusion academic.
Further, one DHB (Northland) has wisely bucked the national DHB approach by accepting the inclusion of the 30% minimum.
Linked to our developing strategy for membership empowerment, the ASMS will be actively encouraging our members to
determine collectively themselves what the hours are that they need for realistic quality improvement and other
non-patient contact activities.
Then, in the event that they act collectively backed by the ASMS, they will achieve it leaving managers with the choice
of being supportive or being trampled by the onslaught of progress. 6. Workload Pressure and Stress Through a
combination of factors (eg, shortages of a wide range of health professionals, increasing acute pressures, inept or
indifferent management) senior doctors working in DHBs are confronted with increasing workloads, work pressures and
stress.
It is a potential time bomb waiting for an inadvertent detonator.
The consequence is inevitably patient safety through a combination of restricted access and compromised quality.
Many of our members are simply working too hard in an increasingly dangerous environment, are too under-resourced, lack
time for quality improvement initiatives, are struggling to take essential rest and recreation, and are confronted with
managerial and policy decision-makers oblivious or indifferent to the seriousness of this situation.
Until the seriousness of this situation is fully appreciated it won’t be resolvable leaving patients the inevitable
casualty. Again, as part of empowering members, we are encouraging senior medical staff to take control of their own
working lives.
By acting collectively they should be prepared to make the harsh calls that others above them have lacked the fortitude
to make.
They should be prepared to reduce the level of services they are currently providing to a level that they can reduce
workload stress, be more confident about safety and quality, realistically engage in quality improvement and
professional development activities, and take the rest and recreational time that they deserve and need.
This and only this will then shift the accountability and responsibility for access to and quality of services to where
it belongs – to DHBs and government.
7. Health Practitioners Competence Assurance Bill The Health Practitioners Competence Assurance Bill was introduced
into Parliament immediately prior to the recent general election and is now before the Health Select Committee.
This is proving to be an explosive clash that came unexpectedly from ‘left field’ driven by a confusing mix of agendas
and perspectives that has taken a life of its own.
But whatever the reasons behind the Bill, it has served to unite without recent precedent a range of professions –
medical, nursing, allied – in strong opposition to the Bill. The original purpose of the Bill as we understood it was to
bring together other groups of health practitioners into a similar legislative framework to the Medical Practitioners
Act that currently regulates the medical profession.
This Act was adopted by Parliament in 1995 but many of its provisions (eg, vocational registration) have had
transitional implementation and have only recently come into full force.
We regard the Act which was developed after many years of extensive consultation, including the ‘watches’ of several
health ministers (both Labour and National) as modern forward-looking legislation that within its short time span has
operated well.
Those difficulties that have occurred have had more to do with ‘teething’ problems related to the transition and early
operation.
They do not arise out of the legislation itself. However, the Bill now before Parliament has moved substantially away
from its original laudable objective and the various professional groups in the health sector have to various degrees a
sense of being ‘conned’ or mislead.
Unfortunately the consultation with professional organisations in the lead up to the Bill’s introduction to Parliament
has been unimpressive with no real opportunity to influence contents or critically engage with those Ministry officials
charged with its drafting and development.
The main consultation has been with the registration bodies and this has been more on technical compliance issues. The
practical effect of the Bill is to gut professional self-regulation that pervades the current Medical Practitioners Act
and in general has worked well for public safety and quality of care.
Self-regulation is significantly eroded by the major extension of more politicised and bureaucratic intervention,
precisely where the appreciation of standards of care and safety has proven to be weak in the past based on more than
one Health and Disability Commissioner report. The Bill fails to meet two key objectives: 1. The safety and health of
New Zealanders is not enhanced by the Bill and more likely is potentially compromised. 2. It is not workable for
health practitioners. In a nutshell the main concerns with the Bill are that it: Increases political and bureaucratic
control through, for example, the power of the Minister to resolve disputes over scopes of practice, audit the
activities of responsible authorities, increased interference in quality assurance activities, and determining the
membership of the Medical and Dental Councils.
Inevitably practical reliance will lead to this control coming under the de facto purvey of the Health Ministry whose
expertise in this area is seriously questioned. Concern over the introduction of codified scopes of practice is
compounded by the lack of clarity over their intentions and potential outcomes due to a lack of detailed discussion and
debate despite the fact that the long-term implications are likely to be profound.
There is a serious risk that scopes of practice will become increasingly narrow rather than broad thereby creating
obstacles to effective workforce development and also shifting to individual scopes of practice. The concept of
restricted activities is new but is being pushed through without effective debate. One of the most significant advances
in enhancing patient safety was the inclusion of rigorous quality assurance requirements in the Medical Practitioners
Act through appropriate recognition and protection but this is gutted by the Bill in what can only be described as a
major reversal without any obvious explanation as to why.
It is a reasonable conclusion to draw that under the Bill it will be almost impossible to get quality assurance
activities recognised.
The approach to quality assurance is hierarchical in contrast with the current peer review processes based on teamwork.
There are so many pit-falls with this Bill and such a lack of robust rationale behind its thrust and key tenets that a
major political re-think is required.
The Minister has been poorly advised by a section of the Ministry allocated responsibility for the Bill, including the
analysis of submissions to the select committee, who appear to see their role as a bizarre attempt to historically
re-write ‘Custer’s last stand’, a ‘hang-over’ of the 1990s.
In addition to arousing increasing frustration of a range of health professional organisations (NZMA, NZ Nurses
Organisation, College of Mid-wives and allied health professionals along with the ASMS and the Council of Trade Unions),
there are also tensions within the Ministry.
There is serious doubt about whether the Ministry section responsible for the Bill represents the consensus of the
Ministry as a whole except at a superficially formal level. The Bill is poorly constructed legislation that lacks a
robust justified rationale.
The public and health professionals deserve to see the same level of intense consultation and engagement over the Bill
as was required for the Medical Practitioners Act and what led to sound legislation that was initially seen as the
framework for the original Bill.
If government does not take urgent steps to ensure that the concerns raised are addressed and that those with practical
expertise and experience are able to advise government and the select committee then it is going to be in serious
trouble with a head-on conflict with health professionals (whose concerns the public are most likely to respect) and
with deficient legislation that is likely to have negative affects on patient safety and standards of care. 8.
Workforce Development and Planning There is a pending medical workforce crisis in this country, both in our public
hospitals and general practice, due to several factors including the fatal loss of a whole decade (the 1990s) to plan
for workforce development needs and anticipate future pressures because of the misplaced ideological belief that market
forces would sort these things out; widespread international shortages in the medical labour market across many branches
of medicine; our relative geographic isolation; and the impact of medical debt due to high student fees forcing
excessive reliance on student loans. The overall effect of these and other factors has created a serious medical
workforce situation that is bordering on crisis or arguably is already here in all DHBs regardless of size although it
is having particularly serious repercussions in provincial DHBs.
As vacancies occur through retirement and other factors the ability to fill them is becoming more difficult.
They must be seen as a proportion of a department.
With many of our members on rosters ranging from 1:3 to 1:5, one vacancy represents a loss between 20-33%.
The ability to recruit to this type of work environment compounded by less or no registrar support, for example, is
very limited. In addition to improved conditions of employment there is an unrestricted menu of possible ways in which
this situation might be turned around such as: 1. Aggressive nationally coordinated promotion of New Zealand including
turning around the negative of lower remuneration into the positive of high relative discretionary spending power in a
country in which most of the population live within 2-3 hours of both a beach and a mountain. 2. A coordinated and
balanced strategy of reducing fees and increasing eligibility for allowances. 3. Professional development and
education (discussed further below). 4. Quality time for rest and recreation is important for employees who on a
daily basis make decisions that affect whether other people have their life harmed or improvement, suffer or receive
relief, live or die.
They are subjected to intense routine pressure.
The consequences of error are severe for patients and therefore emotionally devastating for senior doctors before we
start to even contemplate the implications for professional careers and medico-legal liability.
Few others in the workforce face this level of stress and danger on a daily routine basis.
Many of our competitors in the international medical labour market recognise this by providing six weeks annual leave
but this is only achieved in one-third of the 21 DHBs and this requires correcting. 5. National terms and conditions
of employment that are fair and reasonable for senior doctors and also allow us to effectively recruit and retain in an
internationally competitive environment.
The pursuit of this objective was the key decision made at our Annual Conference last month based on a
‘best-of-the-best’ approach along with no loss of existing conditions.
It will be important for effective workforce development and planning that DHBs respond positively to this initiative
early next year rather than behave like embellished administrative overheads with little appreciation of who produces
value in the health system. 6. The option of salaried general practice with DHBs as the employer has much potential
in helping address the serious workforce shortages and vulnerabilities in general practice including the practical
problems facing the self-employed model.
With the basis for greater integration with secondary care it also has the potential to relieve some secondary
workforce pressures. 9. Professional Development and Education New Zealand falls short in its support for the
professional development and education of senior doctors despite the relentless calls for quality improvement.
We are supposed to be an innovative economy but we lack the infrastructure support for the means to achieve quality
improvement in a geographically isolated health system.
In contrast senior doctors in Europe and North America can normally access the full range of quality improvement events
within a 2-6 hour plane flight. New Zealand lacks the critical mass and sufficient close neighbours to ensure access to
the full range of continuing education conferences and various professional development activities.
Senior doctors need from time to time to cross hemispheres to attend these important events in order to keep abreast of
developments.
While the leave entitlement (two weeks per annum) is competitive the expenses reimbursement ($6,000-7,000 per annum)
fall short particularly given the limited international purchasing power of the New Zealand dollar, particularly in
Europe and North America. Further, although most DHBs have provisions in ASMS negotiated collective agreements for both
shorter-term secondment and longer-term sabbatical, these are not actively encouraged and largely rest on a high level
of managerial discretion.
There is no sense of pro-activeness within DHBs to utilise these valuable provisions. And, of course, what is most
devalued is time for quality.
Time is the biggest resource for a highly intelligent, specialised, innovative and cognitive workforce and is precisely
the key resource that is devalued with the narrow focus on those tangible things that can be counted – operating lists,
clinics and ward rounds.
Time for patient related investigation, clinical audit, peer review, administration and other clinical and non-clinical
duties is downplayed.
The ASMS is raising the importance of ‘time for quality’ in our collective bargaining and other forums but it is
disappointing to see so many DHB managers run for cover or turn their nose up due to their inability to distinguish
between price and value. 10. Performance of DHB Management One of the most depressing features on the health
landscape is the wide variety of managerial skills and attitudes.
We have an oversupply of managers and an under-supply of managerial talent.
Poor performance management does not prevail among management as a whole but it does punch well above its weight and
unfairly tars the reputations of the majority.
The ASMS has witnessed too many instances of short-sighted or aggressive managerial attitudes being the last straw in
senior doctors packing their bags or deciding not to take up an appointment. Unfortunately for government many managers
do not understand, are indifferent to or are directly opposed to its health policy direction.
The government’s main source of information about what happens in DHBs comes from DHB chairs that comprise its main
point of direct interaction.
But board members are generally dependent on management’s understanding and perspective and management itself is often
quite divorced from sentiments and realities at the front-line.
Thus government receives a filtered version of what is` actually happening and sometimes this version constitutes
misrepresentation.
Despite the Health Minister’s strong advocacy of strengthening the role of the culture of health professionals within
DHBs at our jointly hosted Professionalism Conference in April, her commitment is not being delivered in part because of
managerial attitudes that directly contradict her vision. One can find serious problems with management to one degree or
another in all DHBs with most having mixes of both the good and the bad.
However, they are most pronounced in four DHBs.
One (Taranaki) can’t be commented on because of litigious reasons.
The other three are: Auckland which is in state of internal crisis with disastrous relations between management and
health professionals in general including senior doctors.
This has come to a head over a bitter radiographers’ industrial dispute but at any point in time any issue can ignite
the tension.
This constant tension is compounded by an aggressive ‘foot-in-his-mouth’ style by the board chair. South Canterbury is
premised on a ‘them-and-us’ relationship between management and senior doctors.
In contradistinction with the Employment Relations Act, South Canterbury is characterised by an employment relationship
based on mutual distrust and lack of confidence.
It has come to a head with the failure of management to understand and empathise with the pressures senior doctors face
on high frequency acute after-hours call rosters without registrar support leading to a stopwork meeting and the first
ever postal strike ballot that is currently underway. West Coast believes what happens in other DHBs has no relevance to
itself and actively encourages a counter-productive ‘divide-and-rule’ strategy, especially between primary and secondary
care, even to the point of undermining government policy.
Management has a particular antipathy towards primary care and appears attracted to PHOs as a cost-shifting mechanism.
There are so many positives in the objectives of government health policy including longer-term funding plans, workforce
development and planning, greater primary-secondary care integration and an end to the failed ‘market experiment’ of the
1990s.
But these objectives are not being fulfilled in the way they need to.
While organisations such as the ASMS can discern and acknowledge useful policy directions and initiatives, this comes
to nothing if senior doctors and other health professionals do not notice a difference for the better at the workplace.
Unfortunately to date they are not and one cannot dine out on the ‘evils’ of the 1990s forever.
The government under-estimates the problems it faces including the ‘enemy within’.
The challenge for the government is to move beyond good intention and empathy for the work and value of health
professionals and take to a new level of effective and active engagement in both decision-making and implementation.
Ian Powell EXECUTIVE DIRECTOR