Are we ditching DHBs because we don't like what they show us?

Ten months ago, health minister Andrew Little announced the government intended to abolish district health boards (DHBs) effective from July 1 this year. This was never signalled and came as a complete surprise to the health sector.

DHB abolition was never part of Labour’s election campaign in 2020. It was not part of the narrative around the review of the health and disability system, led by Heather Simpson, nor of the leadup to Little’s announcement. There was a complete lack of prior consultation.

The minister’s justification for replacing DHBs with a new additional national bureaucracy (Health New Zealand) was that they were responsible for a so-called postcode lottery in the health system. But no evidence was given to this claim.

What are DHBs?

It is important to understand what DHBs are (and what they are not). Established on Jan 1, 2001 under the Public Health and Disability Act, they replace the failed market experiment in the 1990s to run the health system as competing commercial businesses. The act rejected business competition and promoted cooperation by excluding coverage by both the Commerce and Companies Acts. 

But there was much more to the newly established DHBs than this. For the first time since our universal health system was legislated for in 1938 (with the exception of the short interlude of area health boards from the late 1980s to the early 1990s), Aotearoa had local statutory bodies responsible for both hospital and community care within defined geographic boundaries. Previously hospitals had their own statutory governance structures while primary care was accountable to the central government.

DHBs were expressly required to be responsible for the health and wellbeing of people in specified geographic areas (described as “resident populations”). This included promoting the integration of all community – including GP and aged residential care – and hospital health services and the obligation to “regularly investigate, assess, and monitor the health status of its resident population”.

Structurally, this gave NZ’s public health system significant advantages over many other modern health systems where community and hospital care are more structurally separated. 

It also made the health system better able to implement a pandemic vaccine rollout. NZ’s rollout started later than larger developed economies but, despite this, our rollout was more successful. Consider the European Union (which negotiated as a block) and the United Kingdom. They had a huge negotiating advantage over Aotearoa because of their much larger economies and physical closeness to vaccine production.

As of Feb 20, NZ’s full vaccination rate was 77% of the total population (including those ineligible). Compare this with the European Union (72%) and the UK (also 72%). The EU and UK advantages enabled them to get vaccines much earlier but despite this Aotearoa has overtaken them.

This is an extraordinary outcome. The biggest factor that differentiates our health system from the UK and EU is that we have local statutory bodies responsible for the whole population of geographic districts (not just hospital or community) and who are required to know their populations well (much more than a more centralised national bureaucracy).

It is often assumed DHBs are local autonomous entities acting as feudal fiefdoms. Not so. There is a high level of central government control masquerading as a velvet glove hiding an iron fist under a that goes well beyond funding. This control was at times an obstacle to DHBs implementing the rollout which makes the result even more remarkable. 

Scrambling to get a justification narrative

The decision to abolish DHBs was only developed very late in the process. The government’s Transition Unit set up to implement the health minister’s ‘reforms’ was only established in September 2020. Abolition was not under consideration before then and would have only been made secretly no earlier than December. It only gained traction when business consultants Ernst & Young got into the engine room of decision-making (The reforms’ Transition Unit is led by EY senior partner Stephen McKernan).

Consequently, the rationale for abolition came down to a soundbite that was repeated by the prime minister in her formal parliamentary address on Feb 8. We have a postcode lottery and DHBs are to blame!

A "postcode lottery" occurs when a patient in one geographic area receives state funding for a particular drug or treatment while a patient with similar clinical needs in another area does not. This happens and the reasons are complex but include central government funding (levels and allocation) and rurality.

But blaming DHBs is blunt scapegoating. In fact, the creation of DHBs with their unique hospital and community focus has enabled postcode lotteries to be identified and understood better. Having identified a problem, DHBs are now being blamed for it.

Without DHBs these lotteries would have been difficult to identify. Who knows? Perhaps this is the real reason for abolishing them.

From poor to insane leadership

The Pae Ora (Healthy Futures) Bill presently before Parliament is vacuous on primary and community care and virtually silent on hospitals (other than public hospitals being run by Health NZ). Before leaving the health system we have, we deserve to know much more about the one we are going to. Replacing existing structures with new ones that have not been worked through is poor leadership. 

Making it worse than irresponsible is doing this in the midst of a raging pandemic. The highly transmissible omicron variant of covid-19 is close to overrunning our hospitals and general practices.

It is almost certain that not too long after DHBs have been abolished (if not before), a new covid-19 variant more deadly or transmissible than delta and omicron will emerge in NZ. 

Aotearoa will need to continue to reach communities for booster vaccinations and potentially new vaccines for newer covid variants. DHBs have proved that they are better placed to do this than a new, much more centralised bureaucratic structure whose key parts have yet to have been worked out.

Abolishing DHBs, especially during a pandemic, is Boris Johnson-like decision-making. Surely NZ deserves better than this. It is time for sanity, reinforced by an evidence-based approach, to be restored to the political leadership of our health system.

Read BusinessDesk's interview with Margie Apa, CE of the new Health NZ agency.