David Clark sacks troubled health board

Health Minister David Clark has appointed a commissioner to the troubled Waikato District Health Board today saying it was "necessary" to address its numerous issues.

Clark announced former Director-General of Health Dr Karen Poutasi will take up the commissioner's role from tomorrow.

"After careful consideration of the submissions from board members, I have decided that the appointment of a commissioner is necessary to lead the significant changes required at the DHB," Clark said.

"While I thank board members for their service, installing a commissioner is a necessary step towards addressing the DHB's deteriorating financial position, lack of strong governance, and ongoing performance issues with clinical services."

Clark said instability at a governance level had meant despite a having a Crown Monitor, it was unable to address ongoing performance issues with clinical services. It had also been unable to recruit a permanent chief executive since Nigel Murray resigned in October 2017.

"I have consistently made it clear to DHB chairs that I expect them to be careful stewards of our health system and deliver quality services to their communities. Where those expectations are not met I have a range of options available, including appointing a commissioner.

"Poutasi spent 11 years as Director-General of Health and would be tasked with improving the DHB's financial and clinical performance. I also expect robust governance arrangements to continue, particularly community and iwi engagement. She would also be making deputy commissioner appointments."

Poutasi will share her time between the Waikato DHB and the New Zealand Qualifications Authority where she is chief executive.

Clark also said he would change legislation so that he could cancel the Waikato DHB elections this year while the commissioner was in place. They would resume in October 2022.

Clark said last month he was considering replacing the board with a commissioner over his "serious dissatisfaction" with its performance. He gave the board until May 3 to respond.

In a letter to Clark, all board members offered to resign, with the exception of Dave Macpherson and Mary Anne Gill.

Poutasi will share her time between the DHB and the New Zealand Qualifications Authority where she is chief executive.

Commenting after today's announcement, Macpherson disagreed with Clark's decision.

"Despite some bad earlier decisions, it wasn't 'dysfunctional', but given the minister never spoke to any members, other than those he'd appointed himself, there was no chance he'd recognise the large amount of work the board has been doing to turn around the failing ship it had inherited," Macpherson.

"There has not been due process, and nor has there been any democratic process."

The DHB has grappled with a number of issues including the resignation of former chief executive Nigel Murray after a spending scandal; the appointment of a Crown Monitor in August 2018; pulling the plug on a failed multimillion-dollar online doctor service; and having one of the largest DHB deficits in the country.

The Waikato DHB deficit was $37.2 million in 2017/18, and is forecast to balloon to $56.1m deficit for 2018/19 - with increasing deficits forecast for future years.

Murray left after a DHB investigation and a State Services Commission inquiry found he spent $218,000 on travel and accommodation, half of which was either unauthorised or unjustified.

Then-board chairman Bob Simcock resigned the following month after the Herald revealed the Serious Fraud Office was investigating.

At the same time the DHB spent $25m on a virtual health solution that was a flop and eventually scrapped. That was now the subject of an investigation by the Auditor-General's office.

In August last year Clark appointed Crown Monitor Ken Whelan to "provide the board with the extra support it needs in its work to improve governance and leadership at the DHB".

Whelan is a principal at consultancy Francis Health and was part of a team engaged by the DHB at the start of 2018 which undertook $1.8 million of work.

Whelan is paid $35,000 per year as a Crown Monitor on both Waikato and Counties Manukau district health boards.

In February, Waikato DHB halted a four-month $73,000 recruitment process for a permanent chief executive officer citing "challenges" that it would not elaborate on.

The move came after it was criticised for complaining to the Solicitor-General over the inquest into the death of Nicky Stevens in mental health care at the DHB.

Stevens is the son of Macpherson, who together with partner Jane Stevens wants an apology and compensation from the DHB over their son's suicide after he left the Henry Rongomau Bennett Centre unescorted in 2015.

Interim chief executive Derek Wright resigned after withdrawing from the recruitment process. His last day was on April 26.

Sacking an entire board is relatively rare and signals the governance level of a DHB is in dire straits.

In 2015 then-health minister Jonathan Coleman sacked the 11-member board of Southern District Health Board over serious financial concerns including a $42 million deficit.

Sacked health boards

• June 2015: Southern District Health Board members sacked by then Health Minister Dr Jonathan Coleman over longstanding financial woes.

• February 2008: Hawke's Bay District Health Board members sacked by then Health Minister David Cunliffe for not managing a serious conflict of interest.

• July 2000: Tairawhiti District Health Board members sacked by then Health Minister Annette King after 465 patients received the wrong results for prostate cancer.