The Southern District Health Board's decision to transfer
the multimillion-dollar home care contracts from local
providers is cynical, contrived, economically flawed and
commercially naive, writes Ray Macleod.
I am an independent director of Presbyterian Support Otago
(PSO), have been for almost 10 years and I chair the finance
committee. My background is as an engineer and economist and
I work in the commercial sector based in Dunedin. I examine
businesses, business cases, operational processes and
complete feasibility studies for varied clients. I also
compete for crown contracts in a different sector but under
similar processes to the Home Support Service process
operated by the Southern District Health Board.
I was employed for 13 years by Otago Hospital and district
health board predecessor organisations of the SDHB and
understand the basics of its operation. I like market forces
and have no issues with competition either domestically or
overseas-based. I do, however, have an issue with the
exclusion of PSO from the provision of home support services
by the SDHB. The process followed we understand was not
price-based but service delivery-based, so price was
apparently not a consideration. I do believe the decision to
be cynical, contrived, economically flawed and commercially
I have put much energy into trying to understand the economic
thought, commercial reasoning and strategy of the SDHB's
decision. I am baffled. We are not seeking to undo the
decision but there is room to be included. We currently care
for 42% of the home support clients in Otago/Southland (along
with Disabilities Resource Centre Southland).
We have staff, infrastructure and networks in place built up
over 106 years. We invented the service as it exists and
quality of service is not an issue. Perversely, the decision,
I believe, firstly relies upon misuse of statute in the form
of the vulnerable workers provisions of the Employment
Relations Act. The SDHB generously adopted a favourable, to
it, interpretation of what constitutes a vulnerable worker
under this Act.
That sounds charitable of the DHB. It is self-serving and
marginalises the PSO's staff, treating them as chattels
tradeable between competing interests under the SDHB
direction. It places 370 valuable employees in an employment
pen allocated to one of three potential employers along with
the clients. Like sale day at a stockyard. Many of our team
are not vulnerable in reality and haven't taken kindly to the
SDHB action. Many choose to work for PSO because of its
community links, reputation and culture and may prefer to
The SDHB has offered to support the transfer of
non-vulnerable key staff. It has to do this. If it doesn't,
its decision will be compromised, perhaps fatally, and
difficult to implement. This reinforces my view that the SDHB
is cynically using statute to give its decision form,
strength and economic value. If the DHB project team didn't
do this, it had nothing to sell its own board. We understand
it didn't place a financial risk analysis for transition
matters in front of its own board and I doubt it had the
forethought to seriously consider resistance to its decision,
not just by PSO but by staff members, wider interest groups
and communities. In my view, the board made a decision with
an incomplete risk analysis around a number of matters.
Disconcertingly, the SDHB board, a community-based
taxpayer-funded entity, has refused to meet PSO, the region's
largest community-based health service provider, to discuss
our real concerns. We are reluctantly airing these concerns
publicly. The DHB project staff advised that a probity
auditor was employed to ensure the right boxes were ticked
and the proper process was followed. This does not influence
the quality of the decision. One party, it appears, does not
have a client or employee in the area. The SDHB simply seeks
to transfer the PSO business. The SDHB believes the transfer
is riskless and costs minimal.
It believes its chosen providers will enter seamlessly and
fully equipped even if one doesn't have any resource in the
district. The transfer costs will be hundreds of thousands of
dollars. This before considering the risk to not achieving
sufficient staff transfers if all providers are to meet their
own regional coverage requirements.
Any PSO surplus from home support activities is invested in
service enhancement, training and coverage. We distribute
dividends to the community. A loss we shoulder without
complaint. PSO has a robust financial history, the envy of
many. We also have 600 volunteers with us, including me, who
support these services. We are unlikely to transfer. The risk
is the SDHB may be poorly advised and got this wrong.
During the past five years, PSO has invested $325,000 into
its home support staff for education and training over and
above any contractual requirements. We possess infrastructure
and networks the envy of the industry. We are expected to
provide this to competitors, apparently at no cost. The SDHB
wishes to transfer this investment to others.
Without our operational platform, the DHB would struggle to
consider an organisation with no available resource, to
implement its decision. The DHB can't transfer community
loyalty. There was an unwillingness to engage with PSO to
consider options. To quote, ''The board has made its decision
and won't change its mind.''
I give full credit to any board capable of considering
matters and reversing decisions on the back of better advice.
Ignoring us isn't useful.