health & science

Top health boss quits abruptly amid DHB tension

The unexpected resignation of Michelle Arrowsmith comes less than two years into what has been described as a controversial tenure. Oliver Lewis reports. 

A top Ministry of Health executive responsible for overseeing massive hospital builds and district health board performance has abruptly resigned.

As deputy director-general DHB performance, support and infrastructure, Michelle Arrowsmith controls one of the largest and most important directorates in the ministry.

Her resignation was announced to staff last Friday, less than two years after she started in the role in December 2018.

The departure of such a key executive this soon into their tenure is unusual, according to health sector sources, who stressed the impact losing Arrowsmith would have on the ministry, coming as it does at a crucial time for DHBs, which have been working through their annual plans.

However, her time in the role has not been without controversy.

“I’m aware that the health sector and in particular DHBs found her style difficult and abrasive,” health commentator and former senior doctors’ union executive director Ian Powell said.

“There was widespread angst and tension from DHBs generally about her style.”

Arrowsmith had a top-down approach, Powell said, that he claimed was characteristic of management in the NHS in the UK, where she previously worked for 20 years.

Another health sector source, who spoke on the condition of anonymity, said of Arrowsmith: “She was very direct. And I think probably a few CEOs and chairs might have taken umbrage to that.”

Arrowsmith declined to comment when approached by Newsroom, instead referring questions to the ministry.

The ministry declined to comment.

The directorate Arrowsmith heads is responsible for ensuring a strong working relationship between the ministry and DHBs, ensuring leadership and support for DHB planning and funding, ensuring accountability for operational performance and providing oversight of DHB infrastructure and capital projects.

During her time in the role, DHBs have posted record deficits.

In 2018-19, the 20 DHBs posted a sector-wide deficit of more than $1 billion (a large amount of which was for one-off items, including missed Holidays Act payments); as of March, they were heading to a forecast $643m deficit for the 2019-20 year (the ministry failed to provide more up-to-date figures).

And that has led to renewed pressure from the Government.

Not long after taking up the role, Health Minister Chris Hipkins reportedly told DHB board chairs that, with the increase in funding provided to DHBs, the Government expected health board deficits to be back to zero within two years, according to minutes from a public-excluded section of a Canterbury DHB board meeting obtained by Newsroom.

Arrowsmith has been a key figure trying to force DHBs to make further savings, in part by providing feedback on their draft annual plans.

The same CDHB board meeting minutes, from July, show she wanted the DHB to claw back $90m this financial year - a request considered impossible by management.

Instead, the CDHB board voted last month to submit an annual plan with savings of $56.9m, including $16.5m in nursing care. As the vote was held, protestors outside the Christchurch corporate office gathered to express their outrage at the proposed cuts and concern at the unprecedented exodus of senior managers.

In recent weeks, the CDHB has lost seven of its 11-strong senior management team, including chief executive David Meates. One of the departing executives, chief medical officer Dr Sue Nightingale, has attributed her decision to leave to an allegedly adversarial and divisive approach from the board and Crown monitor Dr Lester Levy.

The CDHB posted a roughly $180m deficit in 2019-20, the largest of any health board, however much of this is made up of capital charge and depreciation costs; CDHB management have also pointed to costs associated with delays getting into the new Christchurch Hospital Hagley building.

Asked about the impact of Arrowsmith’s resignation, Levy said he and the CDHB board needed a continued link into the ministry to respond to questions and issues.

“That link is even more critical for CDHB management, especially relating to infrastructure,” he said.

While there were people in the ministry and the CDHB who could provide continuity, Levy said - for all DHBs - Arrowsmith’s role “will be an important role for the [ministry] to replace”.

Hipkins would not comment on Arrowsmith’s departure, and did not directly address the two-year DHB deficit timeframe, saying instead “we don’t accept that deficits are inevitable”.

The Government had provided substantial increases in operational funding to all DHBs, including a $980m a year increase last Budget, Hipkins said.

“We don’t expect every DHB to break even straight away after years of underfunding, but it’s important they demonstrate they are making progress toward this goal and they do so without cutting services.”

As part of her role, Arrowsmith also provided oversight for DHB infrastructure projects, including the $1.4 billion Dunedin Hospital redevelopment and the $525m Christchurch Hospital Hagley building.

A source close to the Dunedin project told Newsroom she wielded considerable influence when it came to decision-making.

The email informing staff of her resignation said Arrowsmith would be taking time out to pursue other career opportunities back in the UK.

Powell said her departure left a gap at the ministry, adding it would be difficult to find a suitable replacement and quickly bring them up to speed on the issues.

“It takes time to make a replacement appointment, so it is a gap.

“But I think it also highlights how doubly sure you have to be about the person you’re appointing in terms of their relationship skills for a role as critical as this.”

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