New Zealand’s national health service faces scrutiny over $72Mn IT outsourcing expense
WELLINGTON, NEW ZEALAND — Health New Zealand (Health NZ), New Zealand’s national health service, is under intense scrutiny for spending NZD 72 million (US$42 million) on contractors and consultants for a single IT project while planning to cut over 1,000 IT positions.
This expenditure is linked to the Health Sector Agreements and Payments Programme (HSAAP), which has experienced delays and budget increases. Despite these issues, Health NZ intends to continue outsourcing while increasing permanent staff next year.
Key outsourcing firms involved
Health NZ allocated substantial funds to various outsourcing firms for its HSAAP. A significant portion of this spending went to Robert Walters, a recruitment firm that received NZD 17 million (US$10 million) over the past two years.
Other key consulting firms involved in the project include Deloitte, which was compensated nearly NZD 10 million (US$6 million), and Infosys, receiving approximately NZD 7 million (US$4 million). Presto Resourcing also played a crucial role, securing NZD 4 million (US$2 million) for its contributions.
In addition to these major players, several other contractors have been instrumental in supporting HNZ’s efforts. These include Momentum Consulting Group, Randstad Digital NZ, H2R Technology, Allegis Group New Zealand, OSS Group, Talent International (NZ), and Hays Specialist Recruitment (Australia).
New Zealand’s healthcare system restructuring
New Zealand’s healthcare system has been undergoing significant restructuring with the establishment of Health New Zealand, aiming to streamline services and reduce costs. However, rising operational deficits have led to cost-cutting measures, including staff reductions.
Te Whatu Ora Health NZ’s recent consultation document outlines plans to save NZD 100 million (US$58 million) annually to address a looming NZD 1.7 billion (US$989 million) deficit by next July.
Concerns over innovation and staffing
The cost-cutting measures have raised concerns about the future of innovative projects like the Tuhi AI app, designed to enhance mental health patient assessments. Senior doctors express fears that staffing cuts could jeopardize such initiatives.
Carin Conaghan, a senior doctors’ union conference delegate, highlighted the app’s potential, stating it is “one of the most innovative things we’ve seen come out of Health New Zealand since it was formed.”
Future plans amid financial challenges
Despite financial scrutiny and operational challenges, Health NZ remains committed to its outsourcing strategy.
Mark Woodard, a Health NZ manager, defended the use of external consultants as necessary for managing complex projects without overburdening internal resources. He emphasized that consultancies are engaged only when their benefits outweigh the costs.
The HSAAP project, initially budgeted at NZD 116 million (US$67 million) but now increased to NZD 140 million (US$81 million), has been criticized for delivering only four percent of its intended capability. Health NZ is working to set a new baseline for the project as it aims to process up to NZD 4 billion (US$2 billion) in billing by next June.
As Health NZ navigates these financial and operational hurdles, the healthcare sector closely watches how these changes will impact both service delivery and innovation within New Zealand’s health system.
