Pattrick Smellie: What's the cure for district health boards?

The idea that local communities are best served by locals might not be the case with district health boards.

The idea that local communities are best served by locals might not be the case with district health boards.

OPINION: Recent political history shows New Zealanders are sceptical about amalgamating public services.

Local government amalgamation was a central government fad for a while, but not only did communities object, the evidence mounted that local communities are best served by localised governance. 

Instead of formal mergers, alliances on big-ticket infrastructure items are growing.

But while amalgamation may not work for local government, does that finding necessarily apply to every supplier of publicly-funded services?

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The Government's social investment approach implicitly suggests that it does.

The policy encourages allowing locally delivered social services to be administered by more agile and responsive non-government providers than a monolithic agency like the Ministry for Social Development.

This has caused a bit of a problem for the left of politics.

For example, at a recent Wellington seminar of the Fabian Society, a left-leaning ginger group, Council of Trade Unions economist Bill Rosenberg had to work pretty hard to articulate just what was wrong with it.

Boiled right down, his objections boiled down to two key concerns. Firstly, the social investment approach's reliance on "big data" – assuming privacy concerns can be addressed – may be fine in theory, but what if it uses the wrong data and drives mistaken outcomes?

How long might that take to discover that? And what if the "right" data isn't even being collected? That's very valid concern. Existing "big" data is not axiomatically "useful" data.

Pattrick Smellie says questioning why a country of this size has 20 district health boards is a topic "only a brave or ...

Pattrick Smellie says questioning why a country of this size has 20 district health boards is a topic "only a brave or foolish government would tackle head-on".

However, Rosenberg had to concede, in principle, that the social investment approach made broad sense if it was well applied.

His second major objection lay with the fact that the policy implied "contracting out" services that have traditionally been performed by the Government – an objection rooted in ideological conviction that central government is best at delivering services and that democratic accountability is unavailable without state provision.

Not only is that view highly contestable on the evidence, but there are gaping examples of it being untrue.

Look at the impact on Serco of failing to run Mt Eden remand prison well – massive loss of reputation, not to mention hundreds of millions of dollars in contract revenue. 

State-run prisons were then found to exhibit many, if not most, of the same problems as got Serco in hot water.

The consequences, assuming there were some, are far less visible and the cries for accountability far less apparent.

However, belief in democratic accountability is hardly a bad thing.

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That is why a recent report from the New Zealand Institute of Economic Research (NZIER) questioning why a country of this size has 20 district health boards, raises political challenges that only a brave or foolish government would tackle head-on.

New Zealand DHBs service on average 240,000 people each, the paper found.

Yet in New South Wales and British Columbia, which have similar populations in size and health status, the equivalent boards serve twice and three times that many people respectively.

In all three locations, similar population health outcomes are being achieved at similar levels of spending.

However, as a Treasury review of DHBs published in February pointed out, there are growing financial stresses in several DHBs, at a time when pressure on the health budget for new and more treatment is rising strongly.

Meanwhile, voter turnout in DHB elections is barely 40 per cent to choose most of the 220 "governors" who oversee DHBs, yet whose capacity to change priorities delivered from Wellington is limited.

And NZIER notes that the way DHBs report their finances makes it impossible to assess their respective running costs.

At the very least, this needs to change.

While DHBs are likely to receive some lumps of new funding in the May 25 Budget and politicians are highly unlikely to pick fights with local communities by pursuing DHB amalgamations, the growing pressure on the public health system demands that their cost of operations be benchmarked.

Then, at least, there would be some big data to work from.

- BusinessDesk


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