The pain came on quickly. It had been a normal Sunday – gardening, Pilates, cooking – but that night, talent agent Sandra Bestall began to experience a stabbing sensation in her lower abdomen. It kept her awake, and in the early hours of the morning her partner said, “Let’s get you to a hospital.”
She arrived at the emergency department at Thames Hospital at about 6am, where she received timely and excellent care. “Straight into a bed. About 30 minutes later, a nurse came in, asked me questions, went away, came back and gave me a fentanyl shot because he could see I was in pain.
“The doctor – I think he comes down from Auckland – saw me at nine o’clock, came back to check on me, gave me another shot, kept me lying down the whole time. He was really nice. He said, ‘Look, I suspect you’ve got appendicitis. We’ll get you a CT scan.’ Thirty minutes later, I was being wheeled in for the scan. Afterwards he came back, did a little jig and said, ‘Unfortunately, you do have appendicitis – but it hasn’t burst. We’re going to get you straight off to Waikato this afternoon.’”
Bestall asked if her partner could drive her. The doctor replied “No, stay lying down. You’re going in the ambulance.”
Waikato Hospital has one of the busiest emergency departments in New Zealand – 84,000 presentations in 2024 – roughly 230 per day. Overcrowding is constant, especially during winter. In 2017, New Zealand Doctor described the problem of “ambulance ramping” at Waikato’s ED – “when injured or unwell patients arriving in ambulances cannot be unloaded because there is nowhere for them in the department”. It quoted a house surgeon: “The situation was dire. We have patients waiting in corridors; nurses are leaving all the time – we are not coping.”
In June 2022, the ED manager apologised to a stroke victim who left after being told they faced a nine-hour wait to see a doctor.
About 5000 people visit an emergency care clinic every day in New Zealand, and many experience a public health system that is clearly under immense strain.
In February, The New Zealand Herald revealed all of the country’s EDs were failing to assess patients with life-threatening conditions within recommended timeframes. More than 300,000 patients with “imminently” or “potentially” life-threatening conditions were not seen within recommended times in the first six months of 2024, the Herald reported, despite triage standards indicating they should have been seen promptly.
In market research company Ipsos’s June survey, 43% of 1002 respondents identified healthcare as the most important issue facing New Zealand.
Early this month, Chief Ombudsman John Allen criticised Te Whatu Ora Health New Zealand for withholding data showing more than a third of evening shifts and half of all day shifts in our public hospitals last year were understaffed.
Crisis, what crisis?
Nearly everyone in the health sector agrees it is in crisis: underfunded and understaffed. Nurses describe themselves taking histories and conducting ECGs in corridors, patients in acute pain standing for hours because reception areas have no spare seats.
And a new Infometrics report for the Nurses Organisation found the public health system was understaffed by an average 587 nurses per shift last year.
But there is a mystery here. If we compare New Zealand with other OECD nations, our health spend as a percentage of GDP is higher than average, and public health spending as a proportion of government spending is one of the highest. We have slightly fewer doctors per head of population than peer nations – but more nurses. And the number of doctors and nurses per capita has risen steadily for 25 years.
It’s true we have a growing and ageing population and this places greater strain on the system. But even adjusting for this, there are more clinical staff than ever before, and funding is higher than it was before Covid. How do we reconcile this with reports of chronic understaffing?
The answer is, unsurprisingly, disputed. National blames the previous Labour government, particularly its decision to merge the 20 district health boards into a single nationwide system, claiming this created a bloated and undisciplined bureaucratic monster. Labour blames the coalition, its budget cuts and reduction of staff at Health New Zealand.
Neither explanation seems persuasive – the delays and overcrowding were present at the end of the last National government in 2017, endured through Labour and are worse today.
Cost disease
New Zealand Institute of Economic Research deputy chief executive Sarah Hogan has a background in health and public policy. She says other public health systems around the world are experiencing the same challenge: rapid increases in the cost of staff, buildings and health infrastructure that call the ability to fund those systems into question.
Our health spend is higher than the OECD average and we have more clinical staff than ever before.
In the late 1960s, US economists William Baumol and William Bowen predicted this crisis, noting the productivity of workers in the healthcare sector was stagnant. It’s a very labour-intensive industry – the amount of time spent on surgery, nursing, diagnosis and patient interaction stays roughly the same over time.
Baumol coined the term “cost disease” to explain why costs rise faster than productivity gains in people-dependent professions. A car company can double the number of cars it makes per day by building better robots, but it’s hard for a hospital to double the number of patients treated per hour without compromising patient safety – unless it doubles the number of staff.
A Treasury report last year estimated productivity in the health sector has declined since 2015. It cited a combination of causes: multi-morbidity (more patients presenting with multiple health conditions, making them harder to treat); an increase in the number of patients over 65; and changes in employment arrangements – including safer staffing for nurses and junior doctors and increased non-clinical time for specialists and consultants. These were designed to improve safety and staff wellbeing, but they increased costs.
If we combine cost disease with an ageing population, global demand for healthcare workers and the increasing expense of novel healthcare technologies – as seen in last year’s funding boost to Pharmac for new cancer treatments and other conditions – we should expect to see less capacity at higher cost. And we do.
Waiting in pain
Sandra Bestall arrived at Waikato’s ED by ambulance at about 6.30pm on Monday. She was put into a wheelchair. “A nurse apologised and said there was nowhere for me to lie down, so they took me to the general reception area. I thought, ‘What’s going on?’ They took my notes – I’d been handed over by a nurse from Thames, so you’d think they’d know I wasn’t just a walk-in with a cut lip.
“But the reception staff laughed and said, ‘There’s no beds, ha ha,’ even though I’d been told there was one for me.”
She befriended another patient – a local – who told her which gangs controlled which regions of Waikato before asking, “And what gang runs Thames?”
Bestall waited about 31/2 hours without anyone checking on her. “At about 10pm, I went to the counter, said I was brought by ambulance, and told there was a bed. They said, ‘Well, there’s no bed.’ I told them I was in a lot of pain and had never had fentanyl before, that I was feeling emotional and unsafe because there was some scary stuff going on in the waiting area. They told me to sit back down.”
She rang Thames Hospital and said, ‘Can I come back there? I’m here alone and nothing’s happening.’ They said, ‘No, go up to the counter and tell them how you’re feeling.’ I did, but nothing happened until a young intern and a doctor came to see me. They asked all the same questions I’d already answered in Thames. They offered pain pills. I said yes, but they forgot to bring them. It was now 1.30am and I still hadn’t had any painkillers.”
After the intern and doctor left, a nurse appeared and managed to find Bestall some medication and a room where she could sleep. “The next day, I was moved to the area I was originally meant to be in once a bed became available. If it wasn’t for that nurse, I think I’d have been stuck all night with no pain relief.”
Nil by mouth
Health is National’s most vulnerable issue. According to Ipsos, Labour is seven percentage points ahead of National on managing the cost of living but 15% ahead on healthcare and hospitals – a gulf of potential election-losing scale.
In his cabinet reshuffle at the beginning of the year, Christopher Luxon took the health portfolio off Shane Reti – a GP and former Harkness fellow at Harvard Medical School – and awarded it to Simeon Brown, who worked as a banker and holds a double degree in law and commerce. Brown had been in the role for six months when the Listener spoke to him.
More than most politicians, Brown communicates in press release-ese, soothingly repeating key messages: “record levels of investment”; “timely access to healthcare”; “hard-working doctors and nurses”; “patients at the heart of the system”.
One National Party insider notes, “There might not be a policy difference between Reti and Brown but if Wairoa gets a new podiatrist Simeon will take credit for it.”
Brown also thinks in terms of productivity, though he naturally attributes the health sector’s decline to the previous government rather than any deeper trend. “We’ve got a big job to turn that around,” he says. “It will take time, but we now have dedicated staff making progress under this government – ED wait times are starting to reduce, investment in cancer medicines is helping thousands of New Zealanders and immunisation rates are improving again for children.”
He says digital technologies are an important tool for improving outputs, predicting AI will be a major productivity enhancer in healthcare. “Health New Zealand has just approved trials of ambient scribes in EDs – AI tools that write clinical notes and reduce admin load. This lets clinicians see more patients each day.”
Nearly everyone in health is cautiously optimistic about AI – although some are less cautious than others. In 2015, computer scientist Geoffrey Hinton – “the godfather of AI” – urged universities to stop training radiologists, predicting they’d be obsolete by 2020. He recently revised the prediction: he now expects interpretations of medical imaging to be handled by a combination of physicians and AI, which will “make radiologists a whole lot more efficient in addition to improving accuracy” – ie, they will increase productivity.
Brown is also looking to reform Health NZ’s IT infrastructure. The DHB merger revealed either 4000 or 6000 (even the number is disputed) disparate systems across the public health system, most of them out-of-date, lacking in proper backup mechanisms and prone to crashing, leading to operational disruptions.
In 2021, a ransomware attack on Waikato Hospital crippled IT and phone systems, exposed sensitive patient data and forced clinicians to revert to manual processes.
A 2024 survey by business research consultancy Gartner found roughly 74% of Health NZ’s IT spending merely keeps these legacy systems going.
One of National’s favourite attacks on the DHB merger is the infamous Excel spreadsheet that Health NZ used in lieu of a financial system. “They were cutting and pasting the data from 20 different DHBs,” Brown recalls with undisguised glee. The coalition government is still working on a formal digital investment plan for the organisation.
Cartels & bottlenecks
Sir Angus Deaton – the world’s most celebrated health economist, awarded a Nobel Prize in 2015 for his work on poverty and welfare – once denounced the medical profession, stating, “Physicians are a giant rent-seeking conspiracy that’s taking money away from the rest of us, and yet everybody loves physicians. You can’t touch them.”
“Rent-seeking” is the strongest term of abuse economists have. It means you’re taking money without creating value. This may sound confusing – doctors obviously have enormous value. What Deaton means is there’s considerable demand for medical care because we put a high value on life and minimising suffering. Most clinical diagnosis and prescribing can be performed only by registered doctors who require at least seven years of training, and this tightly constrains the supply of medical care.
Since 2000, between 550 and 650 new doctors a year have graduated; we need nearly twice as many to meet demand. The constraint makes doctors comparatively wealthy. The bottleneck is always justified on the basis of patient safety, although keeping patients with acute conditions waiting for many hours in the ED, or weeks to visit their GP, does not seem very safe.
New Zealand is also short of hospital beds. The OECD average is 4.3 per 1000. We have 2.7. In September last year, Waikato Hospital’s cardiology department had 109 patients but only 54 beds. Overflow patients were placed in other wards, filling them up. This blocked the emergency department, with incoming patients stranded in the waiting room or sitting in ambulances. A cardiologist told RNZ National his department performed eight operations a week. “At the moment we have 20 inpatients waiting for cardiac surgery, so it’s not difficult maths to say that if you come in today with a heart attack and need cardiac surgery you will wait four or five weeks.” One patient waited 54 days.
Bed blocking is occurring across the entire system. In May, a clinician’s report at Auckland’s Middlemore Hospital found 1500 patients had been treated in corridors – including road crash and stroke victims – over a single month. It noted: “The ED has 151 beds but there were at least 12 days last winter where more than 400 patients arrived in a single day.”
A lack of community facilities contributes to the problem. Many bed-block patients are elderly and need rest-home, dementia or hospital-level care that isn’t available. Emergency physicians have warned the access shortage is the single biggest risk to patient safety.
Supply-side focus
Many of the government’s reforms are aimed at solving supply problems. A new medical school at Waikato will add 120 training places a year after its planned 2028 opening. It is funding an extra 25 places a year at the Auckland and Otago medical schools from next year and has announced a two-year training programme to support 100 overseas-trained doctors into primary care.
But Brown is also interested in expanding the nature of the workforce. “We want a wider range of professionals: specialists, doctors, nurse practitioners [who work in GP practices and can prescribe medicines] and physician associates [a new category of overseas-trained health professionals working under doctor supervision]. We’re funding 120 new nurse practitioners per year. The goal is a multidisciplinary workforce where patients can be assessed, diagnosed, treated and prescribed for by a wider set of professionals.”
Finally, Brown is outsourcing more elective surgeries to private providers, transitioning from ad hoc contracts to three-and even 10-year agreements and moving more patients (about 10,000 this year) into private hospitals. This is arguably his most controversial policy change.
The Association of Salaried Medical Specialists, which represents senior doctors, warns outsourcing could lead to private providers treating the less complex, lower-risk patients, leaving the costly and complex patients to the public system. Many specialists work across both sectors, and as private work expands, it may take staff away from the public system, reducing capacity to treat acute conditions and teach new doctors, affecting the future specialist pipeline.
In May, the association released data showing the specialist workforce in public hospitals grew 4% from June 2022-June 2024 (less than population growth) while those working in the private sector increased 9.5%. Public hospital capacity fell in psychiatry, cardiothoracic surgery, paediatric surgery and anaesthesia.
Outsourcing fears
When Labour’s health spokesperson Ayesha Verrall was practising as an infectious diseases specialist in Singapore, a poor Malay patient in ICU with septicaemia pulled his IV lines out because his insurance wouldn’t cover his bills.
“That’s life threatening to do that,” says Verrall. Experiences like this are one reason Verrall is highly resistant to increased use of private providers in the public health system.
“I certainly disagree with the idea there should be 10-year outsourcing contracts. That will lead to the Americanisation of our health system … public services will collapse because we will lack the staff.”
She’s also critical of the lack of transparency surrounding the pricing of these operations and the lengthy delay in reporting on the quality of their outcomes.
Health NZ has just approved trials of AI tools that write clinical notes and reduce admin load.
Verrall is one of the most cosmopolitan and highly educated politicians New Zealand has seen. She trained in medicine at Otago – where she entered student politics – then studied tropical medicine and bioethics in the UK, Singapore and Peru before postgraduate work in Alabama, completing a PhD in tuberculosis epidemiology at Otago. Critical of Labour’s early Covid response, she was commissioned to investigate the contact-tracing system, which led to her becoming a list MP in 2020 and minister of health in February 2023.
Like Brown, Verrall is interested in technological solutions to the health sector’s problems. She says Labour had planned a unified national health IT system but National not only cancelled the funding for it “but cut the staff who do the IT maintenance and repair”.
To her, many problems in the public health sector, especially in hospitals, sit on the demand side: it’s too expensive and difficult to see a GP, so people defer treatment until their conditions are worse, requiring more advanced treatment.
“That is backwards. It should be easier to get the care you need in the community … Otherwise, it does just drive people to the emergency department. Or many people miss out.”
She’s an advocate for public health (population-wide) programmes to reduce the drivers of chronic disease. “There is a cheaper way to do all this, and that is by taking prevention and primary care seriously.”
She has pursued the roll-back of anti-smoking measures driven by Associate Health Minister Casey Costello like an oncologist exposing tumours.
Economist’s prescription
Between the two main parties there are glimmers of the solutions NZIER’s Sarah Hogan argues for. She believes “cost disease” is a solvable problem: that we can afford to maintain a comprehensive system so long as we maintain economic growth. If we’re getting richer as a country we can simply choose to spend some of our additional wealth on healthcare.
To Hogan, unaffordability is a “fiscal illusion”, but only if we shift away from the constraints of the current system. She identifies five priorities for funding public health:
1. Shift away from the dominance of GPs delivering primary care (to relieve some of the supply bottleneck) and scale up community-based services, including non-government agencies with diverse skills and workers.
2. Strengthen non-hospital services such as aged care to reduce hospital stays that are blocking capacity.
3. Build digital infrastructure – not just integrated patient-tracking, finance and payment systems promised 30 years ago but never delivered, but a 21st-century stack allowing remote patient monitoring and broader workforce participation.
4. Adopt the ACC approach to incentivising prevention and early diagnosis, rather than waiting for chronic patients to require hospital treatment.
5. Expand access to medicines by expanding prescribing rights beyond doctors. OECD nations spend an average 1.4% of their national income on pharmaceuticals. A 2023 report by Sydney-based Shawview Consulting estimated New Zealand spends 0.4-0.5%.
Next, please
After her first night at Waikato Hospital, Sandra Bestall was told she would probably not be operated on until the following day. She went into surgery on Wednesday morning, but by then her appendix had burst – a potentially life-threatening development greatly complicating her recovery.
“I was just in a lot of pain and just [had this] constant feeding of a sushi train of drugs pumped in. I had a night where I was vomiting on the toilet floor where the young nurse had to come and put a towel under my head to help me with the throwing up.”
She spent the rest of the week including the weekend in hospital battling the infection and was discharged a week after she’d arrived. “When I said, ‘Oh yeah, I’m feeling better’, someone came in an hour later and said, ‘Hey, listen, we need the room.’ They wheeled me down to another waiting area for another three hours. They gave me one pack of paracetamol and five days of antibiotics and said, ‘See you later.’”
Bestall returned home to Thames. No follow-up or convalescent care was offered or organised between Waikato and the local hospital, despite her having had abdominal surgery.
Anton Chekhov, the Russian playwright who was also a medical doctor, said, “When a lot of remedies are suggested for a disease, that means it cannot be cured.”
The symptoms afflicting New Zealand’s public health system seem grim, but if the primary affliction is economic rather than medical, it can be cured with the seemingly simple remedies of reducing demand and increasing supply.
Economics, however, is constrained by politics – which usually prevents significant change to the status quo. But with health, political inertia is coming into conflict with patient lives, and a growing public clamour for serious change.