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The Hospital And Community Dentistry Conference

Address To The Hospital And Community Dentistry Conference Queenstown, 1 August 2009

Thank you for the opportunity to address you again. As always my comments are personal observations although in broad terms at least I believe they are consistent with the Association’s view on the matters discussed. My theme today is the need to shift from policy based on ‘I/we know best” (I call this FIGJAM culture, a term I will clarify later) to clinical leadership in the fuller sense of the terminology.

Like you the ASMS is adapting to a new political environment with a change of government following three successive victories of the previous Labour-led governments. For reasons that defy historical record it was assumed in some quarters, such as the Listener last December, that the ASMS was close to Labour and would struggle under a National government. This is despite the fact that in 2001 our National Executive voted no confidence in the Budget in respect of Vote Health (the only time the Executive has ever taken such an action), our criticisms of the Health Practitioners Competence Assurance Bill for its removal of binding elections for medical and dental practitioners on the respective registration councils, tensions over the national DHB MECA negotiations during 2006-08, and our strident criticisms of former Health Minister Pete Hodgson for his approval of the biggest privatisation of public hospital services (laboratories) as well as his political interference in an appointment to the Medical Council. Our National President’s public rejoicing of Mr Hodgson’s removal as health minister far exceeded any such comment over the revolving door of National health ministers of the 1990s. Health ministers are a mixed bunch. To paraphrase Oscar Wilde, “some cause happiness wherever they go; others, whenever they go.”

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It was interesting that when new Minister of Health Tony Ryall addressed our Annual Conference last November (around 24 hours after being issued his ministerial warrant) he looked at the colour of our logo on the PowerPoint screen, thought it was red, and observed that we must not have yet got over the election result. It had to be pointed out to him by our National President that the colour was actually maroon which is a mix of blue and red. To his credit the Minister took the clarification well.

Observations on general government direction

It seems to me that the government in general is astutely led, despite a few Christine Rankin, Paula Bennett and Richard Worth moments, touching the public pulse with effect, and is enjoying a lengthy ‘honeymoon’ with the public although it should be noted that Helen Clark’s ‘honeymoon’ lasted for around four years followed by five of hard slog. But one wonders how long before the John Key/Bill English ‘good cop/bad cop’ routine frustrates people; one saying that we are coming out of the recession and the other promoting measures that suggest we are not. The focus on inflation and international credit ratings may resonate with the public at the moment, as unemployment continues to increase unabated the mood may well change. Clearly what happens to our health system will also affect this mood.

There are some disturbing indications in government conduct in its response to the challenge of the economic recession which suggest that it is heavily influenced by the arrogance of a strong parliamentary majority and the American axiom of never let a good crisis go to waste. In particular, I refer to the unprincipled character assassination of the former ACC board with disingenuous misleading accusations over fiscal performance (which was rubbished by independent economic commentators), all done to gloss over the fact that the objective was to put an associate of the privatisation bent Business Roundtable into the position of chair. I understand that the ACC may soon be reporting impressive advances in injury rehabilitation. If so I’m confident the ACC Minister and his new board will not attribute this success story to the former board under which it occurred. More likely they will take the credit themselves. Very FIGJAM!

Also worrying was the use of the recession to justify rushing legislation through Parliament before Christmas without select committee scrutiny. One example is the ‘fire at will’ 90 day bill while another is the even more distant enabling legislation on national educational standards. There has been a definite FIGJAM cultural feature to these matters.

Government health directions: clinical leadership

These general concerns at this point in time do not apply to health at least in the main. Mr Ryall to date has largely been of the non-FIGJAM culture. He earned early ‘brownie points’ by announcing at the ASMS Conference last November that regulatory amendment would be enacted to provide for some of the medical practitioner positions on the Medical Council to be filled through binding elections of the medical profession, a principle he subsequently extended to the nursing council with our support. The attraction to the Minister of this decision was a mix of common sense, earning professional goodwill, and no fiscal cost involved. [The ASMS has raised with the Minister our advice that this principle should also extend to the Dental Council although we had to note that this would be more difficult because of the expansion of the Council’s role beyond dentists to include dental practitioners. The Minister is conscious of this difficulty and would welcome proposals from the dental profession to overcome it.]

But what has really stood out is the Minister’s commitment to promoting and requiring clinical leadership in DHBs. His approach has been non-FIGJAM. For several years, beginning with Annette King, health ministers have in their annual letters of expectations to DHBs promoted in various ways enhanced clinical engagement and leadership. But they made little practical difference; those senior managers and DHBs already interested in engagement continued to try while those who gave it lip service continued to do so. The ASMS made a strong effort with former Minister Pete Hodgson to give it more teeth in a proposal advocating health professional leadership but while professing interest simply sat on his desk. He was FIGJAM culture personified.

It was not until hyperactive ‘boy wonder’ David Cunliffe became health minister that we started to get traction, although he only held the portfolio for less than a year. As well as playing an instrumental role in breaking the impasse in our national collective agreement (MECA) negotiations with the DHBs, he was also central to the signing of the Time for Quality agreement between the ASMS and the 21 DHBs. The focus of this agreement was on engagement between health professionals and DHB managers with all the engagement principles also incorporated into the MECA. One of the engagement principles affirmed that health professionals were to play the lead role in service design and configuration with managers in a support role. The essential premise of Time for Quality is that:

• the health system should be driven by quality;

• to be driven by quality requires health professional leadership; and

• to provide leadership health professionals require time.

Mr Cunliffe’s performance in these respects was non-FIGJAM. What was heartening was that his successor embraced Time for Quality and built on it with a new policy statement on clinical leadership known as In Good Hands which was written by a group selected by the Minister including the ASMS National President Dr Jeff Brown in the chair. In Good Hands both reiterates the importance of clinical leadership in DHBs as the most effective vehicle for ensuring clinical governance and takes it further in at least three key respects:

1. Clinical leadership is much more than clinicians in formal leadership positions; the latter is a subset of the former.
2.
3. Clinical leadership should be embedded at all levels of DHBs including the devolvement of as much decision-making as makes good sense to the individual unit or clinical department.
4.
5. Teeth are provided with reporting requirements, including to the Minister of Health. The Joint Consultation Committees the ASMS has in each DHB are singled out as an example of involving clinicians in this reporting.
6.
In my view much of current health system decision-making is aptly described by Mark Twain when he asked “Why do you sit there looking like an envelope without any address on it?” In this context clinical leadership is giving the envelope an address (and postage stamp) to ensure it gets to its destination.

To put it another way, while the health system might not be characterised as having ‘enemies’ it can’t necessarily be characterised as having, outside the public, ‘friends’. With a little bit of literary license the following observation from Oscar Wilde has some relevance: “He [the health system] has no enemies, but is intensely disliked by his friends.”

Just as Mr Ryall has been clearly non-FIGJAM in clinical leadership, so has he in emergency departments. As an effective opposition health spokesperson he became acutely aware of the pressure that emergency departments were under and actively sought the advice of emergency medicine specialists. He also recognised that these pressures were not an emergency department problem; they were a ‘whole of hospital problem’ that impacted in emergency departments. This led to the waiting time target of six hours (95%) being included as one of the key clinical requirements of his Letter of Expectations to DHBs in February. What is important is that the six hour target was based on the expertise advice of emergency medicine specialists. It was clinical leadership in action; definitely non-FIGJAM culture.

The Minister has also grasped well the importance of clinical networks as being central to addressing the effectiveness and clinical viability of DHBs. Networks are more than networking because they involve service provision and organisation along with resource allocation. They are a ‘third way’ between clinically risky and increasing unviable fragmentation, on the one hand, and centralisation to a few key centres, on the other hand, where the risks lie in overstating the capacity of the centre and underestimating the health impact on the increased hinterland.

The ASMS has advocated clinician-led clinical networks for some time in part influenced by the success of these networks in New South Wales. When in opposition Mr Ryall listened to our advocacy, did his own homework and visited New South Wales to check whether we were embellishing the situation. He realised we were not and made it a key part of National Party advocacy and policy. It is now the policy of government and part of his Letter of Expectations to DHBs. The recently announced exciting cardiac network development is a result of this new policy direction although it should be acknowledged that this work was initiated by the Ministry of Health under former Minister David Cunliffe.

Pending cultural FIGJAMs

However, there is risk of cultural FIGJAM in some other areas of government health policy. One is the commendable intention to boost public hospital capacity for electives. The difficulty is what Mr Ryall said in opposition (and to a lesser extent since being Minister) jumping on the bandwagon with claims that productivity in the health system had fallen despite the Labour led government increasing health spending by record amounts. This view continues to be expressed by the ideological archaic Sir Roger Douglas who has arisen from the crypt and can now be found haunting Parliament’s debating chamber. But it is fundamentally wrong and misleading.

Essentially productivity data only covers a minority of work undertaken in DHBs, primarily discharges. It excludes, for example, what laboratories do even though they affect around 70% of clinical decision-making in public hospitals. They also exclude chronic illnesses, much of mental health, multi-disciplinary actions, and clinical consultations between DHBs. And yet so much political mileage is made out of the very limited Treasury data.

Productivity also excludes the impact on primary care where much of the increased health spending went. Between 2002-03 and 2006-07 visits to GPs increased by over 3 million; during the same period the number of adults who needed to see a GP but were unable to for any reason halved and cost the major reason for this unmet need (only 0.8% of children and 1.7% of adults were unable to see a GP because of cost); 80% of all New Zealanders saw their regular GP in the 12 months up to November 2008. This is impressively productive but not part of the productivity data.

Another example of uncounted productivity is that in the five years to 2007-08, access to secondary mental health services increased by 14% in total (12% for children and adolescents).

In the context of the Minister’s imperative for increasing electives by 4,000 per annum is that this is how one can improve counted productivity. But precisely because this is so it generates a strong incentive to do the easier and less immediately serious work at the expense of the more urgent and complex. There may be some advantage in ‘bottom slicing’ some of the elective work in terms of training and early intervention before conditions deteriorate. But it will create potential conflict between the drive for increased elective volumes (numbers – ‘bums’ on operating tables) and prioritisation (caseweights) upon which existing funding is based and there are strong ethical and professional drivers. If the Minister is to avoid adopting a FIGJAM culture approach to electives he is going to have to let and enable health professionals to have the flexibility to play lead roles in the application of the objective of increased elective volumes. In other words, the principles of Time for Quality and In Good Hands should provide the basis of decision-making.

Another potential FIGJAM is the Minister’s requirement in his Letter of Expectations to DHBs for them to transfer some secondary services to primary care at no cost. The difficulty with this is because it is more that the incremental clinical based evolution between what is done in secondary and primary care settings, more than simply improved general practitioner access to hospital diagnostic services, and gets tangled up in the different funding systems to primary and secondary care (one charges patients and the other does not), it is not an initiative that has come from the health sector but instead from a ‘left field’ political manifesto. Just has it has much potential, including possible ‘virtual first specialist assessments’, it also has serious risks of clinically inappropriate and fiscally questionable transfers.

If this initiative was to evolve into budget-holding of secondary services, as has been increasingly suggested in our discussions with DHBs, then the risks are higher. The government seems to be looking at the Primary Care Trusts in England as the future model for Primary Health Organisations. England’s PCTs are being pushed down the path of budget-holding under the pretentious inter-planetary title of ‘world class commissioning’. As sure as day follows night if you fragment funding, you fragment provision including by opening up the capacity for picking ‘low hanging fruit’. If risks are to be avoided then it will be critical that any decision to transfer services to primary care will be based on clinical leadership in accordance with Time for Quality and In Good Hands with the threshold being clinical sensibility and fiscal sustainability.

A third budding cultural FIGJAM is the Minister’s approach to bureaucracy which he requires to be constrained (others call this capped). His definition is not just corporate and service managers. It also includes clinical support staff including secretaries, ward clerks, booking clerks and information technology. But without these health professionals can’t function. Certainly in the case of secretaries at the very least we need more, not less. Specialists would rather be underpaid specialists than overpaid secretaries. There is a missing ingredient of common sense here. The Minister needs to loosen up a bit here. Populism over easy targets is not necessarily good policy.

Is privatisation on the agenda?

Given the experience of the 1990s it is inevitable that there will be concerns that the government will go back to the market approach including privatisation of that era. This view was given, at least at the level of appearance, credibility by the Minister’s announcement of new protocols for using the private sector.

In August 2006, largely due to advocacy from the ASMS, the then Minister of Health, Pete Hodgson agreed to changes in the provider selection protocol used when a DHB has a proposal to shift services to the private sector. These were:

In respect of hospital based services. In the event that public and private delivery options are equally effective… then:

- for long term delivery of services, publicly provided services are preferred

However, Mr Ryall removed this preference for public preference in long-term contracting arrangements.

Given the government’s political ideology this deletion while concerning was not unsurprising, is of concern. It is giving the green light to DHBs to contract out if they wish to do so.

But what was surprising was the other noteworthy removal:

Where a DHB is considering shifting services to a non-DHB provider, it must actively and constructively engage with the health professionals involved in the provision of the service, about the objectives the DHB is trying to achieve, and whether there are other more cost-effective means of achieving those objectives.

Whereas the Minister engaged with the ASMS over clinical leadership, In Good Hands in particular, there was no such engagement over this deletion. But what he deleted was a provision for clinical engagement in action and in a specific context. There are two lessons to be learnt from this – the Minister giveth with one hand (In Good Hands) and taketh with the other (clinician engagement over contracting out) and, for the Minister, the ASMS is there for some things and not for others. This is FIGJAM culture.

But does this mean a return to the 1990s? I think not. The 1990s need to be understood. It was an ideological drive to run the public health system as a series of competing commercial business. It involved overturning a health system that had just been highly rated internationally by the World Health Organisation into something that inefficient, fragmentary and fiscally irresponsible. It was a great time for spivs and snake oil salespeople posing as business consultants. As an NZMA chair at the time (Dr Alistair Scott) said in a Nordmeyer address, the 1990s ‘health reforms’ were designed by the sorts of people who would try to make a “profit out of a soup kitchen”.

It somewhat reminds me of what the famous American journalist James Reston said of Richard Nixon: "He inherited some good instincts from his Quaker forebears, but by diligent hard work, he overcame them." Or Mae West: "His mother should have thrown him [former Health Minister Simon Upton responsible for designing the 1990s ‘reforms’] away and kept the stork."

But while the Minister’s changes to the private provider protocols and the possibility of budget-holding driving the transfer of secondary services to primary care rang alarm bells, this is not the 1990s reincarnated, at least not so far. The 1990s was ideology on steroids; today is ideology restrained by pragmatism and with the absence of spivs for reasons such as;

1. The recession, not a good time to privatise.
2.
3. The unpopularity of National’s 1990s ‘health reforms’. Political parties have a strong preference for being elected rather than thrown out. As former Deputy Prime Minister Jim Anderton once said, one bad day in government is better than 364 great days in opposition.
4.
5. The Minister is keen to prove to the public that a conservative government can be trusted with the public health system. Privatisation risks undermining this trust.
6.
7. The government’s decision to build 20 additional theatres in public hospitals and to increase electives by 4,000 per annum signifies a major commitment to building public hospital capacity.
8.
9. Privatisation fragments services. The government is committed to clinical networks which depend on an integrated approach and would be undermined by fragmentation.
10.
Of course, if Tony Ryall has a Paula Bennett moment and appoints Christine Rankin to a key health leadership position then I reserve the right to change my assessment.

Despite these observations, however, and although it is early days, a major worry is reports of the government establishing public-private partnerships on infrastructure including schools and hospitals. There has been no official announcement but recent reports by Radio New Zealand have not been challenged by government. If this is so then depending on the detail there are serious worries especially if the government is looking at the Private Finance Initiative in England. On health policy at least there are some similarities between the New Zealand and British governments if one puts to one side the fact that the latter is on life support while the former is still on a wellness programme.

Driven by European Union borrowing limits, the PFI is highly controversial in England (rejected by Scotland, Wales and Northern Ireland) because it involves not simply using the private sector to build new hospitals but also gives it control over the design and capacity. Outcomes include delayed large fiscal costs, inadequate capacity and lack of flexibility to meet future service demands. Importing the PFI or variant of it would be truly FIGJAM.

If the government is contemplating market mechanisms in health it might wish to first consider the wisdom of George Soros [Chair of Soros Fund Management] who gave the following timely warning on the perilous unreliability of markets:

prices in financial markets do not necessarily tend toward equilibrium. They do not just passively reflect the fundamental conditions of demand and supply; there are several ways by which market prices affect the fundamentals they are supposed to reflect. There is a two-way, reflexive interplay between biased market perceptions and the fundamentals, and that interplay can carry markets far from equilibrium…fundamental change…is followed by a misinterpretation…Initially that misinterpretation of the new trend reinforces both the trend and misinterpretation itself; but eventually the gap between reality and the market’s interpretation of reality becomes too wide to be sustainable.

Future fiscal shock therapy, 2010-11 and beyond

In its last budget (2008-09) the outgoing Labour led government made a commitment to $750 million baseline funding increases to Vote Health for the 2009-10 financial year and beyond. In this year’s budget the new government allowed this to continue for 2009-10 but gave a strong signal that future increases would be much less. This message has been subsequently reiterated by the Health Minister including in letters to DHBs approving their District Annual Plan and by Treasury in its briefings to the health sector, including DHBs and the health unions.

The government believes that Vote Health was generously funded over recent years and that this can’t be allowed to continue. But caution is required here. Much of this increased funding went into primary care, new initiatives and capital works. The increase for public hospitals to continue to provide secondary care was much less. Whereas health funding under the future funding track formula has increased by around 3% per annum for some time, hospital prices have increased by 6%. Secondary care has been financially squeezed and pressured for sometime now under the mistaken belief that improving primary care and population health will reduce demand for public hospital services. Ironically the primary care strategy has been too successful. By considerably enhancing access, more illness has been detected some of which has had to be referred to public hospitals. The net result has been increased pressure on the ability to provide secondary care and increased overburdening of the workforce. While much good happened in health under the former government, its greatest error was to underestimate the financial, resourcing and other pressures on public hospitals and their workforce.

If the government seeks to claw-back on necessary funding increases it will amount to a form of fiscal shock therapy for public hospitals especially given the financial pressure they are already under. This will also contradict the Minister’s requirement of DHBs that they have a particular focus on the needs of their hospitals.

This shock therapy will also come on top of increased pressures on public hospitals. This is an inevitable consequence of economic recession especially if it is as severe as Treasury is saying. HINI is, of course, on top of all of this. Ironically investing in health makes good economic sense. It enhances the capacity for a healthy workforce, so important for productivity, and because secondary care in particular is labour intensive it is job rich across a range of occupations.

The SMO Commission

Critical to resolution of our MECA negotiations with the DHBs in 2008 was the establishment of a commission to recommend to three parties – government, ASMS and DHBs – a sustainable pathway to competitive terms and conditions of employment for senior doctors and dentists employed by DHBs. The establishment of the Commission was necessary to break the impasse in the previous negotiations. It arose out of one industrial negotiation and was supposed to feed into the next.

The SMO Commission report was released 3 July. In summary, the Commission:

• Identifies a collective specialist pay gap of around 35% between New Zealand and Australia, primarily base salaries but also superannuation.

• Describes the DHB workforce as ‘vulnerable’ and notes a deteriorating retention situation. Further, the Commission uses DHBNZ data to say that there is a 9.5% vacancy rate of SMOs at DHBs (a deteriorating situation from DHBNZ data dated December 2006 when the vacancy rate was around 8%). We know, of course, that the true vacancy rate is higher than this and that vacancies are not the same as shortages (the former understates the latter).

• Highlights the disengagement of senior doctors and dentists from DHB management, which it attributes to the managerialism enhanced in the 1990s commercial business era. I’m not sure whether the Commission had the following exchange between George Bernard Shaw and Winston Shaw in mind when it considered the tetchiness that sometimes exists in clinician-management relations:

Shaw to Churchill:

"I am enclosing two tickets to the first night of my new play, bring a friend...if you have one."

Churchill to Shaw:

"Cannot possibly attend first night, will attend second...if there is one."

Its recommendations include a focus on clinical leadership in DHBs, improved national service planning and sharper workforce development by DHBs. One useful recommendation is that DHBs should review the provision of space, tools and support for senior doctors and dentists, recognising the importance of these factors to retention.

There are weaknesses in the report partly because the Commission has taken DHB supplied information at face value and partly because it has not taken an historical view of the recent rapid improvement in remuneration for specialists in Australia. The Commission has badly underestimated the threat that the recent increases in Australian pay rates pose to a viable New Zealand public health system. Consequently none of the recommendations directly addresses ‘a sustainable pathway to competitive terms and conditions of employment for senior medical and dental officers in New Zealand’.

Some, not all, of the deficiencies may have been influenced by the late decision of the Minister of Health to require the Commission to report to him only earlier than the scheduled date. This may have prevented Commission from forwarding the draft report to DHBs and ASMS for comment in order to correct inaccuracies. Both the ASMS and DHBs received the report only 24 hours before the Minister publicly released the report. If the report had been forwarded embarrassing errors such as the suggestion that 40% of specialists working for DHBs are not on call might have been corrected. Whereas the report was supposed to be to three parties, the Minister’s action made it to a report to one only meaning that for the ASMS at least, there is no shared ownership of it; it is his report now, not ours.

The Commission’s concludes that though there is a 30-35% difference in salary this largely reflects the 28% gap between Australian and New Zealand wages in general. The lower end of the specialist pay gap is influenced by an individual 2007 case selected by DHBNZ, not an organisation noted for accuracy. Individual cases showing much larger individualised cases were provided to the Commission but were not used. The Commission concedes that there may be a factor of 5% where New Zealand specialists are behind in relation to the rest of the New Zealand population than Australian specialists.

This is a specious argument. More so than most if not all other occupations New Zealand is competing in an Australian specialist labour market. Unless one is in a specialty with significant earning capacity in the private sector, with our common training system New Zealand specialists can just as easily find a satisfying job in Australia where they earning much more. They are more integrated into Australia than most and therefore the 35% gap is a real gap rather than a gap discounted by 28%. A 5% salary increase would, for example, do nothing to allow New Zealand to compete against Australia for overseas specialists and would do little to stop the loss of specialists from New Zealand to Australia.

A positive feature of the report is that it accepts averaging of collective agreement terms and conditions for determining the collective pay gap. To get to 35% the Commission selected four states – Victoria, New South Wales, Queensland and South Australia. But there are two faults with this:

1. It compares the top steps of the Australian scales with New Zealand’s top step but the Australian scales are all much shorter than New Zealand’s as well as going much higher than New Zealand (the comparison should have been the average of the top Australian steps to the equivalent step number in New Zealand).
2.
3. It excludes Western Australia where one of the largest settlements was recently negotiation.
4.
If the correct step comparisons had been made the pay gap would have been around 42% and if Western Australia had been included the pay gap would have been 49%.

The ASMS National Executive has given the Commission’s much deliberated and when meeting on 22-23 July unanimously adopted the following resolution:

That, while encouraged by a number of the recommendations of the Senior Medical Officers Commission, the Association is disappointed that it did not fulfil its terms of reference with regards to a sustainable pathway to competitive terms and conditions of employment for senior medical and dental officers.

ASMS approach to MECA negotiations

The current national collective agreement does not expire until 30 April 2010 with formal negotiations to commence. However, the National Executive has already begun its planning which has been made more difficult by the failure of the SMO Commission to fulfil its terms of reference and the serious errors and misunderstandings in the report. Our overall approach was articulated by the ASMS National Executive at its meeting on 22-23 July where it unanimously adopted the following resolution:

That the Association promotes the right of equal access for all New Zealanders to high quality public health services. Both access and quality are threatened by the medical workforce crisis in our district health boards. Critical to resolving this crisis are:

(a) a clear pathway to competitive terms and conditions of employment for senior doctors and dentists;
(b)
(c) recognition that district health boards are competing in an Australian medical labour market; and
(d)
(e) recognition that the Government is responsible for resolving the crisis.
(f)
There is no argument that there is a crisis – both the government and ASMS agree. The resolution shoots responsibility for resolving this crisis to the government. While the ASMS and DHBs also have a role to play, prime responsibility rest with our political masters. Within this context the ASMS’ strategic direction for next year’s negotiations will be formulated at our Annual Conference in December.

If it is good enough to accept the need for clinical leadership over how DHB services are organised, configured and delivered and to be embedded at all levels of DHBs, then this should be extended to how to address the recruitment and retention crisis, including competitive terms and conditions, affecting senior doctors and dentists in the same DHBs. It would be consistent with FIGJAM culture not to.

Finally what is FIGJAM an acronym for? I’m Good, Just Ask Me!

Ian Powell

EXECUTIVE DIRECTOR
ASSOCIATION OF SALARIED MEDICAL SPECIALIST

ENDS

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