David Farrar: Joyce on health reforms

Steven Joyce writes:

Former Health Minister Andrew Little’s lament this week that reform shouldn’t be this hard underlines how little he knew about the ill-starred task he was taking on. As a merger it was of gargantuan scale for New Zealand, and overly complex in world terms. Merging 20 separate organisations with 80,000 odd staff in one big bang restructure was courageous, as they say. Or more aptly, ridiculous. …

As I observed in this column three years ago, the new entity is four times the size of Fonterra, our largest company. Fonterra itself was the product of consolidation of the dairy sector from tens of constituent organisations which took place progressively over decades. Even then the end result took a couple of decades to shake down.

Joyce’s point is not just that the timing was bad with the pandemic, but that the whole idea of merging 80,000 staff into one entity was ill-conceived.

Joyce suggests three key changes going forward, being:

1. Flatten the structure, eliminate the layers of bureaucracy and bring the management back close to the frontline with a chief executive for each hospital who can walk the wards, speak with the doctors and nurses, see what’s happening, and respond as required. Over time, the hospitals could be run as trusts, owned by the Government but reporting to their local community.
2. Separate the health funding decisions from the operating decisions to get a better balance between primary care and hospital care. Slim Health NZ into a comparatively tiny health funding organisation with no ownership responsibilities, like the Tertiary Education Commission in the tertiary sector.
3. Train a lot more doctors more cost-effectively, and that means breaking the fat and happy university duopoly that is Auckland and Otago Medical Schools.

The first suggestion is fascinating. Rather than merge everything centrally, it would be having each hospital run by its own trust and CE. But they would not be a funder, just a provider.

The second is basically to bring back a funder/provider split. Having the one entity both run the hospitals and also decide how much money goes to hospitals vs GPs etc is a bad idea. I would note though that the description of the TEC as tiny may be optimistic. Before we had a TEC, tertiary funding was done by a team of around 12 officials in the Department of Education. Today TEC has around 400 staff!

It will be interesting to see what the Government does.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders.