Hospitals around the country are not allowed to make a single hiring decision without the approval of Te Whatu Ora's head office, including for cleaners and administration staff.
It means if somewhere like Southland Hospital wants to replace a nurse, that decision has to go a long way up the chain - and the country - for approval.
It is the same for every hospital and clinic in the huge organisation.
Te Whatu Ora chief of people Andrew Slater said the process was "short-term", as part of its efforts to stay within budget to the end of the financial year.
"Health New Zealand/Te Whatu Ora has a workforce of over 90,000 and it is important that we direct our resources to the areas where there is the greatest demand," he said.
But the former chair Rob Campbell said that was no way to run such a big organisation.
The agency's bosses should set rules and guidelines then trust local management and people on the ground to make the specific decisions, he said.
"There's no way you can be sitting in Wellington or Tāmaki and make rational decisions for someone in Invercargill or Kaikohe, it just doesn't make any sense," he said.
When Te Whatu Ora replaced 20 district health boards, some feared there would be over-centralisation, with power and decision making taken away from communties.
Campbell said it was sad to see the latest policy.
"It does feed in to that narrative that this was always about centralisation which it certainly never had to be," he said.
"What happens in these cost cutting exercises is sometimes they go to extreme levels and this would be an example of that."
Slater said Te Whatu Ora was still hiring staff.
In the weekend ending 15 April, the Hospital and Specialist Services division had given approval for 360 jobs, he said.
