Brian Easton says the claim that there are currently 14 layers of management at Health New Zealand, raises wider issues of how we organise systems

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

I want to write a column about current proposals to redisorganise Health New Zealand but, frustratingly, the Coalition Government has not released evidence of its claim that the successor to the District Health Boards is projected to lose $1.4b in the current year, after running a small financial surplus last year. That is a massive turnaround. The cynic must wonder whether the projection involves a bit of creative accounting, a cynicism heightened by the delay in publishing it.

The political purpose may have been to change the top management of Health NZ by appointing a commissioner because the government has little confidence in the previous management. If so, that is their judgement, using smoke and mirrors to disguise what should be a routine governance decision.

Certainly there were smoke and mirrors in the government’s claim that there were ‘14 layers of management’ at Health NZ. The list was probably packed for political purposes. A better one might have been

• 1.         Commissioner

• 2.         Chief Executive

• 3.         Regional deputy CE

• 4.         Hospital manager

• 5.         Service manager

• 6.         Clinical director

• 7.         Ward management

• 8.         Clinical staff

• With the Minister of Health on top.

The minister’s list had the Commissioner at its top and the Patient at its bottom, giving the impression that the purpose of patients is to support the managers – an absurd impression, but too often that is how the managerial hierarchies think and operate. (One recalls the university joke – I think it is a joke – that once the role of registries was to obtain funding to enable academics to work; nowadays academics generate funding to enable registries to work.)

There is a current government belief that there are too many wasteful bureaucrats on the government payroll and they should be made redundant. I was surprised at the ease with which the Chief Executives met and even exceeded their targets. The cynic might conclude that the apparent overstaffing of the agencies implied that almost every Chief Executive in the public service had allowed overstaffing and was  incompetent. My guess is that problems will occur on the frontline as a result of the back-office redundancies.

Whether Health NZ is overstaffed is a matter of contention. There are claims that the numbers of back-office staff have already been reduced. Even so, according to the government list there is at least one additional layer added by the creation of the centralised Health New Zealand and abolition of the DHBs. Even if this has resulted in fewer bureaucrats, its effect is to separate the most senior management even further from the front line of patients.

It is too easy for generic managers to isolate themselves from the real activities of their agency. Recall that the Senior Leadership team at Statistics New Zealand during the 2018 Census crisis had no experienced statisticians on it. The phenomenon is not confined to the public sector. When Fletcher Building had a crisis arising from failing building contracts, there was nobody on its board with building experience.

Universities are collegial enterprises (knowledge is collegial). However, they have become increasingly hierarchical to the point that deans of faculties (they have fancier names nowadays) are often appointed without consulting the college of academics and are simply imposed on them. In one case (only one?) the dean quickly proved incompetent and became thoroughly disliked. The dean’s response was a Praetorian Guard of management layers which appeared to do little, so the academics told me. They thought its purpose was to protect the dean when the academics became too bolshie.

Multitudes of management layers also reduce accountability. Nobody gets blamed for failure because there are always others to blame. The Peter Principle, that managers rise to their level of incompetence, does not apply in New Zealand; here they get promoted well beyond it.

Lacking the expertise to manage professionals, generic managers not only distance themselves with management layers but they also overuse consultants rather than developing the skills internally.  This also reduces managerial accountability, since failure can be attributed to the consultants – it is rare to point to poor management of consultants.

Recently there was severe under-staffing at the Dargaville hospital. Once upon time the complaints would have landed on the desk of the CEO of the DHB based a car-drive away in Whangarei. Instead, it landed on the Wellington-based Minister of Health’s desk (rather than Health NZ’s senior managers). While I have no doubt the matter is serious for those living in Dargaville, surely the Minister should not have got involved unless there was evidence of systemic failure in Health NZ.

What can be done to reduce the dependency upon hierarchical structures? An obvious step is to reduce the layers and sublayers of management. A second is to devolve responsibility; that was the point of DHBs being in charge. A third is to build into upper management connections with those at the front end. (Avis used to require their managers to spend one day a week on a front desk.)

Upper management is besotted by its agency’s finances, measured by the balance sheet. Perhaps the excess waiting that the sick face could be listed as a liability (assessed as the cost of eliminating it) in the balance sheet. The listing would confront those at the top with all those who were suffering. (Even so, it would soon manipulate the waiting list to reduce the liability without actually reducing the client discomfort.)

Do we need such hierarchical structures? Consider treatment in a hospital – say, an operation. Yes, there is a hierarchy in the theatre, but fundamentally it is a cooperative team – just as your local sports team has a captain but the team plays together (respecting the captain). The full health team includes administrators – like booking clerks – but they are working together, respectful of one another and in touch with their patients. Even the team captain typically interacts with the patient as a human being.

Where a hierarchy is necessary, Simon Sinek observed:

Senior doctors and especially hospital administrators don’t know what their job is. When you ask them ‘what is their priority’, they say ‘patients’. It’s not. It is to take care of the people who work in the hospital – of the people who take care of the patients. Every administrator, every senior doctor, every senior nurse should be preoccupied with one thing and one thing only: are my doctors OK, are my nurses OK, is my staff OK? And if they get that right, the staff will devote their time and energy taking care of each other and the patients.

Each tier in a hierarchy should be looking down to the tiers below instead of, as happens far too often, looking upwards. If they insist on looking that way, turn the list of management provided by the Minister of Health layers upside down, putting patients at the top.

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.