Something is rotten in the state of New Zealand’s healthcare

Something is rotten in the state of New Zealand’s hospitals – literally. And the source of that rot lies in the state of governance in health and politics. How else to explain recent revelations about the state of Middlemore Hospital buildings in South Auckland? It appears politicians and health managers have irresponsibly run down infrastructure in a way that calls into serious question levels of funding under previous governments, and puts immense pressure on the new government over what it is prepared to do about it.

A case study in rotten politics
South Auckland’s Middlemore Hospital has recently become the emblem of what is wrong with New Zealand’s healthcare system. The decrepit and decaying state of many of its buildings has come under the spotlight over the past week or so thanks to the excellent investigatory work of RNZ’s Phil Pennington, who has put together about a dozen reports on the scandal. His original story – Hospital buildings full of rot and mould – started the ball rolling, with details of how bad the situation at Middlemore is, and how the hospital’s management has known of the crisis for many years.

Mr Pennington followed that up with further reports such as Sewage leaking into Middlemore building's walls, and Hospital rot was 'fully disclosed' to board, ministry – former boss. The latter focuses particularly on who knew what and when. It also looks into the performance of the former Counties Manukau Health chief executive, Geraint Martin, who now runs Te Papa museum in Wellington.

Mr Pennington’s latest story details power supply problems, and reports on how the person in charge of the Middlemore buildings claims the health board knew it was all an accident “waiting to happen” – see: Major power failure revealed at Middlemore Hospital clinic. Former building manager Greg Simpson is reported believing that maintenance budgets were vastly underfunded: “Instead of an international best-practice of 2-3% of asset value as a maintenance budget, he was getting less than half the $15m a year Middlemore needed.”

To make matters worse, although many of the buildings have been poorly built, the hospital has been unable to get compensation from the company that made some of the alleged mistakes – see Pennington’s story, DHB unable to take legal action over rotting buildings.

It is now unclear how much it will cost to fix the buildings but many of those involved are talking about the need to demolish and build new ones. One estimate puts this cost at least $1.6 billion.

How has this happened?
The Middlemore buildings are symptomatic of a rottenness in the way health is run in New Zealand. Middlemore is no anomaly, according to Gordon Campbell, who says there’s been an overall underfunding of health since 2010 – see: On Middlemore Hospital as a symptom of neglect. Campbell says the decay and neglect at “Middlemore Hospital serve as a perfect symbol of the dilapidation that’s been fostered by pressure to meet the political goals of budgetary constraint.”

His main point is about the previous National government’s insistence on creating surpluses at almost any cost: “All of it done so that John Key and Bill English could brag about being capable managers, who kept expenditure under control – as if balancing the books was an end in itself. Meanwhile, at Middlemore, the necessary investments in maintenance were being deferred – as they have been in DHBs all around the country, to prop up the illusion of competence by a government always far more interested in delivering another round of tax cuts, if it possibly could. It didn’t want to hear bad news. Its managers in public health heard that, and obeyed orders.”

DHBs and various other health sector figures are now talking more openly about the pressure hospitals have been under to make cuts and follow the efficiency agenda of the last government. This is strongly conveyed in the must-read RNZ report, DHBs under ‘relentless pressure to make surplus'. According to this, “The health system is facing a funding shortfall so bad that three DHBs are likely to need at least $4.3 billion in capital expenditure alone. Canterbury DHB's hospital is being rebuilt but after that it will still be short of beds, Counties-Manukau has rotting buildings, and Auckland is short of beds.”

The DHBs appear to have been under more political pressure than in the past, according to one long-time DHB chairman, Peter Glensor, who is quoted in the RNZ item, saying: “What happened over the last government's term was that the instructions from central government became more and more explicit, more and more pointed … If you are appointed you are appointed at the minister's grace and favour ... if you don't like it and you can't do it, then you need to move on… You have to make it all sound as though 'we're becoming more efficient constantly, and all of these changes are for the good of the community'.”

The article suggests DHBs have made cuts to areas such as capital expenditure to achieve targets set by their political bosses, and they are unable to speak out, or to be accountable to the public.

According to David Galler, an intensive care specialist at Middlemore, the whole situation should make people reflect not only on how this country runs hospitals but also the wider society – see: The toxic mould and rot of Middlemore is the legacy of a crisis in values. He points to the ideology of light-handed regulation and low government spending as the main problem, with crises arising from “a concentration on short-term costs instead of valuing a longer-term investment.”

Labour’s challenge and dilemma
Many commentators argue the neglect of the health system over recent decades is now simply “coming home to roost.” Previous governments – both National and Labour – have increased health expenditure but nowhere near enough to keep up with needs in the health system.

Prime Minister Jacinda Ardern suggests the total deficit in capital expenditure in DHBs across the country is now about $10 billion, and she says Labour didn’t realise the extent of the problem until now – see Lucy Bennett’s Health Minister receives advice on Middlemore Hospital issues as blame game continues. 

It is quite understandable for the new Labour-led government to point the finger at the previous administration (and perhaps even also at the Clark Labour government). But the big question is now whether the new government is willing to properly fund health. And to inject the billions of dollars now needed, taxes might need to increase, or further borrowing made. Yet Labour and the Greens insist on their Budget Responsibility Rules of essentially maintaining National’s fiscal policies.

Dave Armstrong wrote about this fiscal issue yesterday, saying: “A well-funded and efficient health system would make lattes at Astoria, Russian spies and incompetent supervision of Labour Party camps pale into insignificance in the minds of most voters” – see: Toss a healthy bit of funding at DHBs and voters will turn a blind eye to almost anything.

Labour has a dilemma, according to Armstrong, because it is going to have trouble affording that funding: “During the election campaign, Ms Ardern and Grant Robertson were at pains to point out they wouldn't touch the corporate tax rate or John Key's 2008 tax cuts for the wealthy. This reticence to change the wealth distribution might have helped them get elected but now they either have to find the money elsewhere or disappoint underpaid nurses, many of whom would have voted for them. So that's the unenviable health dilemma that this government faces over the next three years.”

Finally, for how cartoonists see the state of the health system over the last year, see my blog post, Cartoons about the rotten state of health in New Zealand.