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Privatised Hospital Laboratory Fiasco (and Profit Driven Fleecing) Continues

The ongoing fiasco that is Aotearoa New Zealand’s laboratory system which effects around 70% of clinical decisions not only continues unabated; it goes from worse to worser.

The nub of the issue is the privatisation of the health system’s public hospital laboratories which began under former Labour health minister Pete Hodgson (2005-07).

It was halted under former National health minister Tony Ryall (2008-14) and resumed under his National successor Jonathan Coleman (2014-17). Privatisation halted again under Labour health minister David Clark.

It has not resumed since. However, the damage of the Hodgson and Coleman endorsed privatisation processes is severe and is getting worse.

Privatisation origins

The privatisation process began when in some financially struggling district health boards put their hospital laboratories up for tender. Hospital laboratories could, and largely did, make their bids. But they were on a hiding to nothing.

They simply could not compete with private laboratory owners who could afford to base their bids on ‘loss leaders’ in order to accumulate big profits in subsequent years.

Poor national leadership from both the Ministry of Health and health ministers at the time enabled this to happen.

Two things happened. First, they fleeced the system through big profit extraction. Second, as predicted, it became monopolised primarily now with the rebranded Awanui.

Consequential damage

I have published three times this year on the consequential damage caused by this privatisation. The first was in BusinessDesk (29March): How to fix the hospital laboratory fiasco.

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The second was an Otaihanga Second Opinion blog (15 May): Showdown time over hospital laboratory privatisations as private tail tries to wag the public dog.

The third was another Otaihanga Second Opinion blog (16 June): Hospital laboratory workers win Nelson ‘battle’ but Health Ministers needs to end private control war.

It did not take long for the privatised hospital laboratories to be subjected to incremental clawing back. This was compounded by the failure of private operators to invest in both their critical workforce and essential equipment.

These laboratories became increasingly under private monopoly control. This acquired monopoly power meant that the consequential drive for an even higher profit return increased. Last year Awanui paid a $43 million dividend to its shareholders.

But, perversely seeing itself as an Oliver Twist, Awanui’s relentless pursuit of profit-maximisation continues. This is what drives it more than anything else.

War now shifts to collective bargaining

After many years there was a recent successful fightback against moves to reduce laboratory services at Nelson Hospital (see above link). However, this was a ‘battle’; the ‘war’ by stealth continues.

It has now manifested itself in the industrial field with a breakdown in collective agreement negotiations between Awanui and APEX, the union representing laboratory scientists and technicians. This has been well-reported in paywalled articles published by New Zealand Doctor.

With the exception of Canterbury, all hospital laboratories in the South Island and the wider Wellington region were privatised. They are now operated by the Awanui monopoly.

They and all the community laboratories in the same area, which are Awanui owned, are covered by this collective agreement. Community laboratories are responsible for testing general practitioner referrals while hospital laboratories primarily test referrals from specialists within their hospital.

The collective agreement is due for renegotiation but Awanui is refusing to make a pay offer. In effect it means the employer is refusing to negotiate with APEX despite the good faith obligations of the Employment Relations Act.

This lack of goodwill from Awanui is a continuation of its longstanding lack of goodwill towards its employees. This has left the scientists and technicians with no option but to strike. A secret ballot produced an overwhelming majority for a week-long strike beginning in mid-July.

Observation from medical scientists professional body

The professional body representing medical laboratory scientists, the New Zealand Institute of Medical Laboratory Science, has chipped in with a very apt, on the button, statement agreeing that they had no option but to strike.

Its President Terry Taylor said:

We’re the poorest-paid registered health professionals in New Zealand and many lab workers don’t even get paid the living wage.

These people worked their butts off during the pandemic, so you’d think [Awanui] would be able to come up with a decent offer for its staff.

As one scientist emailed me:

Until these power plays are whacked at its roots this will continue on unchecked. Awanui want more money topped onto their lucrative contracts, they are more than happy to leverage off the hard working and under resourced staff.

This is a carefully scripted push from a 100% financially focused approach….

There have been warning signs galore but no one with the fortitude to cut the umbilical cord Ian. Maybe this might just be the straw that breaks the camel’s back…

Hitting nail on the head

Former Health New Zealand (Te Whatu Ora) Rob Campbell hit (actually whacked the nail on the head in his late June LinkedIn post:

This is very sad.
Not a decision which will have been taken lightly by these professionals many of whom I have met.
They are, genuinely, an essential health service. Privatising their role was always myopic and dangerous.

Their treatment should not be acceptable in our public health service, directly or indirectly.
The Minister and Te Whatu Ora should step in and make this clear to their contractor.

He is absolutely right (and we don’t always agree). Awanui is operating the hospital laboratories on behalf of Te Whatu Ora who also fund the community laboratories. It has ultimate responsibility with only Health Minister Ayesha Verrall.

Time for Te Whatu Ora and health minister to step up

Chief Executive Margie Apa needs to step into the arena and insist that Awanui bargain in good faith with APEX representing an exploited workforce.

This includes a pay offer that recognises the impact of the high cost of living on this workforce and the recruitment and retention pressures.

But there is another step to be taken. Dr Verrall needs to provide the necessary political leadership to ensure that these hospital laboratory privatisations are terminated at their next expiry dates.

It is straightforward; it is the right thing to do for the health system and for patients; and it’s fixable.

Just fix it Minister. It’s called leadership.

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