Health NZ managers ate $9000 of canapés as financial crisis loomed

Three hundred Health New Zealand leaders ate $9000 of canapés at a national conference as the current financial crisis engulfing hospitals was looming.

Leaders flew in for the three-day conference at Wellington’s Sky Stadium in late March.

The bill for canapé finger food was $9200, and it was $60,000 for lunch and breakfast.

Health Minister Shane Reti gave the conference’s keynote speech.

Two days before the event, Reti was told by Health New Zealand’s chief executive they were facing cost overruns of half a billion dollars from hiring nurses.

The board chair, Dame Karen Poutasi, who also spoke at the Connect 24 conference, had spent the previous weeks reassuring the finance minister about Health NZ’s financial controls and intent to make cost savings.

Health NZ said the conference was a one-off, useful event that would not be repeated in the current fiscal environment.

Its content remained relevant, although several conference workshop leaders’ jobs had since been disestablished, the agency said.

The 250 canapés cost $32 each. With GST added, the bill came to $9200.

An invoice from stadium operator Delaware North also shows 700 standard lunches of six items at $40 each were ordered, costing almost $32,000 GST inclusive – equal to five months starting pay for a registered nurse.

Breakfast cost almost $12,000, while venue hire was $60,000.

Health NZ was unable to provide a total cost of the conference to RNZ.

It said travel costs were booked at local districts. It provided zero information about accommodation costs.

“Costs were not collected centrally, and Health NZ is unable to estimate the total cost of this event,” it said.

Promotional material for Connect 24 said: “Connecting with our strategic context means understanding the priorities from our authorising environment. This includes Minister of Health, Dr Shane Reti and our Board Chair, Dame Karen Poutasi, speaking to the expectations of us as a system.”

It added: “No media expected.”

Reti’s keynote speech was titled ‘Setting a vision’.

Health NZ chief executive Margie Apa opened the conference on a Monday – the Saturday immediately before, she had written to Reti with one of the first warnings about a surprise deficit that has since grown to over a billion dollars.

A month before the event, Poutasi told a worried Finance Minister Nicola Willis: “We will be doing all we can to further improve our performance and deliver better health outcomes for New Zealand.”

On 22 March, Poutasi wrote to Reti, rejecting Willis’s criticism of Health NZ, calling it “unfair” and assuring him the board was intent on “ensuring good financial discipline”.

RNZ asked Reti if he supported Health NZ running nationwide conferences for hundreds of senior managers at a time when the frontline of GPs and at hospitals needed more funding.

His office replied: “Minister Reti has made it very clear that under the turnaround plan being developed for an agency facing extremely serious financial difficulties, he expects Health NZ and the Commissioner to be absolutely focused on delivering healthcare to the people of New Zealand.

“Their priority must be on frontline health services.”

The government’s “expectations” had featured in communications in the weeks before the conference.

Poutasi, at the top of a letter to Willis on 22 February, cc’ed to Reti and Treasury, wrote: “On behalf of our board, I want to underscore that we understand the government’s expectations and, as part of that, the importance of ensuring a strong focus on savings, value-for-money and impact.”

Health NZ told RNZ that the conference was one of a kind.

“It is the only time a meeting like this has taken place since Health New Zealand was established,” it said.

It was useful for networking and “to align leadership to the government’s priorities for Health NZ”, it said.

“In the current fiscal environment, no further Connect meetings are planned.”

However, in the period the conference was still being planned, Willis told the Health NZ board chair: “Boards must ensure their entities make the best use of Crown funding to deliver high quality services and you should expect enhanced scrutiny of Crown funding.

“Boards should review programmes regularly … activities that are not delivering results should be stopped.”

The conference held a workshop titled ‘How do we make Health NZ more transparent for our staff and the public?’

It also included a speech from ex-All Black and Super rugby coach Tana Umaga titled ‘This isn’t tiddlywinks – leaders as coaches’.

Health NZ told RNZ that many of the conference workshops “are still relevant in the current period … The content is still relevant despite the change in Health NZ [sic] financial position”.

However, at least four of the top leaders who presented workshops have since had their jobs disestablished or left the agency, as it undergoes a mass reset following its descent into a half billion-dollar deficit.

One of those was award-winning chief financial officer Rosalie Hughes (nee Percival), ousted amid the financial fallout. She led a Connect 24 workshop on “maximising value and improving productivity”.

Another, chief of data and digital Leigh Donoghue, led a workshop on “the three horizons of investment and 12 flagship initiatives”. Not only was his job later disestablished, but $500m of those initiatives have been cut, pared back or the money redirected to bail out Health NZ’s fraught payroll project.

The Māori Health Authority Te Aka Whai Ora gave another workshop; it was shuttered soon after.

Documents show that since at least January, Willis and the Ministry of Health had been after Health NZ for better financial information.

On 2 February, Health NZ responded: “We have been and remain clear on the need to look further at savings options.”

In the week before Connect 24, on 19 March, Willis again raised concerns, this time with Reti, about signs of a deficit emerging, and if the savings plan was enough.

Two days later, Apa sent Reti an “urgent” briefing about imposing extra financial controls after over-recruiting new nurses.

“We are tracking indicators of expenditure weekly, with executives accountable,” she told him.

Lester Levy took over from Poutasi and in July sacked the whole board on the government’s say-so.

The Official Information Act response to RNZ, signed by manager of government services Danielle Coe, laid out six focuses for the conference, including “horizon scanning” and “transformation and productivity”.

The intention was to bring together tier three and four managers and clinical leaders whose roles were now permanent after 18 months of change, and ahead of planning for 2024-25, Coe said.

More change has since ensued: Many of those managers’ roles have been shuffled about in the Health NZ reset, and in August, the agency called for staff to apply for voluntary redundancy.

Health NZ is continuing to work on a plan for financial sustainability.

After RNZ requested the Connect 24 details, the agency apologised in August for the time it was taking; it said this was due in part to it trying to calculate the total costs.

It later said: “The decision to decline the travel costs, being flights and accommodation and taxis/shuttles is on the grounds that this information is not held at a national level and is difficult to identify due to the way each local area codes costs. As the OIA says, where travel and accommodation would have been met by project/programme and business unit budgets, as the travel was dual purpose, they were coded there.

“For this reason, we also can’t provide an estimate of the costs and it would be inaccurate and wrong to use an estimate as many of the attendees who travelled were asked to hold other meetings they would normally have to coincide them with Connect 24 to reduce travel costs. A proportion of attendees were also Wellington based.”

Timeline

Mid-February: Nicola Willis tells Health NZ board: “Activities that are not delivering results should be stopped.”

23 March: Health NZ tells Reti it will impose extra financial controls over a blowout on hiring extra nurses.

25-27 March: Connect 24 conference with Shane Reti as keynote speaker.

17 May: Health NZ credits its extra nurse hires with making hospital safer.

Restructure proposed, including cutting jobs of several leaders of Connect 24.

rnz.co.nz