INSTITUTE OF HEALTH MANAGEMENT/NEW ZEALAND HOSPITALS ASSOCIATION

ROTORUA CONVENTION CENTRE

Note: the following is a transcript of what Mr English said.

Good afternoon and thank you very much for the chance to speak to you today. It's a slightly odd feeling here with everyone sitting to my left.

What I wanted to do today was to take my topic from the programme which is the view from the top and try and give you a sense of the political context in which you will deal with the more technical aspects of the process of integrating health care.

I think it is important we have a grasp of the political context, not because I think it's the most important thing about a public health system - it almost certainly isn't - but because it seems to have quite an impact on the way people think about what they do and if I want to leave you with anything today, it is to leave you with a sense of possibility; that is a sense that you can do the things which you know makes sense to be done.

I'll start with the Coalition Agreement - it being the sort of founding document of the current Government. The Coalition Agreement has two parts to it that are relevant from a health point of view. In the first part of the Coalition Agreement on health it has some statements of values. They are statements that are driven to a large extent by the perception of what the previous National Government was doing to the public health system. But they are important statements because they re-establish the view that the Government is committed to a public health service which was a matter in some doubt, and secondly that the health service ought to be driven not by fiscal or financial imperatives but by the need to procure better health outcomes. It doesn't go into detail about what those are but nevertheless they are statements of principle which re-orientate Government thinking and reassure the public and the health sector that the Government wants a public health system.

The second part of it that matters is a series of policy decision that were made in the context of the Coalition talks themselves. The first was the move to one RHA or one national funding agency as it's likely to be called. We decided to bring that forward twelve months ahead of when it was laid down in the Coalition Agreement and start the transition on 1 July this year and so we have magically the Transitional Health Authority.

We did that because we felt it wasn't going to work very well to have RHAs spending eighteen months worried about what was going to happen to them while they spent somewhere around $11 billion of public money. We need purchasers to be concentrating on the job and that's why we decided to bring the transition forward to provide more certainty.

A second plank is the move to non-profit CHEs. They haven't been making profits but we're going to make that official in the middle of next year by putting it in legislation so everyone can be reassured about it. What I think is important about that is not so much that it's going to make all the problems go away or all the pressures, but that it responds to the public's desire to have more confidence in the system. If they believe decisions particularly by those organisations that are owned by the Government are made for the purpose of generating a profit then they won't trust those decisions. If they believe they're made for the purposes of increasing health benefits and health outcomes then they are much more likely to trust those decisions.

One of the ironies of this particular decision is that when CHEs were first made into profit organisations it was regarded somewhat as the end of civilisation as we know it and all sorts of dire consequences were predicted. Now we're changing back to non-profits a whole lot of people are saying it doesn't make much difference. In fact they're right and wrong. Changing them to non-profits won't mean they've suddenly got more money or are going to find it any easier to make decisions about their structure or their services.

A third plank of the Coalition Agreement has been the new emphasis on child health and in particular commitment of substantial resources to the free visits for under sixes. That has been implemented on time which is something of an achievement. Other governments have tried that policy before and founded on traditional medical politics. This Government, by taking a slightly more pragmatic approach has been able to get the policy in place and so provide better access to primary care for quite a lot of New Zealand's children although there are, of course, those groups who have never really frequented a GP anyway and we have to make sure that we make further efforts to increase their access as well.

A fourth part of the Agreement which has attracted a lot of attention has been the statements that have been made with respect to private participation in the public health sector. The Coalition Agreement does not ban private participation. What it does is put in place a process that public agencies are to use if work is going to shift from the public sector provider to a private sector provider and private sector in the Coalition Agreement was regarded as a pretty wide ranging term including Maori providers, disability providers, non-government organisations, charitable trusts as well as profit makers by GPs and pharmacists.

It's really important to understand that it is a process not a ban and that the process actually makes quite a bit of sense. The Coalition Agreement requires us to assess the clinical and financial benefits and if there aren't clinical and financial benefits or health outcome benefits and financial benefits, then we shouldn't do it and would agree with that wholeheartedly. We shouldn't be changing providers unless there's some benefit in doing so. The provisions I think arose out of a belief that previous governments were pursuing private participation purely for ideological reasons and so that's why the process is in place and public agencies are required to meet some audit requirements when they make those sorts of decisions.

Another crucial part of the Coalition Agreement was the requirement to have a policy review. The Coalition Agreement was negotiated in a very unusual process. There was no consultation, there was no official advice, there was no participation by the media or the public at large - it was purely a bunch of politicians sitting in a room trying to get into Government and the kind of incentives that puts on people are rather different from those that you face if you were trying to actually end up with a better health system.

So it was recognised at the time there was a need to review the policy to have a wider participative look at it. So we set up what is called the Steering Group. I was anxious to ensure we didn't have a wide ranging, long-winded, many-papered officials review of policy because those never really come to an end.

We took 13 people from right across the health sector covering the whole political spectrum to my knowledge as well as the whole provisions spectrum. For instance there was one person from my electorate on that group, Dr Branko Sijnja who ran the Save Balclutha Hospital campaign very successfully for six or seven years right through to the Chief Executive of A-Plus and quite a few primary care orientated people as well.

Now what came out of the Steering Group was not remarkable for its insight. There isn't a whole lot new in health and those of you who have been in it for a while will know that. What was remarkable was the degree to which they were able to come to a consensus across a wide ranging group of practitioners. These were people who are working every day with the contract system with the incentives good and bad, with the failures and successes of service delivery. So the Government has taken up the Steering Group report and put it through its own official process because we have the task of proposing legislation which incorporates the decisions that were made in the Coalition Agreement and which have been examined in some detail by the Steering Group report itself.

So we've made a number of decisions in the last week which will frame the legislation that we'll put forward. Now the legislation isn't meant to be some comprehensive description of how the public health system works. In fact the legislation is very much a skeleton and our health legislation has I think been quite successful in this respect. It describes some of the institutions, the public institutions, their roles and accountabilities and leaves it at that.

So we have decided that we will have a national funding agency and it will be a Crown entity with an appointed board. We have decided that CHEs will become non-profit companies - again with appointed boards. We have decided to do quite a bit more work on accountability and the accountability cycles that apply within the public sector. You're also going to see as a result of these decisions some quite significant changes in the role and probably the size of the Ministry of Health as well.

So that's the sort of formal policy agenda. It's outlined primarily in the Coalition Agreement. There's been some discussion about it and consultation in the vehicle of the Steering Group and we will be turning that into legislation on which you will have every chance to comment in the usual public process that goes with any legislation.

I have to say that having witnessed now, I think, three health restructuring - the first one being when my mother joined an Area Health Board several years ago when it was being set up, then those in the early 90s and the last this particular round, I would hope, that we'll be able to kick the habit where politicians don't like the answers public agencies give them so they restructure them.

I suspect the ones we're setting up now - the national funding agency and whatever it is that CHEs have for a new name, any suggestions welcome, I suspect that if they're going to give us answers we don't like. As well they're going to tell us resources are restricted; they're going to tell us there's incentives that need to change; they're going to tell us that sometimes services fail and politicians have to be accountable for that.

I don't think in the future that politically-driven restructuring is going to be what drives the public health service and I'm not sure that this particular round is going to have a big impact on the direction of the service. But I think there are three or four fairly clear principles that are now driving the kind of sustainable change that's going on in public health.

So here's four principles that seem to come through all the discussion and I think are very useful as signposts for those of you who are involved in health management.

The first is simply that we want to organise services around the patient and the community and it's a slightly different view from what we've done traditionally which is expect communities and patients to organise themselves around our service. The public are much less tolerant of the kind of institutional arrogance that's been a feature of the public health service in the past and often communities such as the Maori community have simply missed out because they couldn't organise themselves the way we thought they should.

The second principle is that it is simply the search for better relationships. Time and again I come across examples of totally dysfunctional relationships between people who have worked in the same town for 20 years or looked after the same patient for the last six weeks but have never quite discussed things with each other.

Just to give you one example, in a relationship between a large hospital and a small hospital that I know about, the GPs who ran the small hospital and the specialists in the larger one 30 miles away have never actually talked about what goes on in the small hospital. They've been doing it for 20 years. The specialists regard the small one as a death trap and the GPs regard it as the only place they can keep their patients safe from the large hospital. It doesn't seem to me to be too demanding to expect those groups to communicate in some kind of professional way, informal way about what they think they're trying to do respectively for their patients.

Better relationships is the easiest thing to say and in fact I think in health the hardest thing to do because it's all about understanding someone else's point of view and that's difficult when you're up to your ears on a daily basis in dealing with all those problems that present in a highly personalised way right in front of you and it's also about exploring the boundaries of our professional and our parochial interests and that certainly isn't easy.

A third principle is that we're looking for local solutions to local problems. It's simply no longer acceptable or appropriate for people like myself or my advisers to sit in Wellington and dream up service delivery models that are going to be accepted by everyone else. Our communities are diverse, their histories are different, the relationships in them are different and Government has to be open-minded enough to allow the solutions to flow from local needs and local relationships rather than to impose solutions on them. That's something of a political risk because the sort of learned helplessness that's for years been a feature of the public health system means people are often looking for what they call leadership.

From what I've seen as soon as someone decides they're going to tell people how to do their job that just engenders a whole lot of fruitless political activity arguing over whether that's the right answer or not. So at the risk of being seen not to provide as clear a leadership as perhaps has been traditional, I want the emphasis to be on local solutions to local problems.

The fourth principle is that resource decisions should be made as close as possible to the need that requires those resources. Again that's not rocket science and pretty obvious to anyone who has worked with it, it's just not how we've organised the system. At the moment the Minister can be the one making quite detailed decisions that would be better made by people dealing with the need.

We actually already carry out all the functions that we know ought to be carried out in the public health system. We have rationing, we have some integrated care, we have an understanding of the resource constraints, it's just that a lot of those are mediated through a political process around a Minister and a Parliament rather than dealt with much closer to the patient, the community, the need and the health professionals.

We see every day examples of how those resource decisions need to be closer to where the need is. If I go to a public meeting particularly with a group of older New Zealanders I'll always get an example quoted to me of someone who needs a hip replacement who is sitting on a waiting list whose pain killers are costing more than what the operation would and I have to be honest with them and tell them there's really no-one in the system at the moment who is able to gather that information and make the decision that it would be cheaper and more effective to get them off the waiting list rather than keep giving them painkillers. No-one has a good reason to do that even thought everyone would want to if they were presented with the patient.

So there's four principles - organising services around the patient; searching and developing better relationships; local solutions to local problems and bringing resource decisions closer to the needs. In a way this is a different way of talking about integrated care but it's a way I think that politicians and certainly the public can understand better than a lot of the discussion and words that go with what is actually quite a complex intellectual construct of integrated care.

So how does this all fit into the current political context? Well it seems to me there's been about 12 months of a lot of uncertainty in the public health sector. With the onset of an election and a somewhat surprising result, then seven or eight months where at least in the health field there hasn't been a high degree of incongruous at the political level. I'd have to tell you that has now been resolved if it wasn't obvious and my message to you today is to get on with it.

I've been around health politics now for seven years as a politician and seen it in most of its guises during that time. I'd have to say that I think right now we have the most positive and accommodating political environment that there has been in that time.

I'm certainly keen as a Minister that we take every opportunity we can to push ahead with the things that you think make sense. I'm very keen to make sure we haven't got a whole lot more trip-wires out there to trip you up than you otherwise would have, but I can't help feeling that over the last 12 months while talk has continued about these concepts, we haven't translated much of them into action and that's not a criticism of yourselves - that's a criticism of the politicians.

Political arguments almost always get in the way of clarity and certainty about policy and that's certainly been the case in the last eight months. That clarity and certainty can now come back to our policy with respect to the public health service and your job I think is to put to one side a lot of the political second guessing that's been going on. Don't try and guess what we might think about the proposal or whether it might cut across some particular statement made by the Minister six months ago.

Put your proposal together, put it forward and put pressure on us to accommodate the things that make sense. We're very keen and I'm very keen to take opportunities wherever we can find them. They won't all work out and some of them shouldn't work out. A lot of the opportunities that people will come forward with will test the bounds of Government.

One which attracted some political attention a few months ago was the Wanganui United proposal where we didn't say yes to it straight off and we haven't actually said yes to it yet, but we're engaged in a constructive discussion with them. But the main problem there was simply the proposal raised a whole lot of issues about how to do business with the Crown which the Crown has never dealt with before. We haven't gone into extensive joint ventures with anyone. For the last 10 years we've been retracting and if other people can do it we let them do it and we don't.

So opportunities won't always work out but I'm willing to take the risks, willing to back people who are willing to take the risks so that we can break through something of a sense of inertia that has developed. The things that make sense will put pressure on Government to make changes there's no doubt about that, but I see my role as primarily accommodating those changes so in your desire to bring care together, to co-ordinate it, to integrate it, to strike up new relationships.

We're not going to make a big deal out of the boundary between public and private not because there's some ideological conviction about it, but just because it doesn't make sense to have that faultline running through the system. Patients aren't that aware of it to be honest. Communities aren't either. What they want increasingly is something that will work for them and what they want less of is politicians arguing about it in theory.

So we will have to look at taking risks on contracting. The purchasers and the current purchaser or funder is always going to be under a lot of fiscal pressure and that makes them somewhat risk averse but I have to say that looking at the budget constraints we have over the next three years, the risks of not changing are much greater than the risks of changing. We will have to take some risks or we won't be able to live within the budget that I've been given even though it includes $1.5 billion extra over the next 3 years.

The Government is going to have to take a hard look at it's role in meeting the information requirements of more integrated and more co-ordinated care. The whole health sector is but Government owns half the health sector. We're a major player in it, we're going to be funding it through the contracting and we need to be probably more focused than we have been in understanding those requirements because they are critical to driving changes in care in the future.

The Government is also going to be forced to have a harder look at its regulatory job. A lot of the issues that we currently deal with internally through political mediation will become regulatory issues as they're pushed out from the centre and into a more devolved situation. That will raise all sorts of regulatory issues to do with the kind of issues you're going to be discussing - patient registration, information technology, coverage, what is that you have to offer to the patient or the community - a question we've never really answered that satisfactorily.

The important point is that it is going to be you who drive the change. It is going to be you who set the pace. Bringing the parts of health care together is far too complicated a task for a Minister or a central agency to actually be able to do. As much as we are magnificently competent we suffer from a gross information asymmetry as the economists might say and there is no way that we can politically determine how to fit the bits together so it is you that will be driving the changes.

It is my job to keep the political boundaries as wide as possible and I'd have to say I don't think we are testing them at the moment. It is my job to ensure that the public have a degree of understanding but in the end integrating care is not going to be successful if your patients and your communities can't see it working for them. For me to get up and say it's the best thing since sliced bread and everyone has to do it will kill it off by the end of next week. You're much more credible and you will be able to sell the message because it's crucial that any changes we make and I think we will be making many changes, are driven by improvements in the service. If it's driven primarily by money or primarily by politics the public won't accept it but also it actually won't work in terms of better health care.

So the important thing today is that you go away with a sense of possibility, with a sense that the things that make sense to you; the relationships that make sense to you; the service improvements that make sense to you, can happen. And also that we can develop in the health sector a sense that we are capable of solving some of the problems. We're not capable of solving them all because some of them are actually insoluble even in practice. The test won't be political sponsorship. The test will be whether it works for your patients and for your communities.

I'd have to say I'm very optimistic because what I see around the health sector is so many people saying so much that makes sense. What I see is so many examples where people have worked with the environment over which they do have control, work with the relationships over which they do have control and actually made them better and I think the next four or five years are going to be in the public health service a very exciting if somewhat stressful time.

The pace of change is going to pick up, not slow down. We've had a bit of lull in my view but as politics gets slightly more organised and the sector grows in confidence, we're going to see an awful lot happen. So good luck and if you get to the end of the conference and you get back to where you're working and you're not thinking about the things that are being talked about in this conference then someone else is going to end up doing your job because they are thinking about it.

Thank you.