Te Whatu Ora - Health New Zealand spent more than $100 million on consultants in the past year despite a commitment to crack down on external staff.
That was a reduction from the previous year but was still “excessively high”, according to the organisation’s former head.
Former Te Whatu Ora chair Rob Campbell said in February that there would be a crackdown on consultant spending, partly out of concern that in-house expertise was being “hollowed out” in favour of consultancies.
Te Whatu Ora said it spent $102m in the year to July on consultants for specialist services, down from a high of $139m the previous year.
Of that total, $70m went to the “big four” firms. Deloitte were by far the biggest beneficiaries, paid $43.6m by Te Whatu Ora in the past year alone, up from $34m the previous year and $19m the year before. A Deloitte spokeswoman said it could not discuss work it did for clients.
PricewaterhouseCoopers (PwC) were paid $9.4m in the past year, Ernst & Young (EY) $7.9m and KPMG $8.7m.
Te Whatu Ora CFO head of office Auxilia Nyangoni said the organisation could not disclose specific details about the contracted work, but said that some of the spending would have gone towards “supporting change and transformation work resulting from the health reforms”.
“For example, Te Whatu Ora has engaged consultants to assist with the development of new national operating models, to establish the Pae Ora Delivery Unit within the organisation [which provides support, governance, and oversight of our key strategic change initiatives] and to assist with the implementation of new structures.”
Spending on consultants rose dramatically in 2020 and 2021 as the Government sought outside help on major Covid projects like the vaccination drive and to develop and implement the Te Whatu Ora health reforms.
The reforms combined the 21 district health boards into a single, centralised health agency, which aimed to provide consistent, timely care across the country.
Campbell, who was fired from Te Whatu Ora in late February, told the Herald that consultant spending had remained at “an excessively high level” after his departure.
One reason for this was that the entire system had been designed by consultants who had “left plenty of room” for themselves within the organisation once it was up and running, he said.
In some cases, consultants had left Te Whatu Ora only to be rehired as consultants on a higher income.
Campbell said the growth in consultants had coincided with the loss of expertise within the ministry and former district health boards.
“When organisations start to lose competency in management, they lose confidence,” he said.
“And the more you bring in consultants, that deepens. In health, it’s been particularly pernicious, because it’s meant that many of the clinical and care staff, who are the lifeblood of it, still feel locked out and ignored. They feel like they’re the objects of change not the subjects of change.
“That has had a huge effect on morale and on management at all levels. They feel they are being second-guessed and overruled.”
National MP Shane Reti, who is highly likely to be the next Health Minister, has pledged to cut consultant and contractor spending, saying it created “layers and layers of bureaucracy” at the cost of the frontline.
He declined to be interviewed until the new Government was formed.
The number of contractors at Te Whatu Ora and the Ministry of Health rose to 1100 in December before falling to 631 by August. An updated figure was not immediately available.
A recently released audit was critical of Te Whatu Ora’s use of consultants, saying there was limited oversight or evaluation of whether contracted services were delivering the services they were paid for or were delivering value for money.
Nyangoni said Te Whatu Ora used consultancies only when the benefits outweighed the costs, usually because there was no practical alternative, and when they provided the specialist support that the organisation lacked.
“They may also be used to support major non-project related initiatives that are too large for in-house teams to deliver without requiring a surge in resources.
“Consultants may also provide expert advice on developing specialist guidance and frameworks, as an alternative to Te Whatu Ora appointing specialist staff.
“This is considered is logical and prudent expenditure as we strive to focus resources into delivering frontline healthcare rather than building back-office FTE [fulltime employee] numbers.”
Isaac Davison is an Auckland-based reporter who covers health issues. He joined the Herald in 2008 and has previously covered the environment, politics, and social issues.