By: Natalie Akoorie and Amy Wiggins
Taxpayers forked out almost $66 million last year to pay 444 people to run the country’s 20 district health boards.
The bulk of that money, up to $60m, pays for 231 chief executives and their senior executives while 209 board members and four commissioners are paid almost $6m for just 30 days of work each year.
And those costs, to manage and govern DHBs, do not include expenses which amount to hundreds of thousands of dollars.
The eye-watering figures are the latest revelations in a Weekend Herald investigation into spending by our district health boards, prompting renewed calls to slash the number of boards running the health system.
In December the newspaper revealed DHB chief executives spent $1.2m on travel and training in the past three years. That came on top of revelations that former Waikato DHB chief executive Dr Nigel Murray spent $218,000 of taxpayer money and half his last year in the job travelling.
That case, now being investigated by the State Services Commission and the Deputy Auditor-General, as well as financial woes and long waiting lists at other DHBs have led to calls to slash the number of boards.
Health Minister Dr David Clark is looking into the situation, announcing in December a Ministerial Advisory Group to research and report back on what changes are needed to improve an ailing health system.
The same month the State Services Commissioner criticised top-end salaries for State sector chief executives, including DHBs, saying they were not sustainable.
At the same time Minister for State Services Chris Hipkins announced legislative changes may be required to curb the high pay levels of some public sector CEOs, the strongest signal yet that change is likely.
Analysis by the Weekend Herald of DHB annual reports show 19 chief executives – David Meates is in charge of both Canterbury and West Coast DHBs – earned at least $8.5m of the $60m in the 2016/17 financial year.
The rest, $51.5m, was paid to their leadership teams, of between five and 20 staff each.
Last year board members cost taxpayers $5.9m and in 2016 the total remuneration was just over $6m.
DHBs have been governed by 11-member boards, seven elected and four appointed by the Health Minister, since their inception in January 2001. Their remuneration and that of executive managers does not include expenses for mileage, travel, meals, accommodation and other costs associated with the job.
While managers work full-time, board members are only expected to attend one monthly board meeting and some committee meetings, around 30 days of work each year.
And each board has the same number of members despite the vast population differences; Waitemata serves the highest with more than 597,000 people and West Coast serves just 33,000.
Critics of the 17-year-old system say it’s time for a shake-up with the return on investment dubious.
At Southern DHB the board was sacked by then Health Minister Jonathan Coleman in mid-2015, because of progressively worsening deficits projected to be as high as $42m.
Commissioner Kathy Grant was appointed to tackle the deficit and is being paid $1400 per day to steer the DHB back into the black by 2019.
Her three deputies, Graham Crombie, Richard Thomson and Angela Pitchford are paid $900 per day each, plus expenses.
Last year Grant, Crombie and Thomson were forced to apologise to prostate cancer patients who waited so long for treatment their life expectancy was shortened.
The DHB was so far behind its cardiac surgery schedule that one patient’s operation was cancelled six times. Another patient whose surgery was cancelled four times died.
At Waikato DHB chairman Bob Simcock resigned over the Murray expenses scandal, which has also attracted the attention of the Serious Fraud Office.
Waikato District Health Board member Mary Anne Gill, a former manager at the DHB, said New Zealand had too many health boards and wanted the number cut by three quarters to free up desperately needed health dollars.
Gill believes DHBs should be culled from 20 to five, located in Auckland, Waikato, Wellington and two in the South Island, even if it means she might lose her seat.
She accepted the argument for democracy within DHBs but questioned whether the system was working.
“The reality is, as we saw in Waikato last year, that some things actually happen and the board don’t know a lot about it.
“You have to question exactly how much influence elected board members have.”
Amy Downs, vice president at the Colorado Health Institute in the US, agreed there should be fewer DHBs.
She completed an Ian Axford Fellowship in New Zealand last year where she was hosted by Treasury and analysed the country’s primary care system.
One of the key recommendations of her report, published in September, was that the number of DHBs be reduced from 20 to between four and six.
Downs said policy decisions were being made based on the short-term fiscal impacts of 20 different entities as opposed to what was best for patients.
“Almost everyone I spoke with (including chief executives of DHBs) agreed that these issues are exacerbated because there are too many DHBs,” the report said.
“Amalgamation could streamline data sharing, support collaboration between the sectors, reduce administration, increase accountability and simplify shared risk.”
Consolidation would create a larger patient base, free up clinical staff to spend more time with patients rather than focusing on administration and allow more thought to go into where funds would be best spent, she told the Weekend Herald.
“Certainly having 20 DHBs that are all fighting for their budget and fighting to keep their hospital doors open is not advancing that goal of getting more care into the community, where it’s less expensive and it’s more accessible and in many cases, especially in primary care, is higher quality.”
Clark said there was room for more shared services in the health sector.
“Regarding the number of district health boards, I have already publicly signalled that I believe there is room for more shared services in the health sector. To some degree, that’s already happening voluntarily.”
Clark said he intended to seek advice on whether alternative structures would represent better value for taxpayers and deliver on affordable, quality care for all New Zealanders.
He said he expected to see good value for taxpayers’ dollars in the health sector.
“Since becoming the Minister of Health, I have made it clear to district health boards that I expect them to operate as efficiently as possible.”
In mid-December State Services Commissioner Peter Hughes issued a warning to State sector boards, who decide the pay increases of chief executives.
“While the board has the right to make these decisions, I do not believe increases of the magnitude given are warranted or justifiable in a public agency, especially where the increase follows previous increases over and above my advice.”
Hipkins announced on the same day the reins needed to be tightened.
“State sector chief executives have important jobs that carry a lot of responsibility and they deserve to be fairly paid but they are still public servants with an accountability to taxpayers.”
He requested advice on how the Crown Entities Act could be changed, signalling the possibility of a law change.
Source: NZ Herald