Introduction

The Government just announced the largest overhaul of the health system in 30 years. The proposals are radical, and go further than the suggestions of the Simpson review.

For the first time New Zealand will have a centralised health agency for the delivery of health services, tentatively known as ‘Health New Zealand (Health NZ)’. This new agency will replace the 20 District Health Boards (DHB) as the provider of health services in New Zealand and will absorb the operational functions of the Ministry of Health.

To work alongside Health New Zealand, the Government will create a new national Māori Health Authority to deliver healthcare to Māori communities. Finally, the Government will create a new Public Health Agency which will be located inside the Ministry of Health to put a greater focus on public health.

Key Points

The new changes will fundamentally change the management of public health services. In particular, you should note that:

• The DHBs and their elected boards are to be scrapped. In a nod to concerns about local delivery, Health NZ will have four regional divisions and local offices. Centralisation should – at least in theory – reduce duplication and simplify operations - but will inevitably come with growing pains.
• The role of the Ministry of Health will fundamentally change, with a monitoring, policy and performance focus. The comparisons with the allocation of roles between the Ministry of Transport and Waka Kotahi are inevitable.
• The creation of a Māori Health Authority is a shift in focus for the health sector when it comes to improving outcomes for Māori. There is a greater recognition of tino rangatiratanga and true partnership with Māori, at least in the words spoken so far.  Whether that translates to genuine change remains to be seen.  The pressure to adopt a by Māori for Māori approach, and significant investment, has already begun.
• In light of the COVID-19 pandemic, the importance of public health has been emphasised, and there is clearly a recognition of the challenges that our fragmented, devolved power structure posed in the face of a global crisis with the establishment of a Public Health Agency consolidating the 12 regional public health units. However, the location of the Public Health Agency within the Ministry of Health (and not within Health NZ) appears to be at odds with the policy/operational split reflected in the wider reforms.

Background

History

Public health services in New Zealand are administered by DHBs which receive funding for their respective regions from the Ministry of Health. Members of the DHBs consist of up to seven elected individuals and four appointments by the Ministry of Health.

The DHB system has a long history, but the current format has been in place since 2001. In some form or another, New Zealand has had a local provision model of healthcare throughout the past century:

• 1938-1983 – mixed model of centralised agencies and various local boards and authorities;
• 1983-1993 – 14 Area Health Boards;
• 1993-1997 – mixed model of four regional health agencies for procurement, and 23 for profit Crown Health Enterprises for delivery of health services; and
• 1997-2001 – one centralised procurement agency and 24 not for profit Crown entities known as the Hospital and Health Services.

The proposal for change

The current configuration has led to what is commonly referred to as ‘postcode healthcare’ with waiting times and availability of care variable depending on where you live. The Government is attempting to address this, the growing demand for health services and perceived inefficiencies and inequality across DHB regional boundaries. In particular, the consistently poor health outcomes for Maori are a very real and pressing issue.

Initially the Government commissioned a report into the Health and Disability systems of New Zealand to investigate these concerns – this report was released on 16 June 2020 (Simpson report). The Simpson report made many key recommendations, including:

• A new health authority, Health NZ, to take control of the health system.
• A reduction in the number of district health boards, from 20 to between 8 and 12, in the next five years.
• Ending elections for DHB members and making them all Government-appointed.
• A Māori health authority to sit alongside Health NZ and the Ministry of Health.

In June 2020 the Government signaled that they accepted the Simpson report’s recommendations at a high level and would work to overhaul the health system in accordance with the report’s recommendations. The reform package, just announced, goes further than Heather Simpson recommended.

Health NZ

Health NZ will do away with the DHBs. It will be a centalised national health agency which receives funding directly from the Government and is responsible for the procurement and provision of health services. It will plan and commission health services for the whole population. Health NZ will be organized into:

• four regional divisions; and
• a range of district offices known as Population Health and Wellbeing Networks, which will broadly operate in the current DHB localities.

The aim of Health NZ is to ensure equal outcomes in the provision of health services, so a consumer of health services will receive consistent quality of care wherever they go in the country. There will be a greater focus on primary care providers. This focus will be through local networks, which will aim to create links between the primary care providers to ensure that there is information sharing and technological symmetry for those who are providing primary healthcare. The shift in focus is to better ensure and that local area needs are being met. Specialist care will also become more streamlined so that regional community needs more widely achieved.

The centralisation will also focus on reducing complexity and waste on administrative duplication. As a result, there will be a reduction in the number of contract providers which currently service the various needs of the District Health Boards such as maintenance of equipment, building management, and other such non-health related services. The creation of Health NZ will require both new tenders to be created for these non-healthcare services and the implementation of new contracts for service between Health NZ and its providers.

Hauora Māori

There will be a new approach to Hauora Māori, the Māori Health Authority. The Māori Health Authority will work alongside Health NZ. This shows a significant shift in the Government’s treatment of Māori, as it is giving governance of health for Māori, back into the hands of Māori.

Māori Health Authority will directly fund the provision of kaupapa Māori services and other innovative health services targeted at Māori. It will also monitor health outcomes for Māori and work alongside the Ministry of Health, Health NZ and Iwi-Māori Partnership Boards to develop strategies to deliver better health outcomes for Māori.

This shift, which does not go as far as many Maori health advocates or the Maori Party would like, is still a move towards rangatiratanga and true partnership with Māori in the provision of one of the most crucial areas of Government service delivery. If the Māori Health Authority works as it appears to be have been designed to operate, this could become a proto-type of co-governance for the delivery of other social services.

Public Health Agency

In addition to the other changes, the Government announced a new Public Health Agency; it will sit within the Ministry of Health. This will centralise the existing 12 public health units into one national agency. The Public Health Agency will be responsible for public health:

• policy;
• strategy;
• monitoring; and
• intelligence.

This will ensure New Zealand can coordinate public health outcomes, such as pandemic/epidemic threats and coordinate other public health issues such as a reduction in smoking and drinking harm. 

Our thoughts

This is a once in a generation change. There are still many uncertainties about how the Government will implement these changes, and how these changes will function in practice. The proposed reform is bold. But it is also complex, and there is little room for error – particularly in an environment where the shadow of COVID-19 continues to be cast over the health sector.

There will also be significant political opposition, the National Party has already announced that if elected it would unwind the changes (but surely not all the way), including disestablishing the Maori Health Authority.

The impact of the changes will be widespread. Staff will be disrupted and some will inevitably lose their jobs. Businesses working with DHBs will have contractual relationships changed or lost. Provider arrangements will be altered. However, as is always the case in significant reforms, there will be opportunities. A new broom in the health sector offers the opportunity to look hard at aspects of the way health services are delivered and supported both by the public sector and the private sector. Whether that opportunity is taken remains to be seen.

Please don’t hesitate to get in touch with Linda Clark or Hayden Wilson if you have any further questions on how these changes will affect you.