Every organisation under cost pressure faces the same temptation: cut the thing that doesn’t generate revenue. IT is always near the top of the list. But when your own internal risk assessment tells you the cuts will compromise patient care, and you proceed regardless, that is not efficiency. It is cost deferral with a body count.
Health NZ’s own document, written in April 2025 and released under the Official Information Act, spells it out in language no spin doctor can walk back: the long-term risk trajectory would “almost certainly elevate as technical debt becomes unsustainable.”
They cut anyway.
The numbers behind the gutting
Health NZ reduced its data and digital workforce from around 2,000 to 1,460, axing roughly 540 positions. That was actually the softer version. The original proposal would have slashed headcount by 47 percent, from 2,400 to 1,285. Health Minister Simeon Brown asked officials to reconsider, and the final cut landed at roughly a third. This was framed as a concession.
Alongside the headcount reduction, Health NZ stopped or deferred 136 IT projects, claiming savings of more than $90 million. The deferred list included booking systems, staff rosters, radiology technology, and an upgrade of Windows 2012 operating systems that had already lost Microsoft support a year earlier. All of it flowed from a Budget 2024 decision to cut over $380 million from data and digital programmes.
The internal document they would rather you hadn’t seen
The April 2025 document, titled “End user impact of digital change – consequences,” is not a union talking point. It is Health NZ’s own assessment. It found the system already had low baseline resilience, no adequate business continuity plans, and “minimal” hot failover mechanisms. Cutting staff into that environment, the document warned, would increase risks to patient care and hospital resilience.
Health NZ’s public response was that it had “built targeted mitigations into its plans for change because of the report.” That confirms the report existed and was taken seriously enough to adjust plans. It does not rebut the finding that the risk curve points upward.
Three outages in two months proved the point
The predicted future arrived early. In early 2025, three major IT outages struck: a six-hour outage in the lower North Island in mid-January, a 12-hour outage at Auckland and Northland hospitals in late January that forced clinicians to use pen and paper, and another Auckland and Northland outage in late February that disrupted transfer of X-rays, CT, and MRI scans for two hours.
PSA national secretary Fleur Fitzsimons described the radiology outage as “critical,” noting that clinicians had to resort to texting each other scan results. “When you’re dealing with patients in ED or in operating theatres, time is everything,” she said.
Minister Brown’s characterisation? He was aware of a “brief IT issue” and thanked staff for resolving it swiftly.
A system held together by institutional knowledge that just walked out the door
The scale of the underlying problem is staggering. NZ’s health system runs on more than 6,000 IT applications, many needing urgent attention. Digital Health Association chief executive Ryl Jensen warned the cuts could have “catastrophic consequences” and pointed to the false economy at the heart of the strategy: “The cuts don’t just impact the present, they stall the future.”
A Health Informatics NZ survey of 358 respondents found 97.5 percent believed the cuts would worsen or delay improvements to patient care, and 94.3 percent said inefficient IT systems already meant staff spent more time on admin than with patients. The new digital budget of $658 million annually represents just 2.2 percent of total health spend.
Internal staff feedback obtained by the PSA puts a finer point on it: “Our systems fail weekly and are kept alive by local IT responding at pace to an urgent phone call. Remove them and their expertise and patient harm will ensue.”
The lesson every board should take from this
This government was elected on a promise to cut bureaucratic bloat, and there is genuine bloat to cut. But IT in a health system running 6,000 applications on ageing infrastructure is not bloat. It is operational plumbing. The PSA has called for a Privacy Commissioner investigation, citing the 2021 Waikato Hospital ransomware attack as proof the cybersecurity risks are not theoretical.
For any CFO or board weighing similar decisions, Health NZ has provided a publicly documented case study in what happens when you book the savings now and ignore the risk assessment sitting on your desk. The $90 million in project savings looks less impressive when measured against three outages in two months, clinicians texting scan results, and a modernisation bill that compounds every quarter it goes unpaid.
Sources
- RNZ: Documents reveal Health NZ knew IT job cuts would risk patient care, hospital resilience (2025-06-10)
- RNZ: Hospital IT outages will continue due to Health NZ staff cuts, union warns (2025-05-27)
- RNZ: Health NZ’s plan to stop or defer 136 IT projects (2024-09-10)
- RNZ: Health NZ confirms a third of all IT roles will be cut (2025-02-07)
- Digital Health Association: More Health New Zealand cuts could cripple the health system (2024-09-10)
- RNZ: Union hits back at ‘astonishing’ Health NZ cuts (2024-10-03)
- RNZ: Call for Privacy Commission investigation into health IT staff cuts (2024-10-03)
- FYI: Health NZ Data and Digital Cuts – OIA request (2025-02-01)