New documents show our new national health service was brought into being by a horde of contractors hired for tasks they might not have been suited to do and paid high wages they might not have earned.
An audit at Te Whatu Ora Health New Zealand has found its corporate office included around 1100 contractors, consultants and other temporary workers as of December 2022 - six months after the new agency launched.
That number has now dropped to 631 contractors after the internal audit found “significant deficiencies” around the new agency’s policies and procedures for hiring contractors.
Finding a point of comparison is not easy - the Herald asked Te Whatu Ora how many people it had working in its head office in Wellington.
A day after it was asked, it had still not come up with the number of people working at its corporate office.
The review was launched after concerns raised at an early Te Whatu Ora board meeting over “inconsistencies” and “risks” around temporary staff and has attracted fierce criticism from National’s health spokesman Shane Reti, saying “the health restructure has been disastrous”.
Those concerns included contracted staff getting paid as much as double as employees with poor controls around how long they were brought in even as managers formed “relationships” with their employment agencies.
Those concerns were borne out in the internal audit - obtained through the Official Information Act - which said the processes review took place “in a high state of change through the current transition process” when policies were being developed while “delivering support services to the business”.
The audit reported back in December 2022 with a tranche of planned changes to its systems, albeit almost two years after the transition agency was set up to mash 21 district health boards into one large health agency.
The audit said contractors and other temporary staff should only be used when “it is the most efficient and effective option available” but no parts of the fledgling agency showed it was the “best resourcing strategy to meet business needs” or if it “delivered value for money”.
It said “there is limited oversight of the contingent workforce, and the information is not reliable or accurate, reports are onerous to produce, and there is limited reporting”. There was no system that showed regular checking on whether work was done or value for money obtained through using contractors.
The audit said it was important to know if contractors provided the “best value compared to other recruitment options”.
There was no single system in place to monitor performance of contractors “to ensure that each contractor and consultant is delivering value for money”.
“Hiring managers are not currently required to evaluate and document whether contingent workers deliver the services for which they are hired. This means contingent workers who are not performing may be re-hired by other managers.”
The audit found different divisions across Te Whatu Ora - national and in its head office - had different approaches and the agency “had yet to establish organisation-wide policies or procedures”.
It said that at the point of transition from DHBs to Te Whatu Ora there was “not a complete view of the contingent workforce” and the system developed to provide that understanding wasn’t maintained. One division - people and capability - had developed a “workaround” which was found to have not captured all contractors, bringing into question its “accuracy and value”.
Other divisions that developed their own systems were also found wanting. Examples included the National Public Health Service’s outbreak response team carrying out physical head counts because “they were not able to reconcile figures”.
The audit highlighted the need for organisation-wide systems that could “improve value for money” and allow the “benchmark and negotiation of pay rates”.
While efforts were under way in teams such as “data and digital” to drive down the number of contractors, the audit said “the scale of programmes that exist, linkage to delivery of required programmes and business outcomes” were “a challenge to the overall strategy to reduce contractor numbers”.
The “data and digital” team efforts to reduce numbers saw weekly updates to Te Whatu Ora’s senior leadership team with contractor roles and contract end dates, which highlighted roles that were highly unlikely to evolve into permanent staff positions.
The audit said there were jobs “almost exclusively performed by contractors in the market” and there was “limited appetite amongst those people to transition to permanent roles”.
“In the past attempts to make some roles permanent has resulted in slowed delivery as permanent replacements were either delayed or not found.”
The audit said there was a “risk of being overcharged” when using contractors and those hiring them “do not consistently have sufficient information to benchmark pay rates when negotiating”.
It found a “wide variety of rates being charged by individual vendors” that should be managed by a standard rate of pay. The size of Te Whatu Ora should allow better bargaining, it said, to “ensure fair rates are charged”.
It also highlighted the long-term tenure of some contractors with at least 33 people on temporary contracts for longer than two years. It said that number could be “significantly higher” with 598 contractors with “unknown start dates”.
It was likely contractors who came across from the Ministry of Health had worked for “a significant period … without reviewing the role to determine why the initial contractual term was previously rolled over”.
Among recommendations was the need to establish a “single source of truth” for contract or temporary staff across the agency with a deadline for completion of June 30, 2023. The audit said the intent was to start with Te Whatu Ora’s corporate office - the same information it has been unable to provide to the Herald this week.
Updates to management up to March 2023 showed systems were being put in place to reduce the number of contractors, including attempting to address poor information over the numbers hired, their pay and tenure.
In one update, it warned that “data quality is not high” while in another signalled “sharp expectations on executives” where good information was lacking on existing contractors “to wind these arrangements down”.
In another OIA response, the scale of the transition is shown through the reduction in second and third tier management roles once held across the DHB network. It had gone from 1440 managers down to about 125, delivering “a very significant and ongoing reduction in the costs” of those roles.
Te Whatu Ora chief people officer Andrew Slater said the agency employed 80,000 people across the country and was “the largest people organisation in the country”.
He said a “large number” of its contractor and temporary workforce was inherited and had “steadily decreased as we have introduced efficiencies and streamlined our systems and processes”.
He said there was still no national record of the numbers of contractor and temporary staff employed across the country.
Slater said it was working “to reduce spend” and aimed to use consultants “in a limited number of circumstances” including specialist expertise or an independent review.
He said the new structure would simplify the health system leading to “more resources” for health care.
Minister of Health Ayesha Verrall said she had been briefed that the numbers of contractors and temporary staff had “steadily decreased as many efficiencies have been rolled out and systems and processes streamlined”.
Verrall said she expected even fewer would be used as contractors were replaced by permanent staff.
National’s Reti said consultants and contractors created “layers and layers of bureaucracy” at the cost of the frontline.
“DHBs were imperfect but the health restructure has been disastrous. Who could possibly think that undertaking health reforms in the middle of a pandemic was a good idea? The design was flawed, the operating model was delayed and the implementation has been appalling.”
He said there should have been strong ministerial oversight of the transition and pledged he would - if National became government - be a reduction in contractors and consultants.
While Reti has said National would work through Te Whatu Ora, he said it did not support “more centralisation”. “National believes in regionalism, localism and subsidiarity. We believe in devolving decision making and funding as close to the home and the hapu as possible.”
Resident Doctors’ Association’s national secretary Deborah Powell said the lack of policies raised questions about work done by the transition authority which worked from February 2021 to July 2022 paving the way for the change.
Powell said the difficulties faced by Te Whatu Ora was a reflection of discordant DHB systems that were different across the country.
“The district health boards were a failure. When we’re judging Te Whatu Ora, we changed for a reason. It wasn’t working - they were sovereign states. We did have a postcode lottery.
“The DHBs created the workforce crisis. Te Whatu Ora just inherited it.”
Powell said the restructuring was coming to a close by people working “damned hard” but she expected to see a shift to efficiency and good decision-making by the end of the year.