A new report has revealed patients cared for by Waikato District Health Board are spending longer than average in hospital, there's a lack of funding to improve Māori health inequalities and tension between clinicians and management.

The five month review, released to staff today and leaked to the Weekend Herald, pointed to significant costs in staffing, clinical supplies and outsourced elective surgical services.

This was despite a $2.4 million project that clawed back $10m in outsourced surgeries from the $25m spent each year.

It also showed:

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• A seriously eroded financial position over the past five years from a surplus of $3.8m in 2014 to a deficit of $66.6m in 2019;

• Evidence that the DHB is not underfunded by the Ministry of Health per capita of population which has been blamed for the climbing deficit;

• Poor investment decision-making and no cohesive strategic direction;

• A major divide between clinicians and management causing tension;

• No funding for the DHB's number one priority to improve Māori health inequalities, with a staggering 30 per cent of Māori patients failing to show up for outpatient clinics;

• A large increase in full-time staff, 1000 in one year, that was much higher than the national average;

• A longer average length of hospital stay for patients.

An industry insider said the review articulated a "systematic failure" right across the health board.

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DHB commissioner Dr Karen Poutasi said the external review looked at how and where money was being spent.

She said it will now inform a wider recovery plan which will be progressively worked on.

The review was commissioned late last year by then interim chief executive Derek Wright, who left in April, amid concerns over the DHB's climbing deficit.

"The Waikato DHB's financial performance has deteriorated significantly over the past three years despite the complexity of its patients staying relatively stable," report author Leena Singh wrote.

Former Waikato DHB chairwoman Sally Webb and then interim CEO Derek Wright, presided over governance and executive systems that have been roundly criticised. Photo / Alan Gibson
Former Waikato DHB chairwoman Sally Webb and then interim CEO Derek Wright, presided over governance and executive systems that have been roundly criticised. Photo / Alan Gibson

Singh, a consultant, worked with DHB clinicians and staff to complete the review in late May.

"The deficit's rapid growth, along with the lack of any notable strategy to reduce it, has caused both the health board's senior executive and the Ministry of Health to raise concerns about the ongoing financial viability of Waikato DHB."

She said the eroded financial position and struggle at times to maintain appropriate clinical and operational oversight, had resulted in lost accreditation in critical areas such as maternity that took more than 18 months to rectify.

It had also led to non-compliance with elective service targets, other accreditation risks including to the orthopaedics department which, if lost, would have plunged the tertiary hospital into chaos, and staff dissatisfaction.

A high turnover in critical leadership positions including the chief executive officer, chief operating officer and chief medical officer had led to a lack of stability and long-term thinking in the organisation.

The release of the review to staff comes one day after the Serious Fraud Office announced it would not bring criminal charges against former Waikato DHB CEO Dr Nigel Murray for unjustifiably spending $120,000 of taxpayer money while in the job.

Former Waikato DHB chief executive Dr Nigel Murray had a team of 18 executive directors when he was in the job. Photo / Christine Cornege
Former Waikato DHB chief executive Dr Nigel Murray had a team of 18 executive directors when he was in the job. Photo / Christine Cornege

Wright took over in October 2017 when Murray resigned.

Each of the chief executives juggled their executive leadership teams and this and the number of duplicated positions of responsibility within the DHB's management was also criticised in the report.

The review also slated poor governance at corporate, clinical, financial and risk levels as directly contributing to the deficit.

In May Minister of Health Dr David Clark sacked the board and replaced them with four commissioners.

According to the report, there was also a failure to follow processes because of constant change, a backlog in requests resulting in delays for critical decision-making, departments operating in silos and concern over expensive investment and clinical plans that had no clear direction.

The DHB's Health System Plan outlined what it wanted to achieve but did not articulate how it would deliver on the objectives.

Information released to the Herald under the Official Information Act in March showed more than $800,000 had been spent on consultants to develop the plan.

The 93-page review also highlighted the need for clinical leaders to be delegated more decision-making authority.

It suggested example leadership structures and made a number of recommendations with the priority being recruiting a permanent chief executive, which has been done.

There was also a need for the DHB to work with primary and non-government providers to capture all of the region's patients.

Lead commissioner Poutasi said the review highlighted poor accountability, inconsistent application for investment and a lack of a performance framework.

"It paints a picture of where there are opportunities for improvement while continuing to provide excellent patient care."

The industry insider, who did not want to be named, said the review made "sobering reading" and pointed to every system in the hospital needing an overhaul.

"But it provides a blueprint for moving forward."