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NZ healthcare sector reforms 1980-2010

In document Health Literacy: (Page 39-45)

Chapter 2 Research Context

2.3 The New Zealand healthcare system

2.3.1 NZ healthcare sector reforms 1980-2010

The NZ healthcare sector has experienced both ‘big bang’ and incremental reforms, under different political parties in government, and with varying economic conditions. This discussion is not intended as an elaboration of what has

8 Starke (2010, p. 491) also emphasises that this goal of universality was only “realized to a limited degree. Most income transfers remained income tested”.


caused these reforms. It is important in the present research to consider the healthcare reforms insofar as they offer insights into the problem pressures, demands for reform, and policy ideas that have been influential in their implementation.

The New Zealand healthcare sector has been characterised by “incessant reforms”

over the last 20 years (Gauld, 2009a, p. 1) aimed at containing costs, reducing fragmentation, and achieving more integrated care. These changes have resulted in radical changes at both the structural and service delivery levels of the health sector. Consequently the NZ health sector has been the subject of extensive reviews, evaluations, analyses, and commentaries by health professionals, health researchers, political scientists, and policy analysts (Devlin, Maynard, & Mays, 2001; Dew & Davis, 2005; Gauld, 2009a, 2009b, 2012; Mays, Cumming, &

Tenbensel, 2007; Ministerial Task Group on Clinical Leadership, 2009; Ministry of Health, 2012a; Starke, 2010; Tenbensel, Cumming, Ashton, & Barnett, 2008).

Although the wide-ranging and regular reforms of the health system followed the political ideologies of the government in power, NZ’s healthcare reforms have also paralleled some distinct phases of health reforms internationally. Over the last 20 years the reforms focussed on restructuring the processes for planning and funding health services while the way services are provided has remained largely unchanged (Cumming, 2011). The healthcare reforms contextualise the area of inquiry of this thesis and, for the current purpose, are discussed in three categories (further details are noted in Appendix 3):

(a) Category 1: 1980s to early 1990s

Developing from the New Public Management perspective, the reforms of the 1980s and the early 1990s focussed on cost containment at the macro level.

The reforms sought to increase patient choice by stimulating competition at both the healthcare purchasing and provider levels. These neo-liberal reforms sought to roll back state intervention from traditional areas and replace with market relationships and systems (Prince, Kearns, & Craig, 2006).


The reforms of this period aimed to improve quality and efficiency by

“subsuming health professionals under ‘managerialist’ structures and creating internal markets amongst providers of public health care services…” (Gauld, 2012, p. 2). Public hospitals were intended to function like private businesses, elected area health boards were abolished, competitive contracting was introduced,9 clinicians were largely removed from management, and a single purchasing agency was established (the Health Funding Authority). Gauld (2000) termed these the ‘big bang’ reforms of the NZ healthcare system, which engendered profound opposition from health professionals and the public alike (Gauld, 2009a, Tenbensel et al., 2008). The separation of purchasing from provision, one of the radical reforms of this period, was intended to encourage competition between government-owned, private for-profit, and not-for-profit providers of healthcare services. Provider-based and community accountability did not feature in the health policy discourse of the early to mid-1990s in NZ (Tenbensel, Mays, & Cumming, 2011); there was also little evidence of the expected technical efficiency gains that had provided the reasoning for the reforms (Ashton, Mays, & Devlin, 2005). The overall conclusion was that the level of performance of the healthcare system had declined.

Despite the separation of purchasing and provision, by the late 1990s the centre-right government focussed its health policies more on national consistency and integration, and prioritising services to be purchased (Shipley, 1995). Furthermore, the terms associated with a market model such as competition, for-profit, and commercial practices largely disappeared, being replaced with the traditional principles of a public service.

The quasi-market model of these reforms did not lead to more competition among GPs but rather increased collaboration in terms of Independent Practitioner Associations (IPAs). These collaborations led to some important but unintended consequences, such as integrating primary care information systems, and quality assurance mechanisms (Ashton et al., 2005).

9 Crown Health Enterprises (the reconfigured Area Health Boards) were structured as for-profit organisations. The Regional Health Authorities negotiated contracts with both public and private providers for the provision of personal health services.


From the mid-1990s there was a move away from market principles to more centralised state control following traditional principles of public service (Starke, 2010). While some reforms were reversed crucial design elements of the 1993 reforms such as the purchaser-provider split were not reversed.

(b) Category 2: Late 1990s to early 2000s

The centre-left government elected in 1999 saw a return to healthcare policies that emphasised community involvement in governance, local decision making, public health strategies and reducing inequalities. A list of population health priorities became the foundation for the New Zealand Health Strategy (NZHS) (King, 2001),10 identifying a specific Primary Health Care Strategy. A fundamental reform was in the subsidy regime for primary healthcare. In particular, this strategy addressed the barriers to primary healthcare faced by low socio-economic status (SES) groups, Māori and Pacific Islanders, through capitation based on population characteristics11 and resulted in significant extra funding to improve low-cost access to primary healthcare, namely general practitioner services (Cumming & Mays, 2009). Reports suggest that the use of primary healthcare services increased (Starke, 2010).

The second element of these reforms was to restore the community’s ‘voice’ by returning to previous models of elected member health sector governance and to emphasise outcomes in which communities could be seen as having a role in co-producing such outcomes (Tenbensel et al., 2011, p. 243-244). These reforms saw a move to localised health governance with 21 District Health Boards (DHBs) replacing the Health Funding Authority (HFA) “designed to

10 Population health generally refers to policy and services aimed at improving equity, universal service access, community involvement in services, social justice and the health of the whole population in an area, community or country (Gauld, 2009a).

11 Ethnicity proportions of the total NZ population are difficult to define as the NZ Census allows people to identify with more than one ethnic group. “Ethnicity is self-perceived and people can belong to more than one ethnic group. People can identify with an ethnicity even though they may not be descended from ancestors with that ethnicity.

Conversely, people may choose to not identify with an ethnicity even though they are descended from ancestors with that ethnicity”.

http://www.stats.govt.nz/browse_for_stats/population/Migration/internalmigration/appen dixes.aspx


democratize and decentralize planning and decision making, as well as run public hospitals and fund other public health services for their regional populations” (Gauld, 2012, p. 1). The DHBs were required by legislation to be accountable by providing the opportunity for public participation in board deliberations, strategic planning, and service provision. However, several factors constrained the extent of community voice (Ashton et al., 2005): DHBs were required to work within the framework of objectives and funding priorities set by the national strategies; DHBs were therefore accountable to central government for the public resources they expended; and tight budgetary constraints meant that service priority decisions were more often disinvestment decisions, than decisions to expand services. While the legislation appeared to decentralise control in these reforms, the predominantly tax-based financing of the healthcare system meant that tight government control continued with upward accountability to the centre. Tenbensel et al. (2011) talk of this as key organisations in the healthcare sector being “simultaneously accountable to central government on the one hand, and local stakeholders and communities on the other” (p. 239). Recent management literature now acknowledges the multiple accountabilities for public sector organisations to what may be conflicting constituencies (e.g., Behn, 2001; Considine, 2002).

Among the measures in this period of reforms was a move to a population-based funding formula for the DHBs (as opposed to an allocation population-based on the services actually delivered). Strategic planning was part of the NZ Public Health and Disability Act (NZPHDA) which required 5-yearly plans along with annual plans. DHBs were also required to conduct Health Needs Assessments (HNAs) every three years which were “the assessment of the population’s capacity to benefit from healthcare services prioritised according to effectiveness, including cost-effectiveness, and funded within available resources” (Coster, Mays, Scott, & Cumming, 2009, p. 277). Despite such requirements HNAs were found to have little direct influence on planning and purchasing and that prioritisation by DHBs was difficult given the reality of continuing tight levels of central control (Coster, 2000; Coster et al., 2009).

29 (c) Category 3: Post 2008

In general, questions were being raised about the performance of the healthcare sector such that the centre-right government that won the 2008 general election was concerned principally with fully engaged health professionals, improved productivity, quality improvement in health service delivery and access - especially to electives and cancer treatments (Ryall, 2008). The nature of the reforms that followed also re-centralised the healthcare organisational systems and relationships. The incoming government set up a Ministerial Review Group (2009) for the healthcare system that concluded:

Bureaucracy, waste, and inefficiencies must be reduced and resources moved to the front-line as spending growth slows. We must focus on quality which will deliver better patient outcomes and on ensuring better access to health services through smarter planning and resource utilisation, at regional and national levels (p. 6).

Measures to achieve this included “Shifting resources to the front-line by reducing the cost of ‘back office’ shared services for DHBs and reducing the duplication of functions carried out across the country” (Ministerial Review Group, 2009, p. 4) and strengthening clinical leadership and the role of doctors, nurses allied and other health workers in decision-making…[so that they]…share responsibility and accountability for improved system performance, in terms of efficiency, quality, and cost” (Ministerial Review Group, 2009, p. 7).

The international financial crisis impacted on the already-existing issues, compounding the need to keep healthcare provision within existing funding allocations. Reducing the bureaucracy was central to these reforms including a nationalisation of various functions (e.g., IT planning). The National Health Board had operational jurisdiction, while the Ministry of Health continued its policy and ministerial advice functions. Legislation changes now require DHBs to collaborate and plan regionally. National agencies have been created for specific functions (e.g., National Health IT Board, Health Workforce New


Zealand) although these have complex administrative structures and often vague jurisdictional boundaries (Gauld, 2012). The policy of ‘better, sooner, more convenient’ healthcare services also resulted in funding for Integrated Family Health Centres, intended to improve access and efficiency of primary care practitioners.

These 2008 reforms were done under the government’s election promise not to restructure the health system. The return to centralised control aimed to provide a national health system that was committed to clinical governance. However, many of the arrangements affecting the organisational systems and front-line service delivery remained unchanged; some patients may even be unaware that changes occurred.

In summary, the NZ healthcare system now demonstrates strategies to reduce inequalities in service access and health outcomes, adherence to principles of population health, and primary care improvement. Although change will continue it is unlikely that the radical restructuring of the last three decades will reoccur (Ashton, 2005; Ashton et al., 2005; Gauld, 2009a).

In document Health Literacy: (Page 39-45)