From an overall perspective, the most expensive health service is an underfunded one, as has existed for decades in New Zealand.
This perversity arises because the most inexpensive healthcare is timely healthcare. This isn’t the case in New Zealand and is causing a rapid downward spiral in delivery of healthcare.
Between 2013 and 2023, emergency presentations increased 22.5% with a contemporaneous dramatic increase in the severity and mortality of the conditions and the cost of treatment.
The burden of emergency care then displaces planned care. As a result, only about 40% of patients receive a first surgical assessment within the target parameter of four months. Of those with a commitment to treatment, this is delivered within four months in less than 40%.
Our myopic coalition government has no appetite for prevention or addressing social inequality. They have reversed smokefree legislation, removed Pharmac’s Te Tiriti obligations and seek to restart prescription charges. Those unable to afford the prescription fee will cost the government a 34% increased rate of admissions to hospital as well as increased absenteeism.
The government is paying commissioner Prof Lester Levy $320,000 for three days a week in the absurd and forlorn hope he can trim $1.4 billion per annum from health expenditure by increasing productivity. This despite the fact that the New Zealand health workforce is ranked the ninth-most productive of 28 countries.
Successive governments claim credit for increasing the health budgets, but in the 2023-24 year this amounted to just a 0.4% increase for funding day-to-day running of hospitals. With growth, ageing of the population and wage growth this amounts to a significant funding decrease.
By international standards, New Zealand’s healthcare budget is unquestionably frugal. We spend less than 10% of GDP on health compared with an average of 11.7% across 14 OECD nations, ranging from 9% to 17%.
But indexing health spending to GDP masks the inequity because New Zealand’s GDP per capita is 13% less than the average of those nations. Factoring this in, Health NZ Te Whatu Ora (HNZ) receives just 75% of the funding of our peers.
Our closest comparator, Australia, has the overall best cancer outcomes globally but spends 40% more on health per capita than us.
For HNZ to succeed, simply closing this gap is insufficient.
We have an estimated workforce shortage of 1700 doctors and 4800 nurses. At times, New Zealand’s biggest hospital, Waikato, does not have any interventional radiologists on site and resorts to the expensive option of temporarily contracting one from Christchurch.
Also to keep up with population growth, we need to recruit/train 1600 health professionals per year, and retain them with adequate pay and conditions. The Health and Disability Commission has identified understaffing as a direct contributor to patient harm.
A 2023 study concluded we need to spend a further $17b to upgrade multiple ageing hospitals.
In 2010 Treasury identified that in 2005, the indirect cost of ill health to the country was between $4.12b and $11.563b, whereas the health budget was $9.917b.
When the solution to our plight is so obvious, it does not justify spending on Lester Levy. Quite simply, our government needs to expeditiously raise sufficient revenue.
As our New Zealand government debt is the sixth lowest of 14 OECD countries, we can afford to borrow. A study of 25 European countries found for each dollar invested in health, it generated $4.30 for the economy.
Based on this metric, borrowing money at an interest rate up to a ludicrous 23% is cost-effective. I am certainly not advocating this, but borrowing at a rate of 5%-6% is rational.
The options for New Zealand healthcare to prosper are to borrow, and introduce either a wealth tax or a capital gains tax. This will require a government with vision and courage.
This is because in order to save money, you first have to spend money.
— Ian Breeze is a retired surgeon living in Dunedin.
