One of the great organisations in our City responding superbly to the earthquakes was CDHB. The staff met the challenges head on. They were there in spades when they were needed. I’m not saying they were always perfect. Which Institution is? However, what did the loyal and hardworking staff gain from their efforts? They were eventually shafted by the Ministry of Health (MOH) and Treasury. Their Boards often had inappropriate elected reps (though a small number have been wonderful) and whenever there were chairs reflecting an honest position of the CDHB they were replaced by others who appear to be prepared to march to Wellington orders.
It didn’t matter whether the Government was National or Labour with the CDHB. Both Governments were driven by their unelected bureaucrats. Labour made some bold comments before becoming Government about the CDHB and then started saying the same things as National had before them as soon as they were elected.
Let us look at some of what has happened to CDHB over the past 10 years.
2020 was the year of the infodemic – the rapid and far-reaching spread of both accurate and inaccurate information.
Un-truths, distortions, dis-information and spin became part of our diet during 2020 on issues as virology, politics, history and CDHB.
Over the Christmas break a number of us have poured through a wide range of documents in relation to CDHB that have been released under the Official Information Act (OIA).
Unfortunately, there are a number of consistent themes that continue to emerge from the huge array of information that does raise the question as to how we survive in a post-truth world. Where beliefs seem to be more important than evidence. While there is temptation to just move on, the intentional use of misleading information by the MOH to influence outcomes presents a serious threat to the integrity of our democratic system. Defence against disinformation has to be rooted in principles and values such: transparency and accountability – this is at the core of the Tuesday Club.
Too often controversy or “opposed views” is what is reflected in our media. There is too seldom the opportunity for investigative journalism to get beneath the PR spin or the political position that is being pushed. Views / truths that don’t match the prevailing rhetoric are very quickly closed down. Next week I will cover how Otakaro Ltd have turned this into an art form.
So, fellow watchers of the Health system what are the consistent themes?
The dispute over what have been the key drivers for the CDHB deficits?
There are 4 drivers that have sat behind CDHB’s deficit (and which have all been largely outside the DHB’s control)
- Earthquake related depreciation;
- Earthquake/insurance related capital costs;
- The formula-driven precipitous decline in funding share;
- the 3-year delay in the delivery of Hagley / Waipapa building and other facility related operational inefficiencies as a consequence of the earthquake.
Consultants have made matters worse not better:
When we reviewed all of the consultant reports that have been commissioned (largely by the MOH) over the past 5 years (PWC, Sapare, EY, Garry Wilson) have all confirmed that CDHB performs as good as, or better than, all other DHBs. This is despite Canterbury has experienced a decade of disasters and crisis that CDHB has had to contend with.
The benchmarking analysis contained in those reports have all demonstrated a high performing DHB. It is unusual for any organisation to have been subjected to so many reviews. But it is even more unusual that all of the reports continued to come up with the same conclusions – a VERY WELL RUN DHB. PWC were even commissioned to review the planning assumptions used by the DHB and they validated all of them.
Last week I published Ian Powell’s meticulously researched article regarding EY – “When business consultants are commissioned for hatchet jobs in health”. Here are just a few quotes from Ian’s article:
“Glaring errors of fact meant that EY’s report should never have been relied upon for decision-making. But it was by the current Board, Health Ministry and Treasury.”
“Not only did EY get basic facts badly wrong but it also disregarded the fact understood by Canterbury’s senior management that there were no opportunities to reduce nursing staff without reducing service delivery.”
“Important questions are raised by this scandal. EY’s involvement through the influential Stephen McKernan (the former DG of Health and now a EY partner)and its subsequent expansion into the health system raises the issue of conflict of interest. It is unlikely to be unlawful. However, it is sailing close to the wind, or worse.
What is even more intriguing is the amazing U-turn by EY (Stephen McKernan) who put out a joint press release with the then Chair of CDHB John Wood that said the following:
“The response of Canterbury DHB to New Zealand’s largest natural disaster has been exemplary despite needing to manage some of the most extreme challenges faced by any organisation in NZ. The performance of Canterbury DHB and the wider Canterbury Health System has been everything that could be expected from a high performing DHB. It is important that the outcomes from an integrated healthcare response in Canterbury are captured as there are many lessons for both New Zealand and Internationally.”
What has become clear by reviewing the reports released under the OIA, is the inconsistency between what is included in the summary report versus what is actually included in the underlying analysis. When we took the time to work through the reports (and understand the methodologies being used) it has been really easy to fault the consultant analysis, but it has been almost impossible to find any flaws in the CDHB analysis.
As highlighted above, the totally inconsistent conclusions drawn from the same data questions the reliance that organisations / government can place on external reviews. Particularly when they are being commissioned to demonstrate a pre-conceived belief and where the “evidence” supports the opposite of that belief. The fact that the large accounting firms leech on risk averse Boards and politicians throughout Central and Local Government is really worrying. This trend is costing ratepayers and taxpayers across the country a fortune. Some partners are referred to as “rain makers” as they bring in the latest project which will then be undertaken by more junior staff who are paid less and provide a greater profit margin.
In the latest document produced by Ian Powell he has undertaken an analysis of consultants and this is covered in this document https://otaihangasecondopinion.wordpress.com/2021/02/14/business-consultants-require-health-union-vigilance/.
The most powerful part of this report stated:
For many years Canterbury DHB had a well-deserved reputation as a leader in innovation and systems improvement. Instead of acknowledging this, EY not only did a hatchet job but went further in what can reasonably be interpreted as a promotion for more DHB contracts. EY condescendingly and lazily included a ‘primer’ on strategy for CDHB to follow.
However, there was a credibility problem. The ‘primer’ was lifted from another EY publication written for a quite different European context with many elements inapplicable to the New Zealand situation such as pharmaceutical procurement practices which, in contrast, are centralised here.
EY also promoted some extraordinary ‘blue sky’ assumptions it claimed were lessons from Covid-19 about improving DHB performance. EY proposed what it called their ‘regional planning tool’. The mind bobbles how people with limited and dated experience of the health system could make such long-term assumptions based on an unprecedented pandemic that was only a few months old. Unsurprisingly this ‘tool’ was rejected collectively by all the South Island DHBs.
What makes EY’s opines particularly pretentious is that was in a report supposedly about the management of CDHB’s operational costs. Trying to extrapolate somewhat abstract notions derived from an unprecedented pandemic that was still at the getting worse before getting better stage to tangible operational management is quite simply navel gazing at best; bananas at worst.
Moral of the story. Never trust business consultants (and those who hire them) who purport to know more about service design, configuration and delivery (including workforce capacity and capability) than the health professionals working in these services. Health unions be vigilant and assertive!
The Government’s (both of them) incorrect arguments over how much Capital has been supplied to CDHB:
One thing that does definitely NOT add up is the capital story from the MOH. The sources of capital were largely from CDHB – via depreciation and earthquake insurance.
The indisputable fact is that of the total $712m of capital spend at CDHB from 2009 to 2019, only $58m of that capital came from the centre with all of the remaining capital coming from CDHB Earthquake Insurance, donations and CDHB depreciation reserves.
These funds from the DHB have funded the new Burwood Hospital, the new Outpatients facility along with a range of earthquake related repairs and cost over runs in relation to Hagley. However, the MOH has continued to claim that this was “new” capital from the MOH to fund the capital developments. It was NOT and that is really clear from documents reviewed.
This, however, raises a major and very serious question as to where close to $500m of allocated capital from the national capital pool that was meant to support DHB facility developments went. It did not go to Canterbury and it would appear that none of this capital went to other DHBs. This was despite the MOH consistently advising ALL other DHBs that Canterbury was using all the available national capital – IT WAS NOT.
The inadequate application of the funding formula has short changed CDHB:
Funding has remained a major issue of contention; with population growth and health needs being a major point of difference with the MOH. However, it is remarkable that contained in the reports is the MOH consistently making statements about Canterbury’s population that has proven to be incorrect! I well remember being on the NZTA Board at the time of the earthquakes. We were briefed that Treasury had decided that the population of Canterbury would drop by 30% post quakes. When I asked how they arrived at this figure they said that they were using New Orleans as the most recent example. Despite my scoffing at this assumption, I feel that this sort of nonsense analysis permeated into the marrow of health funding assumptions as well.
Recent Statistics NZ work verified that Canterbury’s population has grown at a higher rate than the New Zealand average (1.35% vs 1.26% annually) and growth has remained steady over the past three financial years. CDHB has approximately 11.5% of the country’s population, but its share of population-based funding has declined markedly, particularly since 2014/15 (from 11.11% to 10.73%). These assumptions have a very big impact on funding decisions.
CDHB share of population-based funding has not matched funding increases of similar sized DHBs who have recently had significant drops in their populations according to recent Statistics NZ estimates.
From 2014/15 to 20/21 CDHB funding per capita of population increased by 18.6%. Over that same time period the average increase across large DHBs was 26.9% and the national average increase for all DHBs was 24.7%. If Canterbury continued to be funded at the same level as 2014/15, it would have over $70m more revenue this year.
How does CDHB performance compare with other CDHB?
The Productivity Commission’s conducted a study on DHB’s which considered the period 2011-2018. The review was titled “On the technical Efficiency of New Zealand District Health Boards’ Hospital Services: A Dynamic Stochastic Frontier Approach.” The report concluded:
“The results show that the majority of New Zealand DHBs performed exceptionally well in short-run relative to the equilibrium level of technical efficiency in the sector. The findings of this study disclose the fact that New Zealand DHBs suffer from significant long-run technical inefficiencies due to high adjustment costs resulting from capacity constraints and lack of adequate clinical infrastructure.”
Despite this sort of report the MOH and Treasury continued to use their puppets in Central Government (both parties) to continue to shaft CDHB. (When people like Ta Mark Solomon, as acting Chair of the Board, challenged the figures and assumptions being used by MOH and Treasury they were quietly replaced. This treatment of our Province by most Government Departments on a range of issues has been under the smokescreen of “Christchurch has been given $17b post quakes”. And the rest of the Country believes this figure. It is fundamentally wrong. The CDHB is one very clear example of this behaviour.)
It is also worth noting that CDHB as the 4th most efficient DHB – behind South Canterbury, Bay of Plenty and Wairarapa BUT ahead of all the large DHB’s!!
Official Information Requests:
Over the past year there have been a number of OIA requests to the MOH. One consistent theme has been the delays associated with the OIA responses and the number of details that are redacted (i.e., blanked out).
This has highlighted the reluctance to release full details and what the actual advice that has been provided by the MOH (and Lester Levy, the Crown Monitor) to Ministers but NOT provided to the DHB. This goes against the laws of natural justice.
The latest response to one of my OIA’s is just fantastic. It just again highlights just how poor the MOH is at presenting information to Ministers by only showing one side of the equation. For example: the MOH highlighting to Ministers that the MOH had provided CDHB over $613m in equity support, earthquake receipts and capital projects. The only catch is that what they have provided is totally misleading.
At face value this looks a lot except that what it fails to communicate was that virtually all of it was paid back by CDHB and the nett impact between 2014 and 2019 was in fact $22.9m. THAT IS A SUBSTANTIAL DIFFERENCE – it really is amazing when competent people get under the bonnet.
The CDHB has been short changed with funding allocations. It has been short changed by capital levies. It has been short changed by politicians being incorrectly briefed by MOH and Treasury and then foolishly believing it. The staff have been incredibly loyal to those of us who live down here and rose with indignation when the senior staff were forced out of office.
Now we have a Board compliant to the will of MOH and Treasury. Their loyalty is to their Wellington masters. They have repeated the mantra that CDHB was living beyond its means and that they would pull back the deficit. Well, lets see. I predict that it will be worse than when the old executive was in office by the end of this financial year.
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