Te Whatu Ora has taken millions of dollars away from crucial digital upgrades to prop up its fragile payroll systems.
The move means funds assigned to future-proof the health system have been diverted to stave off an emergency rooted in the past.
The central health agency insisted to RNZ on Friday that "key building blocks" for what was promised to be a digital-led transformation of healthcare were now in place, despite its flagship patient-information-sharing programme being cut short.
Newly released documents show in March, the agency asked the Health Minister Dr Shane Reti to confirm it could get more of the future-proofing money, stating: "Data and digital services are uniquely positioned to reduce pressure on our health system."
Instead, within weeks, Budget 2024 had cut at least $340 million from the digital upgrade's half-billion-dollar pot.
This cut off the three-tranche project before even the first tranche was done.
The health agency revealed on Friday that ministers had diverted $25m of the project's contingency in April to stabilise hospitals' payroll - this, after it warned the government in March that multiple payroll systems were fragile, and might fail, and there was "no funding set aside" to stabilise them.'
"Since we met, stabilising payroll systems has emerged as a risk that will require immediate investment," they told Reti in March.
"The backlog of Holidays Act remediation and pay equity settlement payments has placed an extraordinary burden on payroll systems and exposed the fragility of what was inherited from DHBs.
"Further to this, there are parts of the country that are not only non-compliant but will require immediate rectification to ensure they will function while a medium-term solution is found."
On Friday, Health NZ told RNZ that the "key early actions" to stabilise the system had been completed.
The payroll emergency has taken precedence over the long-term fix for the digital and data system.
The problem was the flagship information-sharing programme, Hira, had inherited the same flaws as payroll: Old and out-of-support and fragmented systems across 29 district health boards and other agencies, full of cracks that vital health data keeps falling through.
After the Budget's $300m-plus cut, Hira was in wind-up mode.
Te Whatu Ora said it had delivered a half-dozen things under tranche one, including an easier way for New Zealanders to check their health info by smartphone.
But, crucially, it did not deliver the Patient Summary system that clinicians remain desperate for. This is the system that would share health data attuned for the first time to international standards, across the clinicians and practices who need it.
That work was still going on, the agency told RNZ. It defended the other progress made under tranche one.
"This provides a strong foundation for future digital health services," said chief of data and digital, Leigh Donoghue, in a statement.
However, even prior to the health reforms, Donoghue's predecessors had promised Hira would transform healthcare, by enabling all levels of it from telehealth to GPs to specialists, with the latest, shared information about every patient, down to their latest lab results.
That promise has succumbed to the fiscal pressures, and "reset" across all parts of Te Whatu Ora, under the sole sway of Commissioner Lester Levy.
"This work is now paused pending consideration as part of Health NZ's 10-year infrastructure investment plan," Donoghue said.
"This plan will encompass both physical and digital infrastructure needs to enable future health services."
That next iteration of the previous plans, will have to cope with a data infrastructure deficit put at $2.4 billion a couple of years ago.
Donoghue listed the achievements of tranche one of Hira as including setting up an interoperatibility platform; a way to securely access health info; a national event management service that in the first version allows services to be alerted if somebody dies; and better consumer access to their info via My Health Record.
There was also a new health terminology service that over 40 companies were using, he said.
As for the vital Patient Summary, "Health NZ is continuing to collaborate with Australian agencies and CSIRO to progress the development and adoption of modern interoperability standards and tools".
And as for payroll, early stabilising work had been done in all areas of the country that needed it, the agency said
"The work includes resolving issues with the servers that run payroll and confirming and communicating our business continuity plans."
It was "committed to developing" an investment case for funding of initiatives known as 'Roster to Pay', though timing is yet to be confirmed.
