5997225

Comments on the Treasurys Benefit Analysis

Identification of Potential Benefits/Advantages: 1. Overall benefit of $75 million per year (from Treasurys option) 2. Superior patient care at Auckland Hospital 3. Incorporation of complex treatment from Taranaki and the top of the North Island into Auckland Hospital, therefore an efficiency increase 4. More effective communications 5. Supplies and equipment are easily accessible 6. Less personnel required, less salary 7. Expanded capability for complex procedure 8. Reduced overall administration Identification of Potential Costs/Risks/Implications: 1. 2. 3. 4. 5. 6. 7. 8. Estimated $80 million per year patients relatives cost (transportation) Redundancy of equipment, buildings, staff, systems, infrastructure Increased transport time of patients and staff, waiting times, higher risk of mortality Decreased staff satisfaction Removal of essential healthcare from other hospitals Cost of long distance transport per patient (ie. Helicopter expenses) Increased risk of road fatalities Disruption to Auckland Hospital as a result of renovation, expansion, systems upgrades, personnel training and other delays associated with the move to concentrate services at one location Delay due to system checking/risk of system malfunction from hurried integration Destruction of environment (Auckland Domain) Risk of poor architectural design resulting in decreased access and efficiency as well as aesthetics Implications of public reactions and response Risk of more redundant facilities at Auckland Hospital due to modernisation/expansion Danger of congestion due to increased number of patients and therefore staff Risk of administration error due to the concentration of DHBs into one ADHB Dependency of lower socio-economic areas upon the Counties Manukau DHB and its unique operations Increased maintenance costs Poorer effective range in terms of area coverage in the upper North Island Increased time to get from end to end of hospital, lower response time Integration of new technology or IT systems to cope with demand Risk of catastrophic event disabling/preventing healthcare ability by having one centralised ADHB (eg. Surrounded by volcanoes)

9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Ben Owen, Tai Te Ariki Stephens, Vishnu Ratnagopal, Luke Eskildsen, Jacob Whitford

5997225 Estimated Financial Benefits:

(As stated in analysts financial benefit analysis)

Transportation of patients: $45 million p/yr Efficiency of centralised service: $100 million p/yr Efficiency of reduced capital expenditure: $50 million p/yr Additional facilities: $30 million p/yr

> Reduced personnel salaries > Superior patient care Estimated Financial Costs: Patient relatives transportation: $80 million p/yr Road fatalities: ~$3 million p/person

> Personnel training > Construction delays > New equipment, technology, infrastructure

Comparison and Considerations:

Overall, the monetary costs incurred by combining other DHBs in the Greater Auckland area into one super ADHB is greater than the financial benefits it results in. This is largely due to the massive area the hospital would have to cover, the transport times associated with that and the estimated increase in mortality rate because of this. An important factor to consider is the significance of the Counties Manukau DHB which provides services specifically for the lower socio-economic areas in its range and the resultant decrease in wellbeing of the population. This would suggest that the proposed ADHB would need to cater for that population and be prepared to offer a nominally free service, as well as meeting the greatly increased demand. It is also essential to note that any Treasury proposal information gathered by the analyst was from informal telephone conversations and may not be a reliable source of information. The risk factor in combining all of these DHBs into one centralised location is substantial. If something were to go wrong on a large scale, for example an earthquake which severely damaged the hospital, the entire operation of the system could freeze. This is an immensely dangerous situation to be in that could cost thousands of lives and is highly discouraged. There are also several negative intangible aspects that need to be considered as consequences of this option. Ultimately these implications outweigh the advantages of the proposed system and therefore it can be concluded that the Treasurys proposal is not the most fit for purpose solution.

Ben Owen, Tai Te Ariki Stephens, Vishnu Ratnagopal, Luke Eskildsen, Jacob Whitford