A "once-in-a-generation" report into New Zealand's health sector has recommended a significant overhaul of the country's district health board system and the creation of new health agencies.

The report calls on the Government to scrap the democratic process of the public voting for DHB representatives and shift to a system where board members are appointed by the Minister of Health, based on merit.

The report, spearheaded by former Prime Minister Helen Clark's chief-of-staff Heather Simpson, also called for New Zealand's 20 DHBs to be slash to between 8-12 within five years.

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Simpson's report labelled New Zealand's health care system "complex" and "fragmented," and in need of major reform.

The report recommends the creation of a new entity, Health NZ, which would focus on the operational and financial side of the health and disability sector.

The Government is also being asked to consider setting up a Māori Health Authority, which would advise on Māori Health and report on the performance of the system.

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Shortcomings

The report, which Simpson herself said was "probably the most comprehensive integrated look" at New Zealand's health care system in a generation, outlined many of the sector's shortcomings.

"The health and disability system is under serious stress," the report said.

It said that from a financial perspective, the health care system has struggled with the resources provided to if for some years.

Heather Simpson, chairwoman of the Health and Disability review panel, with a copy of their report in Wellington. Photo / Mark Mitchell
Heather Simpson, chairwoman of the Health and Disability review panel, with a copy of their report in Wellington. Photo / Mark Mitchell

"From a workforce point of view, staff are feeling more and more stressed, facing increasing demands and significant shortages in supply."

The report's major recommendations, now being considered, include:

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• Shifting to a greater focus on population health
• Creating a new Crown Entity, provisionally called Health NZ, focused on operational delivery of health and disability services and financial performance
• Reducing the number of DHBs from the current 20 down to 8-12 within five years, and moving to fully appointed Boards
• Creating a Māori Health Authority to advise on all aspects of Māori Health policy and to monitor and report on the performance of the system with respect to Māori
• Greater integration between primary and community care and hospital/specialist services

Simpson's report was particularly critical of DHB leadership, saying that it "needs to change" and the effectiveness of elected board members was "not compelling".

"The review recommends that all board members be appointed by the Ministry of Health against a transparent set of competencies."

These include financial and governance experience, knowledge of Māori health needs and an understanding of the disability sector.

Simpson also proposed that a new agency, Health NZ, be set up which would run the ruler over DHB's financials.

The majority of New Zealand's DHBs have reported deficits for quarter after quarter and are expected to remain in the red for the foreseeable future.

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The creation of a specific Māori Health Authority, which Simpson said would strengthen Māori leadership, has also been recommended.

This authority would be the principal advisor on Maori health issues, as well as taking the lead in strengthening the Maori workforce in the health sector around the country.

A Government decision

The decision on whether or not the recommendations will be accepted now falls to the Government. Prime Minister Jacinda Ardern will lead a team of top ministers – including Finance Minister Grant Robertson and Health Minister David Clark – to drive the changes.

Clark, who said Simpson's work was a "once-in-a-generation" report, appears to be open to implementing the recommendations. He was committed to fewer DHBs.

Health Minister David Clark in the House. Photo / pool
Health Minister David Clark in the House. Photo / pool

DHBs had been focused on planning year-to-year, they lacked a longer-term focus around funding, he said.

"Cabinet has accepted the case for reform, and the direction of travel outlined in the review."

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The health sector was ready for change, "everyone agrees there is an opportunity to make things better".

Any incoming Government would want to prioritise the recommendations - which could take up to three to five years to implement.

"The opportunity is huge", Clark said.

Ministers will discuss the recommendations over the coming months and make a decision after the election. Clark didn't directly answer whether or not the recommendations would be implemented in the first 100 days if the Labour Government was re-elected.

Asked whether the Government would enact all of the recommendations, Clark said individual decisions on each of them would go to Cabinet, or to a future Government.

"Make no mistake, reforming our health and disability system is a massive undertaking, and will not happen overnight. Meaningful change and improvement will take a concerted effort over many years."

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There wasn't a great deal in the report which Clark said he would disagree with.

He said many of the recommendations were what people in the health sector had been "crying out for".

Asked if having the power to install DHB members was too much for one Minister, Clark said that would go to Cabinet.

The feedback Clark said he'd got from the sector was that voters didn't know the DHB candidates they were voting for.

"The case for professional governance has been made," he said.

He didn't expect to propose DHB mergers before the election on September 19. Local health boards were still needed, said Clark in response to questions on whether the DHBs should be done away with altogether.

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He didn't expect any job losses as a result of the changes proposed in the report. Asked about bleak financial forecasts for DHBs, Clark said he expected the new agency recommending in the report would have oversight of all boards and stronger governance function.

He said the balance sheets of DHBs "started to run dry in 2013".

Good structures for governing DHBs would help hold them to account financially.

"I expect DHBs to return to surplus over time," said Clark.

He said as Health Minister he had acted to strengthen individual boards, and that had led to performance changes.

Asked how the recommendations fitted in with last week's report that $14b was needed to fix New Zealand's hospitals, Clark said today's report was all about planning and the Government was absolutely committed to capital spending to make sure communities had access to health care.

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"We are absolutely committed to rebuilding our hospital infrastructure," he said.

Asked if the government was considering subsidised dentists for adults, Clark said the focus was still on providing the right access for young people to oral health care.

"We want to make services more affordable and accessible," he said.

'A national shame'

Asked how disabled New Zealanders were being "let down", Clark said it was mostly in the access to services.

He said the health sector should employ more disabled Kiwis. Having more in the health workforce would make a huge difference, Clark said. That change was "front of mind" for him.

Asked how long it would take for racism and inequality to be removed from the health system, Clark said it wouldn't happen overnight.

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Maori have some of the worst health outcomes in New Zealand and needed a stronger voice in the system.

Asked if the health system had failed Maori, Clark said: "I think Maori have been not well served in our health system historically."

With the structures proposed in the report, the health system would have a stronger Maori voice.

"We will learn from that Maori voice what is needed," he said.

"Maori have amongst the worst health statistics in this country. That is a national shame. the changes proposed in this report will make it better for all New Zealanders"

No evidence of a second wave

Clark said New Zealand knew more now than it did before the Covid-19 lockdown and its response to the pandemic. Clark said New Zealand needed a flexible health system that could respond when needed.

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Asked if the country was ready for a second wave of Covid-19, Clark said New Zealand was much better prepared for it.

He added there was no evidence that a second wave was here.

New Zealand's pandemic plan had been a good starting point for dealing with Covid-19, he said.

Clark said contact tracing was a manual task and would be a backbone of the public health response, when asked about the Covid-19 tracking app. He was confident we had a better system was in place.