By tracing where the funding goes, we’ll see whether Government health reforms benefit regular doctors, nurses and patients – or private providers
A surgeon or anaesthetist can already earn enough working a Saturday in a public hospital to pay for a round-the-world cruise, says Ian Powell, and that could double with surgery outsource to private hospitals. Photo composite: Getty Images/Newsroom
Analysis: I still remember metaphorically sitting at the knee of legendary union leader Bill Andersen while listening to him opine pearls of wisdom. The most important question, when assessing a particular proposal or initiative, was ‘who benefits?’
To assess that, you follow the money. This is a catchphrase popularised by the 1976 film All the President’s Men, starring Robert Redford and Dustin Hoffman.
The film was about the investigation that exposed the Watergate scandal and eventually forced the resignation of American President Richard Nixon in 1974. The general use of the term involves political corruption which is exposed by examining money transfers between parties.
Corruption, at least on the magnitude of the Watergate scandal, is not a feature of Aotearoa New Zealand’s health system – not even close. However, questions arise especially when ‘follow the money’ is adapted to ‘follow the funding’.
It is becoming increasingly clear that Government funding decisions are strongly oriented towards the for-profit private health sector rather than addressing the critical needs of our health system.
Former Health Minister Dr Shane Reti, both in the lead up to the 2023 general election and after, was firm on the issue that the top priority for addressing the health system crisis was the severe health professional shortages – medical specialists, nurses and allied health professionals in hospitals and general practitioners and nurses in primary or community care.
Unfortunately, this is precisely what has been ignored by the Government.
Public hospital wait times for planned surgery
Instead of focusing on Reti’s top priority through funding to reduce shortages in order to bring down wait times for planned (elective) surgery, the Government has focused on funding to benefit the private sector.
The problem with this is that it is much more costly using private hospitals to reduce these wait times. Public hospitals have been required to use private hospitals because of their severe workforce shortages. Previously they had been able to use shorter term contracts with private hospitals as a cost control measure.
However, Health Minister Simeon Brown is now requiring Health NZ to enter into longterm contracts of up to three years. This is very expensive compared with doing these operations within the routine hours of public hospitals.
Further, most surgeons and anaesthetists who work privately also work in public hospitals. It is largely the same workforce. Consequently, these specialists are incentivised to do more in private and less (or none) in their increasing stressful public hospitals, thereby compounding their rundown.
To reduce wait times the Government is allowing private hospitals to ‘cherry pick’ the easier low complexity elective cases (outsourcing) while requiring public hospitals to do the more complex cases (insourcing) after-hours, predominantly weekends.
Under insourcing, public hospitals are able to contract their surgeons and anaesthetists (along with other theatre staff) to work extra hours in weekends in their own theatres hospital in effect as private contractors. This is more expensive than do this work as part of routine duties (though less expensive that outsourcing).
Recently an experienced anaesthetist described to me how an anaesthetist was able to work on a Saturday as a private contractor in his public hospital for four surgical cases.
Beginning with a base locum (private) fee of over $4,000, there were also additional fees for post-operative care and complexity fees for pre-operative care for patients with moderate co-morbidities. Another anaesthetist was engaged for the actual operations.
Depending on the level of complexity such an anaesthetist could reasonably expect to earn between $8,500 and $15,000. In other words, somewhere between a round-the-world flight travelling premier business class, or a 10 to 14 day luxury cruise for one or two of these days.
On top of this are the fees for the surgeon (likely to be higher) and the anaesthetist in the theatre along with nurses and other theatre staff. The anaesthetist commented to me in a private communication that:
“It beggars belief how much cash is being thrown around, and this is ‘in-sourcing’ out. Chuck in real ‘out-sourcing’, paying higher rates still, AND to private hospital. How long is it reasonable to expect existing staff, docs & nurses, to work this intensity extra on Saturdays?”
It isn’t clear how much more expensive outsourcing this work to private hospitals would be other than much more. Maybe double the number of around-the-world business premier flights or luxury cruises!
Public-private partnerships
The Government’s expressed private sector orientation is also evident in its stated intention to use public-private partnerships (PPPs) for major health infrastructure, specifically public hospital rebuilds. This was reinforced by its recently announced National Health Infrastructure Plan.
This document is the kind of plan one has when there is no plan. It briefly lists initiatives that, to one degree or another, are already underway. But it does strongly indicate that PPPs will be the basis of hospital rebuilds.
To varying degrees and ways, PPPs involve the ‘private partner’ being enabled to extract as much profit as achievable through either its influence or control over the design, construction and operation of the new health infrastructure. PPPs favour building on new sites (‘green sites’) rather than existing sites (‘brown sites’) because of the greater opportunities through this influence and control for higher profits.
The last attempt at a PPP in health was a new green site health centre in Westport. Had it proceeded the West Coast District Health Board estimated it would cost around 10 percent more per year than normal procurement costs. Fortunately, the PPP was quietly dropped after the 2017 election.
Urgent care funding
On 18 May, Prime Minister Christopher Luxon and Health Minister Simeon Brown announced a new $164 million four-year funding boost for urgent and after-hours care services. These are in Counties Manukau, Tauranga, Whangārei, Palmerston North and Dunedin. It also includes new daytime urgent care services in Lower Hutt, Invercargill, and Timaru.
Two things immediately stand out. First, these are privately owned facilities. Second, they are not the top priority for fixing the health system crisis. While urgent care centres deserve a boost, they are a symptom of a much bigger and wider problem; severe workforce shortages (primarily doctors and nurses) in general practices and public hospitals.
If the Government was genuinely committed to ending the escalating crisis in the health system and respecting the insightfulness of Dr Reti, it would have given greater priority to substantially improving (quantum and complexity scope) the funding formula for general practices (capitation) and developing recruitment and retention strategies, including competitive remuneration, for health professionals in our public hospitals.
Workforce shortages are at the heart of the health system crisis along with increasing health demand from increased sickness and an ageing population. The pressure on urgent care centres is a symptom of these shortages.
In fact, there is an important distinction within urgent care private ownership. Some are owned by general practices (including combinations of practices) while others are owned by corporates such as Tamaki Health (largely private equity owned) and Green Cross Health.
The profit motive is more of a driver for the latter, with its much larger capital base, compared with the former. This is reflected in their respective responses to the Government’s announcement.
Silverdale Medical, a combined general practice and urgent care centre in Waitemata, dismissed it as “window dressing”. Its chief executive Ranyani Perera observed that it wasn’t enough to cover the rising costs of delivering urgent care. Instead, she said that there needs to be a more comprehensive solution to address ongoing workforce shortages.
In contrast, Lloyd McCann, chief executive of Tāmaki Health, which owns the White Cross urgent-care clinics, called the announcement “positive”. While acknowledging that the devil would be in the detail and finding staff would be difficult, he said: “I think it’s great to see the Government investing in urgent and after-hours care…”
The urgent care funding boost is an example of fiscal ineffectiveness in making a realistic impact on the health system crisis. It is part of the short-term thinking of favouring the for-profit private health sector.
If the Government were to adopt long-term thinking and invest in the general practice and public hospital workforces rather than favour private providers, it would go a long way to ending the crisis along with reducing the demand for urgent care centres.
Following the funding will confirm whether or not the Government changes direction for the good of the public and their health system. The answer lies with who benefits.
