Some strategic missteps being made by our health minister

The Minister of Health Simeon Brown is clearly energetic in his approach to the health portfolio, but made several missteps, including his directive to Health New Zealand to give 10-year contracts to the private sector for elective surgery.

This may seem a sensible decision but the problem is that rather than asking the public sector to raise its game, it is being set on a path to providing what will amount to a “charity service”.

Senior clinicians will now have future-proofed, well-paid private practices guaranteed. This has always been the case for those who split their time between private and public, but this system will encourage more practitioners in public hospitals to either start a part-time practice, or increase their hours in private practice.

But what incentive will there be for a clinician to ensure their public hospital practice thrives when that is likely to be at the expense of their private practice?

I saw this in Auckland in the 1990s when the public sector provision of ophthalmology had the appearance of a charity service run by part-timers. So, if there were staff shortages in the public hospital, the list (for that day, or even half of that day) could be cancelled something that would be unlikely to happen in private because of the immediate financial implications. Patients may also be encouraged, if they had insurance or were well-off, to side-step the public waiting list and “go private”. A two-tier service developed.

In due course, however, Auckland hired a senior clinician who made sure the public sector provision of ophthalmology was fully staffed. The public system rose to the challenge.

I would also argue the decision to wave through a third medical school, to be hosted at Waikato, doesn’t bear scrutiny.

At present the two existing medical schools – Otago and Auckland – produce about 600 medical graduates a year. Australia produces about 3,000. So, if we take Australia as a benchmark, New Zealand is producing as many medical graduates proportionately as it should. The problem is not that we aren’t producing enough medical graduates; the problem is that we cannot keep them. A third of our graduates leave these shores within 10 years, and nearly half of our medical workforce is foreign-trained.

Rather than jawboning and requiring our existing two medical schools to raise their game the Government seems likely to allocate major public resources to a third medical school to add to our current output, many of whom may well follow their colleagues to work elsewhere in the world. Nowhere in this scenario is a system of bonding considered to safeguard the taxpayers’ huge investments in medical education.

Another area for concern is the way our drug-subsidy agency, Pharmac, has become an Aunt Sally for the Deputy Prime Minister (who also in his role as associate health spokesperson has special responsibility for the agency). Yes, it can be asked to raise its game and be ever more efficient, but the frequent harping on the slowness of the agency’s decision-making and the acceptance of new drugs on the New Zealand market overlooks the key limiting step – the budget.

Pharmac has a fixed budget. It barely shifted under the Key government and has only recently received major increases. The agency has taken the heat for decisions made by politicians to cap its budget.

Rather than receiving thanks for giving the wider health vote an extra billion dollars in the savings made, the agency is berated by politicians, talkback hosts, and activists for its failures to support the latest medications, most of which are very expensive, and many of which are poorly substantiated by cost-benefit analysis.

I worry that politicians will so undermine public confidence in Pharmac, and make it so weak-kneed in its negotiations with pharmaceutical companies, that New Zealand will end up paying far more for the drugs it buys.

Finally, there is the purchase of Primary Healthcare Organisations by corporates. We are well on the way to a scenario where traditional, professionally run general practice will only exist in the leafy suburbs of our major cities, while elsewhere patients will be dealing with corporates focused on their bottom line.

The OECD has recently released a report highlighting the growing financialisation of health services through purchase and operation by investors and for-profit corporates, such as private equity. New Zealand seems to be part of this trend, and this is potentially another step on the path to a two-tier health system.

Health is always a difficult area, and almost impossible to get completely right, but a number of strategic decisions are being made that are setting our system on a future path that can only offer less value to the public.