Address to the Hospital And Community Dentistry Conference

BAY OF ISLANDS, 27 JULY 2013

IAN POWELL

EXECUTIVE DIRECTOR

ASSOCIATION OF SALARIED MEDICAL SPECIALISTS

Thank you for the opportunity to address you again. As always my comments are personal observations although in broad terms at least I believe they are consistent with the Association’s view on the matters discussed. In this address I would like to focus on the theme of countering the effect of destructive tendencies in the health system.

A couple of weeks ago I was struck by an incident I witnessed while crossing Lambton Quay on a wet Wellington day. A couple were crossing immediately in front of me each with their umbrellas up. Once they crossed to the other side and before they went their respective ways they turned to give each other an affectionate peck right in front of my eyes. But instead of lips connecting with lips somehow they managed to jab each other in their faces with their umbrellas. After watching them stagger off in opposite directions with a sudden and discernible absence of affection and after I pondered on how was it practically possible to do what the couple had done to themselves, the incident started to resonate in respect of our health system. More often than not good intentions end up becoming bad or unsatisfactory outcomes leading to confusion, disappointment and sometimes pain.

The Relevance of the Irrelevant: Tendency of the rate of profit to fall

I now want to comment on an issue that you and your colleagues discuss and ponder every day – Karl Marx and his theory of the falling rate of profit. Marx, whose admirers these days seem to include the odd mix of Marxists and Wall St bankers, had an abstract intellectual approach resembling a zoom lens. In order to understand how a system worked, such as capitalism, he would, using variable lenses, zoom into systemic principles and characteristics in order to establish a theoretical construct.

One of these was to argue that systemic to capitalism was that the rate of profit would decline thereby contributing to its demise. He argued that human labour rather than technology or machinery produced surplus value in the production of commodities. Owners of capital were under pressure to reduce the costs of labour by replacing labour with technology as much as possible. But, so the argument goes, because labour increases the value of the commodity produced, reducing the labour component of production has the effect of reducing surplus value causing the rate of profit to fall.

There are obviously contestable assumptions in this theory but for the purpose of this discussion they should be put to one side because they are not the issue. Let us assume the theory is correct. But this would make capitalism unsustainable. Why has capitalism not collapsed in the around 150 years that have passed since Karl put pen to paper? All the signs show that profits are increasing, even if more narrowly concentrated among what is now called the 1%.

But this disregards two important features of his work. One is that it was an abstract construction not locked into specific predictions. The other and more important was that Marx described this as a tendency. That is, a systemic feature of capitalism which produced a tendency for the profit rate to decline.

Well, what has the falling rate of profit got to do with our health system? Absolutely nothing at all! But the point of this digression is the term tendency. If there is a tendency for the rate of profit to fall then there are other countering factors that can prevent the tendency from eventuating such as market expansion, innovation and increased exploitation.

Just as there are tendencies in health systems which would eventuate into reality if nothing else happened, if other things do happen then they don’t necessarily eventuate. I’m not sure why I go down the path of these digressing irrelevancies to make a point other than it seems to be in my DNA.

Proposed Amendments to Employment Relations Act

Before commenting further on the theme of tendencies I want to report on serious concerns the Association has over proposed changes to employment law. Currently before Parliament is a bill that if implemented will be a major step backwards for employment relations in the health system. From 1991 to 2000 we had the Employment Contracts Act which, consistent with the ideology of that decade, saw employment through a narrow contractualist lens. The assumption was that employment could be reduced to words in a contract, it was little more than a commercial transaction, and that there was a level playing field between employer and employee. This approach lent itself to a more adversarial approach to employment relations.

Since 2000 we have had a fundamentally different and opposite approach under the Employment Relations Act (ERA) where the focus is on the employment relationship (not the contract only) and that in most jobs and occupations there is a significant imbalance in the employer-employee relationship favouring the employer. The ERA endeavours to reduce this imbalance by focussing on the quality of the employment relationship between employer and employees (which is also seen as enhancing productivity) and the rights of employees to negotiate collectively through their applicable unions.

In contrast to its predecessor, the ERA has fostered the development of a single set of transparent, fair conditions of employment for senior doctors and dentists, codified ultimately in the ASMS DHB MECA. This has also been the case with other parts of the DHB workforce including nurses and resident doctors. The ERA has proved a good framework for systematically working through sometimes very difficult issues for our members who form a crucial part of the New Zealand public health system.

However, the amendment bill seeks to encroach upon the principles of the ERA in three new main ways thereby posing threats to the publicly provided health system.

1. Removing the obligation to conclude a negotiation

One of these ways is the removal of the current obligation in the ERA for employers and unions to conclude negotiations for a collective agreement. This duty is important because it provides protection against those who would otherwise only go through the motions of bargaining in order to avoid it. While it does not determine what the settlement should be, it does require that there be one.

Since 2004 the ERA has required that a collective agreement be concluded unless there is genuine reason based on reasonable grounds that it not be. The legislation then spells out the limitations on what constitutes a genuine reason on reasonable grounds. The ASMS has concluded several collective agreements since 2004 (with employers outside the DHB sector) which would have been unlikely to have been concluded if the proposed provision had been in effect.

If this provision is removed then only employers would have any incentive to take advantage of this situation (employees through their unions would have no incentive at all). This is unlikely in the DHB sector at least for unions representing health professionals because of the counter-balance of the high density of union membership. But in the more vulnerable non-DHB sector we could see some employers going through a sort of ‘fake bargaining’ where they go through the motions but have no intention of and never intended to have a collective agreement.

2. Opting out of a MECA

One of the strengths of the ERA is the ability to negotiate industry or sector focussed multi-employer collective agreements (MECAs). This has been particularly beneficial for the health system which functions best on a ‘whole of system’ basis.

The Bill proposes that any employer with whom bargaining for a MECA is initiated can opt out by writing to the other parties within ten days of receiving such a notice. The MECA the ASMS negotiates with DHBs provides the base terms and conditions of employment for an increasingly ‘joined up’ public health service. Collaboration between DHBs would have been far more difficult in a situation where senior doctors and dentists were not covered by a single MECA.

3. Protection for new appointments in their first 30 days

The ERA requires employers such as DHBs to employ new appointees under the applicable collective agreement (where one exists) if they are a union member (eg, ASMS) or, if not a union member to be offered the same terms and conditions of employment as an individual rather than collective agreement. But this retrograde Bill seeks to remove this protection for health professionals at their most vulnerable position in terms of employment.

This is an extremely short sighted provision for a nation that is seeking to establish a skilled and stable labour force and is particularly short-sighted in the public health sector. Any specialist who discovers that they have been taken advantage of in this way will inevitably have difficultly trusting in their DHB’s goodwill ever again. These amendments are irrelevant in the hands of wise good DHBs but high risk in the hands of the less wise and good.

Tendencies

And now back to health system tendencies – in particular, managerialism and micro-management.

Tendency towards managerialism

Arguably the strongest tendency of health systems is towards managerialism. I’ve been prone to quote, for the purpose of adaptation, as recently as June this year one of what I had thought was a famous Winston Churchill saying.

”The Americans always make the right decision but only after they have exhausted all other alternatives.” I have subsequently been advised by a vigilant member that there is no evidence that Churchill actually said this. There are several people who have attributed it to him but that is as good as it gets.

Nevertheless my ‘non-Churchillism’ was that first our health leaders tried managerialism (late 1980s), then they tried commercial competition plus managerialism (1990s), then they tried cooperation with the residual of managerialism (early to mid-2000s), and then they tried clinical leadership which was the right decision after exhausting all other alternatives. This appeared to be a justified assessment given the increasing promotion of clinical leadership by successive health ministers – Annette King with her annual ‘Letters of Expectations’ to DHBs; David Cunliffe through his facilitation in 2008 of the Time for Quality agreement between the ASMS and DHBs, and then Tony Ryall in 2009 with his policy advice statement In Good Hands. Each was an acceleration of their predecessor that further strengthened the emphasis on the critical distributive feature of clinical leadership. In other words, clinical leadership is more than simply having empowered formal positions of clinical leadership. It was about all health professionals having the time to be involved and empowered in professional and organisational leadership activities beyond their immediate clinical practice and their DHB providing the supportive culture to enable this.

Unfortunately not only was I wrong about what Churchill said but I was also wrong in my adaptation of what I thought he had said. The global recession brought out the worst rather than the best of our health leaders, including in DHBs. It encouraged a shorter term approach to decision-making.

In this tight financial environment distributive clinical leadership has shifted from the front foot to the back foot in response to this capacity and cultural deficit. We are less well placed to achieve the benefits of clinical leadership than we were before In Good Hands was published. We are experiencing too much top-down decision-making and many instances of DHBs not engaging with hospital specialists over service delivery changes and reviews and failures to adhere to the engagement principles of the MECA.

We are also experiencing situations where DHBs do make an effort to counter this tendency towards managerialism through active engagement, but nevertheless the signs of resurgent managerialism are there to see. The pressures of a deteriorating financial position, increasing external demands and pressures, and micro-management are revealing a culture and capability deficit in health leadership. The drive is to focus on short-term pressures and to see things through a narrow managerial lens. There is too much bullying of health professionals, too much marginalising health professionals to reactive responders rather than proactive leaders, and a failure to consistently apply a ‘what makes good clinical sense’ threshold to decision-making.

Tendency towards micro-management

Another significant health system tendency is towards micro-management. A major weakness of our health leadership is that we lack a strategic direction over where our health system should be going and how it should get there. Instead we have targets. While generally laudable and benign, avoiding the rigidities and perverse incentives of those in the National Health Service in England, they are blunt instruments that only measure what can relatively easily be counted. This is considerably less than the totality of what public hospitals actually do such as chronic illnesses, acute surgery, mental health and secondary services provided in a community setting, which don’t lend themselves to targets.

Targets themselves are not the problem but what is the problem are the intense micro-management coupled with insufficient investment in the resources (usually workforce) needed to deliver them. Even though they constitute only a small part of what DHBs do, their constant monitoring and reporting coupled with ministerial and central government direct communications to DHBs (including at the level of senior management), such as phone calls and texts, puts extreme pressure on DHBs and generates risk of distraction from more substantive quality and safety issues.

The ASMS has regular Joint Consultation Committees in each of the 20 DHBs. These are good mechanisms for engagement with senior management including chief executives. We have started to use them to discuss the experience of targets including unintended consequences. To date, what has emerged includes:

1. Some types of clinical need are being favoured over other equally pressing clinical needs that are not covered by a target.

2. Referrals of emergency department patients to the wrong hospital service due to pressure to meet the six hour target.

3. DHBs insufficiently resourced to meet the reduced waiting time target for cancer first specialist appointments.

4. Elective follow-ups being crowded out by the pressures to do more first specialist appointments.

5. Concern that specialists would be accused of cynical manipulation in the meeting of targets through, for example, relabeling.

A tale of two DHBs and their cultures

I now want to discuss two unfortunate recent experiences in two DHBs with quite different leadership styles and cultures. The performance of these two DHBs makes the Hamilton City Council look good – arguably.

College Accreditation of Anaesthesia: Hutt Valley

An unfortunate example of taking the eye of the ball through a serious leadership deficit occurred recently when the College of Anaesthesia advised that it would be withdrawing training accreditation at Hutt Valley. This led to a blunt discussion at our Joint Consultation Committee over “how did it happen, how come and why?” It was only three or four years ago that Hutt Valley had a very good reputation for attracting and retaining registrars with a number then taking up specialist positions at Hutt Valley. Hutt Valley was at the forefront of successful DHBs in this respect.

In response some within management hinted at criticism of the College. But the College adopts a very measured and rigorous approach and would not make such a decision without very good reason and not after giving a lot of flashing light warnings.

The DHB wriggled further by claiming that apart from resource issues, the things the College brought up were a surprise and although they knew there were issues they did not see the College action coming. We found this difficult to accept with one of our members noting that “the rest of the country knew.” Further, the College had advised the DHB of this risk six months earlier in writing.

A key issue in Hutt Valley was that there seemed to be no opportunity within the current culture of the DHB for contestability of views and this led to a loss of communication and quality of decision making. The leadership only responded to convenient messages. To provide conflict over the past three years or so internal morale at Hutt Valley among specialists at least has plummeted. Prior to this if there was a bad news media story in Wellington you automatically knew that it was Capital & Coast. In contrast and in the main, Hutt Valley had buzzed along below the radar productively and effectively.

It was unwise of the DHB to point the finger at the College as they will have been careful and measured in their processes and there was no joy or incentive for the College to remove accreditation. Subsequently the College has given Hutt Valley a 12-month extension largely due to some excellent retrieval work by some key players including the Chief Medical Officer. But contacts in the College advise me that Hutt Valley was very lucky.

This deplorable situation should never have happened in the first place. It was avoidable and its occurrence was a leadership failure.

Electronic Referral System Fiasco

But bad decisions and outcomes are not the monopoly of DHBs with a leadership deficit. Taranaki is an example of a DHB with a generally good leadership and management culture but in the environment they are forced to work in can make decisions that have bad outcomes. In this case they behaved like possums in car headlights.

In late 2009 the government initiated an ‘expression of interest’ process for primary providers to make business case proposals relevant to primary-secondary collaboration or integration. One of the small number of successful cases came from the Pinnacle IPA (subsequently morphing in the Midlands Health Network) primarily based in Waikato. Despite its limited coverage in the Midland region, the business case covered all five DHBs (Waikato, Bay of Plenty, Lakes, Tairawhiti and Taranaki). A key project in the business case was the development of an electronic referral system between primary and secondary care. Politically this ticked critical government boxes – in particular, regional collaboration between DHBs and primary-secondary integration.

But it had a downside for Taranaki which already had a very functional home grown system. It was replaced by what has turned out to be an inferior regional system which was slower and provided less clinical information. There was no engagement with Taranaki specialists over whether this change should be made and what the consequences would be if it was introduced. It was simply imposed. The new system was described as a "piece of junk" by specialists including at a recent Joint Consultation Committee of the Association and the DHB. Specialists also advise that Taranaki GPs who were forced to use the new system are also unhappy with it.

At our Joint Consultation Committee specialists described this outcome as an example of “regionalisation gone bad”. Management confirmed that they, in effect, had no option but to accept it implying strong political pressure to ditch their superior system.

We put to management that there should be more investigation of the impact on what the DHB currently does or have in place already before agreeing to regional “solutions”. Had there been genuine clinical engagement and leadership over this matter then this outcome would not have happened. Despite being a generally well-disposed and competent leadership in Taranaki it may well be that they did not put up much of a fight, if at all.

But compounding the bad outcome was the extraordinary comment from senior management in the Taranaki Daily News which ran a story on the controversy (20 July). At the Joint Consultation Committee, senior management had accepted the validity of and commiserated with the specialists concerns, in the Daily News they dumped on them. In an extraordinary U-turn they said that specialists concerns were wrong and that the new system was “viewed as a positive step for both GPs and the hospital”.

Funny that management never said that when in a ‘face-to-face’ discussion with the specialists! Instead specialists had left the meeting believing that management agreed with them but were forced to impose the change. While they may have believed that management could have stood up to external pressures more, they nevertheless were given every reason to believe that they and management were on the same page.

It is a basic test of leadership calibre that what you say to people over their concerns should be consistent, not the opposite, of what you say about them in public. Taranaki leadership was blinded by political headlights and consequently unnecessarily and avoidably created internal credibility issues for itself.

After considering these two incidents it is seems appropriate to introduce a new word I came across recently that appears apt – sisyphean; an interesting adjective that entered English in the early 1600s. It refers to endless and unavailing labour and originates from a Greek myth about a King who was condemned to eternally roll a stone up a hill.

Health Benefits Ltd

Health Benefits Ltd is the agency charged with the responsibility of organising DHBs to save money by sharing so-called ‘back office’ services. HBL’s work is a regular agenda item at our DHB Joint Consultation Committees and we also raise these matters in national forums. In the politically charged and at times repressive environment that increasingly pervades the health system sometimes it is left to the ASMS to publicly comment on matters that DHBs feel they can’t.

One positive development is the establishment of the HBL Clinical Council which includes some excellent specialist appointments to this body including its Chair Dr Johan Morreau. While it may of necessity have a reactive role to play, we hope that the Council especially given the calibre of people on it will be able to provide proactive leadership and advice to HBL on a range of matters directly and indirectly relevant to its brief.

But concerns still remain. Behind the scenes DHBs tell us that:

• They have from the outset worked very hard to engage with HBL accepting that change is on the way and they are best to engage to try and direct or affect the changes rather than be reactive. They see HBL as under enormous pressure to deliver on their promises and that this is creating problems. From the ASMS perspective the problem is not so much HBL but the external pressures behind it including unrealistic expectations and timeframes. Further, the unfortunate use of the term ‘back office’ for political reasons devalue the high dependence clinical services have on these support functions.
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• A major area of concern is around the finance and procurement work-streams. Some DHBs consider that they have been driving the agenda to mitigate damage from HBL.

• In some DHBs the finance and supply chain have already been reviewed and reorganised some years ago and the savings have already been achieved and are on-going. Pressure from HBL to now find more savings is destructive. HBL are looking for the northern based ‘Health Alliance’ shared services agency to take over the finance and supply chain functions. But this risks destroying current very good teams and meaning that things will be worse in terms of savings, not better.

• ‘Health Alliance’ will take over all supply chain services but there are serious doubts that it has the infrastructure or staffing necessary to deliver.

• Some DHBs forecast a ‘disengagement process’ for specialists involving a loss of their input.

• DHB Annual Plans are required to include HBL estimated savings but there are serious doubts within DHBs over the robustness and validity of these cost assumptions which are believed to be very risky.

All of the above are serious concerns about the HBL process that have been relayed to us. They are powerful in my view. But they do not mean that the HBL process should be abandoned. Instead the process should be revamped to ensure there is more realism in the scope of the project and that the assumptions should be able to be challenged more Where is the evidence, for example, that it is more cost effective to have the DHBs’ finance functions run through one shared services agency. External pressures on HBL need to be reduced. Further, the direction of HBL should be given a more positive focus as an innovation hub rather than a narrow focus on cost savings in clinical support services.

Could there be Mid Staffordshire in New Zealand?

Many of you will be aware of the Mid Staffordshire disaster in this foundation trust in the National Health Service in England. This involved appalling examples of nursing care due to the hospital cutting its already depleted nursing establishment to build up its financial resources to ensure a successful application for foundation trust status which they were under strong government pressure to achieve. The hospital hierarchy became obsessed with finance and targets at the expense of patient care.

The Francis report on Mid Staffordshire identified that the prevailing culture, focussed on doing the system’s business rather than the care of patients, was at the heart of the problem.

This has led to discussions in the health sector, including at some of our Joint Consultation Committees, over whether we could have a Mid Staffordshire here. On the one hand, there is no public hospital in circumstances like Mid Staffordshire and nothing appears to be on the horizon. In contrast with England, we have a more integrated health system, we don’t have the same level of obsession with targets (although we are not without risks), we have not had direct cost cutting (although we have eroded funding), and we have not been subjected to the disruptive restructuring of our health system in order to convert it into a privatised commercial market.

Inconvenient truths

But there is a downside summarised by the following observations which could be seen as inconvenient truths:

1. Our political masters and their agents are too willing to turn a blind eye to the risks of having a public hospital specialist workforce functioning on entrenched shortages. The government seeks to cover this up by deliberately misleading claims of extra hospital doctors by both fudging the data with resident medical officers and then using unreliable RMO figures to boot.

2. The government refuses to invest in their specialist workforce and DHBs have walked away from their responsibility to advocate for this, including using the cheap shot of confusing formal vacancies with shortages.

3. The micro-management of public hospitals, including the blunt instrument of targets, has an intimidating effect on DHB leaderships.

4. Increasingly DHBs are being funded below the costs necessary to run them and the rate of increases is reducing. DHB specialists and other health professionals are being expected to do more with relatively less.

5. Managerialism is reviving as pressures for short-term decision-making and crisis management increase while the drive for genuine distributive clinical leadership has lost its way.

6. External pressures on DHBs continue and increase including the top-down narrowly focussed HBL process.

7. Increasingly we are seeing more reviews and other decisions that are inconsistent with the principles of Time for Quality and In Good Hands. Specialists are cast in the role of reactors to proposals, rather than being in the engine room of proactive development.

Voice suppression

We are seeing increasing signs of suppressing inconvenient voices. The Francis report was critical of the failure of health professionals and leaders to voice concerns and warnings over what was happening. This included criticising the Royal College of Nursing for failure to voice.

In New Zealand we are noticing increased signs of an environment of intimidation. For the first time in around a decade a specialist was threatened with disciplinary action for invoking his right under the MECA to participate in public debate and dialogue. We have seen a clinical leader dumped on in public because the advice he provided general practitioners on surgical waiting times was inconvenient. We are seeing signs of more hard line adversarial employer attitudes in DHBs. There are also worrying signs of increased managerial bullying. There have even been attempts behind-the-scenes to muzzle the ASMS from voicing our concerns.

The specific circumstances of Mid Staffordshire are not the same as in New Zealand. But at a higher level what characterised Mid Staffordshire was the ignoring of inconvenient truths such as the impact of nursing cuts, the raising of critical concerns, and data reporting significant deviance from accepted standards.

Consequently, because of ignored inconvenient truths, it is impossible to rule out whether a Mid Staffordshire happening in New Zealand. The circumstances here are different but there are also trends. The disincentives to enabling health professional voice suggest that it is quite possible.

Recently I learnt of a nice story in a primary school where a young girl reported to a teacher that a boy had sworn at her using the F-word. With trepidation the teacher asked exactly what he had said to her. She said that he had called her an egg.

This is a nice story about the innocence of misunderstanding. But it also has some resonance for the health system. We don’t need more swearing in the system but we need not only to be allowed to say what has to be said but also to have what we say understood by health leaders. It is a delight to experience the misunderstanding of children. It is anything but a delight to experience it from our political bosses and their ‘back office’ bureaucrat agents.
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