Commissioner Lester Levy. Photo: RNZ
New analysis shows Health New Zealand / Te Whatu Ora is unlikely to find the requested $1.4 billion in savings without impacting frontline services.
Health Minister Dr Shane Reti in July said without urgent action, Health New Zealand would run an estimated deficit of that amount by the end of 2024-25.
An editorial published in the New Zealand Medical Journal on Friday claims New Zealand's health system has been systemically under-funded by successive governments, with "record" funding only enough to cover cost increases.
It was written by four policy researchers from the Association of Salaried Medical Specialists: Virginia Mills, Lyndon Keene, James Roberts and Harriet Wild.
A public debate has played out in the aftermath of the government's overhaul of the Health NZ board - appointing it with a commissioner, Professor Lester Levy - about whether financial mismanagement is solely to blame for the organisations cost overruns.
This, the authors claimed, was unlikely.
"Official data and documents suggest New Zealand's health system has been systemically underfunded, and our analysis of the 2024-2025 health budget suggests funding for this financial year is also inadequate.
"Each year, politicians claim 'record investment' in health. In context, the cost of providing health services increases annually due to population growth, ageing, inflation and wage growth, and so must the budget."
The editorial said funding increases in this year's health budget just covered the increased costs for the day-to-day running of the health system, and money labelled as new funding was actually found to be recycled or relabelled.
Officials indicated in March that this fell short of what would be needed to maintain the current level of service in health, they wrote.
There was not enough money to cover fair pay for staff, and to maintain safe staffing levels amidst staff shortages of up to 1700 doctors and 4800 nurses.
"The frontline has felt the impact of managing these financial risks, as Health New Zealand / Te Whatu Ora implemented a hiring freeze for non-patient facing roles and a centralised approval process for clinical roles that slowed recruitment. Staffing shortages contribute to clinician burnout, increased waiting times and unmet need."
New Zealand's investment in health was far lower than that of other OECD countries, the editorial claimed, despite the country being able to afford to invest further.
"The commissioner has indicated confidence in finding $1.4 billion in savings from efficiencies. However, with comparatively low investment and relatively high productivity, it is difficult to see how a further $1.4 billion of savings will be found without impacting frontline services."
The editorial's authors called for an urgent independent inquiry into how New Zealand's health system was funded.
'Limited funds' made to go far
Sarah Dalton Photo: LDR / Stuff / Kevin Stent
Chief executive of the Association of Salaried Medical Specialists Sarah Dalton said health staff were already stretching every dollar to the limit, and the pressure to find savings will undercut frontline services.
"No, there's absolutely no way. By international measures, we are already a relatively underfunded system, and a very productive system. Our staff, both clinicians and administrators, are used to finding ways to make the limited funds go as far as they possibly can."
She said New Zealand has been understaffing hospitals and community healthcare for a long time.
"We need to stop seeing at our health system as a massive cost and look at it as a system that needs investment."
Health funding should be taken out of the government's hands, she said.
"We would like an external body to use a set of tools and metrics to determine actual need, actual costs. And then it's simply a requirement on any government to make sure those funds are there."
"Proper health funding and planning works in longer cycles than three years."
In response, Health NZ said the ministry's view was that the editorial's claims were not entirely accurate.
Deputy Chief Financial Officer Kevin Davies said "Budget 2024 does take demographic and inflationary pressures into account, and is over and above the funding provided in Budget 2023''.
Davies said the ministry appreciated there were data quality issues, and staff were working to remedy those over time.
"Our view is that the selection of certain countries by NZMJ to compared with New Zealand does not paint an accurate picture of NZ's contribution to health.''