Peter Crampton on public health in New Zealand


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Prof Peter Crampton (Dean and Head of Campus, University of Otago Wellington)
specialist in public health medicine, argues that public health is a social, political, economic and justice issue, not a medical one. After charting the course of change to our health system since the 30’s, he urges every citizen to articulate in all their relationships (personal, professional, civil), their commitment to public health as a right of citizenship. He also agues that the goal of the public health system is to reduce inequalities and produce just outcomes for all New Zealanders.

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  • Health systems in all developed countries are facing similar set of circumstances, which are tending to push health care costs up. Principal amongst these circumstances are: Ageing populations Proliferation of medical technology Ever rising expectations of the public.
  • It has been noted that "the keynote of this [the government's] approach was that service and care would be provided by the state according to medical needs of individuals without regard to their ability to pay". However, the New Zealand Branch of the British Medical Association (BMA) was in favour of an arrangement that would make government responsible for funding all care for the poor, while retaining high income patients in private markets. Although the government succeeded in implementing free hospital services, pharmaceuticals and, after a wrangle with the BMA, free maternity services, it failed in its initial plan to introduce capitation payments for GP services with no capacity for private billing. Following protracted battles with the BMA, in 1941 the government finally implemented a patient medical benefits scheme that equated to a subsidy scheme for GP services rather than fully tax-financed primary medical care. Only about 51 GPs ever opted for capitation funding under the original scheme, the vast majority opting for fee-for-service payments. By 1948 there were only about 23 GPs operating under capitation funding.
  • Minister of Health in the first Labour Government - Peter Fraser
  • The 1974 White Paper, titled A Health Service for New Zealand , was released by the Labour Government a year before they suffered a crushing defeat in 1975. The 1974 White Paper foreshadowed certain important changes that were to occur twenty years later, particularly the formation of regional health authorities responsible for the functionally integrated provision of services on a regional basis. The White Paper differed markedly from the 1991 Green and White paper in that the 1974 paper argued strongly for a fully tax funded system, and was not in favour of increasing private sector interests in the health sector. Rather, the White Paper argued that financial barriers to access, and the failure of the private sector to provide for all sections of the community, necessitated increasing both state funding and provision: "In the long-term view, the progressive improvement of State health services will restore true freedom of choice for patients." Due to Labour's defeat in 1975 the White Paper policies were not implemented at the time, however some of its themes were picked up in 1976 by the Special Advisory Committee on Health Services Organisation (SACHSO), eventually leading to the formation of the first area health board in Northland in 1984. Although area health boards combined the functions of hospital boards and the Department of Health's district health offices, there was no attempt to integrate either funding or provision of primary care services.
  • 1978-79 - pilot area health baord schemes in Northland and Wellington
  • Increasing costs and increasing availability of health care technologies, ageing populations and broader fiscal constraints have stimulated structural reform of health systems in a range of industrialised countries. The concept of the purchaser provider split was introduced to New Zealand as a policy option aimed at addressing some of the problems faced by the health sector. The purchaser provider split Alain Enthoven is the economist most closely associated with the concept of limited competition. His model was developed in the US in response to local conditions. Later Enthoven made recommendations that influenced the reform of the NHS in the UK. A similar set of ideas underpinned the introduction of the purchaser provider split in New Zealand. The terms limited competition, managed competition, internal markets and quasi-markets are used in the context of Enthoven's model. UK model Extensive health reforms were commenced in 1989. The reforms involved separation of purchasers and providers. The publicly funded purchasers were called District Health Authorities. Purchasing by GPs was subsequently introduced in 1991. NZ model A similar model was introduced in New Zealand as part of health changes brought about by the Health and Disability Services Act 1993. Four publicly funded purchasers - the four regional health authorities (RHAs) - were established. A fifth purchasing organisation, the Public Health Commission, was also established to monitor the state of the public health and to purchase public health services (and was subsequently disestablished in 1995). The four RHAs were amalgamated in 1997 to form a single national purchaser, the Transitional Health Authority. The Transitional Health Authority was reconfigured as the Health Funding Authority (HFA) in January 1998.
  • The system adopted was inherently monopsonistic, although the legislation allowed for the introduction of alternative health care plans (competing purchasers). The system relied on the HFA purchasing services, via a contracting process, from a range of providers. Some of the benefits of the split include 1. Efficiency - Competing providers may lead to increased efficiency in service provision and in resource allocation. 2. Equity - The role of the purchasers is to purchase according to need for services, rather than according to historical patterns of service provision. 3. Accountability - Contracting may lead to clearer lines of accountability. 4. Cost containment - Capped budgets for purchasers provide a strong incentive for cost containment. 5. Consumer sovereignty - Competition and the purchasing ethos emphasise the rights of the consumer. Problems associated with contracting 1. Lack of information - The ‘data free environment’ creates major problems for purchasers wishing to negotiate realistic prices for services. 2. Short term ‘market-led’ decision making - Short term decisions are not necessarily beneficial to the health system in the long term. 3. Transaction costs - Significant costs are associated with contracting. 4. Asset specificity - Providers frequently become ‘locked in’ to providing a set of services as they alone possess the resources required, thereby reducing the potential for competition. 5. Fragmentation of services - There is a risk that services become fragmented as different service components are purchased from different providers. 6. Unproven benefits of ‘competition’ - The benefits of managed competition remain largely un-evaluated. 7. Loss of cooperation - Competition may lead to loss of cooperation between service providers which previously worked together cooperatively.
  • Peter Crampton on public health in New Zealand

    1. 1. Never-ending health reforms in New Zealand <ul><li>Peter Crampton </li></ul><ul><li>Dean and Head of Campus </li></ul><ul><li>University of Otago Wellington </li></ul>UNIVERSITY OF OTAGO WELLINGTON DEPARTMENT OF THE DEAN
    2. 2. <ul><li>Major changes </li></ul><ul><ul><ul><li>Area Health Boards Act 1983 </li></ul></ul></ul><ul><ul><ul><li>Health and Disability Services Act 1993 </li></ul></ul></ul><ul><ul><ul><li>the 1996 Coalition Health Policy </li></ul></ul></ul><ul><ul><ul><li>New Zealand Public Health and Disability Act 2000 </li></ul></ul></ul><ul><ul><ul><li>National’s current reforms 2009 </li></ul></ul></ul><ul><li>Major themes: </li></ul><ul><ul><ul><li>Vision and purpose </li></ul></ul></ul><ul><ul><ul><li>Treaty of Waitangi and health services </li></ul></ul></ul><ul><ul><ul><li>Accountability </li></ul></ul></ul><ul><ul><ul><li>Integration </li></ul></ul></ul><ul><ul><ul><li>Community participation </li></ul></ul></ul><ul><ul><ul><li>Centralisation / decentralisation </li></ul></ul></ul><ul><ul><ul><li>Strategic goals </li></ul></ul></ul>
    3. 3. International perspective: Development of modern health systems Phase one: 1940s and 1950s <ul><li>Development of national health systems and social insurance systems </li></ul><ul><li>“Classical universalism”- free access to health care for all </li></ul><ul><li>… rapid growth of hospitals… </li></ul><ul><li>… increased financial stress </li></ul><ul><li>… focus on urban populations… </li></ul>
    4. 4. Phase two: 1970s and 1980s <ul><li>Primary health care movement </li></ul><ul><li>Affordable “Health For All” </li></ul><ul><li>...economic rationalism... </li></ul><ul><li>...structural reforms... </li></ul><ul><li>...growing inequalities... </li></ul>
    5. 5. Phase three: 1990s <ul><li>Managed care </li></ul><ul><li>Focus on cost-effectiveness </li></ul><ul><li>Mixed health economies (private, public, third sector) </li></ul><ul><li>“New universalism” - high quality essential health care </li></ul>
    6. 6. Health reforms …
    7. 7. In the beginning… the Social Security Act 1938 <ul><li>Creation of the ‘social welfare state’ </li></ul><ul><li>NZ’s first integrated approach to health care financing </li></ul><ul><li>Two basic aims: </li></ul><ul><ul><li>To set in place means-tested benefits for those unable to earn for themselves </li></ul></ul><ul><ul><li>To provide universal tax-financed primary and secondary medical care, and prescriptions, free of charge to the patient </li></ul></ul>
    8. 8. In the beginning…the Social Security Act 1938
    9. 10. The Area Health Boards Act 1983 (1) <ul><li>Prior to 1983 </li></ul><ul><ul><li>27 Hospital Boards existed </li></ul></ul><ul><ul><li>Private sector primary care subsidised by the state </li></ul></ul><ul><li>1974 Labour Government White Paper </li></ul><ul><ul><li>Proposed creation of 14 regional health boards </li></ul></ul><ul><ul><li>Foreshadowed functional integration of services on a regional basis (ideas incompletely reflected in AHBs and RHAs) </li></ul></ul><ul><li>1975 National Government elected </li></ul>
    10. 11. The Area Health Boards Act 1983 (2) <ul><li>National Government enacted the Area Health Boards Act in 1983 </li></ul><ul><ul><li>First AHB created in 1984 (Northland) </li></ul></ul><ul><ul><li>AHBs combined functions of old Hospital Boards and public health services </li></ul></ul><ul><ul><li>AHBs decentralised the Department of Health’s public health function to regional offices </li></ul></ul><ul><ul><li>AHBs had provider role only </li></ul></ul><ul><ul><li>AHBs did not integrate primary care </li></ul></ul>
    11. 12. The Area Health Boards Act 1983 (3) <ul><li>1984 Labour Government elected </li></ul><ul><li>Population based funding for Hospital Boards introduced in 1983 </li></ul><ul><li>1989 14 Area Health Boards finally in place </li></ul>
    12. 13. The Area Health Boards Act 1983 (4)
    13. 14. The Health and Disability Services Act 1993 (1) <ul><li>Key features </li></ul><ul><ul><li>Purchaser-provider split - the ‘internal market’ </li></ul></ul><ul><ul><ul><li>Five purchasing agencies (competing with health care plans) </li></ul></ul></ul><ul><ul><li>Competition between providers </li></ul></ul><ul><ul><li>User part-charges </li></ul></ul><ul><ul><ul><li>For inpatient and outpatient services </li></ul></ul></ul><ul><ul><li>Core health services </li></ul></ul><ul><ul><li>Contestable policy advice </li></ul></ul><ul><ul><li>Alternative health care plans </li></ul></ul>
    14. 15. The Health and Disability Services Act 1993 (2) <ul><li>Emphasis on </li></ul><ul><ul><li>Targeted assistance </li></ul></ul><ul><ul><li>Consumer choice </li></ul></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Individual responsibility for health </li></ul></ul>
    15. 16. The Health and Disability Services Act 1993 (3)
    16. 17. The Health and Disability Services Act 1993 (4) <ul><li>Changes to the original plan </li></ul><ul><ul><li>In-patient hospital charges dropped in Apr 1993 </li></ul></ul><ul><ul><li>Alternative health care plans dropped </li></ul></ul><ul><ul><li>Public Health Commission closed 1995 </li></ul></ul><ul><ul><li>The idea of a ‘core’ was dropped (the ‘Core Committee’ was renamed the National Health Committee in 1995) </li></ul></ul>
    17. 18. The Health and Disability Services Act 1993
    18. 22. Focus on management and efficiency...
    19. 24. Hospital charges...
    20. 26. The coalition agreement
    21. 27. The 1996 Coalition Agreement (1) <ul><ul><li>Key features </li></ul></ul><ul><ul><ul><li>Replacement of the four RHAs with a single central ‘funder’ (4 RHAs  THA  HFA) </li></ul></ul></ul><ul><ul><ul><li>Minister of Health to incorporate the role of the Minister for CHEs </li></ul></ul></ul><ul><ul><ul><li>Replacement of CHEs with non-profit Hospital and Health Services </li></ul></ul></ul><ul><ul><ul><li>Shift away from competitive contracting to long-term relational contracting </li></ul></ul></ul><ul><ul><ul><li>Provision of ‘free’ care for under-sixes </li></ul></ul></ul><ul><ul><ul><li>Dropping of hospital out-patient charges (July 1997) </li></ul></ul></ul>
    22. 28. The 1996 Coalition Agreement (2)
    23. 29. The Coalition Health Agreement
    24. 42. The New Zealand Public Health and Disability Act 2000 (1) <ul><li>Key features </li></ul><ul><ul><li>Disestablishment of the HFA and HHSs </li></ul></ul><ul><ul><li>Creation of 21 District Health Boards </li></ul></ul><ul><ul><li>Regionalisation of (most) purchasing functions </li></ul></ul><ul><ul><li>‘ Dilution’ of the purchaser-provider split </li></ul></ul>
    25. 43. The New Zealand Public Health and Disability Act 2000 (2) <ul><li>District Health Boards </li></ul><ul><ul><li>21 DHBs </li></ul></ul><ul><ul><li>Defined geographical areas </li></ul></ul><ul><ul><li>Based around hospitals </li></ul></ul><ul><ul><li>Combine purchasing and providing roles </li></ul></ul><ul><ul><ul><li>Purchase - primary care and other services </li></ul></ul></ul><ul><ul><ul><li>Provide - hospital services </li></ul></ul></ul><ul><ul><li>Elected boards </li></ul></ul><ul><ul><li>Advisory committees </li></ul></ul><ul><ul><li>Shared Support Services </li></ul></ul>
    26. 44. The New Zealand Public Health and Disability Act 2000 (3)
    27. 52. National’s reforms 2009 Ministry of Health Policy and regulation Monitoring Devolve $2.53b out National Health Board Chair- Murray Horn Advisory Board - GM – Functions: Funding and Planning specialist national services such as paediatrics, onclology, clinical genetics and burns Infrastructure planning IT, Workforce, Capital Mgt Create Shared Services Est Board Consolidate admin functions for DHBs and regional shared agencies strengthen regional co-operation, service planning and delivery devolve $2.53b MOH to DHBs National Health Committee revamped 21 DHBs Regional planning Establish governance and support structures to deliver on plans Independent Quality Agency New Crown entity to provide shared services to DHBs Progress recommendations of MRG over time Minister of Health