Government Appoints Commissioner to Address Health NZ’s $1.4 Billion Deficit

• Government replaces Health New Zealand board with a commissioner due to financial mismanagement.
• New Commissioner Professor Lester Levy to implement a turnaround plan with a savings goal of $1.4 billion.
• Health NZ overspending at $130 million per month, prompting urgent government intervention.

In a significant move, the Government has dismissed the Health New Zealand board, appointing a commissioner due to serious financial concerns. Health Minister Dr Shane Reti cited issues with oversight, overspending, and a “significant deterioration in financial outlook” as the primary reasons for this decision.

Dr Reti attributed the financial challenges to the previous Government’s “botched health reforms”, which have left Health NZ facing an estimated deficit of $1.4 billion by the end of 2024/25. Despite record investment in health, with $16.68 billion allocated in this year’s Budget, the organisation has struggled to manage its finances effectively.

Health NZ first reported its worsening financial situation to Dr Reti in March 2024, despite previous assurances that it was on track to make savings in the 2023/24 fiscal year. The organisation is currently overspending at a rate of approximately $130 million per month.

In response, the Government has appointed Professor Lester Levy as the new commissioner for Health NZ, with a one-year tenure. Levy, who was recently appointed as the organisation’s chairperson, has been tasked with implementing a “turnaround plan” aimed at achieving savings of about $1.4 billion and ensuring financial stability. This appointment is the most significant ministerial intervention available under the Pae Ora Act, a decision Dr Reti described as necessary given the magnitude of the issues.

Dr Reti criticised the previous Government’s health reforms, which he claimed resulted in an overly centralised operating model, limited oversight of both financial and non-financial performance, and fragmented administrative data systems. These issues, he argued, have led to the current financial crisis at Health NZ.

The commissioner will focus on cost efficiencies, particularly in middle management, where back-office staff numbers have increased significantly over the past six years. Dr Reti emphasised that the Government’s primary priority in health is improving the delivery and quality of frontline services. He expressed confidence that the new governance structure would provide better oversight of health spending.

Dr Reti has already taken several measures to address the governance and financial issues at Health NZ, including appointing a Crown Observer, a new Chair, and a Board member with financial expertise. He reassured that these steps have helped identify longstanding issues with the organisation’s governance and operating model.

Professor Levy has assured Dr Reti that the implementation of the turnaround plan will not adversely impact the delivery of care. Instead, the goal is to bring decision-making closer to the frontline, improving the efficiency and effectiveness of healthcare services.

The Ministry of Health will continue to monitor Health NZ and report on the commissioner’s performance in lifting the organisation’s financial position. Dr Reti emphasised that this move does not reflect on the work of frontline staff, who remain a top priority for the Government.