It is now clear that a decision in June 2019 was made in Wellington by then Minister of Health David Clark, almost certainly on the advice of his Director-General Ashley Bloomfield which set what was to follow in train. He appointed Lester Levy crown monitor for CDHB. It was an incompetent decision based on highly questionable advice with an objective of bringing CDHB’s leadership into line over a dispute involving the DHB’s deficit without regard to its prime cause.
Crown Monitor role
Crown monitors are rarely used in DHBs. They monitor, advise and report to the Minister and Ministry on the performance of DHBs that are considered to be struggling financially. They are not Board members.
It was extraordinary that Clark would reach out to a National Party favourite to deal to those he had previously praised when in opposition. Levy’s track record in the 3 previous DHBs where he had been Chair of their Boards soon led to the resignations of all 3 chief executives (1 was justified and the other 2 scapegoated).
From June 2019 it was clear that Canterbury Chief Executive David Meates would be the fourth. There was a consistent narrative in the first 3 DHBs that continued with Canterbury – the DHB was in a state of crisis (none were) and Levy was the solution (modesty wasn’t a consideration).
There were 3 other reasons why this was a surprise Ministerial appointment. It was common knowledge that following Levy’s appointment as Chair of the third DHB (Counties Manukau) its workforce morale plummeted.
Second, CDHB’s leadership was from the school of low translation cost relational decision-making whereas Levy was from the opposite school of high transaction cost contractualism and managerialism; a clear cultural clash.
Third, Levy had been the deputy chair of Health Benefits Ltd, a crown entity charged with developing shared support services between DHBs. He had pushed strongly for the Compass catering company to extend its coverage of DHBs. Many DHBs such as Canterbury resisted this pressure. Shortly before controversy over the contracting process and patient food quality became public he quietly resigned. Curiously his HBL involvement doesn’t appear on his Wikipedia profile.
Deficit dispute
The dispute between Minister Clark (and the Health Ministry) and CDHB over the approved deficit as part of the 2019-20 annual plan continued with the Minister refusing to sign the plan by the end of the financial year on 30 June. This was highly unusual indicating strong political and bureaucratic antipathy from Wellington.
In December, the Minister chose not to reappoint the CDHB Board Chair John Wood and his deputy Maui Solomon, both of whom recognised the effectiveness of the relational leadership culture. They were inconvenient. New Chair John Hansen turned out to be more responsive to the central government position and much less inclined to fight for the needs of the Canterbury population on matters where his political masters took a different view, which is presumably why he was appointed.
As has been previously discussed, despite these difficulties, the executive management team managed to submit to the Health Ministry a draft annual plan for the 2020-21 financial year with a $145 million deficit (including a savings plan for $56 million on estimated total costs) and a pathway to breakeven within 3 years. The Ministry, supported by Lester Levy, rejected it and said the deficit must be $90 million.
To my surprise the Board supported the $145 million deficit at its meeting on 20 August although not unanimously (neither did Levy). This was unquestionably due to the public outcry of Canterbury senior doctors, nurses and other staff and the continued advocacy of the largely outgoing executive management team. This throws the ball firmly back in the court of the Health Ministry and Health Minister Chris Hipkins where it belongs.
This morning Lester Levy was interviewed on Radio New Zealand’s ‘Nine to Noon’ programme. He made a number of assertions that I considered to be disingenuous. One was that ordinary operational expenses (rather than structural ones linked to earthquake driven rebuilding) were a significant driver of the current deficit.
The main drivers are the intertwined deadly combination of capital charges, depreciation and big delays to the new Hagley building (acute services block). The refutation of Levy’s claim is that in CDHB’s proposed plan for the current financial year the continued Hagley delay accounts for $18 million additional outsourcing to the private sector. Without that delay CDHB would have a $9 million surplus on operational expenses (excluding those driven by structural rebuild drivers).
The executive management team has for some years advised that CDHB would be able to breakeven 2 years after Hagley was opened (it still isn’t). The enormous irony is that the Health Ministry is responsible for the Hagley building, not CDHB, and consequently responsible for the high deficit.
An inevitable but avoidable consequence of all this turmoil is not so much the deficit argument as important as this is. It is a clash of leadership cultures and the principles upon which a modern public health system should function including that what makes good clinical sense also makes good financial sense. It has led to a well-performing DHB relative to other DHBs spiralling downwards and out-of-control.
This clash of cultures has inevitably led to a toxic environment between the Board and the senior staff that report to it and a loss of trust and confidence from the wider health professional workforce upon whom it depends.
Minister must step up
Minister Hipkins must intervene. He must require that the Board Chair be replaced with someone in tune with a relational leadership culture that has done so well for Canterbury during over a decade of natural disasters and mass murder. The crown monitor similarly must be replaced. Finally he needs to require a change of direction from his Health Ministry away from this adversarial relationship.
It’s time to step up Chris. The Board and Crown Monitor are accountable, but the Minister is responsible.
- Ian Powell is a former executive director of the Association of Salaried Medical Specialists.
