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Nurse pay hike could hit private health providers

Private healthcare providers are watching collective negotiations between the nurses' union and district health boards to see when and if a far-reaching pay hike will spill into the rest of the sector.

The NZ Nurses' Organisation and district health boards are currently at odds over a multi-employer collective agreement (MECA), with the latest offer of three 3 percent annual increases, a lump sum plus the introduction of two new pay grades worth about $520 million over two years. The union's 27,000 eligible members this week voted to strike over pay in July while keeping the door ajar to avert industrial action if a deal can be cut, and have grumbled at the DHB's public release of the offer before putting it to members as "unhelpful". The DHBs have retained external PR firm Senate SHJ.

The nurses' collective agreement is one of several the new government will have to deal with, having set aside $2.13 billion over five years as a contingency for things that crop up, including wage negotiations.

Private sector health providers aren't directly a part of the DHB collective talks but will be affected. Green Cross, an integrated pharmacy and primary healthcare operator, today noted the shortfall in funding from the government's $2 billion pay equity deal for aged and residential care workers meant the firm had to foot the $1.9 million bill for leave.

Increases won't be limited to nurses, with everyone in the health sector "looking for an uplift, so it's a bit of a cascade actually".

Grant Bai, Green Cross Health

Green Cross's suite of businesses include Total Care Health community nursing services, and while head of the pharmacy and medical divisions Grant Bai doesn't anticipate a repeat of the leave liability hole left in the pay equity deal, he does expect any deal will have a flow-on effect.

"I'm a great believer in fair pay for good work and we do have a number of nurses, but it goes to the whole structure - they changed the homecare worker package to a certain extent with some funding but a whole bunch of unintended consequences occurred with that," Bai said. Increases won't be limited to nurses, with everyone in the health sector "looking for an uplift, so it's a bit of a cascade actually."

Private hospitals are also keeping tabs on the talks, with lobby the New Zealand Private Surgical Hospitals Association saying "member hospitals are closely monitoring the DHB MECA negotiations and private surgical hospitals will discuss salaries for nursing staff on an individual hospital basis”.

Green Cross is keen to improve the way it interacts with patients and has been investing in new technology to augment its services. In the year ended March 31, the Auckland-based company spent $7.2 million developing software, up from $4.1 million a year earlier and taking the total cost spent on software to $20.2 million.

Bai said the future of healthcare is a far more proactive management system, which will be aided by the smart use of technology and using primary care operators such as Green Cross to be the first port of call for people, helping ease the pressure on "EDs (emergency departments) and hospitals, which are struggling under financial strain."

The country's aging demographics are expected to become a bigger strain on the government's over a long-term horizon, with a universal pension and increased healthcare spending expected to account for 17.6 percent of Crown expenditure by 2060 from 11 percent in 2015 if nothing is changed.

New Zealand's fully-funded healthcare system is often blamed for the country's low level of health insurance uptake, although figures this month show insurers are covering 1.39 million lives as at March 31, registering 12 straight quarterly gains.

Bai said his personal opinion is that those macro-factors, which support the business model for an integrated healthcare firm, meant a risk-sharing model to fund healthcare could be a good option for the future and is a capability Green Cross is building into its own modelling.

"It's a natural progression of a healthcare system that needs to develop with the times," he said.

Health Minister David Clark this week ordered a review of the country's health and disability sector focused on a fairer future, and headed by Heather Simpson, the chief of staff to former Prime Minister Helen Clark. Primary and community care and early intervention are also chief among his goals.

The draft terms of reference include considering how the system is funded and whether it could be more flexible, provide greater transparency of returns on investment, and reduce inequity by better targetting. A national infrastructure stocktake is also cited as worth considering. Private health insurance is out of scope, although how it interacts with demographic drivers is in scope.

"The review should consider the overall structure, governance of the health system and distribution of resources to ensure it is fair, better balanced towards primary prevention, equitable and effective, as well as simple for people to access and navigate," the terms say.

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