It’s been a busy time for New Zealand Health IT, with another successful Digital Health Week that again eclipsed the Australian and Canadian equivalents for reasons I have never understood. Perhaps the Tron (Hamilton) is a drawcard but, having grown up in Waikato, I suspect not.
More likely is that New Zealand has long traded on its reputation for being historically strong in health tech innovation; indeed around the year 2000 the country was globally in the vanguard of health automation. All GPs had electronic medical records connected to labs, hospitals, radiology clinics and so on.
The Ministry of Health (MOH) had world-class systems and it would take a good chunk of this article to list all the areas of leadership. Much of this was due to the health tech start-ups that had popped up everywhere, combined with a willingness by the sector to give things a go.
Today, 23 years on, early-stage health tech is on its knees, with most start-ups having given up on New Zealand and skipped the conference altogether. There’s no point attending the Digital Health conference if all your business is offshore - a hugely difficult situation for a start-up. Consequently, a generation of them has been strangled by Te Whatu Ora and its gaggle of consultants, who take home over $100m in fees annually. There’s another lazy $337.7 million (not a typo) going to the ‘Hira’ IT project plus several others costing tens of millions each that are difficult to sum up.
But wait, there’s more. Despite the flood of current spending, Te Whatu Ora’s chief of data and digital, Leigh Donoghue, told the conference the agency is suffering from significant IT under-investment; he appears to be angling for yet more public funds, perhaps hundreds of millions of dollars (or billions?). Simply put, this is totally out of control.
How did this tragic situation arise?
In 1993 NZ’s Department of Health was reorganised into four Regional Health Authorities (RHA’s) and 21 Crown Health Enterprises (CHEs), all needing big improvements in their information systems. While the reforms had flaws, this was the catalyst for a tsunami of innovation with health professionals and technologists collaborating everywhere. This all happened with little top-down control and there were many successes as well as a few failures.
By the turn of the century, this rampant but disorderly innovation had delivered world-leading health IT for New Zealand. However, the lack of central control and the odd small failure did not sit well with central Government. This led management to rein in innovation with all sorts of controls, sign-off hurdles, and more stifling IT department involvement. The bureaucrats grabbed hold of the innovation steering wheel - which was a bit like putting King Herod in charge of babysitting services.
So, it is no surprise that today we have a fraction of the coalface innovation we once had and start-ups are struggling.
To make matters worse, New Zealand has circled back to the pre-Simon Upton single Department of Health structure and so there is only one customer for start-ups to sell to. And that customer, Te Whatu Ora, is mostly buying from big US vendors through woefully unfair procurement practices.
Also, it seems the data and digital department is mostly non-technical and risk-averse and prefers the comfort of their well-paid jobs, rather than innovating to improve healthcare for Kiwis. They seem to believe big international vendors must have the best products and can be relied upon to deliver, and the project will look good on their CVs. As they used to say, no one ever got fired for choosing IBM.
The reality is, all these assumptions are wrong. The majority of the Government’s large international vendor health projects have drastically underdelivered, often with large cost overruns and with several projects being complete road accidents with tens or hundreds of millions wasted or written off.
This hasn’t worried Te Whatu Ora leadership and has allowed several staff to completely dodge any proper procurement and buy whatever they like, often citing Covid as a reason. The business cases are often complete nonsense, the projects have huge delays, eye-watering cost overruns aren’t a problem and no one is ever held to account.
Conversely, over the past 35 years, not one large local innovative New Zealand health vendor project has ended this way.
Te Whatu Ora’s most mind-numbing boondoggle Hira project was justified in a truly farcical business case consisting of 123 pages of consultancy codswallop. The goal was to give health providers access to all clinical data to deliver better healthcare. This sounds good, but the obvious question is why this business case never once mentioned that the South Island already has had such a system in place. For almost 10 years, HealthConnect South / Healthone has given all South Island providers comprehensive access to all health information and costs chump change to run. Just expand to the North Island, plus a few enhancements and job done.
The most farcical aspect of this business case is it mentions the creation of an ecosystem for small New Zealand vendors and start-ups 27 times with throw-away lines such as “Innovators will be enabled and transformation across the health ecosystem will be accelerated”.
What’s not mentioned is that they can’t sell their software to New Zealand’s single health customer - Te Whatu Ora. These vendors don’t care about technical gobbledygook, they just want local market access.
Finally, former prime minister Jacinda Ardern’s message about “being kind” didn’t get through to Te Whatu Ora, which is often vindictive. Critics go straight to the “naughty corner” and start-ups can’t say anything negative as their exceedingly slim chances of selling anything would disappear faster than a snowflake in the Sahara Desert.
Hopefully, one day New Zealand Health IT can get back to the front of the global pack and our annual Hinz conference will overflow with start-ups.
Fortunately, the new Minister of Health, Shane Reti, is far more technologically savvy and won’t get hoodwinked like the last lot.
- Ian McCrae is the founder and former CEO of Orion Health.