Commissioners or board—which is best for the role of Health New Zealand – Te Whatu Ora?

Over the last 40 years the most noticeable feature of the structure of the Aotearoa New Zealand health system has been repeatedly restructured looking for effectivities. We have had Area Health Boards (1983–1989), the Regional Health Authorities and Crown Health Enterprises (1993–1997) and the Health Funding Authority (HFA) and Hospital and Health Services (1998–2001). Subsequent to this, we had the District Health Boards (DHBs; 2001–30 June 2022).

Now we have Health New Zealand – Te Whatu Ora, which replaced the country’s 20 DHBs as the primary publicly funded healthcare system of New Zealand. The stated objectives of Health New Zealand – Te Whatu Ora are to plan and deliver health services at national, regional and local levels across New Zealand.¹ This is outlined in the document Te Whatu Ora Statement of Performance Expectations 2023–2024. While the details are worth reading it is beyond what can be reproduced in this editorial, but in summary it states:

“Our strategic direction is articulated in the Pae Ora (Healthy Futures) Act 2022, the Interim Government Policy Statement on Health 2022-2024 (the iGPS), and Te Pae Tata | the Interim New Zealand Health Plan 2022. Importantly, all these strategic foundation documents include a strong focus on embedding Te Tiriti o Waitangi.

The Pae Ora (Healthy Futures) Act 2022 sets out the broad objectives of the public health sector, to

a.       protect, promote, and improve the health of all New Zealanders; and

b.       achieve equity in health outcomes among New Zealand’s population groups, including by striving to eliminate health disparities for Māori; and

c.       build towards pae ora (healthy futures) for all New Zealanders.

The iGPS is a public statement of what the Government expects the health sector to deliver and achieve. It identifies six priorities for Aotearoa New Zealand’s public health sector:

1.       Achieve equity in health outcomes

2.       Embed Te Tiriti o Waitangi across the health system

3.       Keep people well in their communities

4.       Develop the health workforce of the future

5.       Lay the foundations for the ongoing success of the health system

6.       Ensure a financially sustainable health system.

 Te Pae Tata, the interim New Zealand Health Plan, was jointly developed by Te Whatu Ora and Te Aka Whai Ora. Te Pae Tata outlines the actions we are taking to implement our part of the health system reform as reflected in the Government’s six health sector priorities (iGPS), through to 2024. Te Pae Tata is an interim plan up to July 2024, which is when a fully costed three-year New Zealand Health Plan will take effect.

Te Pae Tata includes six priority actions that respond to the iGPS and deliver on the Government commitment to the major shifts required to improve the New Zealand’s public health system:

• Priority action 1 – Place whānau at the heart of the system to improve equity and outcomes
• Priority action 2 – Embed Te Tiriti o Waitangi across the health sector
• Priority action 3 – Develop an inclusive health workforce
• Priority action 4 – Keep people well in their communities
• Priority action 5 – Develop greater use of digital services to provide more care in homes and communities, and
• Priority action 6 – Establish Te Whatu Ora and Te Aka Whai Ora to support a financially sustainable system.

Te Whatu Ora has prioritised as part of Te Pae Tata the development of a full and representative set of consumer and whānau voice measures, as well as further work that will enable effective measurement of clinical quality and safety.”²

The previous various health structure organisations and Health New Zealand – Te Whatu Ora have had governance boards, the purpose of which had been to provide good governance of the entity by engaging with the relevant minister on strategic direction of the organisation, to monitor performance and risk of the relevant heath sector and to work cooperatively with the senior management team to do so. The Health New Zealand – Te Whatu Ora Board has had a difficult time achieving these aims and trying to overcome the challenges it has faced.

The history of the Health New Zealand – Te Whatu Ora Board is complicated. It started in mid-September 2021, when the then-Labour Government announced the interim board members of Health New Zealand – Te Whatu Ora. The agency was to be chaired by the economist Rob Campbell. Other board members included Sharon Shea, Amy Adams, Cassandra Crowley, Mark Gosche, Karen Poutasi, Vanessa Stoddart and Dr Curtis Walker. In late February 2023, Health New Zealand – Te Whatu Ora’s Chair Rob Campbell criticised the National Party’s proposal to scrap the Labour Government’s Three Waters reform programme. The then-Prime Minister Chris Hipkins stated that Campbell’s Three Waters remarks were “inappropriate”. On 28 February, Health Minister Dr Ayesha Verrall used her discretionary powers under section 36 of the Crown Entities Act 2004 to relieve Campbell of his position as head of Health New Zealand – Te Whatu Ora. Subsequently, Dame Karen Poutasi was appointed as chair. In December 2023, after the change in government, Health Minister Dr Shane Reti appointed Ken Whelan as a Crown observer to Health New Zealand – Te Whatu Ora, citing ongoing challenges that the agency was facing following the previous Labour Government’s 2022 health reforms. Roger Jarrold was brought onto the Health New Zealand – Te Whatu Ora Board in March via a notice in the New Zealand Gazette on 25 March for a 3-year term starting 29 March. Poutasi subsequently resigned as chair and board member in April 2024, but remained in the role until a successor could be appointed in May 2024. This successor was Dr Lester Levy. In July 2024, three Health New Zealand – Te Whatu Ora Board members—Amy Adams, Vanessa Stoddart and Dr Curtis Walker—had decided not to renew their terms, while two others—Naomi Ferguson and Dr Jeff Lowe—resigned prior to the end of their terms. So, in 2 years the board has had three chairs and now is down to two board members: Lester Levy and Roger Jarrold.³

On 22 July, the Minister of Health Dr Shane Reti released a ministerial statement that said, “In response to serious concerns around oversight, overspend and a significant deterioration in financial outlook, the Board of Health New Zealand will be replaced with a Commissioner … ‘The previous government’s botched health reforms have created significant financial challenges at Health NZ that, without urgent action, will lead to an estimated deficit of $1.4 billion by the end of 2024/25 – despite this Government’s record investment in health of $16.68 billion in this year’s Budget … Health NZ first reported a deteriorating financial position to me in March 2024, despite earlier repeated assurances by the organisation that it was on target to make savings in 2023/24 … In the months since, the situation has worsened. Health NZ is currently overspending at the rate of approximately $130 million a month … That’s why today I am announcing the appointment of Professor Lester Levy, the recently appointed Chair of Health NZ, as Commissioner for a 12-month term. This is the strongest ministerial intervention available under the Pae Ora Act and not a decision I have taken lightly, however the magnitude of the issue requires such action … The issues at Health NZ stem from the previous government’s mismanaged health reforms, which resulted in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems which were unable to identify risks until it was too late … Professor Levy is tasked with implementing a turnaround plan with a savings objective of approximately $1.4 billion to ensure financial balance, and actions to strengthen governance and management … Operational responsibility for the turnaround plan will sit with the Commissioner, however I have made it clear that it should focus on cost efficiencies in areas such as any back-office bureaucracy which has blown out, particularly in middle management, as a result of the previous government’s damaging reforms … As one example between March 2018 and March 2024, back-office staff numbers which formerly sat at district health board level grew by around 2,500 … As a Government, we’ve made it clear that our first and foremost priority in health is improving the delivery and quality of frontline services. We have already invested very significantly in health, with $16.68 billion announced in the Budget to support frontline healthcare services … As Minister, I am not confident I would have adequate oversight of that spend if the existing Board structure at Health NZ were to remain in place … Today’s move to appoint a Commissioner is one of several steps our Government has been forced to take over the past eight months due to concerns about the governance of Health NZ and resulting performance issues, including health workforce and hospital wait times … Previously, I have appointed a Crown Observer, a new Chair and a Board member with financial expertise. Through those measures we have been able to identify long-standing issues with the existing governance and operating model … Lester Levy has assured me there will be no adverse impacts on the delivery of care in implementing a turnaround plan – rather, he and Health NZ will be seeking to bring the frontline closer to decision-making … Following today’s announcement, the Ministry of Health will continue its monitoring role and play a key part in reporting on the Commissioner’s performance in lifting Health NZ’s financial position, both to me and to New Zealanders … Today’s announcement is in no way a reflection on the work of frontline staff in our hospitals and health care facilities. As always, I thank them for their professionalism and want to reassure them that we are taking these steps to secure a better future for health in New Zealand,’ says Dr Reti.”⁴

With Dr Lester Levy installed as commissioner, three assistant commissioners have been appointed: Roger Jarrold, Ken Whelan and Kylie Clegg. The deputy commissioner roles include strategic oversight of Health New Zealand – Te Whatu Ora’s financial turnaround, development and implementation of the turnaround plan and ensuring Health New Zealand – Te Whatu Ora has robust financial management and accountability across the organisation.⁵

What happened to cause the failure of the governance infrastructure is uncertain. Numerous theories have been proposed on news and social media, which include ministerial interference, the impact of the change in government, the lack of robust financial experience of board members and the impact of COVID-19 on the health system (affecting demand and staffing), to name a few. The present Health Minster Dr Reti stated that a commissioner was required because of the “mismanaged health reforms, which resulted in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems that were unable to identify risks until it was too late.”⁴ In the end, someone will analyse this failure of the board as it is substantial, and the outcome of this analysis would be relevant to the future of such bodies.

We now have Dr Lester Levy as the Health New Zealand – Te Whatu Ora commissioner, and no board. His job and that of his assistants will be challenging, with the Government’s repeated statements that the front line of the health sector has to be improved, waiting lists have to be reduced, new health targets have to be met and Health New Zealand – Te Whatu Ora has to run to budget. The financial focus of the new commissioner and assistants may well achieve the financial requirements (priority action 6 of Te Whatu Ora Statement of Performance Expectations 2023–2024) given their track record and the promised funding increase of NZ$16.68 billion across three Budgets; however, it will be interesting to see if they make the health delivery requirements and the other five priority actions with the present structure given the lack of clinical input into its governance. Perhaps a clinical advisory group to advise the commissioner may help?