Health 'shake-up' necessary to 'shape-up'

Significant health system reforms have the potential to improve healthcare access for all New Zealanders – and budget delivers key signals

The health sector is at the centre of Budget 2021, with a record $4.7 billion in operating expenditure allocated to health over the forecast period, bringing total health expenditure to $24 billion.

The Budget includes funding of $486 million for the establishment of Health New Zealand and the Māori Health Authority, both of which are key to the health sector reforms. Also, an additional $2.7 billion of funding for District Health Boards (DHBs) over the 4-year forecast period has been included, and PHARMAC receives an additional $200 million to widen access to existing medicines and invest in new medicines. 

Health Sector Reforms

In addition to the establishment funding of $486 million for two of the major reform bodies, it can be expected that a portion of the $2.7 billion funding for DHBs will also need to fund DHB transformation efforts – not just service and volume growth or deficits.

The health sector reforms aim to provide a cultural compass by introducing the Māori Health Authority and separating the vast functions of the Ministry of Health into a policy function that is distinct from the operational execution to be carried out by Health New Zealand. In the future, high-level strategy and policy will sit with a smaller team in the Ministry of Health, whilst the mahi of developing a NZ Health Plan and turning ideals into actions, will be the responsibility of Health New Zealand.1

If we are serious about equity and using the Māori Health Authority to build a nation-wide network of Kaupapa Māori Providers, the Authority should double down on the Government’s Māori business procurement policy2 – that mandates at least 5% of the total number of annual procurement contracts
are awarded to Māori businesses. Authentic change cannot be implemented through short-term ‘grants funding’ and one-off cash injections but requires sustained investments to allow providers to grow and thrive over time.

The reporting lines are being re-drawn across the sector and by June 2022 our DHBs will be no more, instead being subsumed into the (yet to be established) Health New Zealand entity. All of this is text-book reform material and laudable. The challenge of authoritative control and capability at the centre of our siloed system has made it difficult to lead and direct change across 20 DHBs, over 30 Primary Health Organisations (PHOs), 12 Public Health Units (PHUs) and a significant number of non-government organisations (NGOs) and community services organisations.


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Making meaningful change can be a bit like wading through treacle. The formation of the Health Transition Unit is a similar construct to what we have seen with the amalgamation of the Auckland Councils – and a necessary pre-cursor to directing the initial transformation efforts. Although how far the Health Transition Unit will go, before handing the baton over to the Māori Health Authority and Health New Zealand, is still unknown.

Similar to the regional consolidation of Auckland Councils, the job ahead entails taking the consolidated assets and amalgamated entity to then turn it around over time. With a stronger sense of ownership and control, change becomes viable, when previously it seemed impossible. So, what might this look like for Health New Zealand?

The new entity will inherit a large employee base spread throughout the country (79,000 staff), over 10,000 IT systems, a significant real-estate portfolio ($24 billion3) and a massive balance sheet (over $20 billion). There will be an expectation to untangle the current health systems and hit the ground running whilst ensuring minimal impact for healthcare users. Clearly many challenges lie ahead: the creation of a high functioning, streamlined, entity will be no mean feat for those leading the transition and ultimately those who will lead Health New Zealand. 

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The healthcare reforms will succeed or fail, based on the actual execution against the plan. Sourcing the right talent and accessing the right capabilities, is no trivial task. The government has learnt that announcing change and making funding available is much easier than actually putting the funding to good use – let alone making something happen in the real world. This is also one of the key drivers for announcing the ‘Government Implementation Unit’ under the auspices of the Department of Prime Minister and Cabinet (DPMC)4.

Over four years, $486 million has been allocated to begin the transition to Health New Zealand and health reforms (of which almost $98 million is explicitly allocated to the Māori Health Authority). The Government Implementation Unit has also been funded through Budget 2021 (with aggregated funding of $4.3 million over two years) and will monitor and support implementation of a small number of critical initiatives, particularly where multiple agencies are involved in the work. This includes areas such as mental health, infrastructure, housing and climate change mitigation. The Unit will report to the Deputy Prime Minister and will engage closely with Minister’s offices.

Other Budget Announcements

Evidence has been growing that all is not well in our fight against cancer and there is a growing inequity between Māori and Pacific people. In the budget announcements, we saw commitments to boost funding for health5 across not just therapeutic medicines and PHARMAC, but also some of the following areas:

  • Budget 2021 continues to build on the gains already made around Bowel Cancer Screening, with an additional $13 million to complete the rollout of the National Bowel Screening Programme to the remaining six DHBs.
  • Budget 2021 funds a more effective cervical screening test to help reduce cervical cancer rates. An investment of up to $53 million to complete the design of and implement a new test for human papillomavirus (HPV).
  • Budget 2021 invests up to $55.6 million in a major upgrade for Breast Screening technology6, and another $10 million is earmarked to match population growth. The new technology will better equip the programme to reach the 271,000 women who are eligible to access breast screening.
  • Doubling down on digital and infrastructure investments, the Budget includes $516.6 million to develop and run effective health infrastructure, including a national health information platform so patient records can be read by approved health professionals anywhere in the country.

More service specific annoucements in the Budget include: 

  • $399.2 million to support people with long-term physical, intellectual or sensory impairment, plus $72.8 million to continue and extend the Enabling Good Lives pilot programmes.
  • $100.3 million to improve air and road ambulance services.
  • Additional funding for adult cochlear implants to the tune of $7 million per annum. This funding will allow an additional 320 people to obtain implants by 2025.
  • Making sure more homes are warm and dry with an extra $50 million for the Healthy Homes Initiative. Given how important social determinants of health are, this will make an important difference to our most vulnerable.
  • $16 million for Pacific health providers to implement the Ola Manuia Action Plan. 
  • $3.8 million for sexual and reproductive health services through Family Planning. 

We hope that these initiatives will help to improve engagement with hard to reach communities, remove barriers to healthcare access and ultimately provide better health outcomes for New Zealanders.

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