Collaboration – or turf war? Two health agencies, three scenarios for their coexistence

The seeds of success, failure and anything in between will be sprouting in 2024

Our health system is entering some uncharted waters. The two periods of major health system reforms in Aotearoa New Zealand (early 1990s, early 2000s) were initiated by governments that remained in power for another five or six years. In the 2020s, the reformist Government only lasted another 15 months after the passing of the Pae Ora (Healthy Futures) Act 2022. One upshot is that the Coalition Government now has custody of a toddler – in the form of Te Whatu Ora – that it didn’t particularly want, but it isn’t taking it back to the orphanage any time soon.

There’s been plenty of scrutiny on what’s changed since October last year. Under Labour, the redesigned structure was closely tied to a substantive policy agenda of addressing health inequities and a deeper embedding of Te Tiriti, priorities that have not survived the change of government, signalled by its promise to begin dismantling Te Aka Whai Ora in its first 100 days.

However, the incoming Coalition Government has confirmed it will keep Te Whatu Ora, arguing it will make the best of it because the alternative is too disruptive. While health minister Shane Reti has indicated a preference for regional decision-making in Te Whatu Ora, this was already part of the original plan.

Whatever the merits and demerits of centralisation (and there are plenty of both), the pae ora structure raises an intriguing dilemma for any government, and a complex challenge for senior public servants and managers. Te Whatu Ora is responsible for 90 per cent of Vote Health and has over 80,000 employees. It will be making major decisions about IT infrastructure, funding of nongovernment health providers and the design and distribution of secondary and tertiary health services.

Ultimately, both organisations are accountable to ministers, but through different mechanisms. As a department, the Ministry of Health is under the direct control of ministers. As a Crown entity, Te Whatu Ora has the additional layer of a board. Ministerial leverage over Te Whatu Ora is less direct through the issuing of written instructions, and the appointment of board members and Crown monitors.

Under the pae ora legislation, Te Whatu Ora is responsible for the New Zealand Health Plan, but this must align with the Government Policy Statement, which is in the minister and ministry’s wheelhouse.

In theory, the revamped ministry has a “policy only” role, while Te Whatu Ora is focused on the delivery of health services. The notion that some parts of government make policy while others implement it dates back to the early days of public administration in the UK, US and Europe in the late 19th and early 20th century.

At that time, it was an important principle that ushered in a more professional approach to government, as part of a defence against political corruption. The idea returned in the 1980s during the wave of new public management reforms that involved a rigorous structural separation between those who “steer” (policy makers) and those who “row” (implementers).

But this century, most public management researchers, and many practitioners, argue that any sharp distinction between policy and operational organisations is untenable. For example, addressing health workforce shortages is high priority for both the ministry and Te Whatu Ora. Last year, Te Whatu Ora issued a workforce plan, complete with overarching objectives and strategies. That smells like policy to me.

Consider also if the Government disestablishes Te Aka Whai Ora and moves its staff to a Māori health directorate in the ministry, while Te Whatu Ora is responsible for commissioning health services. Both Te Whatu Ora and the ministry will be shaping the development of policy about Māori health providers. Will they be on the same page and, if so, how?

Further, the creation of Te Whatu Ora now means there is another channel for health providers and interest groups to influence policy in areas such as primary healthcare funding. Te Whatu Ora is the Government’s vehicle for the PHO Services Agreement. I would not be surprised if Te Whatu Ora is working away on proposals to reform primary care funding. If so, how will this line up with work done by the ministry?

While Te Whatu Ora’s operational role is, in theory, subordinate to the ministry’s policy and monitoring role, Te Whatu Ora will have considerably more analytical capacity, relationships with the broader health sector, and knowledge of local situations than the ministry.

We have been here before, but only briefly in the late 1990s, in the days of the Health Funding Authority. Overlaps and tensions between organisations are not inherently destructive – they can generate highly creative ways of working and approaches to problem-solving.

There are three broad scenarios that could unfold, and a mix of all three is likely.

One scenario is pitched turf battles between the two organisations. It’s unlikely ministers will tolerate overt conflict, but that might mean such conflict plays out behind the scenes. Many survivors of the late 1990s can recall these stories.

A second scenario is that ministers and senior officials of both agencies attempt to demarcate spheres of responsibility in order to minimise or avoid conflict. In this scenario, everyone stays in their lanes. The likely downside is that there are significant policy areas left unaddressed, for fear of setting foot in “no-man’s land”.

A third possibility is for senior management to develop sustained efforts to build collaboration across the agencies and establish trusting and generally positive working relationships, implementing rules and habits for engaging with each other. While this is the best strategy, it requires considerable effort to build across two large organisations, particularly when staff regularly change jobs.

Only time will tell whether the governance of our health sector will be strengthened by the creation of a two-headed health system. But the seeds of success, failure and anything in between will be sprouting in 2024.

Tim Tenbensel is professor, health systems, in the Faculty of Medical and Health Sciences at the University of Auckland

This column was written before the release of the Pae Ora (Disestablishment of Te Aka Whai Ora) Amendment Bill and the associated Cabinet papers