Profiting from health, Brian Easton

Democratic Governance and Health: Hospitals, Politics and Health Policy in New Zealand
Miriam J Laugesen and Robin Gauld
Otago University Press, $40.00.
ISBN 9781877578 274

I have long puzzled over the point of local democracy in the highly centralised state of New Zealand. If you don’t like what your local representatives decide, you appeal to the government in Wellington, and as like as not – if you are a big enough business – it will change the rules in your favour, or even replace your locally elected representatives with commissioners.

Even were Wellington less authoritarian, I would still be unsure of the purpose of those we elect to our district health boards (DHBs). We certainly don’t want them interfering with clinicians, but since funding and legislation are set from above, what discretion that matters do they have?

The question is progressed by Democratic Governance and Health, a narrative of the history of the DHBs and their predecessors, by Miriam Laugesen, Assistant Professor in the Department of Health Policy and Management at Columbia University, and Robin Gauld, Professor of Health Policy at the University of Otago.

As their narrative recounts, the DHBs originated in local initiatives to provide charitable hospitals that were locally funded, first with donations, later with local rates. In such circumstances, governance would be local and elected by locals. Over time, funding came increasingly from central government; by 1952, the rates levy was abolished (and charity contributions went to auxiliary services such as ambulances). But political inertia meant that elected boards continued, although there was an ongoing struggle between the central government funder and the boards over spending (the locals, and therefore their elected representatives, favoured overspending). That inertia continued until 1991, and indeed to this day.

In 1991 Parliament abolished all the elected boards. Overnight, mark you, without any pretence of consultation – an extraordinary instance of just how centralised political power is here. The official reason was that hospitals were to be run by Crown health enterprises on corporate principles, but a consequence of the abolition of elected boards was that the institutions which represented localities were castrated.

Thus the period until 2000 when partial election to the boards was reinstated (about a third of each board is still appointed centrally) becomes a test of the relevance of local democracy to the health system.

The book does not handle the period well. This is nicely illustrated by the references of the relevant chapter; some three-quarters of the New Zealand ones are official. It is a bit like independent scholars writing a history of democracy in the Soviet Union using KGB files. The 13 non-official references (including the authors’) hardly cover the field. I have more (uncited) publications about the period, and I would be astonished if I contributed even a tenth of the available literature.

The full story of the response to the changes has yet to be written. Curiously, the dismissed boards played a minimal role. One might have expected that the stood-down elected representatives would have been at the forefront of the opposition, but they generally faded out. Instead, there was a public upwelling of resistance. Its leadership came from a nationally based Coalition for Public Health (CPH) (I was one of the CPH economic advisers) and similar, but not as prominent, local organisations. The key players were clinicians and health policy specialists. They denied the use of the term “reform” for the changes – it has a notion of progress. Following Alan Maynard – an eminent visiting British health economist whom the government chose not to consult – it was called a “re-disorganisation”.

Those promoting the changes dismissed their critics as having a self-interest in the status quo. Certainly the critics were deeply committed to a system of public health – many had made personal sacrifices to promote it – and rejected the proposed commercialisation (the rhetoric said “Americanisation”, the American system being the most commercial – and least efficient – in the rich world).

(There were humorous incidents although none are recorded in the book. Having been bested in a TV debate, the prime minister turned angrily on the CPH spokesperson, the doughty Peter Roberts, who had fled the American health system. Moving closer, the politician said, “I know where you are coming from” (ie Roberts was acting solely in self-interest). “If I am ever sick, I hope I don’t have to rely on you.” Peter replied, “I hope not. I run the intensive care unit.”)

The book’s references to those managing the change remind one that, in contrast to the CPH expertise, the insiders knew little about the health system. Their task was the Procrustean one of forcing the provision of health to conform to the same commercial model as is used to supply baked beans. In economic terms, health care is fundamentally different. Purchases are usually rare, erratic and expensive, and the purchaser is not well informed.

The insiders’ ignorance could be amusing were it not potentially fatal. One announced that as well as the intensive care unit at the base public hospital, there was a local private hospital with one. This demonstrated, he said, that even this specialisation could have regional competition. But he had confused the private hospital’s post-operative care unit with an ICU; if he were ever in need, he should make sure he went to the right one.

The commercialisation was so ill thought through that it would never have worked, but the public speeded the end, reducing the damage from the re-disorganisation. Resistance came at all levels, even the cabinet. Uneasy about a proposal to fund health through private insurance (mendaciously called “social insurance”), it asked for public submissions which were overwhelmingly opposed, and the option was dropped. Local groups demonstrated to prevent particular changes. The media ramped up the public outcry. Individuals refused to pay their hospital charges.

One outcome of the elimination of the elected board was that clinical failures ended on the minister’s desk. No Minister of Health can be responsible for every slip of the scalpel. Elected boards had shielded ministers in the past, and do so again today. (The Health and Disability Commissioner plays a critical role too.)

The ultimate democratic test is that health policies were top of the list of reasons why, despite a comfortable majority in 1990, National almost lost the 1993 election. (Its voting share fell a quarter from 47.8 to 35.1 percent.) By 1996 the National Minister of Health was arguing that the developments in the public health system were back on the 1980s’ track. Labour did not think so and made further changes in 2000. Instructively, the post-2008 National government has not made major changes and – the adequacy of funding aside, together with unfortunate clinical errors – health is largely off the political agenda. But in the interim, resources were wasted, while there is documentary evidence that people died as a result of generic managers and the re-disorganisation.

Balance requires mentioning that, if the book is weak on the public’s reaction in the early 1990s, some of its insider accounts are extremely valuable – including that of the Gibbs report of the late 1980s, which presaged the 1991 changes and the slow death of various health funding authorities a little later. It is a valuable resource for specialists in the field.

The authors do not come to a definitive conclusion on the role of elected representatives. On the one hand, the boards – despite being partly elected – are but the local agents of Wellington providing governance and fiscal prudence. Although they contribute to the accountability of the employees, they have little influence over what is provided. People I greatly respect have had themselves elected to DHBs but stayed for only a term because they thought they had wasted their time.

On the other hand, the elected representatives are a clear signal to central government that locals care deeply about the public provision of health. Next year I shall vote in the national elections on the fundamental democratic principle that this is the most effective way of getting rid of incompetent governments (although sometimes we replace them with just as incompetent ones). This year I am voting to tell central government I care about the public health system (and, in the council elections, my locality). I’m telling the centre that it ain’t to muck health care around without proper consultation, or a suitable leavening of expertise and the avoidance of ideology.


Brian Easton is an honorary fellow, Department of Public Health, Wellington School of Medicine, University of Otago – among other things.


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