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The Government has appointed Health NZ Te Whatu Ora board chair Lester Levy as commissioner to replace the organisation’s board.
The organization will also be divided into four regions, with each region appointing a deputy chief executive.
The board of directors usually has seven members, but this is Down to 2Previously, three members chose not to serve again, and two others resigned with more than a year left in their terms.
Levy was recently appointed president of the organization and will take over as a commissioner for 12 months.
Health Minister Shane Reti announced the move alongside Prime Minister Christopher Luxon at his weekly press conference following Monday’s cabinet meeting, saying the move was in response to “serious concerns about oversight, overspending and a significantly deteriorating financial outlook.”
Dr Reti said a report submitted to him by the Ministry of Health in March showed the deficit would reach $1.4 billion by the end of this financial year.
“In the months since, the situation has deteriorated further. The New Zealand Ministry of Health is currently overspending by about $130 million a month,” he said.
Luxon said the organisation lacked performance management and had an overly centralised system, leading to “heavy bureaucracy” and, ultimately, financial mismanagement.
He said it was not a matter of underfunding but the failures “do require urgent and significant intervention”. He noted the government had invested an extra $16.3 billion in the health system over the next three budgets.
“We’ve invested all the money we’ve got, we’ve raised the money and prepaid the money.”
Mr Levy was tasked with finding $1.4 billion in savings, with a focus on cost efficiencies, including “any back-office bureaucracy that has become inflated, particularly at the middle management level”.
Reiti blamed the previous government, saying “failed health reforms have created huge financial challenges for the New Zealand Ministry of Health”.
“The Ministry of Health’s problems stem from the previous government’s mismanagement of health reforms, which resulted in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented management data systems that prevented people from identifying risks in a timely manner.”
He said the overspending was due to a variety of factors, including back-office staff and outsourced staff, noting a report by the Auditor General’s Office pointed to the lack of an operational framework.
Dr Reti said he had previously appointed a Crown observer, a new chair and a board member with financial expertise to address the organisation’s financial problems, and that bringing in a commissioner was the strongest ministerial intervention under the Act.
He said it was not a decision he made lightly, “but the severity of the problem requires us to take such action.”
“Lester Levy has assured me that implementing the turnaround plan will not have a detrimental impact on health services – on the contrary, he and the New Zealand Ministry of Health will work to bring frontline staff closer to decision-makers.”
Labour: ‘This year’s budget does not provide enough funding for health’
Labour leader Chris Hipkins told reporters in parliament the government’s portrayal of the situation at the Ministry of Health was misleading and a brazen and desperate move to shift the blame for its own decisions onto the previous Labour government.
“This year’s budget did not provide enough funding for health. The consequences of that are now being seen. I think New Zealanders can actually see that the health situation has been caused by this Government.
“The current issues they are talking about today all happened while they were in office.”
He said it was just an excuse and a desperate attempt to cover up underfunding of health in this year’s budget. He said the process Reiti was talking about bringing together the New Zealand Ministry of Health was “well underway” under Labour.
“The Ministry of Health has identified four regions so that’s already underway. Work is already underway to reduce duplication – one of the reasons for bringing all the DHBs together was to reduce the layers of management. So all that work is already underway.
“These changes are not going to happen overnight. You’re not going to see all the results of these changes overnight. But it’s important that we get to the root of these problems. Government propaganda is not going to do that.”
Labor health spokeswoman Ayesha Verrall said having one recruitment point, rather than 20 DHBs all scrambling to recruit staff, would allow the government to hire more staff for the health system as the country emerged from its Covid-19 response.
She said the reforms would also help end the postcode lottery and allow infrastructure decisions to be considered across the system and ensure there was expertise to manage them.
“I do not accept the government’s claim today – that the number of middle managers has been increasing over the past five years – as the reason for the budgetary difficulties they have had in one year in office. It is absolutely untrue.”
She said the number of nursing staff may have increased during that period, but it was desperately needed.
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