A Healthy Prognosis

Twenty four Principles for Salvaging the Health System.

Listener: 11 November, 1995.

Keywords: Health;

It is the practice of this column to focus on explaining underlying economic analysis, rather than policy prescription. Typically, when I have to cut for length a column I have written, it is the policy that goes first. However we have got into such a muddle over our health system that this column breaks its practice and simply sets down a set of policy principles. (There are a number of areas which I have not discussed, because they are non-controversial – like that the biggest single health gain would be if we could abandon smoking.)

Primary Care
1. Reestablish a Public Health Commission as a consultative body responsible for supervising population based health activities.
2. Establish a procedure to determine what health care the public is entitled to from the public health service, including the period they should wait for treatment. (The Core Health Services Committee has miserably failed to do this, despite the advocates of the reform saying their role was central to the success of the changes – it was.)
3. Experiment with budget-holding by general practitioners, systematically monitoring outcomes. Budget-holding involves giving the GP funds from the public sector (a budget). GPs then pay out any public health expenses from their treatment (e.g. for pharmaceuticals and laboratory tests). While it encourages efficiency, there are major problems about setting a fair budget (reflecting the patients’ needs), and also what to do with any surpluses. Note GPs should only hold budgets for the resources their decisions use and not, for instance, for major hospital expenditures.
4. Promote the public’s management of its own health care by better health education.

Secondary Care
5. Rename the Crown Health Enterprises, Area Health Services.
6. Change the business directed objective of the AHSs to the pursuit of the highest possible health of the community, while using resources in an efficient way.
7. Separate out the property of each AHS into a subsidiary company run on business lines, so that the service focuses on health rather than lands and buildings.
8. Change the composition of each AHS board so that it has greater competence in the provision of health services. (Put the businessmen on the property subsidiaries.)
9. Have over half of each AHS board elected by the locals, and have the board – rather than the Minister of Health – accountable for mismanagement in the AHS services (as when a doctor or nurse makes a mistake). Where areas are large, have subsidiary community boards advising to the AHS board.
10. Make information on the performance of their AHS available to the local community.
11. Where rationalization is necessary, as in major cities, amalgamate the existing CHEs into a single AHS.
12. Require each AHS to provide transparent costings of its activities, and have them subcontract outside (including to a private provider) where there are lower costs for the same quality of service.
13. Require each AHS to provide a full economic and social evaluation where it is closing down a hospital, or a major part of a hospital, justifying the closure in other than narrow commercial reasons.
14. Require each AHS to certify that any long-stay patient (e.g. in for psychiatric care) it discharges into the community has adequate social support.
15. Where an AHS does not treat the patient within a set time period, have the patient would be treated by the private sector, at the expense of the AHS.

16. Require all public health providers (including AHSs) to have a Patients’ or Health Care Charter, including a mechanism to enforce it.
17. Replace the four Regional Health Authorities with a single Health Funding Authority within the Ministry of Health.
18. Abandon plans (and extant legislation) to introduce the privatisation of funding (via Health Care Plans and the like). They are subject to moral hazard and are inefficient.
19. Noting that a country at a similar per capita income level as New Zealand spends 7.5 percent of GDP, fund at least 87 percent of this amount by the public sector, so that annual public sector funding would be at least 6.5 percent of GDP or $6 billion this year. (The 87 percent was the level in 1983/4. It is now below 80 percent.) Note some spending on health is inevitably private – such as aspirins – so it cannot be 100 percent. As the standard of living of New Zealand rises, the share of GDP spent on health care will also rise.
20. Require Statistics New Zealand to report to parliament each year on the attainment of the target in the previous paragraph.
21. Abolish assets test for those in long term care, but extend the income test to include an imputation for non cash generating assets (a home would be valued at its rental return).
22. Abandon user charges where the user has little say over the decision as to whether the item or service should be used. (So prescription charges would be abolished.)
23. Stop cost shifting from the public sector onto families and the community.

And most of all
24. Consult rather than impose from the top.