Health NZ is struggling with a $2 billion staff IOU, a $1.76 billion deficit, and has just announced further staff cuts, but has also spent $72 million on under-staffing. contractors and consultants.
Photo: RNZ

Health New Zealand spent $72 million on contractors and consultants on a single IT project before laying off more than a thousand IT staff.

Just one recruiting firm, Robert Walters, has received $17 million over the past two years for the project. Robert Walters declined to comment.

Significant spending on external hires is expected to continue next year, although Health NZ said it also expected to hire more staff.

Its plan to cut costs by cutting hundreds of staff is expected to save just $13 million a year, according to Te Whatu Ora Health NZ’s consultation document released on Wednesday.

The ax hangs over entire teams of staff, even as at least two projects seek to extend contractor contracts.

The cost-cutting plan had also sparked fears that a revolutionary new AI application, which could almost double the rate of mental health patient assessments, was at risk.

“This is one of the most innovative things we’ve seen come out of Health New Zealand since its inception, so it would be extremely disappointing… for this… to be shut down,” the delegate to the Health New Zealand conference said. union of senior doctors. and psychiatrist Carin Conaghan.

An official information request has exposed spending of $72 million on contractors and consultants for RNZ, on the eve of the publication of the cost reduction proposalwhich aims to save Te Whatu Ora $100 million a year, on orders from the government to make big savings, to curb a threatened deficit of $1.7 billion by next July.

The significant spending included $37 million for consultants and $35 million for contractors, from mid-2022 to September this year, to work on the Agreements and Payments program in the construction sector. health (HSAAP).

The HSAAP project was conflicted and delayed, and its budget was increased from $116 million to $140 million.

It was supposed to be almost complete by now, but it was currently operating at 4% capacity, processing only $400 million of the $13 billion in annual billings it requires. This amount could reach $4 billion by next June, HNZ told RNZ.

“The project was forced to consider setting a new benchmark in June because it was “below what it should be.”

“The rating of this program should be RED,” the HNZ June report cited a Treasury review, adding that it was on a positive trajectory, despite “the difficulties discovered in recent months”.

Half of the critical IT equipment in New Zealand hospitals is obsolete, experts have warned.
Photo: 123RF

HNZ denied RNZ the rates it paid to external hires for commercial reasons.

He also declined to say how many people had been under contract for more than six months, saying it was too much work to determine.

Contractors will retain a role at Health NZ under its plan published on Wednesday to cut IT employees.

It envisaged a “flexible resourcing model with a mix of HNZ staff and contracted resources provided or trusted partners”, the consultation document said.

It found that rising personnel costs, including growth in the number of contractors, were the “primary” reason for an operating deficit that stubbornly remained above $140 million a month until October.

The document mentioned the contractors only once.

HSAAP has extended contracts for some contractors, according to sources familiar with the project.

Furthermore, this is also happening in another large-scale IT project, one that is slow to reimburse staff for arrears related to the Leave Act.

In it, five health districts out of 14 requested authorization to extend the recruitment of subcontractors, according to an updated report. Northland, Wellington and Whanganui would all face a looming crisis if contracts were not extended, according to a project update.

“High immediate project risk – finalizing project budget,” Northland’s report states.

“If this is not concluded by early November, there is a risk in terms of project resources, as contractual agreements for 70 percent of the team are due to expire on November 30, 2024.”

Wellington’s said: “If contractors’ contracts are not extended beyond December, there will be no resources in place to complete next year’s work programme, for all three regions (Hutt and Wairarapa also ).”

Wanganui and Canterbury said something similar.

Waikato was bringing in contractors to replace permanent staff seconded as part of the recovery project. “If these infill resource contracts are not extended, the project will lose key resources.”

“The benefits exceed the cost”

HNZ has defended its use of contractors and consultants.

“Health NZ only uses consultants when the benefits clearly outweigh the costs,” said director Mark Woodard, in the OIA’s response to the HSAAP project.

Photo: Supplied/Waikato Hospital

The highest paid consultants on the project were: Deloitte (nearly $10 million), Infosys and Circini (around $7 million each).

The second highest paid contractor after Robert Walters was Presto Resourcing ($4 million). Many subcontractors were recruitment agencies that filled permanent positions, a spreadsheet shows.

Woodard said Covid and the restructuring of the Department of Health made it difficult to get the project off the ground and staff did not have the expertise, knowledge or capacity to deal with it.

It “was driven by the need to manage this complex and large-scale initiative, without overburdening existing resources.”

The project will likely hire more permanent employees next year, he added.

HNZ did not say how this was linked to the massive cost cutting within its IT department.

Fears related to AI applications

In a small data and digital corner, a small team was working on the Tuhi AI application.

Doctors’ union conference delegate and senior psychiatrist Alain Marcuse from Wellington said trials indicated Tuhi could almost double the number of patients a psychiatrist could see in a day, to around eight.

“This is one of the most promising technologies to come,” he said.

Carin Conaghan said many doctors were excited about this and her team had hoped live trials would begin soon and Tuhi would be deployed next year, but that was now uncertain.

“The release of clinical capacity and patient safety has yet to be fully determined, but I think the early trials show it’s absolutely there,” Conaghan said. “It’s revolutionary.”

They believed that the development of Tuhi had cost only $100,000 to date.

When asked if the Tuhi development team should be disbanded, Te Whatu Ora replied simply that: “Tuhi is currently undergoing testing, with a formal evaluation underway to assess the efficiency and effectiveness of the application. Decisions on the future of the program will not be made. until the evaluation is completed.

It did not require any special hardware and, being developed locally, it was culturally sensitive and did not pose data jurisdictional issues, union delegates noted.

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