Address to New Zealand Private Surgical Hospitals Association Conference
11 April 2008

It is a pleasure to address your conference this afternoon.

I do so as Leader of the UnitedFuture Party, who also just happens to be an Associate Minister of Health, although my delegated area of responsibility relates specifically to the development of the national medicines strategy, Medicines New Zealand, regarding the safe and quality use of medicines in New Zealand.

However, I do have a long standing and strong interest in the interrelationship of the public and private hospital sectors in New Zealand, in the interests of delivering good patient care to the widest of people, and, wearing my Party rather than my Ministerial hat, want to focus on this afternoon.

The confidence and supply agreement we signed with the Labour-led Government after the last election included a provision that “appropriate private hospital capacity will be used to reduce waiting lists where this is feasible.”

I am frustrated that while we have made considerable progress in the fourteen other areas of our agreement to the point where they have all either been implemented in full already over the last couple of years, or will be during the course of this year, we have not been able to make the same level of progress in the private hospital area, although it is now our top priority.

After all, waiting lists for elective surgery continue to be a major problem across all District Health Boards, but their responses vary.

Some are able to treat their patients within six months.

Others reprioritise their waiting lists after six months, so that the numbers are reduced as longer term patients are culled from the list, in line with the Ministry of Health’s requirement that where “public treatment” is “not yet available … you will cared for by your primary care practitioner and/or specialist.”

In other words, if we cannot treat you, we will get you off our books – even if it means in some cases, patients are transferred to Australia to get the treatment they need.

What irks me is that there no recognition in any of this that utilising private sector capacity is even a viable alternative.

The message seems to be that the public system can cope, and that it is just a matter of time before you get your operation, so be patient and wait.

Well, the sad fact is that some people do not have the luxury of time.

But what is even more disturbing in all this is that, notwithstanding its self-assurance, the public health system’s commitment to its patients is actually extremely circumspect.

It does not offer a comprehensive health care system, nor does it make any bold proclamation of a patient’s rights or the system’s obligations to people.

Rather, its official documents simply make the bland statement that “if public treatment is available you will be told that you have a firm treatment date within the next six months, or will receive treatment within six months and you will be given the treatment date closer to the time of treatment.”

It is hardly consistent with the Minister’s ringing assurances we have a world class health system that will do its best to help patients when they need it.

Now, this would maybe not be so bad if, at the same time, it was also acknowledged that, the limits and pressures on the public health system notwithstanding, there are alternatives for patients, but this never happens.

The public health system is too often presented as a giant, caring monolith that, given time and resources, will meet all the country’s health needs, and that other providers are simply luxury add-ons, creaming the most profitable parts of the health business.

Again, the reality is rather different.

For too many patients that reality is that if they do not get their elective surgery within the first six months, then it is more than likely to be a case of back to square one.

That is as unfair and unjust, as it is unnecessary.

In addition to our 21 District Health Boards, there are 35 private surgical hospitals across New Zealand, from the far north to the deep south.

Already, almost 150,000 elective surgery operations are carried out in these hospitals each year.

That is more than half of all elective surgery performed annually in New Zealand.

But here is the rub: it appears that less than 2% of those operations are funded by the public health system.

I say “appears” because in this context, it is extremely difficult to get precise figures from DHBs about the real level of their engagement with the private sector.

Some are straightforward – many others are obfuscatory or downright fearful of too much disclosure, lest they receive a “please explain” notice from their political masters.

There are those DHBs who regard any procedure they contract to the private sector as actually a public procedure, privately provided, and therefore not needing to be disclosed as being performed privately.

Others claim officially that they make no use of private provision, while unofficially doing deals with the hospital down the road.

It is all quite unsatisfactory, and leads one to question overall the credibility and reliability of any of the figures provided.

In that regard, I would very interested in your take on what is happening, in particular your figures on the numbers of private provided elective surgical procedures that are currently funded publicly.

What is clear, though, is that DHBs have the message that using the private sector to meet needs is officially frowned on, and that is simply unacceptable.

Last week, the State Owned Enterprises Minister Trevor Mallard took me to task for claiming that Labour was ideologically opposed to the use of the private sector to reduce waiting lists.

It was simply not true, he claimed, that Labour was opposed to the utilising of the private surgical sector.

How could that possible be so he wrote in the Hutt News when the most recent figures for 2006/07 show that around 2,800 publicly funded operations a year are carried out in the private sector, and that that figure would perhaps increase to as much as 7,000 in the years ahead.

Well, let me say this to Mr Mallard.

His 2,800 figure corresponds almost exactly with the 2% figure I quoted a moment ago.

Moreover, I do not regard having a mere 2% of elective surgical procedures carried out in the private sector publicly funded as amounting to anything like the appropriate use of private hospital capacity to reduce waiting lists where this is feasible, and nor do I think do most New Zealanders, especially those witnessing the agonising wait of a loved one or family member for treatment.

The message patients get from all this is abundantly clear – if you want elective surgery in a timely manner, go private; otherwise, take your chances, with no guarantees, in the public sector.

This is as stark and brutal, as it is unacceptable.

That choice is simply not available for many elderly people, or for those on low and fixed incomes.

Labour’s ideology gets in the way of addressing the problem, because it finds it difficult to acknowledge there is a legitimate role for the private sector in health care, so vulnerable people are denied the care they need.

The message that sends to DHBs is proceed with caution, lest you antagonise your political masters, so nothing happens, and waiting lists grow.

While National’s ideology is more sympathetic to private sector involvement, its commitment to helping the vulnerable is far less convincing, leaving itself open to the criticism that its real agenda is privatisation of the public health system.

All that does is provoke wariness of a different kind from DHBs.

Patch protection becomes more important.

So either way, patients will continue to be the losers, if things stay the way they are.

But a middle ground solution is obvious, and attainable if there is the political will to do so.

In a country our size we do not have the luxury of two stand-alone health systems – we are simply not big enough.

We therefore need to be looking to the effective utilisation of all our health resources to provide the best levels of care and treatment, while at the same protecting the right of those who choose to go private to do so.

This includes the public sector, as well as the private and voluntary sectors, and a fair measure of personal responsibility as well.

It is not about which one is dominant over the other – our health system will always be predominantly publicly provided and funded – but much more about how the various elements contribute to the effective delivery of healthcare services overall, recognising that each element has its own particular valid contribution to make.

There are some tasks that the public hospital system is best placed to perform; other tasks that can be carried out more efficiently within the private sector, and still others where the voluntary sector is best placed to provide.

Within this approach, reducing burgeoning elective surgery waiting lists has to be a priority.

UnitedFuture would start this task by publicly funding private hospital elective surgery for the elderly, who have been on an elective surgery waiting list for six months or longer.

This would be on a similar basis to the contracting procedures currently followed by the ACC with regard to private provision.

Our eventual aim would be to make such a system universal, so that no-one would have to wait longer than six months for elective surgery.

However we know that will be expensive and will take time to implement fully, but it is a goal we believe is worth setting.

That is why it is important to make a start now.

The current policy is not working, and there no signs that anything is likely to improve in the future, if we rely on more of the same.

We have seen one of the biggest increases in expenditure in Vote:Health over the last decade to record levels of $11 billion a year, with no commensurate increase in the quality of services provided.

Those levels of increased expenditure cannot be continued indefinitely into the future, and there is no evidence that we can afford anything like the expenditure required to abolish all waiting lists, nor would it be economically prudent to do so.

More of the same is simply not a viable option.

That is why we need to take a different approach.

Our policy also favours making medical insurance premium payments for over 65s tax deductible, to encourage many older New Zealanders to retain their medical insurance, at the very time they need it most.

It seems crazy that people who have contributed to medical insurance schemes throughout their working lives cannot afford to keep on paying the premia as they reach their golden years because of the way in premium costs are calculated for older people.

But I would like to see us go further and consider the feasibility of establishing a taxpayer subsidised national health insurance scheme to ensure all elective surgery needs can be met in a timely manner.

In time, it might even be possible to consider whether such a scheme could include pharmaceutical costs, as in the case in Canada, for example, as a way of helping meet the cost in part or in full of new and expensive medicines, although I think that is something else that might need to be put into the category of longer term ambitions.

If, at some point in the future, Kiwisaver was to become a compulsory savings scheme, as I believe it should, we could look then at the feasibility of a modest increase in the contribution rate, possibly offset against marginal tax rates, to fund a national health insurance scheme, similar to the model Singapore has followed for many years.

Another option might be to take a fresh look at the current treatment as a fringe benefit of health insurance cover provided as part of an employment package.

The important point about any and all of these options is that they recognise the personal responsibility prong of health care provision that I made reference to earlier.

None of the proposals I have outlined today is driven by a particular ideological view of the world.

Their impetus comes from a deep sense of frustration at the inadequacies of current policy, a realisation that it will not lead to significant improvements in the future, and a rising anger that an often all too narrow and blinkered view of the world is getting in the way of meeting the common good.

While there is a clear tide for change running across the country at present that we want to part of, the risk is that we lurch from the oppressive rigidity of the current settings into an equally unacceptable environment where health becomes just another commodity to be traded like a bond or stock in the marketplace.

There is a middle way which UnitedFuture promotes that we do not need to turn our health system upside down again to make it work more effectively in the interests of patients.

Rather, all the elements of an effective and workable system are already there – we say they simply need to be better configured and used to more optimal effect to serve the best interests of patients.

And the private surgical hospital sector has a critical role to play in that, and has to be recognised accordingly.

That is a position we will continue to push in this government, and in any future governing arrangement we are part of, because the people of New Zealand deserve no less.