'Totally bloated': New Health NZ Te Whatu Ora boss Lester Levy lays into bureaucracy

The new Commissioner of Health NZ Te Whatu Ora says his top priority is reducing waiting times, and he also wants to boost productivity and compassion.

The government on Monday announced Professor Lester Levy, who had been brought in as chair of the organisation at the end of May, would replace the board as a commissioner.

Health Minister Shane Reti had said this was a response to serious concerns about oversight, overspend, and a significant deterioration in financial outlook, with Health NZ now spending $130 million a month over its budget - heading towards a $1.3b deficit by the end of the financial year.

He also brought in changes to add four regional deputy chief executives, to devolve decisions on healthcare to a more local level.

Levy said a lot of the government's announcement yesterday which included a lot focused on finances, but he took on the role for three reasons: wait times, productivity and compassion.

"Our most urgent and critical priority is to reduce waiting times," he told reporters in Auckland on Tuesday morning.

Second, a lot more healthcare could be delivered out of the resources being provided, he said.

"Productivity is not an economic or financial construct .... productivity is a clinical construct."

Finally, he wanted Health New Zealand to be more compassionate and caring.

"We want to be consistent that every person actually gets this."

He said the $1.3b deficit was "entirely unacceptable, because never before has there been so much money invested into healthcare, never before have we had so many FTEs".

He said Health NZ was a big organisation, but in his view it is "totally bloated" with bureaucracy. It would be a challenge to resolve but it would be resolved, he said, and then the organisation would focus all its attention on patients.

Health NZ was formed when the previous Labour government merged 20 District Health Boards, aiming to reduce costs and duplication and eliminating the 'post-code lottery' of inconsistent care across different regions.

Chief executive Margie Apa said the organisation now had some resources it did not have when it started, and to focus on delivering care in the regions.

She says the change will push responsibilities and accountabilities for budgets into the regions, as well as looking at how resources and staffing was managed.

Merging 29 entities was never going to be fully achieved in the first two years, Apa said - particularly when they were dealing with Covid during the first couple of years - but there was now an opportunity to ensure the different regions had a voice in the way care was delivered.

Political storm rages

The political rhetoric around Levy's appointment has continued to focus on who takes the blame for the budget blow-out.

Prime Minister Christopher Luxon could not say exactly how much an extra 2500 back-office staff had cost, but was confident the extra bureaucracy had contributed to costs.

He said the agency had a $30 billion budget to manage and that had not been done well.

"So there's a financial performance issue, but importantly there's also an organisational performance issue in terms of what has been put together as a restructure, what has created large amounts of bureaucracy and management."

Luxon said there was also a third issue - a lack of healthcare targets and outcomes. He had on Monday put the blame on the previous Labour government's approach to its health reform programme.

However, Labour has continued to hit back against those accusations, saying a financial blow-out "in the financial year that they are responsible for is [the coalition's] responsibility".

Labour leader Chris Hipkins told reporters at Parliament on Tuesday the government was overstating its intervention at Health New Zealand, saying the suggestion it had sacked the board was "interesting spin" given five of the seven board members had already quit.

He told reporters it was a big shift in power to just one person.

"It's a bit ironic that they're saying the system has become too centralised, when they've now gone to the ultimate centralisation model where they've now got one person doing the job that used to be done by many."

He said the government was manufacturing problems to justify its own Budget decisions.

Health Minister Dr Shane Reti was clear in his view Health NZ was overspending, and had a lack of oversight.

He told RNZ the overspending was due to back-office staffing, outsourcing of personnel, poor procurement processes for supplies including inventory on expired stock, as well as inflation and population growth.

It included things like 2500 administrative backoffice staff being added to the payroll since 2018 with no notable improvements to the health metrics, he said - and part of the problem had been that no one was watching.

"This is what the Office of the Auditor General said as well .... there was no internal performance monitoring framework, no one was looking, no one was watching until it became so bad that it suddenly raised a flag up the flag pole and Health NZ became aware of this."

He said some of the recruitment had been into areas where it was needed least, and not into priority areas such as mental health, maternity, and critical care.

Health New Zealand also had not been sharing financial information and board papers with the ministry, he said.

"Part of the issue was Health NZ wasn't sharing. They refused to share information with the Minister, and with the Ministry of Health, and actually with Treasury.

"Minister Willis and I had to be quite firm early in this year: 'you will share information with your legislative steward the ministry of health, oh, and by the way, with Treasury."

In a statement issued as National's spokesperson for Health, Dr Reti claimed Labour was "reinventing history".

"This is not a matter of there not being enough funding," he said.

"When National and Labour released their strategy for health in the 2023 election, both parties had exactly the same figure - an additional $12.57 billion for Health NZ over the forecast period. National has gone even further and invested a record $16.7 billion in the [three budgets to 2026] for Health New Zealand, plus an additional $604 million for more medicines."

However, Labour's Ayesha Verrall said this was a major misunderstanding of his own Budget.

"Following the election, new estimates of cost inflation and of population growth were made and those were not funded by this government - that's why there's a deficit."

She said the government owed the public an explanation, and perhaps Health NZ should reinstate the DHB approach of publishing monthly accounts and the breakdown of staff and costs.

The board meetings should also be public, she said.

"I have said repeatedly that those meetings should be public, they were made public while Labour was in government and then they reverted to being predominantly in private since the government's changed, which is odd because Shane Reti campaigned on them being public as well."

Asked about Levy's track record, she said she would judge him on the job he had been appointed to now.

"I'm not in the habit of slagging off public servants who decide to do service for our country. I think the exiting board of Te Whatu Ora has been treated shabbily, I am going to judge Lester Levy on the decisions he makes in this role now."

Health advocates warn of underfunding

Executive director Sarah Dalton, from the Association of Senior Medical Specialists senior doctors union, questioned the government's $130m a month overspend claim, saying her organisation saw an understaffed system.

"I'm in the middle of meetings with our members all over the country, and there is not a single service that is well staffed and that is able to provide the kind of care the people of New Zealand want and expect to be able to access in our health system. So taking to our health budgets with an axe does not seem an appropriate response when we do not have enough doctors, nurses, or allied health workers or the people who support them to do their work."

She said the health system was not adequately funded, which was a major part of the problem.

Her organisation had done a "deep dive" into this year's health budget provisions and found there was very little new money, with lots of smoke and mirrors in the way it had been presented.

Former chair of Te Whatu Ora Rob Campbell - who was fired from the agency's board last year after making politicised comments about the National Party - said he agreed with Prime Minister Christopher Luxon that they could not keep putting money into a system which was not working.

He said the issues in Te Whatu Ora were, however, much wider than just financial or governance control.

Campbell said he believed there were issues of mis-management and underfunding, but the government should be looking at the Ministry of Health to find out why the system was not working.

He said the Ministry of Health was the key element in setting targets for Te Whatu Ora, setting its budget and allocating money, and had presided over the running-down of the health system over many years.

It had now devised and was running the new system, he said.

"The Minister of Health remains the steward of the new system and the key element in setting policy and the amount of funding that is available. The Ministry of Health is the place they should be looking to say 'why isn't this working, and why haven't we been told'."

Verrall said the issue came back to the government's choices, and this year's Budget did not fund the health system in line with inflation.

"Predictably, in a country with increasing population and inflation in the health sector, they are now behind where they need to be in terms of funding the health system to keep up with demand."

She said it was impossible to cut $1.4b without affecting frontline services.