health & science

Cracks widen at ‘imploding’ DHB

The Health Minister expresses confidence in a troubled board that continues to be rocked by resignations. David Williams reports

Chris Hipkins is putting a brave face on ructions at the Canterbury District Health Board, despite another senior resignation yesterday and divisions within the board itself becoming painfully obvious.

The Health Minister refuses to say if he has sought or received assurances about ongoing management from the DHB – the second-largest in the country, which has a shared services model with the West Coast DHB.

“Ensuring effective senior management at Canterbury DHB is the responsibility of the chair and board and I have confidence in their ability to do this,” Hipkins says in an emailed statement.

The statement arrived just hours after the resignation of Canterbury chief financial officer Justine White, who was also executive director of finance and corporate services, and is the fourth senior officer to quit in recent weeks.

Chief executive David Meates resigned after an emergency board meeting on Monday, which was a management-versus-board showdown over spending cuts. His notice period is short – just one month.

Planning, funding and decision support executive director Carolyn Gullery and chief people officer Michael Frampton have also quit.

DHB chairman Sir John Hansen refuses to be interviewed, but released a statement yesterday. It says the board is working urgently to address executive management team vacancies. “A recruitment programme has been initiated and interim solutions will be put in place,” the statement says.

Canterbury’s deficit is a concern, he says, and final decisions have not been made on how to reduce it. Recommendations from the management team – many of whom have resigned, uncoincidentally – will be considered at the next board meeting, scheduled for August 20.

“The board is determined not to reduce services.”

But the board isn’t unified

Long-serving member Andrew Dickerson, who was first elected in 2007, says via email that Meates’ departure is a sad day for the DHB and the local community. He’s the best of 11 health sector CEOs he has worked with.

Tellingly, Dickerson, a former chief executive of Age Concern Canterbury, says his personal relationship with Meates, the management team and clinical leaders “remains excellent”.

“There is no conflict between myself and the management and clinical teams. We are all on the same page.

“I do not wish to comment on my relationship with the board chair and other board members.”

Another board member, Jo Kane, a former Environment Canterbury councillor, won’t comment and is expected to issue a statement today.

It’s not just board members calling the shots, of course. The former Auckland Transport chair Lester Levy, who also chaired the Auckland region health boards, sits alongside them as Crown monitor. Newsroom has been told Levy has been pressuring the DHB’s senior managers to make cuts they think are too deep.

Association of Salaried Medical Specialists (ASMS) executive director Sarah Dalton – who calls the recent ructions an “implosion” – believes the run of resignations is based on ethics, and is a show of solidarity with staff.

“I guess everyone has their limit, of saying, ‘If I stay does that appear to be agreement with what’s going on?’, and I don’t think there is any agreement with what’s been happening.”

Dalton is extremely concerned. “I’m particularly concerned that there’s going to be some directed interim leadership from outside of the DHB, in a similar way to the decision to put in a Crown monitor. This has not served the DHB well and I wouldn’t expect a similar approach to the leadership gap to serve their interests either.”

Dalton says there seems to be a breakdown of trust and confidence between the governance and management within the DHB, and also between the DHB and the ministry, she says. “And it seems to be largely over whose numbers are right and interpretation of the budgets and the pressures on the deficit.”

Newsroom put that to the ministry, and was referred to its statement in Monday’s story.

Dalton says it’s the appointed DHB board members, and the Crown monitor, who are the most hostile to the DHB’s senior management. Hipkins’ office had no response to that allegation.

West Coast DHB chair Rick Barker confirms he was told on Monday that Meates intended to resign.

“I’m quite confident that we will continue to manage the day-to-day operation of the West Coast DHB well. What we’ll be looking for is a reasonably rapid replacement of those staff who provide the more strategic, long-term overview of the issues that would concern us.”

On the raft of resignations, he says: “People do leave and I’m not going to get overly wound up about this.”

“Those wards that they’re in are not where you would put people if you had any other choice.” – Sarah Dalton

In some ways Canterbury is a special case, but in others its financial woes reflect those of all DHBs.

Many of the problems at the Canterbury DHB, the South Island’s biggest employer with more than 10,000 staff, can be traced to rebuilding work because of the 2010 and 2011 earthquakes, and the need to pay the Government a “capital charge” on building work, as well as depreciation, from existing budgets. (Insurance proceeds also paid for some work.)

That’s big money when your capital works programme over a decade nears $1 billion, and can eat into operational spending – the delivery of accessible, timely healthcare for the people who need it.

(The new 10-level Hagley building, which is more than two years late and, at a cost of $525 million, is about $80 million over the initial budget, will take its first patients in November.)

While Treasury reviews capital funding in the health sector, the Government announced last year that it would spend tens of millions of dollars to help cover the capital charge.

But Dalton, of ASMS, says the charge is a nonsense and needs to go.

She calls Canterbury’s deficit “manufactured”, and says no one seems to accept its operations are a “sleek machine” with an underlying surplus.

What makes things worse is when funding is stretched in different directions – in terms of paying for health services as well as much-needed building upgrades.

“The buildings are appalling,” Dalton says of Christchurch hospital. “Patients who have surgeries and then recuperate at Burwood have fewer complications or infection rates than patients who are in the old hospital buildings at Christchurch, like Parkside, and what have you. Those wards that they’re in are not where you would put people if you had any other choice.”

On any given week day, the DHB has to pay for 10 private operating theatres to perform public surgery, because of limited capacity. (The new Hagley building has 12 operating theatres, a new emergency department and intensive care unit.)

Blunt about budget worries

In June, the Government released a national stocktake of hospital buildings, which said $14 billion needed to be spent over the next decade. That’s going to be hard for DHBs to pay for when they all have deficits and the capital charge on new builds is 6 percent.

(Auditor-General John Ryan wrote to DHB heads last year about their worsening financial positions and the state of hospital buildings. He noted: “It is not clear what the capital charge is actually achieving in the health sector.”)

Dalton’s just been doing the rounds of DHB chief executives and says they’ve all been pretty blunt – they’re under pressure to reduce their deficits, and move as quickly as they can towards balancing their budgets. “None of them, I don’t think, feel that is achievable.”

One DHB boss told her if they were given an extra $100 million they’d have to choose between a new regional hospital and its mental health services. Dalton: “They shouldn’t be having to make that decision, right? That’s a Solomon’s choice.”

What’s happened at Canterbury crystalises the need to pick up parts of the Simpson review of the health system, she says, and have a “meaty conversation” about Kiwis’ expectations. What can they realistically expect of our health system, and what are they prepared to pay for through the public purse?

“Spending on health should be seen as an investment not as a drain.”.

Meanwhile, cash-strapped DHBs are making bids to the capital investment committee and the ministry for long-overdue rebuilds.

“I used to describe it as a lolly scramble,” Dalton says, “but now I feel like it’s more akin to the Hunger Games.”

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