With health spending under pressure, with estimates of a $1.3 billion budget blow at Health NZ, there is now another lobbying effort to try and stop the Government from spending $280 million on an extra medical school at Waikato University.
The Universities of Auckland Otago have commissioned a report from the top accounting firm PWC to show that they can train as many doctors as the Waikato school could without any extra capital expenditure.
That report was released last night, and the timing was designed to have it hit the 6. 00 p.m. TV news bulletins.
The Waikato school was a key National Party campaign promise, and the University has hired former National Finance Minister Stephen Joyce to make its case.
That may not have been such a smart move.
There is a long-standing antagonism between NZ First Leader Winston Peters and Joyce.
POLITIK understands that New Zealand First has yet to be convinced the school should be built.
The current Ministry of Health workforce plan is at the core of the issue.
It says there is currently a shortage of 1,700 doctors, which is projected to increase to 3,400 by 2032.
Currently, New Zealand relies heavily on immigrant doctors; Health NZ’s 2023 workforce report said it had the second-highest proportion of international medical graduates in its workforce in the OECD.
The report said: “Given the length of medical training, we will need to drive increased international recruitment to address our current gap. By increasing our on-the-ground presence in other countries, we could improve the flow of specialists into New Zealand—for example, by making better use of our existing commercial presence overseas and by better reaching out to New Zealand-trained doctors practising overseas.
“At the same time, we will need an acute focus on retention – as with all our workforces – to avoid losing our skilled doctors.”
That campaign to hire overseas is currently in full swing.
Health Minister Shane Reti told Parliament yesterday that 124 doctors had been recruited in June alone.
Reti conceded during last year’s election campaign that we would rely on immigrant doctors in the short term.
But National’s policy favoured the Waikato Medical School.
The policy said, “New Zealand does not train enough doctors to meet the demands of our growing and ageing population.”
“To address this, National will establish a third medical school at the University of Waikato, with satellite training centres in regional areas.”
Thus, any decision not to accept the Waikato proposal would involve considerable embarrassment for the Government.
Meanwhile, the new Whatu Ora Commissioner, Lester Levy, has floated the idea of cutting back spending on the Dunedin Hospital and other regional hospital rebuilds to help address various budget blowouts at Whatu Ora.
Though the funding for the Waikato school would not come from the health budget but probably from education, the optics of the Government spending $280 million on a medical school that was not really needed while hospitals were downsized or delayed would not look good.
But Health Minister Shane Reti seemed to defend it last night, telling TVOne news that it would complement the existing medical schools rather than compete with them.
Otago and Auckland argue that they could train an additional 285 to 589 students a year by 2031 without any additional capital expenditure. However, they would require Cabinet approval for the additional tuition costs.
Waikato would produce 120 students a year with the first students graduating in 2031.
Ironically, in a reflection of how tight health and education funding is, in June, the Government halved the promised increase in medical students’ numbers for the two existing schools next year from 50 to 25.
The PWC report has evaluated the various options and, perhaps not surprisingly, given that it was funded by Auckland and Otago, has concluded that expanding the existing programmes at Auckland Otago incurred a lower cost and risk than Waikato’s proposal and would be the quickest to deliver the new students.
“This is because it is focused on expansion of the existing programmes, with no additional infrastructure,” the PWC said.
The Waikato option would cost more and take longer to deliver.
“It also carries the highest implementation complexity and risk,” the report said.
The report said, “This is due to the need to build new facilities, develop new programmes, and for the University of Waikato to gain the necessary accreditation.”
Perhaps surprisingly, New Zealand is actually increasing its number of doctors, which is ahead of population growth.
In 2006, there were 297 doctors per 100,000 population. In 2022, the number had risen to 367.
However, there are problems with what those doctors do and where they practice.
Most prefer to work in the larger centres, and fewer are becoming general practitioners because of the higher salaries they can get as specialists.
However, the Waikato proposal aims to train doctors to focus on primary and community care in provincial and rural locations.
That is its major plus.
However, the PWC report warns that it could be more costly than the estimates currently being discussed.
“There is a risk that both the capital expenditure (capex) and ongoing operating costs (opex) will
be significantly higher than they are expected to be today,” the PWC report said.
“Based on currently available information, the estimated capex requirement for a University of Waikato medical school is $380 million, and it is proposed that this cost be split between the Government ($280 million) and the University ($100 million).
“Along with the initial capex, there is a substantial list of opex that will need to be factored into the establishment and ongoing operating costs of the proposed medical school.’
The report says that would include “high, and ongoing, costs associated with rural immersion programmes, which cost more than standard programmes. The Waikato proposal will see 120 students placed into rural immersion programmes from Year Three, which would carry a significant annual cost.”
The question for the Government is likely to be defined by one of Stephen Joyce’s favourite phrases when he was Finance Minister: Is the school a must-have or a “nice to have”?
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