Doing more with less: New Zealand’s response to the health care sustainability challenge Toni Ashton Professor in health economics School of Population Health, University of Auckland School of Population Health

Average spending on health per capita ($US PPP)

Real growth in public health expenditure 1950 - 2010 Key issue is growth in PUBLIC expenditure

Inputs New Zealand Netherlands % GDP on health (2010) 10.1 12.0 Expenditure per capita (US$PPP ) 3022 5056 Annual growth rate 2000- 2010 5.5% 5.4% Physicians per 1000 2.6 2.9 Nurses per 1000 10 8.4 Hospital beds per 1000 2.7 4.7 Pharm. Expenditure per cap (US$PPP) 285 481 Source: OECD Health Data 2012

Outputs New Zealand Netherlands Doctor consults per year 2.9 6.6 MRI exams per 1000 3.6 49.1 CT scans per 1000 22.4 66.0 Hospital discharges per 1000 1469 1158 Caesarean sections per 1000 235 148 Source: OECD Health Data 2012

NZ health system 82% public funding (74% tax, 8% SI) Risk-adjusted population-based regional funding Free care in public hospitals - specialists salaried GPs paid by capitation + copayments Supplementary private insurance Strong central guidance SI = ACC. Covers all accident-related injuries in and out of the workplace. Unlike, Finland, GPs run as private businesses. Specialist and hospital care: parallel private system. Insurance or OOP. Many specialists work in both sectors.

Waves of “reform” in NZ 1938: 1993: 2000: Introduction of public health system Locally-elected hospitals boards 1993: Purchaser/provider split and provider competition Commercialisation of hospitals 2000: Back to locally-elected district health boards Emphasis on primary health care

20 District Health Boards PHOs, NGOs, Other private providers Ministry of Health Population-based Funding Accident Compensation Corporation 20 District Health Boards “Service agreements” Ownership Single-funder – our Ace card in terms of fiscal restraint. Challenge is therefore more around maintaining access and quality, subject to a hard budget constraint. DHBs are both purchasers and providers of services Money includes Social care Private providers: GPs Pharmacists, Maternity care Home care Long term care Community-based mental health services PHOs, NGOs, Other private providers Public Hospitals

Budget May 16 2013 NZ$1.6 billion extra over next 4 years “While many developed countries are freezing or reducing health funding, this government is committed to protecting and growing our public health services.........” NZ$1.6 billion extra over next 4 years

“We need to see further improvement in efficiency gains and containing costs..... We must do more with less” 1 billion is to offset population and cost increases. This leaves about $35 (€21) extra per person per year and most of this is already ear-marked for aged and social care.

Doing more with less: Macro (policy) level Regionalisation/centralisation Regional planning Regional provider networks Regional procurement of supplies Centralisation of DHB ‘back office’ functions, IT, workforce Fewer DHBs?? HTA and prioritisation Extension of PHARMAC to medical devices National health committee Charged with prioritising new and existing technologies -

Impact of PHARMAC on drug expenditure

Meso (organisational) level Concentration of specialised hospital services Shift of care from hospitals into the community Improved integration of services Micro-level: Considerable focus on the micro-level during the 1990s and 2000s Development and use of clinical guidelines to try to reduce clinical practice variations Change in payment mechanisms (eg from FFS to capitation to change financial incentives of GPs NOW: Task-shifting – greater use of nurses, pharmacists. But what else?? Little effort being made to directly influence resource use by doctors or demands by patients

Integrated Family Health Centres: The vision Co-location of a wide range of services provided by multi-disciplinary teams Minor surgery Walk-in clinic Nurse-led clinics for chronic care Full diagnostics Specialist assessments Allied health services Some social care

Integrated Family Health Centres: The practice Development patchy – and slow Lack of start-up capital Collaboration more important than co-location

Meso (organisational) level Concentration of specialised hospital services Shift of care from hospitals into the community Improved integration of services Productivity of hospital wards Micro-level: Considerable focus on the micro-level during the 1990s and 2000s Development and use of clinical guidelines to try to reduce clinical practice variations Change in payment mechanisms (eg from FFS to capitation to change financial incentives of GPs NOW: Task-shifting – greater use of nurses, pharmacists. But what else?? Little effort being made to directly influence resource use by doctors or demands by patients

Productivity of public hospitals Doctors and nurses Med and Surg outputs Productivity

“Releasing time to care” Time spent with patients increased by over 10%. Sometimes doubled. Cost savings: eg: reduced stock levels, laundry Fewer patient complaints, increased patient safety, improved staff morale Some wards, time spent with patients has doubled from around 28% to over 50%

Meso (organisational) level Concentration of specialised hospital services Shift of care from hospitals into the community Improved integration of services Productivity of hospital wards Long term care Micro-level: Considerable focus on the micro-level during the 1990s and 2000s Development and use of clinical guidelines to try to reduce clinical practice variations Change in payment mechanisms (eg from FFS to capitation to change financial incentives of GPs NOW: Task-shifting – greater use of nurses, pharmacists. But what else?? Little effort being made to directly influence resource use by doctors or demands by patients

Long-term care New Zealand Netherlands Pop >65 years 13.5% 15.2% 3.4% 3.9% 65+ in residential care 3.6% 6.7% 65+ receiving home care 11.6% 12.9% %GDP on long-term care 1.4% 3.5% Source: OECD

Long-term care “Aging in place” Standardised needs-assessment Assisted living arrangements?? Stricter income and asset testing?? Increase pre-funding?? Compulsory insurance Incentives for private saving Micro-level: Considerable focus on the micro-level during the 1990s and 2000s Development and use of clinical guidelines to try to reduce clinical practice variations Change in payment mechanisms (eg from FFS to capitation to change financial incentives of GPs NOW: Task-shifting – greater use of nurses, pharmacists. But what else?? Little effort being made to directly influence resource use by doctors or demands by patients

Micro-level (doctors and patients) Task-shifting Nurses, pharmacists, physician assistants Improve patient self-management Prevention CVD and diabetes risk assessment Immunisation Smoking Micro-level: Considerable focus on the micro-level during the 1990s and 2000s Development and use of clinical guidelines to try to reduce clinical practice variations Change in payment mechanisms (eg from FFS to capitation to change financial incentives of GPs NOW: Task-shifting – greater use of nurses, pharmacists. But what else?? Little effort being made to directly influence resource use by doctors or demands by patients

What is NOT being discussed? Increasing copayments Greater use of private insurance Increasing competition and choice Methods of reducing “unneccessary” care

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