The Director General of Health Dr Diana Sarfati and the Vice Chancellor of the University of Waikato Neil Quigley earlier this year sign a Memorandum of Understanding on a proposed Medical School for the University while Health Minister, Dr Shane Reti and Prime Minister, Christopher Luxon look on.

The University of Waikato has reworded an advertisement that begins the tender process for its new $300 million-plus medical school even though the Government still needs to approve it.

But ven the reworded ad contains an architect’s visualisations of what the school might look like.

ACT leader David Seymour told POLITIK last night that if the University proceeds without the completion of its business case, it could breach the ACT-National coalition agreement.

That requires a “full cost-benefit analysis” before a “binding agreement” for the country’s third medical school could proceed.

However, the  University would seem to be confident of its yet-to-be-completed business case succeeding with the new Government, possibly because of the strength of its political connections, which it has forged by employing former National Finance Minister Steven Joyce as a lobbyist.

If the case succeeds, it will be despite numerous previous official studies and reports questioning the proposal.

Officials advised the previous Government that the school would be a costly project unlikely to add large numbers of general practitioners to the New Zealand total.

Instead, it could even reduce the number of doctors being trained at the University of Auckland.

Supplied A sketch plan for the new Medical School from a “Concept Pack” published by the University

The Key/English Government endorsed the Waikato proposal’s fundamental goal of increasing the number of rural GPs in New Zealand.

But just before it lost the 2017 election, rather than give it approval, it agreed to a competitive tender process between the Auckland and Otago Medical Schools (acting together) and Waikato to determine which campus should host a School of Rural Medicine.

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The Labour Government rescinded that.

Then, the University of Waikato hired two well-connected political lobbyists to push its case.

The University retained Neale Jones, the former Chief of Staff to Labour Leader Andrew Little, and former National Cabinet Minister Steven Joyce.

Joyce succeeded where Jones failed.

Labour refused to agree to the proposal but National did and committed to it in its manifesto despite the widespread scepticism among advisors that it would be either value for money or would even achieve the goals that it was being set.

In contrast, National made an election promise last year to fund up to $280 million of the estimated $380 million capital cost to establish the school, which would open in 2027 with 120 students.

In February this year, with Prime Minister Christopher Luxon and Health Minister Shane Reti looking on, the University’s Vice-Chancellor and the Director General of Health signed a memorandum of understanding to develop the school.

But first, the Ministry of Health was required to produce a business case.

POLITIK understands it has yet to do so, not that you would have noticed from the University’s call last Friday for potential contractors to register their interest.

“The University are proposing to construct a new health precinct on the previous B-Block site on their Hamilton Campus which is accessed off Hillcrest Road,” the notice on the Government tenders’ website, GETS said.

“The facilities are to include a new medical school building with teaching and staff facilities, accommodation and all associated landscaping and services.”

A spokesperson for the University told POLITIK that the medical school was still in the business case stage with the Ministry of Health.

“Our Property team issued the ROI document on the Gets.govt.nz with wording that didn’t clearly reflect it is still a proposal,” the spokesperson said.  

“We have since corrected the wording on the site and with potential vendors to reflect the construction would be for a Division of Health precinct and to house our growing health offering in nursing, pharmacy, midwifery and, should the proposal proceed, would also be the site for a medical school.”

That is not quite what the site still says.

It includes a “Concept Pack” for the Medical School, complete with architectural sketches of its potential design.

The documents say the design for the medical school should be finished by the end of this year, and construction should start in January next year.

It is expected to be ready to occupy in January 2027.

The site does say that the Ministry of Health is still considering the business case but that the design and construction contracts will begin in July this year.

It sounds like the University expects to hear that the money will be appropriated in the budget on May 30.

It will be a substantial sum and have some important repercussions.

The school’s purpose has always been to increase the total number of medical graduates in New Zealand and, in particular, to see more become rural General Practitioners.

However, study after study has questioned whether a new medical school is the solution.

The school’s stated aim is to increase the number of rural practitioners, but in 2017, a joint Treasury, Tertiary Education Commission, and Ministry of Health study found that multiple factors made rural careers less appealing to new medical graduates.

These included a general lack of support, including cover for training or holidays; reduced downtime, with doctors in rural practices spending more of their free time on call; and practices located in remote areas with few facilities, few opportunities for partners and children, and a large amount of travel required.

The proposal also has the potential to impact the number of graduates produced by the Auckland Medical School.

Medical students are required to spend an intern year in a hospital after they complete their academic studies before they become junior doctors in major hospitals.

Supplied Waikato Hospital from Hamilton Lake

The University of Auckland has up to 160 undergraduate medical students at its Waikato Clinical Campus, and many do their clinical training at Waikato Hospital.

“The Waikato proposal indicates that the establishment of regional clinical training centres will provide additional training placements for medical students,” the joint study said.

“However, there are still likely to be some placements required (particularly at the hospital level) which are currently used by the Auckland and Otago medical schools.

“It is noted that Waikato DHB has already informed the Auckland medical school that if the Waikato proposal is successful, it will look to reduce the number of Auckland students undertaking clinical placements in its hospitals.

“However, it is possible that DHBs could work with the universities to create additional clinical places.”

A spokesperson for Te Whatu Ora (which has replaced the DHBs) did not comment yesterday on that claim.

The big question will be the cost.

The latest estimate from last year was $380 million, but the joint study noted that even at lower cost estimates, it was still “very costly.”

That cost is made more challenging because the University of Waikato leases the land it is built on from Tainui; thus, it cannot leverage its balance sheet to raise capital.

A Treasury report said this put it at a financial disadvantage compared to other Universities, which generally owned their land.

“With a limited balance sheet and few assets, Waikato is limited in its ability to leverage its balance sheet to support borrowing,” the Treasury said.

“As such, a large portion of the project’s capital and operating cost is being sought from the Crown.”

The joint study thought that suggested the solution to increasing rural GP might favour a solution involving existing universities.

“If there was to be an extension to the numbers of doctors trained and a focus on rural training, there may be less costly ways of achieving this, such as doing this through other universities which can afford to contribute more of their own resources (particularly capital) to establishing a programme.”

ACT would be likely to focus on those considerations.

Thanks to the University’s Registration of Interest deadlines, the Government has until May 30 to produce the business case. Otherwise, the University can’t do anything with the responses it gets.

The alternative is that it presses ahead and risks a major political blowup within the coalition.