Wednesday, 18 March 2015

Outsourcing hospital & Meals on Wheels meals - why this is a dumb as move.

Thanks 3News for the pic!
If you have had the "pleasurable" experience of a hospital stay you will know all about the food.  It is mass produced and has been known to arrive in a tepid state, but for the majority of hospital stays the food has been cooked within the resident hospital kitchen or in a kitchen within a short drive.
Tony Ryall, the former Minister of Health from December 2008 until he stepped out of politics into a flash as job at the September 2015 election, was on a drive to cut costs in the health sector and "streamline" systems.  He set up a Crown company called Health Benefits Ltd (HBL) with the goal of  making cost savings in the health sector.  One of those cost cutting efficiencies he looked into was catering of patient meals by hospital kitchens. 
In April 2013, the Labour claimed that Mr Ryall was looking at outsourcing patient meals and closing 50 hospital kitchens.  It would come at the cost of 1300 jobs.  (Govt may close all NZ hospital kitchens.  NZ Herald 10/4/13).
Tony Ryall - former Minister of Health
At the time Mr Ryall said that they were merely consulting the unions on streamlining services, but believed efficiencies could save more than $10 million per year and be channelled back into "frontline health services".
What is more "frontline" than feeding your patients?
The Greens also warned against the outsourcing of patient meals (Outsourcing hospital food will cost NZ in the long run., 10/4/13).

But this article in the Otago Daily Times Frozen meals - sent from Auckland (13/4/15) shows that not a lot of thought has been put into the practicalities of it at all. 

Meals on wheels will be made in Auckland and trucked to Dunedin and Invercargill under a proposal to outsource hospital food services, the Compass Group confirmed yesterday.
The Southern District Health Board is yet to decide whether to approve the proposal.
The meals on wheels would be frozen, and reheated in local hospital kitchens.
Patient meals would be prepared on-site, using components driven ''around New Zealand'' in trucks, Compass said.
A stock of pre-prepared meal components would be held at a Dunedin distribution centre.
''The pre-prepared components of the meals will be prepared by specialist suppliers based in a number of different regions of New Zealand [including] Tauranga, Mt Maunganui, Dunedin, Auckland.''
Asked if Compass planned to subcontract meals on wheels to another provider, the food giant said: ''Compass Group is working with an Auckland-based supplier to supply the individual snap frozen meals for the meals on wheels solution''. Asked how often the meals would arrive in trucks, Compass said it was yet to be determined.    
Asked what contingency plans were in place for adverse weather, Compass said it was part of planning work that would happen with the health board.
Since the proposal was announced nearly two years ago, it has been unclear where meals would be produced.
Last week, health board members relented to union demands and deferred the final privatisation decision by a month to the May meeting.
Service and Food Workers Union organiser Anna Huffstutler, of Southland, said producing meals on wheels in Auckland reduced the amount of work available for local staff.
She also questioned the logistics of transporting meals during a civil defence emergency.
''What's the back-up plan?''
Ms Huffstutler is pleased about the deferment of the final decision, saying unions had lacked enough information to form a counterproposal.
The counterproposal would include suggestions on how money could be saved. Securing the extra month had given a sense of hope the board might be willing to listen to a proposal from unions, she said.
The Compass Group says it can save the health board $7 million over the 15-year contract.

Considering how long this proposal has been worked on, you really have to wonder why there are no answers to the questions raised by Anna Huffstutler, the SWFU organiser.  It also does not appear that much consulting has been done with the unions over how this proposal will work considering Mr Ryall said in April 2013 that was on the agenda.  And not even saving half a million dollars a year for the Otago District Health Board?  Have they not considered the wider costs to the patients and the community?  By the way, you really should click on the article to read the comments under the article - they're pure gold!
No one supports this idea because it is a bad idea.  Like I just said above, have they considered the impacts to the wider community of what Tony Ryall has envisioned for the whole country?  I have, and here is why it is flawed:
  • How can a health board justify supplying frozen meals to patients and Meals on Wheels clients instead of freshly made meals on a health basis?
  • The practicalities, cost and environmental impact of trucking these components around the country! And don't we have enough trucks on our roads already?
  • The personal touch to food preparation will be gone and the likelihood of some food allergy not being catered for increases.
  • Who likes mass produced food? Patients and Meals on Wheels clients may as well go get a frozen meal out of the New World (et al) freezer!
  • The jobs lost to the catering staff and the impact on their families.
  • What about the impact on local suppliers and growers when everything in centalised to Auckland?
  • What happens during bad weather or a natural disaster when the "components" can't get through?  (As pointed out by the SFWU organiser).
  • So if we're getting rid of the catering staff for patients and Meals on Wheels clients does that mean cafeterias for staff and visitors will also be replaced with a vending machine selling frozen meals and a pay by the second microwave?
  • Compass, the company charged with making it happen, has a "colourful" history (horse meat in your hospital meal sir?).
  • Considering the cost saving is merely $7 million over 15 years for the Otago DHB (that's less than half a million per year!), how does that compare to the costs of the unemployment benefits that will need to be paid to the redundant catering staff nationwide? And did they consider the impact on the tax take of more workers being unemployed and paying less tax as a result?

As with many ideas from Tony Ryall, this one is a dog with fleas and now he's gone and isn't there to bully push them through the truth is slowly coming out.  In fact his flag ship HBL is now under investigation by the Auditor General (Scheme can't pay back loans, Stuff, 19/4/15):

The Government's flagship health cost-cutting scheme has taken out millions of dollars worth of taxpayer-funded loans, despite concerns it could not pay a cent back, new documents reveal.
Once dubbed a government "ponzi scheme" by district health boards (DHBs), Health Benefits Limited (HBL) has been granted more than $10 million in loans by the Government. HBL was also given three separate extensions to the deadline to pay the money back, amid concerns the original deadline would leave the crown entity insolvent.
The final deadline for HBL to pay at least $10.2 million back is now March 31. If the money isn't paid back, it is likely to be recovered from the already cash-strapped budgets of DHBs.
The organisation is now the subject of an investigation by the auditor-general.
HBL was set up by former health minister Tony Ryall in 2010 to save DHBs $750 million over six years by establishing shared contracts for key hospital services.
But documents show the group took out an initial $8m "short-term credit facility", or a low-interest loan, from the Government in July 2013 so it could develop three detailed business cases for its food services and linen and laundry services and its National Infrastructure Platform programmes.
In a June 2013 letter HBL chairman Ted van Arkel told the Government the loan would be an "interim step" while the group worked with both the Ministry of Health and Treasury to establish a "long-term capital structure".
Van Arkel said it was expected the three projects would deliver $189.7m in savings across the health sector, once the contracts had been filled. It was proposed the money loaned would be paid back through the successful contract providers, but, failing that, DHBs were liable.
Ryall and Finance Minister Bill English approved the loan, with a deadline for repayment set at April 30, 2014.
But subsequent documents show the HBL board had to ask the Government for an extension, after project delays meant it could not afford to repay its loans.
In an email to English's economic adviser Simon Carey, Ministry of Health chief financial officer Mike McCarthy warned that if the loan was outstanding at June 30, "we would have a possible legal issue".
"I have now spoken to the [chief financial officer] and interim [chief executive] of HBL, they advise if the loan is not extended they will not be able to make payment as they have insufficient cash reserves and will be insolvent," he wrote.
On June 24 last year Ryall wrote to van Arkel approving an extension to March 31 this year.
In August, HBL requested the Government lend it more money so it could meet its forecast costs; hoping to increase its $8m debt to $15.1m. Ryall only approved handing the group an extra $2.2m, taking the total loan value to $10.2m.
But a ministerial report shows DHBs were not forewarned of the amount, despite their liability for the loans.
Ryall retired from politics at the election.
HBL is being wound down by Health Minister Jonathan Coleman in June, with its programmes transferred to Auckland regional DHB-led services provider HealthAlliance.
Neither the Government nor HBL has been able to provide any information over whether the loan has been, or is being, paid back.
Labour health spokeswoman Annette King said she had been concerned about HBL for more than two years.
"And I'm delighted the the auditor-general has agreed to my request for an inquiry."
In June 2014, a memo between some DHB chief financial officers branded the organisation a ponzi scheme, calling it the biggest threat to the public health system in a generation.
Coleman has said that HBL had delivered $300m in savings. His office has not yet answered questions and a spokesman for van Arkel refused requests for comment.
 - The Dominion Post

This not only raises questions about the management of Tony Ryall and why he conveniently left parliament at the last election for a job in the private sector with Simpson Grierson, but it raises questions about our Minister of Finance, Bill English, and his ability to actually understand numbers and how money works.

There'll be some horror stories to come yet in the health system from the decisions Tony Ryall made.  I predict there will be some particularly nasty stories in regards to the waiting lists.

This is yet another example of how the National led government is really not qualified to led this country based on its own trumpet blowing of being the best managers of the economy.  This is yet another example of how the National led government has failed to meet the standard yet again.

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