Papers show ‘extreme risk’ around Health NZ decentralisation

Source: Radio New Zealand

Papers show that Health New Zealand faces the “extreme risk” of not having enough of the workers it needs to push through the government’s order to decentralise rapidly.

Health Minister Simeon Brown last November ordered the agency to “rapidly devolve decision-making to its four regions and 20 districts” to improve healthcare.

A new devolution committee has been set up and last month was presented a report assessing the “current state” across the board.

RNZ has seen papers from the report.

“People capability is an extreme risk,” it said.

“Workforce has the lowest capability rating identified across regions and their districts with critical resourcing gaps.”

The “most common” gaps were around staff to handle infrastructure, procurement, health and safety, planning, finance and analysis.

Brown had pushed for speed, but the assessment said there was “a feeling that basics need to be in place first”.

“The transition back to a devolved model too quickly may remove the current controls and undermine the effective oversights that have been put in place.”

That included around finances, it said.

Health NZ told RNZ on Monday it was working to address the workforce gaps and capability issues identified.

The papers showed gaps in devolution resources in areas where the centralised agency in the last two years cut jobs and accepted hundreds of voluntary redundancies.

“The highly centralised organisation structure has led to a loss of experience” in making organisational, operational and strategic decisions in districts, the assessment said.

Even at national senior leadership level there were big gaps – “all interim apart from one role”.

‘As quickly as possible’

The government two years ago castigated Health NZ for loose financial controls, sacked its board and under a reset the new commissioner Lester Levy embarked on a $2 billion savings plan.

The goverment then embarked on rolling back large parts of the centralisation reforms of 2022.

“We want a nationally and regionally planned system, but one that has strong clinical input and buy-in at the hospital level,” said Brown last November.

He gave HNZ a New Year’s Eve deadline to come up with a devolution policy in his letter of expectations.

“This reinforces my expectation that regional accountability, production planning, and local decision-making is embedded as quickly as possible,” his letter said.

“Local districts and regions should be empowered to manage within their allocated budgets, including hiring decisions.”

On Monday a spokesperson for Brown said the government had had to stabilise and turn around a system Labour had restructured during a pandemic “without a plan”.

It “cannot simply be switched off” and must still deliver more care to more patients, faster, and a key to that was moving health decisions closer to communities, they said in a statement.

The report – the second one done on devolution by consultants Deloitte – offered a glimpse of how devolution had been going.

The senior doctors’ union, the ASMS, in principle supported devolution but warned against districts having to take on more responsibility without the resources.

“The chatter that we’re picking up from around our regular set of meetings with the districts is a massive concern that this is just pushing responsibility onto districts without any realistic means of achieving what needs to be done in terms of providing health care,” said executive director Sarah Dalton.

‘Carefully managing the transition’

The assessment said some areas like in strategy and finance showed progress.

But it varied alot. What it called ‘People and Culture’ would be hugely impacted by devolution and was rated the worst, with ‘low’ assessments across all six measures; it was especially weak in the South Island and central North Island from Taranaki to Bay of Plenty.

“Regional and district finance and operational capacity remain concentrated at national level and many local teams are under-resourced in financial management,” it said.

The solution? “Build capability across the organisation.” The districts had lost key roles, now they needed them back.

A chart showed 12 categories – such as budgeting, analysis and auditing – and rated nine of them as less than fully effective. Three were only partially effective – the second-to-lowest rating – including HNZ’s savings programme and its internal audit programme.

Among the other gaps was technology. Key devolution changes were predicated on AI that was not yet in place, and so manual “workarounds” persisted.

Health NZ executive national director of strategy performance improvement Jess Smaling said the current state assessment report was to support “carefully managing the transition back to frontline decision making”.

It came only after HNZ had addressed the first priority of fixing the financial crisis and improved performance, she said in a statement.

“We are committed to ensuring our districts are ready, able and most of all supported, to have more autonomy over their clinical decisions and operational budgets.”

‘Not driven by … cost savings’

Health system commentator Ian Powell had long called for devolution but said that required the right capabilities.

“And we’ve lost that through short-sighted restructuring.”

He did not see signs in the assessment that the topdown command culture was being overhauled. “That’s the missing bit.

“Overwhelmingly on the management side of Te Whatau Ora, both regionally and nationally, there’s a high level of job insecurity, and that is a terrible environment to actually to have to work in, and it guarantees a destabilised organisation.”

Health NZ Te Whatu Ora subsumed all 20 of the old district health boards – DHBs – almost four years ago. Its establishment cost tens of millions of dollars including large sums in consultant fees.

Brown in his letter of expectations to the board chair late last year said it was “clear to me that Health NZ is too centralised”.

“Too many decisions are made by people who are removed from the problems that frontline clinicians are trying to solve.

“While the final devolved structure may result in a smaller national office than in recent years,

this change is not driven by restructuring or cost savings.”

The driver instead was to embed local clinicians in budgeting and planning services, and set up straight lines of accountability everywhere, Brown said.

But the papers the committee looked at last month indicated that districts might struggle with budgeting.

“Staff churn and the absence of robust costing systems and processes has created knowledge gaps, making it difficult to form an accurate bottom-up budget based on cost of services delivered, paticulary in H&SS [Hospital and Specialist Services].”

It talked about reducing some of the risks by adopting a devolution “timeframe” that allowed regions and districts to get critical activities in place to take on more autonomy.

‘Trade-offs and risks’

It sounded other notes of caution, too.

“While there is a desire to accelerate the devolution process, HNZ recognises that there are trade-offs and risks involved,” said Deloitte’s assessment.

This could lead to “lack of control, poor decision-making, duplication of effort, inconsistent reporting and accountability gaps”.

The solution was good planning.

But this appeared a long way off.

“The desired end state has not yet been clearly defined, including the [transition] from a national to a regional structure,” it said.

The “scope, sequence and pace” of devolution all needed defining.

Dalton said while 2022’s centralisation had caused “chaos” by distancing clinicians from decisionmaking, devolution had to be resourced and the minister would be wise to taihoa.

“I mean, it really does smack of trying to come up with what looks like some quick wins in an election year, and that’s no way to run a health system.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand