The new University of Waikato medical school was the best option for increasing the number of doctors in New Zealand, beating the other two options considered by the Government – but only by a whisker.
Parties on the other side of the debate, such as the University of Auckland – home to one of New Zealand’s existing medical schools – are questioning the assumptions that went into the business case for the medical school.
There are views some of the assumptions are inaccurate and unfairly knock back the case for using the existing two medical schools to bring on more doctors.
With the Waikato option only narrowly ahead of the others after a cost-benefit-analysis, a tweak to the assumptions behind the business-case options might have changed the outcome.
The Government looked at three options in the business case. The first was to increase the intake of students at the existing medical schools at the Auckland and Otago universities. This was estimated to have a total lifetime cost of $10.9 billion over the 16 years from 2026 to 2042.
Option 2 was a specialist medical training programme focused on rural health run by those two universities and was estimated to cost $10.2b, while option 3, the new medical school at Waikato, was estimated to cost $9.1b, making it the cheapest overall – although the University of Auckland has criticised the assumptions behind this costing.
The Waikato medical school was also estimated to deliver greater benefits, leading to a benefit-cost ratio of 1.99, meaning each dollar spent on the school produced $1.99 in benefit. Option 1 and 2 had a ratio of 1.5 and 1.8 – placing them only narrowly behind Waikato.
Health Minister Simeon Brown told the Herald the school was a “game-changer for the long-term growth of our medical workforce in New Zealand”.
“Cabinet agreed to this proposal following the Ministry of Health undertaking a business case and a cost-benefit analysis which demonstrated this proposal would be the most effective at building this critical health workforce for New Zealand,” he said.
The University of Auckland’s Dean of Medical and Health Sciences Professor Warwick Bagg told the Herald he was “deeply concerned” by the business case, which seemed to have a predetermined outcome: to favour the Waikato medical school the National Party took to the last election.
He said the assumptions of the report were flawed.
The capital cost for the new school at Waikato of $232 million was far greater than the other two options, which had costs of $49m and $81.5m respectively. The ongoing operational costs racked up over the years 2026 to 2042 were higher for the first two options, at $513.6m and $508m compared with $361.6m at Waikato.
Bagg said this modelling made unfair and inaccurate assumptions about the existing two medical schools that put them at a disadvantage.
For example, the business case said that it is “more certain that Option 3, the Waikato school, has a lower operating cost … simply due to it being a shorter programme”.
While it is correct that the Waikato Medical School is a shorter programme, tailored to just graduates, the students admitted the school will still have to offer an undergraduate programme somewhere, probably in New Zealand, which the Government will have to subsidise.
Bagg said the cost of turning Waikato’s students into graduates who can be admitted into the school isn’t reflected in the business case. Lifting those costs out of the business case made Waikato look better overall.
“They are focused on the four-year graduate programme … they haven’t focused on the three years that they’ll have to do to get into that medical school,” he said.
He said another way the high capital costs for Waikato have been “offset” is the business case has found “more benefits for the Waikato medical school”.
The business case is particularly reliant on the assumption that far more Waikato graduates will go on to be GPs – and GPs who work rurally – than graduates of other schools.
The business case found increasing capacity at the existing medical schools would result in just 23% of those graduates staying on to become GPs, while the joint rural training programme would result in 33% of its graduates becoming GPs. In the Waikato medical school’s case, 38% of its graduates would become GPs.
The business case notes that having a higher number of GPs in the community increases people’s health. The fact the Waikato school provides the greatest number of GPs therefore weighs heavily in its favour.
Bagg said Sapere, who provided cost-benefit analysis for the business case, “haven’t used the data we provided them” to calculate the GP figure for the option of increasing capacity at Auckland And Otago.
He said “about 35%” of graduates from Auckland and Otago medical schools are working as GPs eight years after graduating – a far higher figure than the 23% quoted in the business case.
He said this lower figure came from a survey of graduates’ intentions when they graduated, not what they actually ended up doing.
“We told Sapere this assumption was incorrect,” he said.
The assumptions for the number of GPs graduating from Waikato were based on figures from Australia’s University of Wollongong Graduate School of Medicine, which will be a model for the Waikato school.
Brown defended the modelling behind the business case.
He said the school will “offer a post-graduate medical qualification based on similar successful programmes in Australia”.
“These programmes include a year-long primary care placement and encourage students to work in primary care settings following graduation. The selection criteria of students alongside their long-term placements in primary care will both support a higher degree of these medical students to work in primary care after graduation,” he said.
Brown poured cold water on concerns councils could be asked to stump up for the new school.
Brown’s Cabinet paper suggested territorial authorities – local councils – are being lined up for a contribution to the school.
A paragraph from the Cabinet paper progressing the school, which will be joint-funded by the Crown, the university and philanthropists, noted, “[t]he University of Waikato has identified $151.859 million which they will ... contribute towards the new medical school costs”.
“This contribution shows significant support for a new medical school from a range of stakeholders from private trusts and foundations, individuals, and territorial authorities”.
But Brown told the Herald, “as Minister of Health, I have no expectation that councils will financially contribute to the new Waikato Medical School”.
University of Waikato vice-chancellor Neil Quigley told the Herald earlier this week about half of the university’s $150m share of the school could come from donations.
“At the moment, we’re well on the way to the 50% of donations just with a relatively small number of large trusts and very wealthy individuals so we don’t see that as particularly challenging,” he said.
Labour’s health spokeswoman Ayesha Verrall called for the business case to be published on Monday to show the assumptions underlying Cabinet’s decision to proceed with the school.
“Treasury has raised concerns about this project. Decisions about the future of NZ’s medical workforce are critical and must be transparent. The Government needs to release the costings quickly,” Verrall said.
The business case was published by the Ministry of Health about 6pm on Friday, a time often associated with the Government trying to bury information because people are enjoying their weekend.
Brown defended the timing of the release, saying: “Cabinet made the decision to progress with the third medical school on Monday with officials tasked with preparing material for proactive release following this decision.
“Normally Cabinet decisions and supporting information are required to be proactively released 30 days following a decision, however due to the significant interest in this decision, this was sped up to ensure the information could be made available as quickly as possible.”