Health Cuts — Can We Afford Them?

Amidst a furore of public protest the pediatric ward at Hutt Hospital closed on Saturday, September 1st. Nine days later, one of the four Wellington Surgical Wards was also closed.

These are some of the measures implemented by the Wellington Hospital Board as part of a cost containment exercise in line with Government reductions to board expenditure. This article examines the nature of these cuts and whether New Zealand's public health system can in fact afford them.

In March of this year, the Government announced as part of its overall retrenchment policy, a 1% reduction in the allocations to hospital boards for 1979/80. The price stabilization grant, which was traditionally given to recompense unexpected expenditure such as increased electricity charges, was abolished for the second half of the year. The cutting of this grant and the partial removal of the salary stabilization meant a further substantial reduction to hospital boards. In addition the devaluation of the New Zealand dollar and a revaluation of the United Kingdom's currency has meant increased costs for overseas medical supplies.

The Minister of Health, George Gair, when addressing a special conference of Hospital Board Chairmen explained that the expansion of health services must necessarily be limited by economic considerations. He recognised that "there would by very few organisationa of any size in the world, private or public, which could not effect economies in their operations to the extent of without loss of significant services or noticeable disruption." But he went on to instruct the boards to "motivate the staff to increase productivity and to effect savings in use of labour and goods and in the treatment of patients without lowering morale or raking fears of redundancies and also by consequence upsetting patients."

These instructions could be considered rather a tall order for hospital boards facing between 1-3% reductions in expenditure.