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Transcript: Cunliffe for More Govt Control of DHBs

Cunliffe Argues for More Government Control of DHB’s

Health Minister David Cunliffe says there is a need for more central control of District Health Boards.

Speaking on TVNZ’s “Agenda” today he also hinted that mergers between boards happen “over time”

But in the meantime he said that “ in the case of small DHBs in rural areas particularly” it was increasingly difficult for them as medicine had got more and more sub-specialised to be able to offer everything.

“And you obviously don’t expect in a regional hospital to get full tertiary services, and I think what that tells us is that increasingly we're going to need to build clinical networks, regional shared services and to ensure that DHBs are cooperating with other so that they can manage across the specialties,” he said.

“There are some things that just make sense to have a clearer central leadership on them perhaps has historically been the case.”

“ IT issues, some financial planning issues perhaps where some of those key enablers it makes sense more to think more them centrally than it does to reinvent that wheel locally.”

But he stopped short of proposing to end the practice of electing District Health Boards.

“I don’t think that there is a public demand to get rid of local representation on 21 DHBs<’ he said.

“There may be some at the margin over time where some form of consolidation seems sensible and we'll address those issues if and when we get to them, but I think most people like to have a hospital board which is elected around traditional provincial boundaries and that’s basically where the DHB system is configured at the moment.”


Bank of New Zealand Chief Economist Tony Alexander says business confidence is improving and the economy may have reached the end of its downturn.

Alexander told TVNZ’s Agenda programme that a BNZ survey of 13 000 businesses, out Monday, showed fewer respondents lacked business confidence. Although fifty five per now felt pessimistic, this was down from 62%.

“It still bespeaks of a weak economy for New Zealand, but it means we’re not straightlining downward, and I think that some people are realising that this is an environment where you’ve got some opportunities,”

Alexander said.

Alexander also said the BNZ expected the Reserve Bank to drop the official cash rate, in December or possibly sooner.

There is no transcript of this i/v but video is being streamed on www.agendatv.co.nz

NEXT WEEK --- Guyon will be back with JOHN KEY --- special extended interview.



RAWDON Hardly a week seems to go by without another scandal erupting in our hospital sector. Last week many hospital cleaners went on strike claiming the company they worked for was refusing to pay an agreed wage increase, the company said that because the government was refusing to fund the District Health Boards to take account of the increase. Meanwhile allegations continue about incompetent immigration doctors and the Hawkes Bay conflict of interest row also carries on. The man in the hot seat is Health Minister David Cunliffe. Good morning Mr Cunliffe.

DAVID CUNLIFFE – Minister of Health
Rawdon how are you?

RAWDON` What recommendations has the report into the Hawkes Bay conflict of interest made?

DAVID Very extensive set of recommendations and they’ve gone so far as to draw up best practice guidelines that will be of use to all boards and consequently I'm sending the report to every chair and board in the country asking them to report on how they are making sure they make the improvements of their own boards, but essentially it says it's not enough as is commonsense to declare an interest at the start of a matter and then carry on being involved in it and possibly voting on it, you have to declare and then withdraw, and you have to do that not just once at the start of your term but on a transaction by transaction basis, so I think it's commonsense but clearly things weren't being done in that way in Hawkes Bay.

RAWDON And you expect other boards to be learning from this that they’ve got the same problem?

DAVID I certainly do and I'll be asking the Ministry to report on how they are learning from it, we won't leave anything to chance with this one.

RAWDON What sort of a response are you expecting from the boards?

DAVID Oh very positive, I don’t think we've got another board in the country that has got the sort of problems that that board had and I shouldn’t imagine that there will be any similar issues but nonetheless I want to be assured that boards are using best practice guidelines and that’s the way it should be.

RAWDON Beyond conflicts of interest what have you learned as a result of the Hawkes Bay debacle about boards?

DAVID Well that’s a pretty general question. I guess in any organisation the quality of the enterprise depends quite considerably on the nature of the folks involved in running it at a governance level and the relationship between the board the chief executive. Now I don’t want to go too much into the background to my decision, but I'm very comfortable with that decision even though it was a big call, we took careful advice and followed it, and I think history's going to prove it was the right call given what was going on.

RAWDON So at what stage do you come in and look at a DHB and say it's time to take action?

DAVID Well the Ministry does most of that work, they have a monitoring system which has DHBs on normal watch if they're doing okay, or performance watch if there are significant issues, or as in the case of good old Capital Coast intensive monitoring if there are multi layered systems issues that need to be worked through, and that gives me as Minister a good clue as to where I should focus my attention, obviously the media helps by drawing particular issues to my attention at particular times and I've obviously got my eyes open.

RAWDON And are the boards working close enough with the Ministry?

DAVID Oh yes I think so, in general terms they're working well, and people like the Commonwealth Fund in New York they think we've got one of the best health systems in the world and they tell other people it's a model to follow.

RAWDON So you don’t think the DHBs have too much autonomy?

DAVID I do think that there's opportunities for improvement, I think the model's fundamentally sound but let me say two things, one in the case of small DHBs in rural areas particularly it is increasingly difficult for them as medicine gets more and more subspecialised to be able to offer everything and obviously don’t expect you know in a regional hospital to get full tertiary services, and I think what that tells us is that increasingly we're going to need to build clinical networks, regional shared services and to ensure that DHBs are cooperating with other so that they can manage across the specialties. That’s the first thing. Second thing there are some things that just make sense to have a clearer central leadership on them perhaps has historically been the case, I mean there are a number of workforce issues, IT issues, some financial planning issues perhaps where some of those key enablers it makes sense more to think more them centrally than it does to reinvent that wheel locally.

RAWDON Are you proposing to reduce the number of DHBs?

DAVID Not at this stage we have no plans to do that, but there will be some cases where there are opportunities to encourage shared services between DHBs, you're already seeing that happening say between Otago and Southland, it's working quite well, between West Coast and Canterbury, and I think probably increasingly between Whanganui and Mid Central and that’s all good sort of positive commonsense stuff.

RAWDON What about these, it sounds to me here as though we're going to be adding other layers to be able to sort of act – to make the flow better between the DHBs of information of shared services.

DAVID And I'm looking to take unnecessary management out, not to add to it.

RAWDON What sort of unnecessary management?

DAVID Well, if I see any examples of wastage in the system then the objective will be to rationalise so that we get the most health dollars going for patient services.

RAWDON Have you seen wastage like that?

DAVID No, I wouldn’t describe it that way, what I have seen is issues like senior doctors negotiations where it was very difficult for DHBs to I think manage that negotiation as efficiently as it might have been because whenever the offer changed they had to go back to their members and get agreement between the 21 which takes a while and that discussion has been going on for nearly two years, and in the end it was what we hope able to be moved forward without too much difficulty, but let's see how that turns out.

RAWDON What's the future for the Whanganui DHB, for the board?

DAVID I think that still remains to be seen, Whanganui's got a chance now to really move forward, a lot of improvements have been made since the historical case with Mr Hasil and I think it has made positive progress.

RAWDON Some people would argue that it was in a bigger mess than Hawkes Bay, but you walked in there with quite a decisive action on that one.

DAVID Well they're different types of issues, Hawkes Bay as far as the evidence I saw were pretty good at clinical level, pretty good at management level, with one or two issues possibly, but some significant issues at governance level, and with Whanganui it's a different issue, it was in the Hasil case about clinical supervision systems and perhaps overstretched by a small regional DHB that was trying to cover a range of difficult speciality services, and I think Whanganui is in particular a case where we do need to explore in partnership with the board the potential for more shared services with some of the newer and larger neighbours. We'll see how that goes.

RAWDON Doesn’t that mean that the DHB system isn't working then if we've gotta start trying to change the system?

DAVID No look we've got 21 DHBs, we've in this conversation I think talked about three of them, and most of them work really really well, and overall our health system is one of the best in the world, we certainly get great outputs out of it for what we pay for it and of course the government's nearly doubled the input since we took office nine years ago.

RAWDON I know we've specifically talked about three DHBs but you did say you were concerned that there may be similar practice issues across many DHBs.

DAVID What I said was that I'll be sending the governance report to all chairs and all boards and asking them to report to me on how they match up, and it's one thing to say that things are going pretty well, it's another thing to pretend that they're perfect, there will always be opportunities for improvement and when we get a good thorough report like this one I think it's an opportunity to learn from it.

RAWDON What about the way we put boards together, I mean why do we need elected boards? You know it seems to me that 30- 40% of people might vote for a board, it doesn’t seem as though it's a system which we're necessarily supporting.

DAVID Well I always encourage people to vote, I'm a great believer in local voices and there are always issues that you need to have a local consideration of and decisions made at the margin about how to allocate resources, and I think that’s an absolutely proper role for an elected local board. The trick is to see each of those DHBs operating within their region as part of a larger network which is also highly effective and efficient and that’s why we have both appointed board members and chairs, and why we have the Ministry supporting that network and increasingly why we want to think about the levers and incentives to get them to work together more closely. So that will be something that I'll be continuing to work on.

RAWDON And how confident are you that we have the right calibre of board members being elected?

DAVID Well all boards are different and I think most boards you'd say they’ve got some real stars and they’ve got some that are less so and that’s probably true of every company in New Zealand as well, but in general they're carefully supported and most boards do very very well.

RAWDON What do you do when you can see a low calibre member of a board?

DAVID I think what you really need to do is have a really good chair and a good CEO and enough horsepower on that board working with the chair to get the job done, and most boards are in a situation where they might be helping to encourage a new member, or they might have one or two other members who are perhaps really strong in one area but not strong across the board, and that’s just the mix of the team it's like a rugby team, you don’t have 15 props or 15 wingers, it's about how you get the best out of the mix.

RAWDON How likely are we to see the health ministry sheriff to walk in and disband another board?

DAVID Pretty unlikely but you can never say never.

RAWDON What about other systems of administration you’ve talked about how you want people to work closer as far as shared services goes, are there other sort of entire systems of administration you're considering?

DAVID No I'm not considering replacing the model that we've got in a structural sense, the health system's had many experiences of wholesale structural change and I don’t think that’s what people need, I think they’ve got a fundamentally sound structure, they need to tighten up some of the overlay processes regionally and nationally so that the network performs as a network a little better than it does and we need to support clinicians to have a greater stake in the way the hospitals are run and managed and I think we will put the icing on a cake which is fundamentally sound, the last thing the health system needs is to throw all the balls up in the air and start again, that would be horribly inefficient.

RAWDON Confident Marie?

MARIE McNICHOLAS – MARIE McNICHOLAS – www.newsroom.co.nz
No because going back to this 21 board makeup, why don’t you just bite the bullet on this, I mean New Zealand is too small for 21 boards. If you look at the skills base we have for management and for governance, I mean part of the problem has been this misunderstanding between management and governance and I'm not sure that the local people understand that. Why don’t you just sort of – you talk about working more cooperatively well isn't that just a Clayton's form of amalgamation, why don’t you just amalgamate?

DAVID Well I don’t think that there is a public demand to get rid of local representation on 21 DHBs. Now there may be some at the margin over time where some form of consolidation seems sensible and we'll address those issues if and when we get to them, but I think most people like to have a hospital board which is elected around traditional provincial boundaries and that’s basically where the DHB system is configured at the moment.

MARIE But is Labour guilty here of having oversold, when you restored the elected boards did you not oversell this notion of democracy, because it's not unfettered democracy in the same way that local councils are, because these people understandably they're spending taxpayers' money and so they have to toe the government line in terms of policy, but if you look at the Hawkes Bay issue these people seem to be outraged because they’ve had their democratic rights undermined, but they never really had true democratic rights did they, they were sposed to be putting government policy into place and I don’t think you’ve ever explained that to the public properly.

DAVID To put it really simply the Public Health and Disability Act gives boards co-equal responsibilities firstly to their local electors and their catchment, and secondly to the Crown who provide the money, and to the Minister who's desk it is that the buck eventually stops on, and that’s why the Hawkes Bay example is so important because while one supports the system and let's the system run as far as possible, it is absolutely within the design of the act that a minister must say at some point, that’s too far, that’s not good enough we have to stop that, and that’s what we did.

MARIE But the public don’t seem to understand that do they?

DAVID Well I think the Hawkes Bay case has been important because I think it is building through discussions such as this, that understanding that the local democracy is not unfettered, it must occur within a network, but that is if you like the flip side of Rawdon's question which is why don’t you just abolish the network. Well what I'm saying is the network and local representation is really valuable, but to get the best out of it it's got to operate within certain processes that enable it to work efficiently so we're not wasting …

But the reality is that the majority of the electorate wouldn’t have the first idea who is sat on their health board and that’s a fact, and to them you know you pick up a daily paper and you see a myriad of problems and while people might applaud some of the decisive actions and interventions you’ve made, they just want the health service well run, they want to get into hospital, get into a bed, not have to travel 250ks, so surely that supports Rawdon's argument regarding the health boards.

DAVID Chris I think you’ve also managed to plant ideas on both sides of the line there, because the more you aggregate DHBs into say if you were going to go to a regional model or a national model the more chance there is you'd have to travel further to get a particularly specialist care, so there is a natural trade off here between localism and the challenges that it legitimately raises and regionalism or national shared services. What I do take very seriously the point that you make which is at the end of the day the public needs to trust the system and they need to trust the Ministry and the Minister to be the guarantors if you like that when they get there it'll be there when they need it, and I do believe that that’s the case.

RAWDON We're in a situation where we haven’t actually been able to find oncologists in our capital.

DAVID We have now, we have now.

RAWDON Oh I know you have now, it's taken a long time and it's still not gonna start for another goodness knows how many months.

DAVID Right, the issue there, I mean there's a particular issue there that it's probably the flip side of what people understand, but there weren't actually enough oncology cases going through Capital Coast to keep the specialists certified, so what Capital Coast has evolved with our encouragement is a network model with Canterbury where they are able to work as a team with the specialists across those two tertiary centres so that they get enough exposure to a case load that does provide …

RAWDON But have we now got more oncology cases in Wellington now that you know we're now staffing it with two?

DAVID There weren't enough cases per annum just in the Wellington and lower North Island catchments to keep Wellington specialists.

MARIE But doesn’t that then force the case that none of these areas are actually big enough to be sustainable?

DAVID But talk to Wellington's people, I mean this is today an Auckland based show, if you stop Wellington people in the street they will say this is the capital of New Zealand of course we must have a tertiary oncology service. Look in this case eventually we've got to the best of both worlds, the people of Wellington and the lower North Island are going to have a locally delivered sustainable paediatric oncology service, I'm delighted about that, and it will require the nationwide system operating as a network to underpin that, and that’s the right thing too, and increasingly the more specialised medicine gets, the more we need clinicians right in the front line of understanding the best ways of organising it, we need to see management operating as a team throughout the network, and I don’t think we need to replace the DHB model but we need to adjust it, reform it, fine tune it, for this increasingly specialised type of medicine that we're seeing.

RAWDON That’s gonna cost money though, any adjustment to the system…

DAVID No I think we're gonna save money actually Rawdon, I think that there are opportunities in the health system for us to improve the system further, I mean over time…

RAWDON How much do you think we'll save?

DAVID Oh I couldn’t give you a number on it, I haven’t done all the analysis yet and I'm not in the habit of pulling numbers out of a hat, but my instincts from a range of job I've done before is that while we've got a really good health system and let's face it one of the best in the world, that there are opportunities to fine tune and to get efficiency gains and I think getting clinicians more involved in hospital governance will take some of the pressure off management, but we don’t want to go to the extent either that you’ve got surgeons answering the phones, cos that’s not a good use of the service.

MARIE But what are you going to do about these accusations of cronyism would you consider some kind of independent authority for the appointments, for the government appointments, I think Britain has something similar where they have …

DAVID Cronyism, I'm not sure of which accusation, of the many I guess you are referring to.

MARIE In Hawkes Bay.

DAVID In Hawkes Bay.

MARIE But even when you have you know clinical catcher on the board I mean the public tends to tick the box for the doctor standing cos they think he's a good guy, but the doctor might have a private practice down the road that he's using the public service to sort of feed.

DAVID Yes, I think we need to take conflicts of interest extremely seriously and one of the very useful things about that Hawkes Bay report is that it has whole chapters on how a best practice conflict of interest management should work and they’ve done a model which I'm now sending to every board in the country and saying tell me how yours works compares to this.

MARIE You wouldn’t consider some independent oversight of that system?

DAVID Well we do have through the Ministry a dedicated team of people who are highly expert in governance and we from time to time get independent experts in where we've got problem cases like Hawkes Bay, we had an independent panel, it was not only removed from the Ministry it was double blind for me, and we do bring in the expertise as we know it, but there are people who sit outside the individual boards and who provide advice and the Public Health and Disability Act provides for a series of steps that the Minister can go through depending on how uncomfortable or dissatisfied the Minister is, you can enhance the monitoring through the Ministry you can put a Crown advisor in one step above that's a Crown monitor, one step above that is the Commissioner which is what we did in Hawkes Bay. So I think the system does provide options, I'm not uncomfortable with the system, I think we made the right call in the Hawkes Bay case, and I think there are lessons that are to be learned and I will expect each board to report on that.

RAWDON Tell me about funding of some high skill level staff, we're talking about these oncologists who've come to Wellington, it's the never-ending problem how do we get the right staff in the right jobs in this country given the pay levels which we offer?

DAVID Well it's not just medicine but if you take law or accounting or a lot of the other specialised professions people can earn double triple what they earn here on Wall Street or in London or perhaps even in Sydney and I know the Australians are worried about the pull factor of the major European and American centres on their workforce…

RAWDON But we're less concerned about lawyers leaving the country …

DAVID I couldn’t possibly comment I'm married to one. But no look in medicine we've just been through I think a really constructive process with the senior doctors and their representatives where we've sat around the table together and we've said look we're all in this for the long haul we want a really great system that’s sustainable we know we've got some workforce issues how can we solve this together, and I think we all agreed that getting the amount of locuming down is good for the system, that that’s a sign, you’ve gotta have some but if you have too much you're displacing people who ought to be on a regular salary and that’s also going to be true I think in the junior doctors issues that we've yet to work through fully. Clinicians, senior doctors particularly need to have a say in how hospitals run, they need to feel part of the place, cos at the end of the day living in New Zealand is n to just about the money, we get a lot of great things free in New Zealand you have to pay for overseas, our environment, the public safety that we take for granted, and clinicians quite rightly need to feel that they're part of the hospitals that they're running.

CHRIS Sorry, you were just talking about the rewards and you're right money isn't everything and hey why am I in New Zealand, I mean it's a fantastic country, but you talked earlier about shared services and again people equate talk like that with reduced services and services that are more stretched.

DAVID Well they shouldn’t…

CHRIS It's a hard sell isn't it, you’ve gotta sell the whole package.

DAVID Take Capital Coast oncology as an example, shared services means more services not less, the reason we can turn that back on in Wellington for the people of Wellington and the lower North Island is because the network is working as a network and Wellington's getting support from Canterbury and so forth, and that’s a good example of a network working well.

CHRIS We still had Wellington Hospital in the past year or so on code red because their beds are full.

DAVID Wellington's got a number of issues, clinical issues, systems issues, they're in the middle – two thirds of the way through, three quarters of the way through building a new regional hospital, it's gonna be fantastic then it's open, it's a bit like getting your house renovated, you know when the builders are pulling the kitchen apart it's not much fun you're living somewhere else and you're trying to do everything you do normally and support the building process, that’s kinda what's going on in Wellington and it's hard, and it's hard on morale, it's hard on staff, it's hard on management, it's hard on the budget, and so we do need to focus in on how we can support them better. I think Sir John Anderson the new chair is doing a fantastic job, I really do, and I think that board is now humming along much better than it's done for a while and they’ve got a top new CEO coming in with I believe a senior team that he can bring with him and I think that'll be fantastic as well. So I'm looking to great things from Capital Coast but by god it's had a hard road lately.

RAWDON Health Minister David Cunliffe thank you very much for coming in.


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