Health NZ proposes to dedicate 2.2% budget to digital services

NEWS - eHealthNews.nz editor Rebecca McBeth 

Health New Zealand | Te Whatu Ora is proposing to spend 2.2 percent of its total operating budget on digital services as part of cost cutting measures.

A restructure of Health NZ’s digital services, currently in consultation, involves a staff reduction from 2400 to 1285 roles in the directorate. This would mean just 1.4 percent of the total Health NZ workforce is dedicated to this critical area. 

Health NZ’s Q1 report says this year’s total expected operating cost for the national health organisation is $29.4 billion, creating a deficit of $1.1 billion.

The operating budget for ‘digital services’ for the 2024/25 financial year will be reduced to $658 million, which is just 2.2 percent of the overall spend. 

Darren Douglass, chief information technology officer (acting) says Health NZ is “looking to a strong digital future for our health services with our Digital Investment Plan, which forms part of Health New Zealand| Te Whatu Ora’s 10-year Infrastructure Investment Plan.  

“This is still in development and will advocate for increased investment in digital as a key enabler for health service delivery and improved outcomes,” he says.

An eHealthNews investigation in 2018 found DHBs were spending about 2.3 percent on Health IT: this was half the global average according to Gartner of 4.6 percent.

The latest Gartner report from August 2024 says healthcare leaders are increasing expenditure on software and services, with annual expected growth rates of 13 percent. 

Gartner identified that on average 74 per cent of health IT spend goes into the category ‘run’, which keeps legacy systems going. Around 17 per cent is spent on ‘grow’ and nine per cent on ‘transform’.

The Digital Services Consultation Document shows Health NZ’s digital budget is broadly spent on people, IT & telco costs for external providers, and non-staff costs such as rent.

HiNZ chief executive Scott Arrol says this indicates that the vast majority of health IT spending in New Zealand is going into the ‘run’ category, in order to keep the health system’s 6000+ applications going.

He says while the focus should be on delivery at the front line, administrative tasks and legacy IT systems contribute to clinicians spending too much time away from patients, as well as getting burnt out over time.

“Rather than thinking ‘I need more people’, we should be thinking about what we can do differently so clinical staff are working at the top of their scope?” 

The Public Service Association submission to the consultation on Digital Services says the restructure proposal does not include any financial information that proves that the reduction in staff will save money across the business.

“While the proposed cuts in staff numbers might decrease the D&D ‘run rate’, the associated issues arising from a lack of staffing (increased system failures, decreased security, increased IT workload or wait times for clinicians, etc.), will cost the business significantly more than what is being saved,” it says.

DHA chief executive Ryl Jensen says that globally, leading countries invest more than 10 percent in health IT. 

“Investing in digital health technologies should be a priority if we want to improve productivity in the health sector, support our health workforce, and deliver the health outcomes and targets the Government talks about,” she says.

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