Learning Lessons From The Past

Collaboration, Not Competition - Learning Lessons From The Past

Address To The New Zealand Healthcare Summit Conference

Auckland, 8 October 2009

Ian Powell

Executive Director

Association Of Salaried Medical Specialists

Thank you for the opportunity to address you today. The subject given to me is both wide-ranging and pertinent to where the health system is currently positioned. One of the numerous tendencies of the health system is the tendency to beat up on it no matter how well it does its job in a way that reminds one of Thomas Hardy's novels. After providing magnificent descriptions of the Wessex countryside, immediately zeros in on the dung heap in the corner of the field.

Why the health system can't be viewed as a commercial sector

It comes down to a question of values and objectives in terms of whether the health system should or should not be viewed as part of the commercial sector. Is the public health system there to produce a universal public good that not everyone will need all the time but all at any given time might need? Accessing the public health system is not driven by choice or desire; it is driven by necessity.

If it is accepted that health services within the ambit of the responsibility of DHBs are a universal public good (and the predominant political consensus accepts this) then there are serious flaws with the notion that health should be seen as a commercial business. This is not because the private health sector is bad or wrong (it is neither) but because the expectations of its capacity are unrealistic and consequences in some instances counter-productive. For example:

* It forgets why public health systems, such as New Zealand's, developed in the first place. If the objective is to produce a universally available and comprehensive public good then an integrated and coordinated system is necessary rather than reliance on a system more orientated towards niche markets and profits. It requires a high level of public funding and benefits from a high level of public provision. Private systems cannot do this because it is not their reason for being. This is why our system moved to its key principles in the reforms of the late 1930s and why it has been incrementally enhanced over subsequent decades notwithstanding the ideological blip of the 1990s.

* The private sector's main involvement in secondary care is electives but these are a relatively small part of its totality inclusive of chronic and acute care.

* If more elective work is siphoned off to the private sector then the consequence of public hospital work becoming more acute based than what it currently is will make public hospitals much less attractive for recruitment and retention of senior medical and dental staff because of the unsatisfactory job mix. For job satisfaction and associated recruitment and retention alone, let alone other factors, public hospitals should be doing more, not less elective work.

* If all true costs are taken into account it is a more expensive way of providing care than public hospitals. There are limitations in the capacity of private hospitals to provide necessary post-operative care such as intensive care. Quite sensibly private hospitals in the main locate themselves within reasonable proximity of public hospitals which gives them access to intensive care and other back-up. It makes sense but it is an indirect subsidy by the taxpayer to the private hospital.

* There is not a reserve army of unemployed specialists to undertake significantly increased volumes in the private sector while at the same time maintaining the present level of electives in public hospitals.

* To the extent that competitive tendering is institutionalised into the system then this increases transaction and bureaucratic costs, increases fragmentation between services, risks destabilising planning for service delivery in public hospitals, and works contrary to inter and regional DHB collaboration over service organisation and delivery.

* The main benefit of private hospitals is the provision of additional plant (eg, theatres) rather than additional labour which is the main difficulty facing public hospitals.

None of the above comments are intended to suggest that the private sector might not have a role. It certainly can in meeting shorter term capacity needs but this is most likely to be around the margins rather than at the core of public hospital activity.

1990s decade

The decade of the 1990s was a period of time characterised by a conscious and deliberate explicit endeavour to treat New Zealand's health system as a commercial business. Our 'market experiment' commenced officially in 1993 when our publicly provided health system based on statutory authorities known as area health boards were replaced crown health enterprises (subsequently hospital and health services) that were more narrowly based on secondary and tertiary care. They were state-owned companies with our publicly provided health system now for the first time governed by the Commerce and Companies Acts.

Under this radical upheaval commercial competition was now the name of the game, the explicit ethos at the core of the system that was to drive its future direction. This meant that CHEs were to compete rather than cooperate with each other and also compete with the private sector. Owing to its relative small size the private sector required a boost in order to establish a 'level playing field' for business competition. This included ill-fated cumbersome and inefficient attempt at user charges for public hospitals.

We had services put up for contestable bidding with strong suggestions of ideological favouritism towards the private sector. GPs were encouraged to hold funds in order to purchase secondary services. Privatisation encroached upon the public system at least around the margins. And it became difficult to promote greater clinical coordination and integration between primary and secondary care without being locked in to privatisation masked under the language of first 'managed care' and then 'integrated care'.

I am reminded of a story told to me by my father some years ago. It involved an American astronaut orbiting the earth in one of the early space travel projects of the 1960s. When asked what he was thinking about in his isolated environment, he replied that it was the fact that each part of his space vehicle had gone to the lowest bidder.

Essential prerequisites for a public health system

I have been fortunate in my job to have the opportunity over the years to discuss health system issues with international authorities including in the World Health Organisation, the OECD and academia. The overwhelming lesson I have learnt is that if a country wants to have a health system that provides more or less universal and comprehensive services of good quality in order of priority it requires:

1. Single public based funding system. The more fragmented the funding sources the more fragmented and less integrated the delivery and organisation of health services. This does not preclude separate additional private systems but these lend themselves more to niche markets.

2. Public provision. This is supplementary and, in relative terms, less critical. Regulated social insurance systems in Western Europe, for example, are still able to produce integrated universal comprehensive services. Public provision reinforces the integration that single funding provides and also does not preclude separate private provision.

The approach of the 1990s market experiment was largely an attempt to introduce competition and consequently fragmentation at the second (provision) rather than first (funding) and more important pillar of an integrated public health system. The closest they got was the short-lived formation of four regional funding authorities and the unbundling of ACC funding for public hospitals. The inroads it was hoped competition would make, were more limited, and despite all the difficulties and disruption the integrity of the core of the publicly provided health system largely remained intact.

Why the market experiment failed

It was inevitable that this ideological experiment would fail. Its proponents had limited understanding of how private markets actually worked and failed to distinguish between 'business' and 'business-like'. Markets thrive on short-term unpredictability whereas public good provision thrives on longer-term predictability. In addition to failing to introduce competition into funding rather than provision thereby blunting its impact, it also came into conflict with the cooperative ethos of health professionals and the wider public. Rather than being in alignment it went toward our health system in the opposite direction of this underpinning ethos.

It involved overturning a health system that had just been highly rated internationally by the World Health Organisation into something that was inefficient, fragmentary and fiscally irresponsible. It was a great time for spivs and snake oil salespeople posing as business consultants. These consultants sought guidance from Lewis Carroll who observed, in Alice in Wonderland, that if one said the same thing three times it must be true. As one medical leader said at the time the 1990s 'health reforms' were designed by the sorts of people who would try to make a "profit out of a soup kitchen".

Thus by the end of the last decade and up until the Public Health and Disability Act 2000 we had a public health system that was betwixt and between. It was a direction-less hybrid governed by legislation promoting competition, on the one hand, and managed by policy statements promoting cooperation, on the other, with the in-built capacity for disruption. Decision and policy makers looked to the heavens rather than their own internal highly skilled and experienced workforce, particularly senior doctors, for guidance. It made me wonder at the time whether astrology was invented to make economics and health policy look good.

The nub of the problems was nicely but perhaps inadvertently summarised by the Commerce Commission which, in January 1998, produced its general guide on the application of the Commerce Act to the health sector. It was explicit viewing:

.medical practices - whether they be run by one practitioner, a partnership, a company, or a public sector organisation - as businesses. Traditionally, the health sector has not regarded members of the same college or association as competitors. Under the Act, they may well be in competition with each other.

The lesson to be learnt from this was provided 10 years ago by the World Health Organisation which, in its 1999 World Health Report, emphasised that active government involvement in providing universal health care has produced great gains. On the one hand, it warned against governments trying to provide and finance "everything for everybody" which while successful in many respects failed to recognise resource limits and limits of government. On the other hand, WHO was scathing about market approaches that ration health services to those with the ability to pay. In particular:

"Not only do market-oriented approaches lead to intolerable inequity with respect to a fundamental human right, but growing bodies of theory and evidence indicate markets in health to be inefficient as well. Market mechanisms have enormous utility in many sectors and have underpinned rapid economic growth for over a century in Europe and elsewhere. But the very countries that have relied heavily on market mechanisms to achieve the high incomes they enjoy today are the same countries that rely most heavily on governments to finance health services." (p.33)

Or, to put its application to health another way, no matter how hard one tries to buff it one can never get a turd to shine.

Understanding the lessons learnt from the past

In understanding the lessons learnt from the past we need to understand both the market experiment of the 1990s and the nine years that followed.

A feature of health systems is that periodically they reach certain cross-roads. This was the case in 1999 when the new Labour-led government was elected. It determined to make a significant break from the prevalent hybrid market ideology of the 1990s. That is what happened with the New Zealand Public Health and Disability Act 2000, which marked a significant shift in direction and whose purpose can be summarised as:

1. To provide for the public funding and provision of personal health, public health and disability services and to establish publicly owned organisations to ensure this provision.

2. Pursuing the objectives 'to the extent that they are achievable within the funding provided.'

3. Endeavouring to promote the 'integration of all health services, especially primary and secondary.' [Sections 3(1), (2) and (4) of the Act].

The Act provides an underpinning legislative framework which is broadly aligned with the ethos and values of health professionals and the public. The New Zealand health system can now be broadly described as including the following features:

* Predominantly single payer, by government through district health boards (DHBs) and derived from general taxation.

* Most secondary and all tertiary care is publicly provided by DHBs while primary care is largely privately provided but heavily regulated by government through the DHBs.

* DHBs (21) responsible for the provision of a comprehensive range of health services with objectives such as improving, promoting and protecting the health of all people and communities, integration of health services (especially primary and secondary) and reduction of disparities.

* The health focus was largely on (a) primary care and (b) population health (eg, health promotion and disease prevention), in part based on an expectation that this will significantly reduce the demand for secondary and tertiary care. The premise is that prevention is both better than cure and also cheaper.

* Linked to this premise, the establishment of not-for-profit Primary Health Organisations (PHOs) within DHB geographic boundaries through which DHBs are to implement the Primary Health Care Strategy, in part expected to increase access to primary care including through capitation.

* The development by central government of a number of high policy strategies such as the Health Strategy and Disability Strategy for overall guidance to the health sector along with other strategies covering primary health, Maori health, Pacific Health and cancer treatment.

National bureaucratic fiefdoms

One of the first positive steps was the disbandment in 2000 of the Health Funding Authority (itself formed out of the disbanding of the four regional health authorities in 1997). In a country of around 4 million people how could we justify two central government agencies, the Ministry of Health and Health Funding Authority, competing against each other for the ear of the Health Minister? The potential for robust policy advice was compromised by the risk of competing bureaucratic fiefdoms each claiming that their moat around their castle was better than the other's. It seems extraordinary that the government is considering a recommendation to go back to a regime national fiefdom competition with the recommendation of the Horn Report to establish a new additional bureaucracy, the National Health Board. The authors of the Horn Report have not learnt this lesson. Hopefully the government will when it considers its recommendation.

'Working to contract'

The preoccupation of 'working to contract', a feature of the 1990s, was out of line with the professional approach of going the extra mile and the public need for this to happen. Government through its funding agencies during the 1990s emphasised the unreal position of public hospitals doing what they were contracted to do and nothing more. Health professionals were between the proverbial rock and a hard place coping with legitimate public pressure and professional ethos to meet important patient needs and political pressure to stick to the regime of the funding contract. There were also some hints that this was starting to encroach upon the professionalism of health professionals. Confining activities to the literal contents of one's job description was not too far removed from public hospitals confining their activities to their funding contract. Unfortunately this lesson has not been completely learnt with some echoes still remaining.

Workforce development and planning

A negative feature of the 1990s was that the capacity for workforce development and planning that had been neglected because of the false ideological belief that markets would sort things out. A decade of lost opportunity precluded the health system's ability to anticipate and plan for predictable domestic shortages in skilled staff at a time of predictable increasing international shortages. Under the market approach planning was a miss-spelt four-letter word. And the chickens certainly came home to roost! We are still feeling them. There was an attempt to address this by the Labour-led government but, aside from some useful scene-setting analytical work, little of a practical note occurred apart from a small increase in medical student intakes and, very recently, the implementation of the recommendation of the newly created and now disbanded Medical Training Board to further increase intakes. The new health workforce group established by the Minister of Health and convened by Professor Des Gorman is encouraging and it is hoped that it will move on from the ideological blunder of the 1990s and the lack of national practical leadership subsequently.

Funding public hospitals

The current government believes that Vote Health was generously funded over recent years and that this can't be allowed to continue. But caution is required here. Much of this increased funding went into primary care, new initiatives and capital works. The increase for public hospitals to continue to provide secondary care was much less. Whereas health funding under the future funding track formula has increased by around 3% per annum for some time, hospital prices have increased by 6%. Secondary care has been financially squeezed and pressured for sometime now under the mistaken belief that improving primary care and population health will reduce demand for public hospital services. Ironically the primary care strategy has been too successful. By considerably enhancing access, more illness has been detected some of which has had to be referred to public hospitals. The net result has been increased pressure on the ability to provide secondary care and increased overburdening of the workforce. While much good happened in health under the former government, its greatest error was to underestimate the financial, resourcing and other pressures on public hospitals and their workforce.

The government needs to adopt a more positive attitude towards our publicly provided secondary and tertiary health services by regarding them as a national treasure. Our public hospitals constitute an impressive system which deals with those complex and interconnected cases that cannot be dealt with in a primary care setting. What is done in primary and secondary care settings has not been and will not be static; it will naturally and sensibly evolve over time. But both settings are critical.

Publicly provided secondary services are effective, of high quality and the public has considerable confidence in what our health professionals do. They have the advantage of an absence of self-interest and commercial or profit motivations that have the potential to distort, corrupt and create perverse incentives. And they have their own internal in-built efficiencies. Just as GPs provide an effective external gate-keeping role which also includes fiscal responsibility, outpatient clinics provide an equally effective internal gate-keeping role.

Public anxiety about public hospitals is not over their standards of care but over the separate issue of access. Public hospitals provide comfort, reassurance and effective care for patients. I believe that the public itself regards public hospitals with sufficient affection and respect as one would expect of a national treasure and governments need to be able to keep up with their common sense. It needs to give the same strategic importance to secondary care as it does to primary care.

We need to invest more in public hospitals relative to other investments, not less. However, we have a serious concern that under financial pressure DHBs will make short-term decisions without sufficient regard to medium and long term consequences. As a generalisation (and accepting many exceptions) senior managers and those that govern them tend to be shaped in their approach to decision-making to the shorter term whereas health professionals, especially senior doctors, tend to look to the long term. 'Short-termism' prevailed in the 1990s (through ideology and fiscal pressure) and also continued in the following years (through fiscal pressure) and we are still stuck with it. This lesson had not been learnt.

Managerialism

Until recently, despite some contrary instances and utterances, the system has failed to realise that its real leadership needs to come from the enormous intellectual human capital it has within it, particularly within DHBs. This is primarily its health professional workforce including senior doctors. The triumvirate system based on a head doctor, nurse and administrator prevailed until the late 1980s. Contrary to mythology doctors were not in charge and those doctors who worked in it don't seem to have a strong sense of nostalgia for it. The system changed to general management in which the administration part of the triumvirate leapfrogged to the top. When the commercial model was introduced shortly after it compounded what became known as 'managerialism'; essentially management knew best and health professionals were disempowered.

Managerialism survived the end of the commercial model. Despite some positive statements in annual Ministerial Letters of Expectations to DHBs and despite some positive initiatives, overall little has changed. Managerialism, reinforced by fiscal pressures on public hospitals and recent dramatic increases in senior doctor terms and conditions of employment in Australia, has continued. It even broke out in our last national collective agreement negotiations when the DHBs sought unsuccessfully to reduce the influence of senior doctors in decision-making including diminishing consultation rights. This left the current government inheriting a destructive legacy of disengagement and disempowerment of senior doctors.

The first health minister to appreciate this was David Cunliffe but he only had one year in the portfolio, the last of the former government. Current health minister Tony Ryall certainly understands it. But learning such an obvious lesson has taken an extraordinary long time and even now we are a long way off embedding clinical leadership in the culture of DHBs.

I always enjoy adapting the words of the erudite West Indian writer and cricket commentator CLR James: "What do they know of cricket, they who only cricket know?" Reflecting on the 1990s and this decade this can also read: "What do they know of business, they who only business know" and "what do they know of management, they who only management know?"

National operational leadership

The Labour-led government's approach was to provide a conducive legislative framework, establish structures in the form of DHBs responsible for the continuum of care including primary and secondary, provide a range of high level policy strategies (the Primary Care Strategy being the most prominent), issue annual Ministerial letters of expectations to DHBs), and provide funding. This was all within a focus on primary care and public or population health (health promotion). It assumed this was sufficient. It was wrong.

Aside from the lack of a coherent and positive vision of the role of public hospitals (discussed earlier) the former government failed to appreciate that a country our size needs a national health system that recognises local needs and dynamics rather than 21 separate local systems. It was also accused, somewhat unfairly of being captured by a 'public (health promotion) agenda'. Certainly it was heavily influenced by this 'agenda'. If one is to be captured by an agenda it is one of the better ones. But it is not enough on its own. In contrast, and unwisely, the current health minister appears to view the public health perspective in the same way that a homophobe views gays.

National systems require some degree of national operational leadership. DHBs were simply too focussed on the pressures of the day and local challenges to provide the level of regional and national collaboration required. Further, the Ministry of Health was not given the authority to provide leadership. Former health minister David Cunliffe grasped this in March 2008 when he announced in a keynote speech that the Ministry of Health should play a greater national leadership role. While it took him around 3-4 months at most to grasp this it took his government over eight years.

Tony Ryall recognised this before he assumed his ministerial warrant and, in part, the Horn Committee was established to advise on this question. The positive lesson is that the various functions identified to be handled nationally are well outlined in the Horn Report. But the negative lesson is that this report ignores the fact that the Health Ministry was not empowered to perform them and, instead of recommending empowerment' proposes another central government bureaucracy to achieve them.

How to ensure collaboration and integration of services

The challenge facing governments in health systems was nicely summed up in an address to our Annual Conference in November 2003 by then Finance Minister Michael Cullen:

It is an unfortunate fact of New Zealand politics that medical specialists and finance ministers seemed to be locked eternally into an adversarial relationship.

It is not difficult to see why this is so. On the one hand, medical specialists are engaged every day in the struggle, if not always between life and death, then at least between quality of life and physical pain and suffering. You provide healing and hope to thousands of New Zealanders and their families; and even those who have never needed hospital treatment take great comfort in knowing that it is available should they need it.

Finance ministers, on the other hand, engage every day with the question of how to improve the economic and financial health of the nation. This involves balancing competing claims for limited government funds from areas as diverse as education, policing, infrastructure, conservation, and social welfare. Some of these decisions - relating to child protection or safer roading, for example - are as much a matter of life and death as those relating to health expenditure. But even those that are not are to varying degrees essential in maintaining our way of life and protecting and promoting our economic well being.

.gains in the efficiency of health-care delivery (gains that not only help spread resources further, but also provide patients with a better service) require that someone, somewhere takes responsibility for how the whole of the health system works, and for shifting the system so that its points of intervention in the lives of individuals are more oriented to maintaining health than to treating disease. To my mind clinicians must play the major leadership role in this regard.

It is my hope that health professionals and government can engage on these issues around an understanding of the facts in all their complexity. There is little to be gained from staking out positions. We need rather to work out principles, address the hard issues of how ... [to] manage limited resources, and find ways forward.

Scottish comedian Billy Connolly once said that wisdom is the option one resorts to only when all others have been completely exhausted. There are some signs that wisdom might be on the horizon with the emphasis now on clinical leadership and clinical networks. This is the opposite of another Connolly piece of wit: to paraphrase him there have been some ideas in health policy that have been needed as much as an astronaut needs a fart in a space suit.

Defining policy documents

There have been three recent documents which set the scene for clinical leadership. One is an agreement reached last year between the government, DHBs and health unions affiliated to the Council of Trade Unions (including us) called the Health Sector Relationship Agreement which includes a strong emphasis on constructive engagement with the workforce within DHBs.

The second, more important in terms of clinical leadership, is called Time for Quality which is an agreement between us and the DHBs (with the active encouragement and support of former health minister David Cunliffe) also reached last year. Its premise is that to be effective the health system needs to be driven by quality; to have quality requires health professional leadership; and to have this leadership health professionals need time. It is based on partnership and teamwork between health professionals and managers but with certain lead roles. Health professionals are expected to have the lead role in providing "leadership in service design, configuration and best practice service delivery", including regionally and nationally, with management in a "support" role.

The third is the initiative of Tony Ryall who established a group convened by our National President Dr Jeff Brown to advise on clinical leadership. This group produced a report called In Good Hands which now forms part of government policy. It has a focus on transformation and defines clinical leadership as been much more than formal positions of clinical leaders (eg, clinical directors). Instead this is a subset of clinical leadership which is much wider and is based on active health professional engagement in decision-making as close to each unit of work as practical. In part, it operationalises Time for Quality. It seeks to embed this culture into all levels of DHBs and, for teeth, requires DHBs to engage with health professionals through various consultation processes to report progress to government.

Clinician led clinical networks

In broad terms there are three possible ways DHBs could go (outside a rehash of some form of 1990s model). One is to continue as we are in which localism generally prevails. This fragmentary addressing of issues will perpetuate the problems we have. Another is to centralise services in a few key centres rather like a hub and spokes. However, centralisation risks pillaging the spokes in order to sustain the hub. Further, it gives insufficient consideration to the importance of accessibility of services and the capacity of both the periphery and the centre to deliver.

Health professional led clinical networks offer a viable third way. Clinical networks are more than networking which happens extensively at least at a senior doctor level. They go to the core of service organisation and delivery. Clinical networks are successfully embedded in Scotland's health system. Across the Tasman New South Wales provides an excellent example. It began as a taskforce covering metropolitan services for a population of around five million. Its performance has been subject to an independent evaluation which was completed in 2004. This evaluation confirms my belief that this exercise of clinician-led resource allocation and development is well ahead of what happens in New Zealand despite our legislative framework being more conducive to it.

In summary, this was a three-year taskforce independent of the state health department led by clinicians and given a budget for expenditure of service development in metropolitan New South Wales. It made numerous recommendations to the health minister on service and resource development which were overwhelmingly accepted. The implementation of these recommendations should be of sustainable benefit to the New South Wales health system because they are based on clinical expertise and extensive engagement. Now it is no longer an independent taskforce. Instead it operates as a semi-autonomous unit in the health department but directly reporting to the Minister of Health.

There are some promising signs of this developing in New Zealand but we are a long way behind. We need regional collaboration between DHBs over the provision and delivery of services for clinical sustainability, cost effectiveness, and enhancing quality and accessibility. Clinician led clinical networks across DHBs are the most effective means of ensuring this objective. They are also applicable to those low volume, high complexity services which should be seen as national services.

Primary-Secondary care relationship

I can only comment briefly on the subject of the primary-secondary care interface but this does not diminish its importance. Rather this was work in progress. In the 1990s this was discredited because it got tangled up in a privatisation agenda and also more entrepreneur general practice businesses were tempted by the lure of controlling public hospital budgets. This was advocated under the appealing titles of first 'managed care' and then 'integrated care'.

The establishment of DHBs responsible for both primary and secondary care was a positive move but for much of the past nine years the focus was on improving access to primary care (and with considerable success).

Now there is a government policy move towards transferring secondary services to primary care settings called devolution. Both 'transferring' and 'devolution' are terms with negative connotations and the term 'integrated care is now being encouraged. There is enormous potential here for considerable gains in effectiveness and quality of care (including GP access to public hospital diagnostic services), especially if it is supported by a national patient management information technology system. The risks are that it becomes camouflage for other agendas, its pace of implementation is dictated too much by political imperatives, or perverse incentives and outcomes if financial levers become the mechanism for delivery. We hope to engage with organised general practice over these important matters to help ensure that the benefits are achieved and the risks are not. Perhaps we might end up calling this interface 'intermediate care'.

Benefits of the national collective agreement system

Taking a longer view of things, we have experienced different industrial relations systems. Prior to the formation of our union in 1989 our system had been centralised and arbitrational based on interconnected relatively criteria. The process was not transparent and the outcome was called a determination which covered a narrow range of issues, largely salary scales, allowances, expenses and leave. This was replaced by national awards which had more emphasis on collective negotiations and was more transparent.

>From 1993 we lost our right to negotiate national agreements. After seeing a threat of individual contracts we ended up with single employer collective bargaining with collective contracts the outcome. In a competitive era we, as a centralised union dealing with decentralised employers each believing they were the cutting edge, actually made major gains (at times going against the tide) in areas such as base salaries, penal rates for working on after-hours call duties, annual leave, and subsidised superannuation for the rest of the decade. The process was quite simply ratcheting based on the premise that the alternative was 'rat shit'. We also widened the scope of what was covered extending into rights such as speaking out.

With the passing of the Employment Relations Act we returned to national collective bargaining with two national agreements to date - the first characterised by the complexity of moving 21 separate agreements into one and the second by acrimony, aggressive DHB counter-claims, unprecedented national stopwork meetings, and an unprecedented ballot with nearly 90% voting for industrial action. Negotiations for the third national agreement will commence early next year.

Why are national collective agreements important? There are several reasons which include:

1. Collective bargaining is the most effective means of delivering improved terms and conditions of employment to the greatest number of people especially when some of them have potentially less influence. It is consistent with principles of utility. Genuine individual negotiations would simply be impossible for DHBs to handle because they would be so resource intensive and would also engender high levels of inequity in outcome, both in fact and in perception.

2. Collective agreements are consistent with best practice medicine. Medicine is best practiced collectively. There is a high level of inter-dependence connection between different specialist groups in public hospitals. Surgeons are only as good as their anaesthetists and pathologists. Cardiac surgeons would be helpless without cardiologists.

3. The experience of the 1990s revealed that despite the prevalence of single employer collective bargaining each crown enterprise, no matter how cutting edge they might see themselves as and how competitive they were, had to recognise that they were operating in a national medical labour market and could not agree to terms and conditions of employment that were markedly out-of-kilter with those of their competitors.

4. Internationally DHBs have to compete with countries that have collectively negotiated or determined terms and conditions of employment, either on a national or state basis.

My overall concluding comment in this address is the astute, somewhat dialectical, observation of Salman Rushdie that:

No story comes from nowhere; new stories are born from old-it is the combinations that make them new.

Ian Powell

EXECUTIVE DIRECTOR

ends

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