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New Zealand underinvesting in health IT

An investigation by eHealthNews has uncovered a low level of spending by DHBs on information technology, putting existing systems at risk and inhibiting the transformational change needed..

New Zealand’s district health boards are spending around 2.3 per cent of their annual budgets on information technology, which is half the global average.

Experts spoken to by eHealthNews say 2.3 per cent is barely enough to keep the legacy systems running and does not allow for investment in the transformational change that the health system requires.

Under-investment also means systems are being pushed towards breaking point and the risk of them going critical is building up over time.

eHN asked all the country’s DHBs what their annual IT spend was for 2017 and found they spent around $280 million. The spend at each DHB varied from $1.8m to $46.6m.

Total funding to the 20 DHBs in the 2016–2017 financial year was $12.2 billion (75 per cent of the Vote Health budget).

Ministry of Health chief technology and digital services officer Ann-Marie Cavanagh says that DHBs are responsible for their own health IT investment decisions based on the needs of their business.

“Each DHB is different and so the strategic and operational impact of health IT investment decisions will vary,” she says.

“Additionally, transformational change requires consideration of many factors, such as customer experience, service delivery design and collaboration, and workforce capability and capacity, in addition to the enabling technology.

“While an increased level of health IT investment would be useful, it would only deliver value if all of these factors were aligned.”

Cavanagh acknowledges that the overall level of health IT investment in New Zealand is lower than some jurisdictions but says the performance of the health system compares favourably with other countries.

Deloitte partner and healthcare lead Thorsten Engel says two per cent is an absolute minimum to be spending on IT within health and the Gartner industry average is 4.6 per cent.

Gartner identified that on average 74 per cent of health IT spend goes into the category ‘run’, which keeps legacy systems going. Around 17 per cent is spent on ‘grow’ and nine per cent on ‘transform’.

“In an ideal world, you want to spend no more than three quarters of your money just keeping the lights on and the rest on growing access to digital devices and systems for staff and services, and on innovation,” Engel says.

“Probably well over 90 per cent of the health IT spend is just on keeping the lights on in New Zealand.

“We are definitely not spending enough money on IT in health, but it has to be well spent and spent to re-engineer the way healthcare is delivered.”

Retired director general of health Chai Chuah says there is no question that more investment in health IT is needed, but that it must fit the most up-to-date models of care.

“The fact that we need more investment is without doubt, but it’s not helpful to be fixated on a number because those are averages for an industry that is largely not fit for purpose,” he tells eHN.

He says the question should be “where would investment need to be in order to make the most impact on shifting the system?”.

Chuah says that while the vast majority of investment in health is in hospitals, the real transformation will come when spending is shifted more into primary and home-based care.

Read more on the issues surrounding health IT spending in Features.

Note: DHBs were asked to report their total IT spending for 2017. The actual spend will be higher than $280m as four DHBs provided only their operating expenditure.

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