New Zealand Doctor print archives - 3
Sitting on the board of a PHO requires dedication and at least
several weeks' work each year. But the more than 700 New Zealanders
who choose to do so get paid far less for their efforts than their
counterparts in the commercial sector.
Some get paid nothing at all.
PHOs became part of the primary care sector vocabulary in 2001
with the release of the Primary Health Care Strategy by then health
minister Annette King. These new organisations, the first of which
were established in 2002, were envisaged as not-for-profit bodies.
They were required to be community focused and to be fully and
openly accountable for all the public funds they receive.
The Institute of Directors in New Zealand points out that only a
third of not-for-profit organisations pay their directors. However,
in a recent review of what the board members of the South Island
PHOs are paid, the institute calls the duties and responsibilities
of a PHO director "onerous" and recommends annual remuneration of
$15,000 for board members and $37,500 for board chairs.
The reality, however, is far from this ideal.
A New Zealand Doctor survey of what the country's 80 PHOs spend
on governance found that, among the 70 that supplied the requested
information (Panel 1), most reported their directors or trustees
are paid an average of nearly $300 each time they attend a board
meeting. About a quarter reported they pay their board members an
annual honorarium averaging around $5000, either in addition to, or
instead of, a meeting attendance fee.
|What we asked them
- How many directors on your PHO board?
- How many board meetings were held in 2007?
- How much does a board member get for meeting
- How much does the chair receive for meeting atttendance?
- The total paid in directors' fees and allowances last
Board chairs receive significantly more, with payment averaging
under $500 per meeting and under $11,000 per year where an annual
honorarium is paid, as it was in nearly 50 per cent of cases.
One PHO began paying its board members for the first time this
year. Meanwhile, four PHOs pay their boards nothing at all, other
than a small amount to reimburse travel costs in one case.
The results are in line with earlier smaller surveys by PHONZ and
the PHO Alliance (>>nzdoctor.co.nz, 'Bits & Pieces'); the
latter noted many boards accept a large degree of pro bono work
Gravy train? Not so much. More of a tea trolley really.
The Institute of Directors' South Island Primary Health
Organisations Remuneration Review, dated October 2008, describes
direc- tors as having responsibility for providing "crucial
strategic guidance and decision making in the development of
primary health outcomes in their respective regions". The tasks
listed include "significant stakeholder management" and "overseeing
substantial government [funding] allocations".
New Zealand Doctor found board members attend an average of 10
board meetings a year, but that board meetings are just the
beginning. There's all the preparation that's required and the
background reading, as well as numerous stakeholder and other
meetings, and time spent travelling and on professional
development. The South Island PHO (SIPHO) review estimates each PHO
board member spends a median of 121 hours a year (excluding travel
time) fulfilling his or her duties, while board chairs spend more
than twice that amount, approximately 300 hours a year.
According to the review, PHO board members have similar time
commitments to the directors of organisations with about the same
turnover (upwards of $600 million a year), yet get paid less than
their counterparts in comparative commercial organisations, at
around $31 per hour versus a commercial rate of $167 per hour last
And the difference is even more stark for PHO chairs, whose time
commitments fall in the upper quartile for all chairs, but whose
remuneration sits below the lower quartile. Last year, SIPHO chairs
effectively got paid about $33 an hour, whereas chairs of the
appropriate competence in the commercial sector received a median
of $190 per hour.
Former Waitemata DHB chief executive Dwayne Crombie calls PHO
board fees "pretty modest" and rates them as consistent with what
boards of academic institutions are paid. However, Dr Crombie, who
now heads large, not-for-profit, aged care provider Guardian Health
Care, thinks the low level of remuneration for PHO board members is
appropriate for work he sees as a "social contribution". "It's not
well paid but I think that's probably appropriate," he says. "At
the end of the day, you want people on those boards who want to do
socially useful work."
Certainly, many PHO representatives spoken to by New Zealand
Doctor echoed the sentiments expressed by Justine Thorpe, chief
executive of South East and City PHO in the Wellington region:
"They [SECPHO board members] are there as a commitment to the
growth in the health and wellbeing of the community." Opotiki GP
and Eastern Bay of Plenty PHO chair Jo Scott-Jones thinks payment
for governance duties is important for the added sense of
professionalism and duty it implies. However, he says, he isn't in
PHO governance for the money, and his attitude towards being chair
wouldn't change if he was paid more.
Dr Scott-Jones, who has been the PHO's chair for more than two
years, and was a board member for about three years prior, jokes
that he got involved in governance because he's a talker and
volunteers for things to "fill the silences". But there's a mission
behind this madness.
"It gives me the opportunity to have involvement in the health of
the wider community, not just my practice, and I do really value
that," he says.
A similar sentiment is expressed by Waitakere City GP Peter
Woolford, who has been a board member of HealthWEST since the PHO
was established. "I get some satisfaction from seeing the bigger
picture and trying to improve primary healthcare for the whole
community population," Dr Woolford says.
"It's extending my practice into the community to provide a better
service, a more complete service." He, like Dr Scott-Jones, thinks
his remuneration is sufficient. But Dr Woolford makes the point
that, as an older GP, he is happy to do his bit for not much
because he received his education free of charge.
"If you have younger GPs with mortgages and student loans to pay
off, then that's a different kettle of fish," he says.
Dr Woolford would not, however, ever want to be the chair of a PHO
- "bugger that for a joke" - because of the enormous amount of work
involved. He has great respect for HealthWEST's chair, fellow GP
Philip Rushmer, whom he thinks should get paid more, saying: "He
earns every penny. I don't begrudge him a cent."
The chair of any organisation is critical to its success, says Dr
Crombie, and it is generally accepted they should be paid between
two and two-and-a-half times more than other board members. The key
role of the chair is to act as a facilitator and manage
relationships. "They need lots of interpersonal skills, lots of
EQ," he says.
As for other board members, Dr Crombie says, the most important
thing for them to do is to observe basic processes, and their most
important attribute is a belief in the core mission of the PHO -
improving people's health.
Getting a good mix of people is also important.
"It's more important to have a diverse board than a board full of
superstars," Dr Crombie says, explaining that social research has
demonstrated that a diverse group has more wisdom than a handful of
smart or experienced individuals.
HealthWEST has a "really good mix" of people on its board,
according to Dr Woolford, with about five GPs, one pharmacist, one
nurse (and soon to be two), two community representatives, one
Maori and two Pacific Island representatives. And Dr Woolford says
working with such a diverse group has been fun as well as a bit of
"I have learned that many different people can bring things to the
table and that's an exciting and challenging opportunity and I've
really enjoyed working in the team," he says.
Good governance is vital to any organisation's success, because,
as the saying goes, "the fish rots from the head down", Dr Crombie
says. And, he says, there's little difference between running a
for-profit and a not-for-profit organisation, because a
not-for-profit organisation still has to generate a surplus to
invest in capital or staff or "other good things", and to enable
the organisation to survive through lean times.
Given the importance of governance, the amounts PHOs spend on it
are surprisingly small and varied.
The totals paid in board fees and allowances for the 2007/08
financial year ranged from nil for three PHOs to just over $156,000
for one PHO in the Auckland region's affluent North Shore City. The
average amount spent on board fees and allowances last year was
just over $37,000.
However, PHOs are variable beasts by their very nature, ranging
from large, urban organisations catering to the needs of more than
300,000 people to small, rural PHOs looking after the health of
fewer than 10,000 people.
Manaia PHO chair Chris Farrelly believes the size and complexity
of a PHO is relevant to what it spends on governance. But Wairoa
PHO manager Margie Sullivan says the size of a PHO does not really
make much difference to the functions it has to perform: "Even
though some are bigger, the work is very similar and they deserve
reasonable recompense for what they do, so you can attract the
And Otago Southern Region PHO chief executive Kaylene Holland
makes the point that rural PHOs face greater expenses than urban
PHOs. "The management services income is adjusted for being a
smaller PHO, but there isn't an adjuster for being rural," Ms
The ways PHOs set remuneration for board members are as varied as
PHOs themselves, according to responses to the PHO Alliance's
Governance Clearing House survey in January this year. Summary
answers included the comment that setting board fees "can be seen
to be creaming off funds from management budget", while another
noted there's a "need to pay a reasonable remuneration to attract
No one asked by New Zealand Doctor was really sure whether PHOs
would attract better people to their boards if they were able to
offer better remuneration, but everyone agreed that more money
would probably attract a greater number of people.
Dr Crombie says Australian research on chief executive pay and
performance shows "money doesn't necessarily buy commitment or
passion or ownership." People in the commercial sector who work for
non-profit organisations do so for the satisfaction: "It's a
balance between earning money and doing things that are good for
the soul or heart," he says.
"If there were fewer PHOs and they were a lot bigger then there'd
be a stronger argument for paying more," Dr Crombie adds.
PHOs have come in for some criticism as yet another layer of
needless bureaucracy. Indeed, the perceived waste of taxpayer money
on the unquantified and faceless beast "bureaucracy", became one of
the National Party's most powerful weapons in its war to win the
hearts and minds of New Zealanders, ahead of this year's general
election. No wonder, then, that PHOs are feeling a little
vulnerable with the change of government.
During the course of collecting information for this article, New
Zealand Doctor became aware of a rumour circulating among some PHO
managers that this newspaper was going to "do a beat up" about the
use of taxpayer money.
One PHO manager, who accused New Zealand Doctor of deliberately
setting out to impugn PHOs ("You're probably sharpening your
knives"), acknowledged the change of government had generated some
paranoia among PHOs.
It appears, however, that this paranoia is unfounded, as the
National-led Government says it has no agenda to require PHOs to
merge (see story, p2).
It took two months and many phone calls and emails, but 70 PHOs
answered some or all of the questions sent by New Zealand Doctor;
two did not respond at all, another two felt unable to reply, and
six refused outright to supply the information.
A few chief executives had to be coaxed into giving the
information, despite their own admission transparency was vital.
Most were genuinely interested in learning how their counterparts
were paid, as all appeared to grapple with the difficulty of
setting fees fairly but within budgetary means.
We've published the full results on our website, as coherently as
possible (>>nzdoctor.co.nz, 'Bits & Pieces'). PHOs who
supplied the requested data are not identified as the data are not
comprehensive enough for comparisons to be made or conclusions
Thanks to everyone who took part.
PHONZ Survey of Board Fees - February 2008
PHO Alliance Governance Clearinghouse - January