No one benefits from health sector cost-cutting

New Zealanders are increasingly worrying about the country’s ailing health sector, and with good reason, says Alzheimers NZ’s Chief Executive Catherine Hall. 

The latest Ipsos New Zealand Issues Monitor shows inflation and the cost of living are still Kiwis’ chief concerns (but dropping in significance) and issues around our healthcare/hospitals sit at number two. 

More importantly, she says, concerns about the country’s healthcare/hospital system are rising in terms of their significance; up from 27 per cent of respondents in February 2023, to 31 per cent in May 2024 to 41 per cent now.   

“The state of our healthcare system may be the result of years of underinvestment by successive Governments, but this administration does seem to be compounding this error,” she says. 

“By continuing its austerity strategy, the National-led Government is doubling down on the financial mistakes of the past, further eroding the system’s resilience across the board – and further eroding public trust and confidence.” 

Three strategic issues 

While Catherine acknowledges there are no quick or easy fixes, she is extremely frustrated by the Government’s unwillingness to address three strategic issues.

1. Health system under-funding 

The first is Aotearoa New Zealand’s total health expenditure which, measured as a proportion of GDP, is ‘middle of the pack’ of 10 countries covered in a US report which supported a financial briefing to Health NZ staff.  This conflicts with NZCTU claims that Aotearoa New Zealand’s healthcare spend is well below other comparable countries. 

Irrespective of who’s right, Health NZ is working very hard to cut even more money – $1.4 billion from Vote Health – to plug the system’s deteriorating financial position. 

This comes at a time when Aotearoa New Zealand has a growing and ageing population, when people have more complex conditions, there are growing inequities in terms of access to care, and we have a shrinking workforce. 

2. Where to spend what little money there is 

The second issue involves the decisions Government makes about where to invest its reducing healthcare spend. 

As a very simple example, she notes the Government’s disinclination to fund and implement the Dementia Mate Wareware Action Plan.  This is despite dementia numbers expected to jump 240 per cent in coming years – costing Aotearoa New Zealand nearly $10 billion a year in inflation-adjusted terms by 2050 – and despite risk reduction being one of the four objectives in the Plan. 

“It would make sense to invest in systems and programmes that will reduce health sector costs in future and relieve pressure on the system,” she says. 

And then there is the robust business case for investing $127.3 million over three years for the country’s 17 Alzheimers and dementia services to support 37,400 families. 

Government has also rejected this option, despite the well-known fact these services support older New Zealanders who would otherwise have to seek far more costly care in either aged care facilities or in hospital. 

“The economics just don’t make sense,” she says. “Decisions like this perpetuate the problems impacting the healthcare system.” 

These decisions also seem at odds with repeated Government claims that it wants to see better value for money from its use of taxpayer dollars. 

“As we said to the Health Select Committee Inquiry on the aged care sector review, New Zealand can avoid the very worst impacts – and costs – of dementia, with appropriate policy and funding now. 

“But, like many choices this Government is making, especially in the health and aged care sectors, it is difficult to fathom the logic behind them.” 

3. The third strategic error 

Which leads neatly to the Government’s third strategic error – Government’s insistence on adopting a myopic ‘Wellington knows best’ approach and ignoring solutions proposed by the very sectors dealing with the health sector’s problems every day. 

She says because of their first hand experience community-based organisations and other providers are extremely well-placed to advise on what will work and what won’t. 

“But it’s nigh-on impossible to get a seat at the table,” she says.  “Government should be picking our brains and leveraging the knowledge and know-how that we, and organisations like us, have in abundance.

“One thing is certain, however – a simple cost-cutting mentality that ignores the views of the sector won’t deliver the health services New Zealanders need.  It will just make an already broken system that much worse, reducing much-needed services even more.  No one benefits from that.”