Health needs new prescription

Remember how in 1999 Labour said if we gave them a wee bit more tax they’d fix health? Well they’ve taken a lot more tax but as the ODT editorial points out our health system is still ailing.

 … after nearly a decade in which government spending on public health services has doubled (and so, too, have wage and salary costs), the system continues to fail to meet even moderate expectations.


The Clark Government’s decision in 1999 to restructure the public health system for population-based funding led to the creation of no fewer than 21 district health boards, each with their own expensive system of directors, structure and attendant camp followers from accounts systems to “communications departments”, together with the cohort of centrally located ministry officials needed to supervise functions and subject everything to regulatory scrutiny.


Given that every board has up to 11 directors, each of whom is paid a minimum of $16,000 a year, this means a nominal 200-plus people, all assumed to have the skills needed to manage their part of a $12 billion business, are overseeing the provision of public health services to just 4 million, a third of whom also have private medical insurance.


Instead of improving services Labour extensively, and expensively changed the system.


Do we need 21 health boards and 200-plus directors for 4 million people? Has anyone asked that question recently? We know that competencies at some health boards have proved inadequate and that, as a general rule, hospital expenditures (adjusted for inflation) have increased far in excess of measured outputs. Some of this imbalance must be due to such a far-flung administrative structure absorbing a hefty quotient of that doubled health funding.


In bureaucracy less is almost always more and a reduction in the number of boards sounds like the right prescription to me.


 It is certain that 21 health boards are bound to result in wasteful duplication, a point picked up in the National Party’s 2007 health policy discussion paper: “It is inefficient and inhibiting to have 21 DHBs that duplicate planning, monitoring and funding functions.


But National’s discussion paper does not talk about reducing the number of boards; it seeks efficiencies elsewhere and greater devolution to primary health care. The party’s health policy has yet to be announced so it may yet look to see if greater efficiencies can be found in hospital governance.


I suspect National is being cautious because the health is suffering from restructuring fatigue and they want the emphasis to be on services not systems.


Recently published comment by a Wellington economist suggests as few as four regional health boards could actually look after the health needs of the whole population. Four replacing 21 might be too much at one bite, but there may be good gains to be made to free up funds for more staff and surgical services by reducing, for example, the six South Island boards to two.


And while they’re doing it why not get rid of the expensive charade of electing board members. It’s Clayton’s democracy because whether or not directors are appointed or elected they’re answerable to the Minister, so let’s stop pretending otherwise.


A public health system which of necessity has to impose the rationing of its services must at least attempt to be as efficient as its private competitors which are restrained, in effect, only by the depth of their users’ pockets.


The relationship between health spending and productivity needs to be very carefully examined, because the long-term forecasts for health spending in the public sector are gloomy indeed: one study predicts the spending needed to cope with the needs of an ageing population will be double the rate of growth in the economy, even allowing for inflation.


There will never be enough money for health. But a responsible Government could do a lot more to ensure that as much as possible of what’s available is spent wisely on the front line and as little as possible spent  in backrooms and boardrooms.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: