Ian Powell: Too Many DHBs? The Wrong Question

Ian Powell: Too Many DHBs? The Wrong Question

Questioning the number of district health boards in New Zealand has got to the extent that “too many DHBs” has become a perceived truth requiring no further elaboration. It is rarely challenged by policy advisers, academics, and journalists. But when one drills down further it becomes clear that the number of DHBs is the wrong question. Inevitably, if the question is wrong, then solutions arising out of the answer will be worse. If our public health system is looked at through a structural lens, structure is all that will be seen. If looked at through a relational lens, then vision is much improved.

Stuff journalist Thomas Coughlan’s article on 13 May, ‘DHB solution has to be more about more than money’ repeats this perceived truth. His online heading is, strictly speaking, correct. Money is a huge issue after over a decade of underfunding in DHBs, especially workforce, but this is not the only big issue. The heading for the published version in the Dominion Post (‘Broken DHBs need more than money’) is partly incorrect.  DHBs are struggling for many reasons, but they are not broken.

Coughlan considers 20 DHBs in a country the size of New Zealand to be “ridiculous” and suggests an unspecified reduction. He refers to the report of the panel chaired by Heather Simpson, set up by the Minister of Health David Clark to review the health and disability system.  The final report was completed on time in March but currently is in a state of suspension between the panel and David Clark. Quite rightly the Minister is not able to seriously consider the report with Covid-19 trumping everything else in importance.  However, this is no reason why he should not release it publicly.

Heather’s interim report

In the meantime, all we have to go on is the panel’s interim report released last August which annoyingly, from the standpoint of interested observers, contains no recommendations. That report did not trash our public health system. It didn’t suggest DHBs were broken. Instead it recognised strengths in the system, including DHBs, but described the system as muddled and confusing.

There are two broad directions for achieving change in health systems – relational and structural. The former is more likely to achieve sustainable improvements while the latter is more likely not to. Unfortunately, the way the interim report is written suggests the review panel believes structural is the way to go.

But the structural change the panel has in mind appears to be softer and less blunt than reducing or removing DHBs.  The panel also suggested that it was possible to improve the system without fundamental changes to structures.  To the extent that structural change was suggested it was in both the largely general practitioner provided primary care part of the health system and increasing the authority and role of central government (primarily the Ministry of Health).

While concerned about fragmentation, the interim report did not discuss reducing the number of DHBs. If the final report were to recommend reducing the number of DHBs the panel would be guilty of being disingenuously misleading.  Surely one purpose of the interim report was to give an opportunity for sector groups and the public to comment on its likely direction and not to imply the opposite of what it might subsequently recommend.

Why DHBs are important

One can’t seriously debate the effectiveness of DHBs without understanding why they exist in the first place. DHBs were created by the Public Health and Disability Act 2000 (Part 3). They were established to mark the end of a failed market experiment in the 1990s to run our public hospitals as commercial businesses. Public hospitals were run by state-owned companies covered by the Commerce Act. They were required to compete against each other and with the private sector. The new Act rejected business competition, ended the company structure for public hospitals, and promoted cooperation.

The 2000 Act requires DHBs expressly to be responsible for the health and wellbeing of people specified geographic areas (described as ‘resident populations).  Aside from a short interlude of area health boards from the late 1980s to 1993, the one structure (DHBs) took statutory responsibility for both community and hospital care.

DHBs being responsible for geographically defined populations and for promoting the integration of all community (including general practitioner and aged residential care) and hospital health services is a tremendous strength of our public health system.  This includes the obligation to “regularly investigate, assess, and monitor the health status of its resident population”.  Structurally this gives New Zealand’s public health system significant advantages over many other modern health systems, including Australia and the United Kingdom where, for different reasons, community and hospital care are much less integrated.

This statutory focus on responsibility for geographically defined populations and integration between community and hospital care is what any considered change in DHBs should be assessed against.  If the focus is on DHBs as structures working more closely together then perhaps fewer DHBs makes sense.

But if the focus is on improving integration between health services in communities and hospitals for a defined population, then the number of DHBs is irrelevant. There is an argument that the bigger the geographic size of a DHB and its defined population, the more obstacles there are to better integrating community and hospital care and to improving the quality of care for patients in this continuum.

Bigger is not necessarily better; sometimes smaller, subject to sufficient critical mass, can be more effective. If DHBs are to better understand the met and unmet health needs of their populations, the further away they are from them the more difficult this is.

Learning from history

The only experience of DHB amalgamation gives no encouragement to advocates of fewer DHBs. Southern DHB was established on 1 May 2010 through the amalgamation of the former Otago and Southland DHBs. The catalyst was the negative experience of Southland DHB whose luckless Board Chair drew a short straw and, with justification, had to require the resignations of two successive chief executives. Opportunistically this led to the then Otago DHB chief executive also being appointed interim chief executive for Southland DHB. From this action came a shotgun wedding. It was a top down bureaucratically driven decision that backfired.

The biggest argument in favour of the merger was the financial savings that supposedly would be made. The assumption was that merging would lead to greater rationalisation. But the realities of providing public hospital services, geography and distance were disregarded while clinical concerns were ignored. The only way to reduce costs in any sizeable way would have been to rationalise patient services.

But, with two base hospitals (Dunedin and Invercargill) over 200kms apart, this would only be possible by cutting patient services which merger advocates claimed would not happen. While both hospitals continued to provide the broadly similar range of services (despite some rundown) as they did prior to the merger, major savings could not be made.

The net result of the merger was that the promised savings were not made, the financial position of the new merged Southern DHB is worse than the combined financial position of the two former DHBs prior to the merger, and the new DHB has proven to be unwieldy and cumbersome because of its highly dispersed population over such a large land mass. Despite good endeavours to improve integration between community and hospital care, its sheer geographic size gives it greater obstacles than the other DHBs.

Behind the scenes, around 2012-14, former Health Minister Tony Ryall attempted a merger by stealth of the three lower North Island DHBs – Capital & Coast, Hutt Valley and Wairarapa – branded as 3D. Its top-down and clumsy execution meant that it floundered and was disruptive for health professionals.  It led to Ryall’s successor, Jonathan Coleman, canning it after considering serious concerns raised by hospital specialists. Ryall’s initiative ignored the level of collaboration that already had existed between the DHBs which was already being improved in some services through clinical networking. Like Southern DHB, it failed because of its belief that structural change could drive service delivery change. If it had continued, financial savings would only have been made if patient service delivery were reduced. That is, services provided in Wairarapa (especially) and Hutt Valley DHBs would have been reduced without Capital & Coast DHB having the capacity to compensate.

Through an alternative relational lens

The most developed, but simplistic, alternative to DHBs comes from Professor Peter Davis (Population Health and Social Science, Auckland University). He advocates returning to the 1990s structure replacing the 20 DHBs with four ‘regional health boards’ and increased direct Health Ministry control.

He does not appear to advocate a return to the business market experiment. But his highly structural alternative would involve a major removal of decision-making from the level of defined populations and a much more centralised top-down decision-making structure.

The Simpson review’s interim report describes our health system as overcomplicated, and this is correct. But health systems are heavily labour intensive and, with its different parts interdependent, human relationships are everything. The solution to overcomplication rests with relational change, not with structural change.

Cultural, including leadership, change is required. Health by its very nature is complex, especially public hospitals which must deal with matters that the rest of the system can’t address. The effectiveness of the system depends on teamwork and integrative work practices. While technology is obviously critical, it is an enabler for, not a driver of change. The solutions to addressing overcomplication, to improving the accessibility and quality of patient care, and to ensuring greater fiscal responsibility rest within the workforce DHBs employ and engage with. This workforce has the capability because of its enormous intellectual capacity. But, especially in the case of hospital specialists, it lacks the physical capacity (due to severe shortages) to ensure that solutions are found and implemented both extensively and comprehensively.

Overwhelmingly this workforce is clinical and diagnostic (predominantly doctors and nurses). This brings clinical leadership to the fore, particularly when it is distributed down to the level of the clinical ‘coal-face’. Canterbury DHB achieved an extraordinary outcome through the development of clinically led health pathways between community (including GPs) and Christchurch Hospital. This development led to it being the first DHB to bend the curve of increasing acute hospital demand. This successful innovation was based on clinically led networks rather than structural change. It was beneficial for both patients and CDHB’s financial performance.

But this development began at a time when physical workforce capacity was much less vulnerable. Other DHBs are now committing to developing these health pathways but their workforce capacity to make significant gains is severely diminished, especially through hospital specialist shortages.

Distributed clinical leadership also delivers significant gains for patients and financial performance when applied to improving hospital based clinical services, improving collaboration between hospital services, and (through clinically led networks) between services across different DHBs. It also means changing the role of DHB management to an enabler of doctors and nurses as the drivers in systems improvement.

The expression ‘what makes good clinical sense also makes good financial sense’ should be imprinted on the foreheads of all health ministers, Health Ministry officials, policy advisers and other administrative overheads. Processes should dictate structures, not the other way around. Focussing on structural changes including the number of DHBs at best is a destabilising distraction and at worst is fiscally irresponsible and risks making an overcomplicated system even more complicated.

Ian Powell was formerly the Executive Director of the Association of Salaried Medical Specialists for over 30 years until December last year.  He is now a health commentator based in Otaihanga on the Kapiti Coast.


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