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Paper: Coming Opportunities And Potential Pitfalls








This paper covers the following subjects:

1 Alternative Health Policy: Joining the Dots.

2 National DHB collective agreement (MECA) negotiations – final settlement.

3 ‘Time for Quality’ Agreement.

4 Tripartite Process and Health Sector Relationship Agreement.

5 Defending the right to strike in the health system.


With the general election now called for 8 November it is all go. The main political alternative to the Labour led government is the National Party which is presently well ahead in the polls although there have been some polls suggesting a Labour resurgence and one which had the potential for a Labour-Greens-Maori Party coalition along with the much smaller Progressive Party to form a coalition under our proportional representation system.

Nevertheless the odds clearly favour a National led government. National has just released the first part of its health policy focussing on funding and framework. Some of the paper resonates positively with us, especially when read in isolation. This includes continuing the current government’s growth in health spending (including indicative spending allocations); enhancing clinical leadership; and encouraging greater collaboration between DHBs (including clinical networks). These are also the policies of the current government although National’s health spokesperson can legitimately claim that he has been a more prominent and consistent advocate of clinical leadership in DHBs and, more so, clinical networks between DHBs than the Government’s Health Minister for the first two years of the current electoral term. Further, he has made the effort to check out the ASMS’s assertions about the effectiveness of clinically-led clinical networks in New South Wales.

However, there are serious negatives in National’s policy: shifting funding to the private sector and destabilising public hospitals; mischievous claims about productivity; and cheap shots on bureaucracy.

Private Sector

The current government does allow DHBs to use the private sector for secondary care services. But this is not supposed to be at the expense of using public hospitals either in the relevant DHB or, where practical, other DHBs (something that is not always adhered to by some DHBs).

This is strongly attacked by National under the slogan of ‘smarter use of the private sector’. By clear implication National would siphon considerably more public funding off to the private sector in what would arguably be a subsidy to it from the public purse (ie, taxpayers) via DHBs. But this risks both destabilising public hospital capacity and overstating what the private sector can offer.

While recognising the potential effective use of the occasional use of the private sector for the provision of health services as a short-term solution to a short-term capacity problem, the extent to which this is now occurring in many DHBs is in excess of this threshold. Any plans for an increase in this will ultimately impair the quality of patient care in the DHB facilities (through loss of the skilled and experienced staff in DHBs, and the possible consequences, to those remaining, of dealing with only high acuity and emergency patients).

It over-estimates how much the private sector can do to relieve the pressure on the public system. Electives are only a relatively small part of what public hospitals do. There is no workforce over-supply in either the public or private sectors. There is a role for collaboration but what it can deliver is significantly overstated.

There is no distinction made between forms of contracting to the private sector. One form, subject to agreement over price, is simply to hire spare theatre capacity in the private sector where it exists. This happens and has advantages at least until capital redevelopment is achieved.

The general experience of contracting out electives is that it is more expensive because of the additional profit drivers in the private sector. Further, the private sector has a strong financial incentive to ‘cherry pick’ and ‘grab the low hanging fruit’. It is less equipped for the more complex cases. It is for reasons of fiscal pragmatism that a number of DHBs that have contracted out in the past are seeking to build up their own elective capacity.

Maintaining and building the capacity of DHBs to provide health services should be the long-term strategy of government and DHBs. This does not preclude sensible use of the private sector but it would put its use on a more realistic and supportive basis.


Regrettably National uses the simplistic notion that productivity has declined despite increased health spending. But the use of the term productivity is misleading. It is simply a comparison of hospital expenditure with those things that can be measured which comprise around 35% or so of hospital activities and outcomes (ie, discharges). Activities and outcomes in mental health and much of medical care, for example, are not counted. But this simplistic approach suggests (a) hospitals are less busy and (b) health professionals are not working hard enough, both of which are blatantly untrue.

This misleading use of the term productivity means that the more inpatient work, with innovation and advances, can be undertaken instead of in outpatients or general practice, the more unproductive public hospitals would become. Perversely if more patients died in hospital (preferably immediately after admission) then productivity would increase. Or, under this perverse logic, improved quality of care inside hospitals can risk at least in some instances reduced productivity.

Health Bureaucracy

National makes some cheap shots about health bureaucracy numbers. The ASMS has made from time to time its own strong criticisms about the performance of health bureaucracy (both in DHBs and the Health Ministry). However, this has been about culture, conduct and performance, not numbers. Understanding numbers is difficult. In part, it risks confusing corporate management with administrative positions further down the food chain. In fact, we suffer in some DHBs at least from shortages in the secretarial and personal assistant field, for example, largely due to inferior salaries compared with the private sector.

I am reminded that in one DHB a reassessment of the working hours of overworked psychiatrists (through the process known as job sizing) led not to an increase in the number of psychiatrists or paid hours but instead, and by agreement, increased secretarial support in order to free up the time of psychiatrists.

It is interesting that the ASMS (me in particular) is quoted approvingly in National’s released policy in a section about the size of the bureaucracy (ie, numbers). However, it is disingenuous. My comments were not on size or numbers but instead on culture in the form of managerialism. Cheap shots on numbers which only serve to devalue the important contribution that constructive and competent managers and administration perform for our health system are unfair and unhelpful. Further, they divert the focus away from the more important concerns of managerial calibre and culture.

As an aside, if National’s envisaged greater use of the private sector proceeds there is the risk that it might increase management numbers because of increased transaction costs unless, of course, there is to be a lack of scrutiny in the allocative and monitoring functions.

Joining the dots

The dots of National’s policies have to be completed by looking at their consultation document released last year which now is official policy. In it National says that it is not looking to restructure and, by implication, would return to the commercial structures of the 1990s without the legislative underpinning of that era. But there is a clear message about returning to something akin to the structures of the commercial system with the intention to convert their funding and planning divisions into “shared service networks across their regions.” In other words, maintain 21 DHBs but devolve them of their funding and planning divisions, and create a smaller number of new regional bodies (four) responsible for funding and planning. This resonates with the purchasing bodies established by National in the 1990s to buy services from competing public hospitals and private providers.

It would introduce a pseudo market biased towards a private sector seeking to cream-skim the relatively easier work undertaken in public hospitals thereby risking severely destabilising the capacity of public hospitals to function effectively and efficiently. Whereas public hospitals have emerged as highly integrated organisations to provide a range of complex and interconnected services that are supposed to be universal and accessible, the private sector is much more about finding less complex, more profitable niche markets. One need not be at the expense of the other but the former should not be threatened or otherwise restricted in order to transfer its income to the latter (with the consequential effect of enhancing the latter’s profitability).

It will also elevate the distinction between funding, on the one hand, and providing, on the other hand, to a disproportionate and unjustifiable level. One of the greatest weaknesses of the 1990s was the propensity of funding decisions to be made in isolation from practical considerations. Rather than a separation between funding and providing, they both work best when there is a high level of integration. Separation of funding and providing is an endeavour to create a structure more suitable for market mechanisms, rather than ensuring the provision of accessible quality universal health services. One of the biggest problems of DHBs at the moment is when funding and planning divisions are disconnected with the realities of provision and act as aspirational fiefdoms.


The previously reported provisional national DHB MECA settlement was finally settled and signed in May following overwhelming endorsement by our DHB-employed members in an indicative postal ballot. The vote in favour of acceptance was 88%, exactly the same as those that voted for strike action the previous November. The only difference was 1% in the high response rate. With all the risks of a long and bitter dispute, including the holding of stopwork meetings and a ballot on industrial action, it might have been expected that we would have lost members. In fact, the opposite has occurred with our largest annual membership increase ever in the year to date (15%) even though we are only half-way through our financial year.

Our position is now stronger than what it was before the negotiations. Despite the difficulties of negotiations and some internal membership debate over the adequacy of the provisional settlement during our ratification process, the settlement seems to be well received by members – the combination of useful advances in terms and conditions; the independent commission on sustainable and competitive terms and conditions of employment (including an emphasis on competing opportunities in Australia and the private sector); and the opportunities provided for enhancing clinical engagement and leadership provided by our ‘Time for Quality’ agreement (whose engagement principles are also included in the MECA).

It is also worth noting that our fiscal position is now stronger despite having to spend a considerable amount of our resources on these negotiations (including an unbudgeted $120,000 on our national stopwork meetings last year) and, for the first time for several years having a deficit for the 2007-08 financial year. However, a combination of conservative prudent financial management over the years in which healthy reserves have been built up and increased membership (plus the bargaining fee income) has placed us in a strong fiscal position for coming years.

Rates during RMO strikes

This strengthened position assisted us in achieving a surprisingly good rate of remuneration with the DHBs when our members undertook clinically essential additional duties and responsibilities during the two two-day RMO strikes last April and May. These rates included $250 per hour during normal day hours and $500 per hour after-hours (including weekends). While some individual DHBs baulked and resisted eventually all came into line in different ways.

It is interesting that some of the strongest membership criticism of the ASMS came from this achievement (from those who believed the outcome to be excessive) rather than those members who considered the MECA settlement to be inadequate.

Independent Commission

The establishment of the cabinet endorsed independent commission of inquiry to investigate and make recommendations on competitive and sustainable terms and conditions of employment for DHB-employed senior medical staff has been slow largely because efforts to approach two proposed chairs have not succeeded for various reasons.

However, in a sign of a new relationship we have been able to agree with the DHBs on possible chairs, other commission members, and an expert advisory group with joint recommendations to the Director-General of Health.

National Consultation Committee

The MECA also creates a joint ASMS-DHBs National Consultation Committee which at least on paper has considerable potential. It has already had one meeting which went well with a second scheduled for later this month. This is an opportunity for us to advance issues of concern and interest to our members that are over and above the usual industrial issues and broader than those which affect particular DHBs. This body will meet at least quarterly. One of the issues likely to be further discussed is the standardisation and enhancement of information technology in DHBs.

Bargaining Fee

The facility for a bargaining fee which was achieved in the MECA has also produced added benefits. This is a legislative provision in response to freeloading by non-members. It provides for the inclusion, on the union’s initiative, in a collective agreement for a ballot process to be undertaken of all members and non-members eligible in each employer to be covered by the agreement. If the majority total vote is in the affirmative, then non-members can either join the union or pay the bargaining fee (there is a limited opt-out facility for non-members). If one pays the bargaining fee, one is entitled as-of-right to receive all or some of the benefits of the MECA (as determined by the union and as identified in the ballot) but not union representation.

The union can set the level of the bargaining fee (the ASMS elected to set it at the same level as the membership subscription). In the 21 DHBs all the ballots produced strong affirmative majorities in favour of the bargaining fee. Many non-members have subsequently opted to join the ASMS rather than pay the fee. In fact, many of them were not actually in our data base and had never been approached by us to join leaving us in the interesting situation of significantly increasing our membership but with a slight decrease in density (still a healthy 90%) despite no increase in the total workforce. The bargaining fee process required DHBs to organise ballots in conjunction with us in which all potential members were included thereby establishing our first contact with many of them. On top of this around 200 non-members have paid the bargaining fee.


The ‘Time for Quality’ agreement between the DHBs and ASMS, was recently signed in a public launch covered by the media and witnessed in support by the Minister of Health. It is also available on our website at <>. Its engagement principles are also contained in Clause 57 of the MECA.

The ASMS is seeing ‘Time for Quality’ as a key organising tool to pursue our wider perspective. The overarching theme of the agreement is that the effectiveness of the health system depends on quality, that quality requires senior (and other health professional) engagement and leadership, and that this engagement and leadership requires time. More so than the Health Sector Relationship Agreement discussed below, ‘Time for Quality’ goes to the core of work and how it is organised and led. Its potential for practical transformation in DHBs is greater. But the two agreements are not in competition or in contradiction with each other.

Its application is also relevant to DHBs’ approaches to reviews. Rather than designed by management with senior doctors cast in a responsiveness role, senior doctors should be the ones who advised whether a review was necessary and, if so, design it.

‘Time for Quality’ also envisages a number of activities (eg, intensive care bed capacity). As it also involves the Ministry of Health in a resourcing role, the Ministry has joined the National Consultation Committee discussed above for part of the meeting to discuss implementation. We expect that some of the National Consultation Committee will be allocated to directing ‘Time for Quality’ national work.

At a local level the ASMS has started promoting joint half-day workshops on enhancing senior doctor engagement in DHBs with a very successful afternoon workshop in Northland (a medium-sized DHB). The membership attendance was very high along with senior managers including the chief executive. Key to the success was the joint decision not to schedule electives lists and clinics for this occasion. Further, it was held offsite. The only senior doctors disadvantaged from attending were those working in private at the time and those involved in acute and emergency care. Subsequently we have agreed with Northland DHB to make it an annual event.

The focus of the programme was also critical to its success. The Northland programme is outlined below with each item being directly relevant to what was happening in the DHB and in the context of engaging our members in each matter.

 The DHB’s planning process for the review of its five year plan (a statutory requirement).

 How senior doctors can genuinely influence service improvements and drive change rather than have it done to them.

 The MECA as a launch pad for senior doctor engagement.

 Senior doctor workforce stocktake – identifying the gaps.

 Site master plan (hospital redevelopment plans.

 Supporting professional development and quality improvement.

 Information technology facilities for senior doctors.

Following the success in Northland we have started to promote it in other DHBs. Two more (Waitemata and Hawkes Bay) have already been scheduled for November, both involving electives and other non-acute/emergency services would not be scheduled for this afternoon. They will also be held offsite.


Previously I have reported on the attempt to establish a health sector relationship agreement signed by the three parties—the government (Health Minister and Director-General of Health), all 21 DHBs, and each of the CTU affiliated health unions including the ASMS.

The actual behaviours by government and DHBs had failed to resonate with the aspirational and noble wording of the draft agreement. Consequently the ASMS resolved not to sign it. In particular, these contrary behaviours involved (a) the continued impasse and adversarial nature of our national DHB MECA negotiations, (b) the omission of our health professional leadership initiative, and (c) the lack of commitment of the government to public provision of core secondary and tertiary services, most evident in the politically approved or accepted shambolic hospital laboratory privatisation, largely through shoddy processes and inept political leadership.

However, with at least the first two of these addressed (MECA settlement and ‘Time for Quality’ agreement), the National Executive reversed its decision and the new agreement has now been signed by the Government, Council of Trade Unions, and DHBs. The ASMS has also added its signature along with the other affiliated health unions.

It is early days yet to assess the value of this tripartite process and it may be affected if there is a change of government (certainly political support for the process is likely to diminish if there is a significant change in the make-up of the next coalition government). However, the potential is there and the opportunity for key central players to debate and progress issues is considerable.

To date the Tripartite meetings have been encouraging but the realisation of this potential may be constrained if its workings become too process or project based at the expense of focussing on the key issues of the moment or those that have the potential to transform DHB decision-making culture.


In July two decisions of the Health & Disability Commissioner involving the impact of strikes by radiation therapists in Dunedin Hospital’s neurology department. One in particular had strong criticism of the application of strikes in relation to patient safety. Although it was not an attack on the right to strike it became the basis for attacks on the right to be made. We have had to defend this right without which our MECA settlement most likely would not have been achieved. This difficult and challenging subject was discussed in a speech delivered in July to the Hospital and Community Dentistry Conference which was forwarded separately to ICM participants.

Ian Powell



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