One page out of 454 sheds light on Health New Zealand money woes

Analysis - A single page from the 454 pages released by Health NZ on Tuesday about its financial woes, provides cut-through on what has gone wrong.

The page is in a briefing by HNZ to Minister Shane Reti on 17 May this year.

This is just after the "significant deterioration" from an expected big surplus, to massive deficit, had showed up in reports and government statements.

On page five of the short aide-memoire at document dump page 234, the "discussion" turned to rising patient demand, and further cost controls being put in place.

A heading said, 'Whilst the financial result is concerning, service volumes and safety are improving'.

This was the dilemma.

Strikingly, 'point 22' said a "positive" was that hospitals were getting more surgery and treatment done partly due to higher than expected patient demand.

Demand for medical and surgical services was running over five percent ahead for July and August 2024, compared to 2023.

"This is greater than twice the rate of estimated population growth."

Then, in 'point 24', more positive news for Reti:

"We also now have safer levels of staffing."

Nurse numbers had risen by almost 2900 since June 2023.

"Nurses also tell us that engagement and having the resources they need has improved. Our latest pulse survey results show a move from 29 percent to 41 percent for 'I now have the resources'."

The benefits were being widely felt.

"As such, we have addressed a long-running problem of a significant nursing shortage," it said.

"We now have levels in key parts of the workforce that improves staff wellbeing and provides greater scope for appropriate breaks and taking annual leave."

(All leave taken reduces a liability on HNZ's books.)

Carry on, and the section immediately after this was headed up, 'Further cost controls are being put in place'.

It listed nine measures, the first being strengthening existing controls, the second being a new and "immediate pause on organisation-wide recruitment, including CCDM uplifts".

What is a CCDM uplift? That is how hospitals safely match capacity to demand.

Effectively, the May 2024 instruction was to apply the brakes to raising capacity at a time of rising demand, heading into winter (the brakes could be over-ridden but only at a very senior level).

The tug-of-war of need versus budget was evident on Morning Report on Wednesday. HNZ Commissioner Lester Levy was repeatedly asked if the extra 3000-plus nurses were "needed", but would not say, except to state that the number exceeded what had been budgeted.

At the risk of taking page 234 out of context, but considering RNZ has been through all 454 pages of the doc dump, the page shows that Health NZ, by spending what it had up till May 2024, had achieved:

• More patients getting more care
• "More clinical staff than ever before"
• More clinical staff delivering care more safely
• And, partly by hiring 3000 or so more nurses, a budget blowout that has led to an overhaul of the 2022 health reforms

Had the extra cost controls been in place earlier, would HNZ have avoided the blowout?

But in the process would it have failed to treat more patients more safely?

Another couple of pages of the doc dump shed some more light on on that.

A March 2024 report showed hospital leaders still faced "immediate workforce resourcing risks" during a financial year "with very high vacancy rates", while at the same time they had been trying for months to find cost savings, and were going through things line-by-line.

Just prior to that, another report in January advised the minister there was an "extreme" risk they would not find enough savings. This was highlighted in a bright red box.

Reti told RNZ on Wednesday that the documents showed "the incoming government and the Health NZ board were unaware of the extent of the overspend until it was too late".