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.

The Effects of the Cuts

The l% across the country reduction particularly affects those board areas which are expanding at the greatest rate i.e. Wellington and Auckland. This raises serious questions as to the rationale behind a policy which seems to be based on expedience rather than looking at the actual needs of the particular board areas.

It is difficult to gain a National overview of the recent cuts to the health system, particularly as a number of the Hospital Boards are noticeably silent on the whole issue. However, the two hospital boards which were informatively helpful, those of Wellington and Auckland, provided enough data to isolate some trends.

The Auckland Board, largest of the twenty-nine boards in New Zealand, has estimated that with inflationary influences its total cut will be $3 million. According to the board the main emphasis has been in streamlining the administration by such measures as savings in photocopying, and closer monitoring of such things as postage, power consumption etc. However, staff replacements have also come under close scrutiny and overtime has been reduced by 25%. This must have an effect on the numbers of nurses, social welfare workers etc. that the Auckland Hospital Board considers it can afford.

The Board hopes that with prudent management direct cuts to services will be avioded, but it predicts that expansion in any particular area, regardless of need, will not be possible unless sufficient savings can be made elsewhere. However, as all the details of the savings have yet to be finalized, more direct cuts may have to be made.

In Wellington the situation is clearer, but more alarming. For a number of reasons, the Wellington Hospital Board had been experiencing financial difficulties before the cuts were announced in March. These factors included the maintenance of rapidly expanding services, the accommodation of clinical school and an unrealistic budgetary allocation from the government.

With the March cuts, the effects of inflation, and the results of the devaluation of the New Zealand dollar, and the revaluation of the United Kingdom's currency, the Board estimates a reduction of funds of approximately $2-4 ml this financial year. This could add up to about a 3% reduction. According to a spokesperson from the Board, "with a cut of this size it is impossible to avoid some reductions in patient services. It is realized that as well as a deficiency in money the Board had the problem of a thinly spread nursing service."

Notwithstanding these cost restraint measures a gap of $600,000 still exists which will have to be met over the next few months.

What does the "reduction to services" mean in practice? Besides streamlining in administration e.g. reduction in conferences, rationalizing xeroxing etc., some very important services have had to be eliminated or partially reduced. The major reductions have been the closures of a paediatric ward and a VD Clinic at Hutt Hospital, the closure of one of the four Wellington surgical wards and an alcohol and drug dependence unit at Porirua Hospital.

Some of the less publicised and not so dramatic reductions to services include charging parents for meals, the elimination of routine biscuit supplies to patients and staff, reductions in drug expenditure and a review of the community services attached to the hospital. If these measures do not recoup the loss in income then some of the medium to long term options will have to be considered, such as reviewing the decision to keep the maternity hospitals at Elderslea and Paraparaumu in operation or reviewing the level and nature of inservice training.

The Health System Eroded

Understandably there has been widespread and vocal public reaction to these cuts, How justified is that concern? Is the public health system really being eroded? Again, let's examine the effects of the cuts in Wellington.

The closure of the surgical ward at Wellington Hospital, according to the chairman of surgical staff (Mr A.W. Beasley) would result in more people waiting for hospital treatment. He stressed that closing the surgical ward at Wellington Hospital would be an abrogation of the responsibility surgeons felt to provide proper surgical care. Even the Minister of Health was quoted in the 30th August's edition of the Evening Post as saying "People who believed that they would not be able to have operations as in the past were under the wrong impression, except possibly in the case of non-essential surgery." Unfortunately this is hardly a comforting assurance, if you happen to have a "non-essential" but extremely painful surgical complaint such as varicose veins.

Superficially, the closure of the alcohol and drug dependence unit at Porirua might not seem particularly harmful to health services. However this unit is the only residential treatment for women with alcohol problems in the Wellington area. With its closure, long term patients from the villa are to be transferred to other wards, but the rest of the patients in the villa are to be discharged, with medical supervision continuing on an outpatient basis. The staff at Porirua Hospital were so incensed by the unit's closure, and subsequent reductions in services, that industrial action was considered as a fightback measure.

Perhaps the clsoure of one of Hutt Hospital's two Pediatric wards, was the cost-containment measure to receive greatest public attention and condemnation. The Pediatric Ward 8 provided specialized facilities for children and adolescents, and was particularly important in the absence of any children's hospital in New Zealand. Protesters against the closure include the Lower Hutt City Council, the epileptic societies, concerned Hutt residents, medical stall, the Handicapped Children's Society and the Hutt branch of the International Year of the Child Committee. They are concerned that the removal of Ward 8 will mean the elimination of specialist nursing care,

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According to Ms Cary (executive director of the NZNA) "The Government must recognise that in fulfilling its committment to provide a health service for New Zealand, it has a responsibility to ensure that adequate standards of care are available. The long term effect of insisting on nursing staff ceilings, within the health services could be disastrous."

Another important factor to note when discussing the shortage of nurses is that patients now require a higher level of nursing care because they are hospitalised for acute care only and are discharged to complete their convalescence at home. This is further increasing the case load of nurses working in the community. With reductions in staffing levels, the quality of patient care is reduced.

Whether safe patient care can still be maintained under these conditions must be a question of concern to the community.

The Effects of the Cuts

New Zealand now spends proportionately more (over 70% of our health budget) on hospital services and less on community health services than any other developed country. Yet at the same time there are still significantly high waiting lists for certain surgical and medical services. The financial distribution and emphasis that should be placed on various areas of health is a difficult question, but of one thing we can be quite sure, indiscriminate cuts to the Hospital boards only worsen the public health system.

With the erosion of the public health system, more people are being forced into private health schemes. The table and graph below dramatically illustrate the huge growth in private medical insurance. It is a shocking indictment of our public health system that an insurance company such as Southern Cross can make a lucrative income from people's fear of becoming sick. This move away from the public health system to the private, was not helped by this year's budget which, after accounting for inflation, saw a 1% drop to the public health sector and a small rise to the private sector.

"Every Area of the Economy must Pay"

The justification for the cuts to the health system are based on the assumption that in times of economic crisis, every area must "pull in their belt". But it is the taxpayer who is paying for the Welfare State and as such is entitled to something in return. Why should the taxpayer have to pay twice — once to the government to provide an inadequate public health system and secondly to an insurance company to "ensure" payment of adequate health care?

Cuts to health like those to education, primarily affect those who cannot afford to pay — students, lower-income families, solo mothers etc. The price New Zealanders will eventually have to pay is their health — a price we cannot afford.

Lindy Cassidy.