The ball is currently in the government’s court as far as the new Dunedin hospital is concerned
They have said that they will build a "kick-arse" hospital but have placed the pre-condition of a cost ceiling of $1.88 billion. The only two options being considered to keep within that cost ceiling are to refurbish the current hospital or to downsize the new hospital.
Neither of those are credible options, which suggests that a "horse’s-arse hospital" is a more likely outcome.
There are myriad reasons why the first option is a nonsense but to put the six major reasons succinctly:
• It is already too small and capacity could not be significantly increased;
• There is nowhere to decant patients or services to that has the necessary proximity to be safe;
• The ward block building has major limitations — concrete cancer, asbestos presence, inadequate earthquake ratings and central concrete columns severely curtailing design options;
• The time line to do the refurbishment floor by floor would extend beyond 10 years;
• The experience of trying to maintain services on other floors during such a rebuild would be utterly intolerable for staff and patients;
• There are a number of services (operating theatres, laboratories, eye and ENT departments, radiology and most of the ED) which are located in the clinical services block which is in even worse shape than the ward block;
• It is likely to cost as much or more than a new build and produce an inferior result.
Downsizing the proposed new hospital would be disastrous. In my view the current plan may already be too small.
The calculated bare minimum capacity will only work if some very optimistic assumptions are in fact accurate. Most important of these are that a lot more will be done in primary care; population increases will not be greater than predicted (this was badly wrong in Southland when they planned their hospital 20 years ago); that people will not be more frail or sick than they are now and that patients will be able to be discharged home or to adequate aged-care or rehab facilities promptly.
There are no signs of any additional provisions to meet any of these assumptions.
As I have explained in my earlier articles, having inadequate capacity in a hospital leads to waste and inefficiency. Bottlenecks mean that one limiting resource causes others to lie idle or unable to be utilised.
Having a start point of a budget cap is not very smart: it is the best way to paint oneself into an undesirable corner.
Consider the proposed new Mt Victoria tunnel in Wellington. Imagine projected costs escalated above the initial budget. Would this government suggest regarding these two options: widening the existing tunnel by half a lane while still trying to use it for traffic, or building the new one but with one of the two lanes only to 80% of the length required to reach the other side?
The government claims that the new Dunedin hospital is unaffordable if it exceeds $1.88b. That is a political choice, not an immovable truth.
The government, if it so desired, could readily borrow what is required to fund this and many other health infrastructure needs. We have relatively low public sector debt (over the past decade averaging around 32% of GDP although it has spiked as in all OECD countries in the last two years, roughly comparable to Australia and Ireland but well below countries like Germany, Canada, the United Kingdom and the United States, the latter two exceeding 100% of GDP).
Indeed we should borrow to fund health infrastructure if the benefits outweigh the costs of delay.
The government can borrow at much lower interest rates than private entities and certainly at a lower cost long term than entering public/private partnerships or lease to buy contracts, so a simple Crown loan would work perfectly adequately.
We need this hospital as designed; nothing less will actually work. It would mean being able to do acute work, or an acceptable amount of elective work, but not both. The cost may be unpalatable, but that isn’t our fault.
Neither the people of this region nor the staff who struggle to provide decent care are responsible for the building cost inflation that has run rampant in this country in the past few years. Nor were they responsible for the multiple limitations and caveats that were placed on the choice of site or what was or wasn’t "in scope" for this project.
That was the work of the ministry acting for central government. We should not be punished for these.
The government would be doing its job if, rather than suggesting unworkable, inadequate solutions, it focused on getting construction costs down, addressing the significant discrepancies in building material costs between here and Australia, running tendering processes competently and stopped dithering while the cost continues to rise by $110,000 a day.
The tragedy is that we have no long-term thinking in our political system. All parties share the blame for this. Very like the UK, our politicians have for decades wanted a first-world health system at a substantial discount.
While healthcare spending may look "sort of OK" on a percentage of GDP basis it looks woeful on a real adjusted US dollar basis. Over the last few decades Australia has spent about 30% more per capita in real terms.
And here is where the most serious disconnect occurs between the public’s expectations and the willingness of successive governments of all political persuasions to assign sufficient funds. Most New Zealanders expect healthcare that is comparable to Australia’s.
There are inescapable consequences of this, one or more of less money being allocated to other areas; increased government borrowing or an increase in tax take, either generic or specifically tied to health.
No political party has seriously canvassed public opinion on any of these, specifically whether New Zealanders would accept higher taxes if it was guaranteed to fix the obvious shortfalls in health, or what else they would be prepared to forego in terms of government spending to enable adequate healthcare.
Most of our increases in health spending have been forced on successive governments by short-term crises. They are reactionary rather than planned.
When adjusted for inflation and population growth most of the trumpeted increases in health spending are illusions. Political parties of all shades are intensely focused on the short term. The only goal that matters to them is winning the next election.
It is shameful that there is no long-term infrastructure plan for hospital renewals. What is happening now in Dunedin will inevitably be reprised in every region of the country.
Why has there been such a failure of planning?
DHBs and their predecessors had to go cap in hand to the ministry and the capital investment committee and even if permission was granted to build a new asset, the government then levied depreciation costs and a capital charge (6% of asset value) annually on the DHB.
The iniquity is that the capital charge had to come out of operating expenditure, which wasn’t enough to start with to provide the services desperately needed for their population. This has been a huge disincentive for both renewal of buildings and timely maintenance, in favour of continuing to provide service to the population, elective surgery in particular.
The problem is that this eventually catches up and is much more expensive in the long term, which is exactly the situation that the Southern region finds itself in.
How could this be done better?
First, abolish the capital charge which is a device brought in in the 1990s to "level the playing field" so private providers could compete with Crown Health Enterprises. The competitive model failed, and the efficiencies that the capital charge was claimed to bring never materialised, in fact the opposite occurred.
Second, planning and renewal for every hospital needs to have a 30 to 50-year horizon.
In the ideal situation each hospital would have four buildings on a block of land, or able to be connected across a road, three of which are occupied and functioning at any point in time, and the fourth is being refurbished or refitted, taking into account whatever new treatment or diagnostic modalities and advancing technologies need incorporating.
The reason for demanding proximity is that there are critical functional relationships between units and services that really matter in an emergency but are also important for efficiency, so that long transfers/transports of patients are minimised.
The ideal hospital buildings need to have adaptable spaces and structural flexibility so that they can for example in one generation be a ward space and in the next a radiology department or operating theatre suite.
We had an opportunity for this back in the 1990s when we still owned the entire block across the road from the current hospital which was occupied by the old Queen Mary Maternity Hospital and the Nurses Home and Fraser Building, but against the strong pleas by me and a number of other clinicians the managers of the time sold it off to reduce the DHB’s deficit.
They then added to the pain by moving a substantial number of services down from Wakari on to the current site, and everything became impossibly tight. It was like a shifting letter word puzzle but with no free space to move any letter. The money realised rapidly vanished into thin air.
That decision set in train the inevitability of having to build a new hospital on a different site. Let’s get on with it before any more money is frittered away by delay.
We need to build it once, build it right and build it now.
• Mike Hunter is a retired consultant general surgeon and consultant intensive care specialist.
