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The underfunding of DHBs

Bill Rosenberg is the Policy Director/Economist at the New Zealand Council of Trade Unions Te Kauae Kaimahi. He is widely published on globalisation, trade and e-learning. You can read Bill’s monthly economic bulletins here

For the past five years, the Council of Trade Unions has analysed how much was approved for Health spending in each year’s Budget. The theme is “Has Health been given enough to stand still?” We look at the costs, the population pressures including the ageing of the population, and the promises for new services, and compare them to what is actually provided. You can see the reports which give details and show the assumptions we used here.

Treasury estimates of real changes in health spending after costs and population growth.health expenses

In the 2014 Budget we estimated that the Health Vote was $232 million behind what is needed to cover announced new services, increasing costs, population growth and the effects of an ageing population.

The Health Vote increased by $307.9 million in operational funding overall between Budget 2013 and Budget 2014 (from $14,134.6 million to $14,442.5 million). This is $185.6 million short of the $493.5 million we estimated was required just to keep up with costs without providing for new and improved health services. However the Budget in addition introduced “new policy initiatives” costing $120.1 million in 2014/15 (putting aside the bulk of the “initiatives” which were actually funding towards increasing costs and population pressures), bringing the total needed to $613.5 million. This was offset by “savings” totalling $73.6 million including $56.7 million that are not explained, plus a reduction in the provision for risks such as epidemics or natural disasters of $17.0 million. If we take the savings at face value, the total shortfall is therefore $232.0 million.

District Health Boards (DHBs) were underfunded by an estimated $94 million just to cover increased costs and demographic changes. When the costs of new services which the DHBs are expected to provide are taken into account, the shortfall is likely to be well over $100 million.

Centrally managed national services such as National Disability Support Services, National Elective Services, National Emergency Services, National Mental Health Services, Primary Health Care and Public Health services received $134 million below needs.

We don’t look at capital funding in any detail, but it rose sharply: from $520 million in Budget 2013 to $1,114 million in Budget 2014. This follows a significant increase in capital expenditure last year. In the 2012 Budget, $289 million was budgeted for capital. The Ministry of Health had observed in its Four Year Plan that “Capital investment is needed nationally because a significant proportion of hospital buildings are in poor condition[1]. While the increase in capital funding is much needed, increased capital assets create additional costs for DHBs because they have to pay the government capital charges and must provide for depreciation. As Treasury noted in 2013 Budget papers, “new capital builds are more likely to result in large deficits for DHBs”[2].

We also had a look at the cost of the welcome policy initiative to enable children under 13 to have free access to GPs and free prescriptions from 1 July 2015. Our estimate was that it could cost closer to $40 million per year rather than the $30 million in the Budget estimates.

How good are our estimates, and what about the forecast funding for the four years to June 2018 which are part of the Budget? In past years, Ministry of Health estimates of the funding shortfall were released, but they were largely redacted from documents released following the 2013 Budget.

However, for the year to June 2015 (financial year 2014/15) Treasury is forecasting health to have a real growth of negative 2.3 percent according to its spreadsheet issued with the Budget. On their figures we calculate that represents a shortfall of $360 million. So our estimate is conservative.

Greater cuts are forecast for the following three years. In the event, Health could get some more from the ‘operating allowance’ for new spending in those years but not enough is being allocated for this to cover the shortfalls in all the areas of the forecast Budgets, most of which will be in a similar position to health. (See the May CTU Economic Bulletin for more detail.)

Treasury estimates of real falls in Health funding after costs and population growth(Fiscal Strategy Model, 2014 Budget)
Year to June 2014 2015 2016 2017 2018
Percent -0.6% -2.3% -3.7% -3.6% -3.1%
$million -$82m -$360m -$587m -$559m -$488m

Treasury warned in the preparation of the 2013 Budget that such cuts would require major changes to our health services. This could include “more targeted services and funding” which implies dropping services, making some available only to certain groups, or introducing user charges[3].

 

[1] Vote Health 4 Year Plan for 2013/14 to 2016/17, December 2012, p.14, available at http://www.treasury.govt.nz/downloads/pdfs/b13-info/b13-2659847.pdf.

[2] Treasury Aide Memoire to Ministers of Finance and State Services, 6 December 2012, p. 6, available at http://www.treasury.govt.nz/downloads/pdfs/b13-info/b13-2505130.pdf.

[3] “Four Year Plan – Assessment and recommendation on final four-year plans submitted by Ministers to MoF and MoSS”, p.4-5, available at http://www.treasury.govt.nz/downloads/pdfs/b13-info/b13-2564298.pdf.


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Free healthcare for under 13s

budget_2Rosemary Minto is a nurse practitioner who works in a very low cost access clinic in Tauranga. She is passionate about the potential for primary health care to create a healthy Aotearoa.

I work in a primary health setting and the machinations of Government that affect my clinical practice, and the people I see are always of interest to me. So I was very interested in the Budget announcements about the $90 million for free healthcare and prescriptions for children under 13.

Working in a very low cost access clinic means I deal with deprivation and preventable illness every single day. The social determinants of health are not theoretical concepts for me; I can tell you exactly how a cold, damp house and not enough money and unemployment affects the health of children and adults alike. So, extending free healthcare is excellent news, and I congratulate the Government for this sensible and sustainable measure.

It is essential that the scheme be viable for general practice. Free health care for under 6s took several years to implement with the level of funding insufficient for many general practices to be interested in the programme. I hope this won’t happen again.

In the practice I work there is constant pressure between budgets and service provisions, and if the funding formula for under 13 visits isn’t sustainable we could end up in the position of cutting staff and services, an untenable option with current pressures on services and quality performance target pressures.

But if they get it right, fantastic. It will be an opportunity for nursing staff to work to the breadth and depth of their scope of practice.

There is more good news for low cost access funded practices in the budget. $1.5 million has been set aside next year for nurses in very low cost access (high need) practices. We’re not sure whether this is to fund more new graduate programmes or to employ experienced nurses, but it’s great that the Government has recognised the value nurses bring to low cost access practices. It demonstrates that nursing is being considered in the equation as planning, negotiation and implementation occurs.

Nursing voices are represented on Ministerial-level advisory panels on primary health and we fully expect to see the nursing workforce utilised well. Unfortunately, $1.5 million doesn’t go very far these days and it would be great to see the government commit more funding to ensuring nurses and nurse practitioners can be utilised to the fullest extent of their scopes of practice. Direct funding for nurse practitioners would have been a great step for this budget.

And whilst free healthcare for under 13s may mean that children are not showing up in ED departments with high acuity, it still means that the causes of their illnesses in the first place are not being addressed. Poverty and housing, unemployment are things that also need to be sorted before primary health can really do what it should. And that is create a healthy Aotearoa, where services are provided to people when and where they need them, with no barriers to access.

Unless the Government deals with the many social determinants of health, this funding will be yet just another drop in the bucket.

 

 


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Don’t sign our future away!

TPPA311Last weekend Trade Minister, Tim Groser accused NZNO and others of being less than truthful when we say New Zealanders are not being consulted about the Trans Pacific Partnership agreement (TPPA), which is currently being negotiated in secret.

He said, in a RadioNZ interview, “There’ve been more discussions with stakeholders on this agreement by a country mile than any trade agreement I’ve been associated with negotiating in New Zealand in the past 30 years, it’s just that these are people taking a very, very politicised view of the matter.”

He then went on to assure New Zealanders that they would hear the facts when the deal was put before Parliament.

Sadly, he neglected to say that when the deal does finally “get to Parliament’ it will be waaaay too late to do anything about it. In fact, Parliament itself is not even able to do anything about it.

Professor Jane Kelsey explains, “Parliament’s role in treaty making is largely symbolic. It has no power to decide whether or not the TPPA should be signed or ratified and no ability to change its terms TPPA or require it to be renegotiated. The select committee process is a farcical exercise because its members know they cannot change the treaty.”

And as for those purported consultations… a few private briefings of selected health representatives does not qualify as transparent, informed public debate.

Why is the content of the TPPA a secret to New Zealand stakeholders? We expect transparency and the protection of public health as a key pillar of our social democracy. ‘Commercial sensitivity’ does not justify blanket secrecy where publicly funded health is at stake; especially when, unlike New Zealand citizens, US trade lobbyists have access to the ‘secret’ text.

We do know some things about what is being negotiated – I blogged about it here and it’s not good news.

Most governments, and it seems that ours is likely to be one, will be deterred from public health regulation because they’re scared of being sued by big business, though a few have refused to be intimidated. Australia went ahead with its plain packaging of tobacco products and is staunchly defending its right to do so against three investor challenges, at a cost of many millions of dollars. Disappointingly, New Zealand reacted by delaying its plain packaging legislation, leaving Australia to defend this important public health decision alone.

This agreement was initiated before the global financial crisis in 2008 and both the economic climate and the public’s willingness to accept deregulated markets allowing unbridled corporate growth have changed a lot since then. People are aware that while there have been tremendous gains as a result of new health technologies and medicines, the benefits have not been shared equally. Inequility is increasing globally, regionally and within New Zealand. The TPPA has the potential to exacerbate that inequity if the growth and innovation it promises increases the costs of health care as has been suggested.

Come on Minister Groser – release the text, release publicly commissioned information and analysis, and give New Zealanders a say in what you’re signing us up to.

 


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A win-win-win solution to dealing with domestic violence

NZNO_Union_poster_finalTwo great things happened yesterday that have the potential to eliminate some of the harm caused by domestic violence.

The PSA launched a piece of research that shows how much domestic violence costs business, and Green MP Jan Logie launched a bill that entitles victims of domestic violence to be supported at work.

The PSA research shows that domestic violence costs businesses a conservatively estimated $368 million per year. The author of the research, Suzanne Snively said at the launch that domestic violence impacts greatly on businesses right around the country.

Victims of domestic violence are often stalked and abused at work, and what’s happening to them and their children at home means that they just can’t work as productively as they would if they were living free of fear and violence. She said that if businesses supported their employees to deal with domestic violence, there would be significant savings to be made by reducing recruitment and induction costs and by raising productivity.

Jan Logie said at the launch of her Bill that victims of domestic violence often lose their jobs because they may not be able to focus on their work, are unable to show up to work, or are stalked by their abusers while at work. Her Bill would work by allowing any employee, no matter where they work or what they do, to take leave to keep themselves and their children safe.

Being able to stay in employment while they find safety for themselves and their children is important for victims. And for employers, supporting workers to become safe and violence free has a positive impact on workplace culture as well as dollar returns from increased productivity and decreased staff turnover.

Jan Logie’s Bill will make four main changes. It will:

  •          protect victims from discrimination on the basis of domestic violence,
  •          allow victims of domestic violence to request flexible working arrangements from their employer if needed,
  •          allow victims of domestic violence to take up to 10 days leave a year related to the violence, and
  •          clarify that domestic violence is a hazard in the workplace that needs to be managed like other hazards.

As Jan Logie said, the Bill is a win win win situation! It’s a win for victims of domestic violence, it’s a win for our society and it’s a win for businesses.

Here at NZNO, we know that with 93 percent of our 46000 members being women, thousands of us will experience domestic violence sometime in our lives, and that some will be experiencing it right now.  Others will be witnessing its negative impact on health in their everyday practice.

We are committed to supporting any initiative that will make working life better for our members.   We are committed to improving the health and well being of society and its citizens.  We commend the PSA and Jan Logie for their work to make our society safer and more tolerant.

 

Productivity Gains from Workplace Protection of Victims of Domestic Violence by Suzanne Snively ONZM

http://www.psa.org.nz/Libraries/Documents_2014/Workplace_Productivity_Improvements_for_DV_21_May_2014.sflb.ashx

Jan Logie’s Domestic Violence-Victims’ Protection Bill

https://www.greens.org.nz/bills/domestic-violence-victims-protection-bill    

If you are experiencing domestic violence or want to find out how you can support a friend or family member who is, check out the Women’s Refuge website: www.womensrefuge.org.nz

The Family violence: It’s not ok campaign has heaps of information too, and resources you can use at work and home: http://www.areyouok.org.nz/

The poster above features NZNO men making a stand against family violence. Thank you Kieran Monaghan, Simon Hathaway and Gary Swift.

 


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Auckland DHB’s leaked email


auckland-hospital-sign2
Our guest blogger this week is a registered nurse working in Auckland. Her concerns about the politics of health spurred her to start a blog: http://politicsofhealthnz.wordpress.com/ and we’re pleased that she’s allowed us to cross-post her inaugural post.

The Auckland DHB’s leaked email, which reveals the management team’s readiness to further ramp up the pressure on staff and services in order to balance the books, will come as no surprise to clinicians who have become accustomed to working within an under-resourced system.

The DHB appears  willing to enforce the National-led government’s agenda, that of demanding more for less from the entire public service.  The government describes this as “cutting the fat”, but those who work in health  are acutely aware that this phrase, with its unpleasant connotations of butchery, is an ugly euphemism for renouncing its responsibility to ensure all NZers have equitable access to healthcare.

The day-to-day reality for clinicians is one of attempting to provide care in an environment which increasingly compromises their ability to do so safely and effectively.  CEO Ailsa Claire’s statement that “staff costs must be reduced” implies a lack of awareness of the depths to which staff morale has sunk.

Ms Claire describes “the danger of the Board or and (sic) external people determining how we resolve this issue.  Not good for the organisation”.  If Ms Claire’s fears were realised, it might well be damning for the Auckland DHB’s current management.  However,  it could be very positive for clinicians and their clients/consumers/patients if the intolerable stresses within the service became publicised as a consequence, and led to the necessary resources being provided.

The services provided by a district health board do not constitute a business, and the failure of those services to function within an inadequate budget cannot be defined as a financial “loss”.

Healthcare for all is a public good which must be properly funded by government, and effectively and compassionately administered and provided by health boards and their  employees..  When the means for the latter to do their work is absent, the solution is not to order them to “cut costs” and “control overspending”, it is to pass the responsibility back to those with the power to do something about it, namely, the government.


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Why the Trans-Pacific Partnership Agreement is a health issue

ImageWe’re hearing more and more people, from all over the world, talking about the Trans-Pacific Partnership Agreement  (TPPA), and they are all saying the same thing: trade deals that are negotiated in secret, that do not give citizens any say over the content, that have the potential to have huge effect on the lives of ordinary people should stop right now. We at NZNO agree; we have a right to know what’s going on.

The TPPA is a free trade agreement that is being negotiated between the United States and ten other Asian and Pacific Rim countries. The negotiations are being held in secret, so what we do know comes from leaked documents.

The things we are finding out are extremely worrying. Big business seems to be in control.

And when big businesses have more rights than States and Governments, you know that it is the citizens of those countries who will bear the brunt.

The group set up to demand transparency and fairness in the TPPA, Itsourfuture.org.nz says,

“From what we know so far, if the negotiations are completed it will become much harder for the New Zealand government to look after our environment, promote health, protect workers and consumers, and promote the public interest.”

NZNO is particularly concerned about that public health will be a major loser under the TPPA and this is why

Pharmac is New Zealand’s purchasing agency for medicines. It buys all the drugs for the country, in bulk and generic versions where possible, to give tax payers the best value for money. It’s a very clever system and as a result we end up paying much less for medicines and medical equipment than other countries like Australia and the US.

The agreement will give big pharmaceutical companies the ability to patent their products for longer, meaning that cheap “off-patent” generic drugs will not be available for years, and possibly decades. They will also be able to make tiny tweaks to existing drugs and then patent them again.

The agreement will also put into place “transparency” provisions which will interfere with the successful commercial strategies that PHARMAC uses to get medicines at an affordable price.

New Zealanders need access to affordable medicines. We are a small country; Pharmac uses our bargaining power very effectively and must be protected from provisions in the TPPA which reduce its effectiveness.

Unfortunately, this isn’t the only provision in the TPPA that will affect the health of New Zealanders and their safety. There’s more on the It’s our future  website and NZNO will blog about this important issue again.