Barker Rick: Urgent Debates — Hawke’s Bay District Health Board—Appointment of Commissioner 
Barker Rick: Urgent Debates — Hawke’s Bay District Health Board—Appointment of Commissioner 
[Volume:645;Page:14547] 
Hon RICK BARKER (Minister of Internal Affairs) 
: 
 I rise in support of the decision made by the Minister of Health to dismiss the Hawke’s Bay District Health Board. I do so with regret and with sorrow at the lost opportunities for the people of Hawke’s Bay. I recall the time when Kevin Atkinson was made Chair and he appointed a very bright new Chief Executive Chris Clarke. It appeared to be an exciting combination and the prospects for Hawke’s Bay looked very good. The district health board was full of ideas about how it would improve health services. It was looking at innovative ideas and new technologies. Sadly all of that has gone. We now have a board that is mired in disputes and litigation and that has a ballooning deficit. That clearly smells like trouble but despite that we have people who claim that all is rosy. So what is the truth? 
Firstly let us look at the finances. At the beginning of the financial year the board proposed a budget that was to balance. We have subsequently been told that the board never believed that the draft budget was achievable—in other words it was deceptive. We now have a set of accounts that show a $7.7 million deficit. To make matters worse the $7.7 million deficit is predicated on making savings worth $5 million. There is no real prospect of achieving those savings. In actual fact the district health board has a $12.7 million deficit which is proportionally greater than that of Capital and Coast District Health Board. 
The Hawke’s Bay District Health Board claims it is well run the board manages its governance well and there are no significant issues. Those claims are made despite the fact that three reviews of governance and management have been held. One such review of a board would be noteworthy two remarkable and three extraordinary. There would not be a problem if the three reviews had resolved the issues but they have not. One of the critical responsibilities of the board is to govern and manage strategic relationships. One of its critical relationships is with the Minister of Health. The board largely manages that relationship through the media. It is the only district health board to do so and that is no way to manage a critical relationship. Consequently the relationship with the Minister can only be described as difficult. The board and board members have regularly made extraordinarily adverse comments about the Ministry of Health. They have accused the Ministry of Health of bad faith and of deception. The board’s relationship with the Ministry of Health is critical to its ongoing success in managing its responsibilities. That relationship is one of suspicion. 
If the failure of those relationships was the end of the matter it might have been managed. But that is not so. There is a toxic relationship between the board and senior management. There are many examples of that and here are a few. It is alleged that during the current review of the board staff members were offered the opportunity to speak confidentially to the inquiry team. That was hotly opposed by the board. The board did all it could to stop people from speaking with the inquiry—quite extraordinary! Staff members did however exercise their right to tell their stories and in confidence as they were entitled to do. The board was so incensed at this that the chair threatened the chief executive with disciplinary action for allowing staff members to talk to the inquiry team. That was beyond the pale. Not satisfied by having done that the board determined to find out what the staff had said. There were threats to the staff of court action. Whether or not this was intended it was certainly perceived by the staff that they were being threatened and they felt intimidated. I am sure all New Zealanders feel a deep unease about such threats. All people must have the right to speak freely and confidentially to an inquiry. Why was this board so hotly opposed to that? 
It is alleged that the chair of the district health board discussed the performance appraisal of the chief executive with another staff member before the chief executive had seen it in order to white-ant the chief executive. That is utterly unacceptable in any normal circumstance. The chief executive was under enormous pressure. He sought medical advice and his doctor prescribed him 2 weeks’ stress leave. Feeling sick and stressed he advised the board of that—and no doubt expected some sympathy from it. But that was not forthcoming. The news of his pending stress leave was immediately leaked by the board to the news media denying the chief executive the opportunity to tell his story in his own time and in his own way. In other words when a man was down the board kicked him. I am sure I speak for many people when I say that I find that sort of behaviour reprehensible. The board has undermined the effectiveness of the chief executive at every turn. 
But the heat is not only felt by the chief executive; staff members at the hospital have said that they are in fear for their jobs. They feel bullied they feel battered and they feel intimidated. The relationship between the board and its senior management is at a crisis point. The chief executive has revealed that many of the senior management team are considering resignation. Anybody in the employment field today knows how difficult it is to employ competent staff. Why should Hawke’s Bay lose such good people unnecessarily? Sadly and additionally to all of this some months ago doctors at the district health board passed a motion of no confidence in the board. 
To sum matters up we have a district health board whose relationship with the Minister of Health is difficult whose relationship with the Ministry of Health is one of mistrust and hostile accusation and whose relationship with the chief executive and senior staff is toxic. By any definition that is a crisis. But that is not the end of the matter. The district health board has been completely fixated on the allegation that Peter Hausmann had a conflict of interest in a particular contract. One would expect that people who are so intensely aware of conflicts of interest would behave impeccably themselves. That is not the case. 
Recently a contract worth $600000 was awarded by the board’s finance and audit committee to Royston Hospital. That was against the advice of the board’s management who said that work for such significant sums of money should be tendered for. The board’s management provided probity advice to the committee that such work should be tendered for but despite that advice the committee awarded the untendered-for contract to Royston Hospital. One member of the committee has a brother who has an interest in Royston Hospital; a second member of the committee has shares in the company that owns Royston Hospital. They did not excuse themselves from the deliberations or the financial decisions made by the committee. A third member of the committee has allegedly refused to sign a confidentiality agreement in respect of his work on the board presumably because he does not want to be constrained in leaking information. That person cannot even keep a confidence about his own bad intent. I have no problem at all with Royston Hospital being awarded contracts provided the tender process is open transparent and fair. 
The problems with the district health board do not end there unfortunately. Recently on the basis of a LECG report the management put up a proposal to rationalise pharmaceutical dispensing that had the potential to save the board millions of dollars. The board rejected that proposal with the assistance of a board member who has an interest in five pharmacies. The board preferred the more expensive current practice than a new procedure that would have saved costs. The net loss here is to the people of Hawke’s Bay who are on the waiting lists. Every dollar spent on pharmaceuticals from now on means there are fewer dollars available for knee and hip operations and other procedures for the people who need them. 
It is a sad but similar story about the process of rationalising laboratory processes. The chair of the district health board on his own initiative and without the involvement of the management commenced discussions about and drew almost to a conclusion a contract for laboratory services with Medlab. Those discussions about the contract were again not subject to an open tender process contrary to the advice of the management and the board eventually approved the chair’s proposal. Sometime shortly thereafter the chair’s proposal was struck down by the Commerce Commission which required the district health board to let laboratory services on an open tender basis. The tender was eventually awarded to another contractor Southern Community Laboratories. The time taken to run two processes meant that the potential savings available to the board were lost. Those savings again represent lost opportunities for the people on the waiting lists to have their much-needed operations. 
The issue about the district health board is about competence. Some have characterised it as being about democracy but it is about competence. We have a district health board that has a dismal relationship with the Minister of Health has a difficult relationship with the Ministry of Health has a toxic relationship with its senior management team has a ballooning deficit and is focused on litigious adventures. The cost of those litigious adventures is being paid for by the people of Hawke’s Bay in terms of forgone operations. Do I support the Minister’s decision to dismiss the board? I certainly do. The board is required to have a good relationship with all its stakeholders. The board is responsible for its failed relationships with the Minister the ministry senior management and management staff. It can blame no one else. The board is completely responsible for the deficit but more important the board had the opportunity to make significant savings for the benefit of Hawke’s Bay but instead chose to have contracts for more expensive pharmaceuticals that favoured the pharmacies. It chose to award significant works without tender where there are clear and demonstrable conflicts of interest. 
Board members have allegedly leaked information. That is extraordinary. The chief executive told the board that the National Party had 25 confidential papers in its possession. That is a clear breach of trust and integrity. Such behaviour is corrosive and it seriously undermines the board’s ability to do the job on behalf of the people of Hawke’s Bay. The information was leaked to the National Party whose members have used the district health board as a political football to kick around. I am opposed to any political party no matter what its colour using our district health board as a political football simply in order to gain the attention of the media. 
Our district health board has an important part to play: to provide the best-quality services to the people of Hawke’s Bay. Its challenges are significant; we have poor health statistics. In order to achieve a high standard for the people whom a district health board represents the board needs to manage itself well. It has to manage its relationships well and by any measure this board failed to do so. I support the Minister’s decision. The people of Hawke’s Bay deserve a district health board that is focused exclusively on the welfare of the people it is responsible for. It has to be vigilant and financially responsible get best value for money and manage key relationships. The former board failed on all counts; it was dysfunctional. The people of Hawke’s Bay deserve better than that. The Minister in siding with the interests of the people who look to the district health board for health care had no option but to sack the board. 
The debate having concluded the motion lapsed.