The paper, prepared by John Marwick, at Sky Blue House Ltd, was prepared for the South Canterbury, Otago and Southland district health boards and follows a recent application by South Link Health to each of the boards to establish super-PHOs.
South Link Health says the current 10 PHO set-up is costing an estimated $1.3 million of unnecessary spending on administration, is not working and does not meet the requirements of the Government for greater clinical leadership.
It proposes three PHOs, possibly with a governance group covering all three areas.
It is a move which has drawn criticism from existing PHOs which say they are improving their delivery of healthcare and South Link Health, as an independent practitioners association supporting GPs, has a conflict of interest.
The PHOs were asked to comment on a draft of the report outlining "requirements and partnership goals" and a revised version has now been put before the boards for consideration.
Regional chief executive Brian Rousseau told the recent Otago board meeting management was considering options for PHOs across Otago and Southland to meet the requirements outlined in the document, and he expected recommendations would be made to the board next month.
The report contains 22 recommendations including one which says the boards should work with existing PHOs, communities and providers to promote and assist mergers of existing PHOs in order to find what arrangements "can cost-effectively deliver services and respond to Government initiatives while maintaining local responsiveness".
The report does not favour competition between PHOs for general practice providers, but also states PHOs and practices must be careful not to act anti-competitively.
Another recommendation in the report is that the boards should work closely with the PHOs to clarify expectations, monitoring their performance, holding them accountable and intervening if necessary if a PHO is not performing.
South Link Health said the report had serious flaws and appeared to be an assemblage of the "centrally driven control and command" thinking of the Labour Government, contained myths about the role of general practice and failed to provide a sense of vision about future clinical leadership.
It is asking that the boards accept its PHO proposal, called the Health Care Network.
Rural Otago, one of the geographically large PHOs, said a merger with another PHO would need to have clear benefits to the communities of Central and North Otago for reasons other than achieving savings in management fees.
PHO manager Carolyn Martin said if there were a forced merger, it would seek assurance that the unique rural needs of the communities were met and not compromised.
Mornington PHO, which is unusual in that it contains only one practice, said there was a risk of detriment to services when looking at restructuring PHOs.
In its response it said increased collaboration with other Otago PHOs had been more easily achieved and more effective since those organisations gained their independence from management by South Link Health.
Well Dunedin PHO, which contains the bulk of practices in Dunedin, agreed there should be discussion to establish a logical and sustainable PHO framework using the existing organisations as the basis.
Chief executive Sandy Baines said the organisation believed the establishment of PHOs with larger geographical areas would realise the required economies of scale and cost savings, but because it had recently undergone considerable change including the implementation of new technology, further change in a short time would undermine progress.
She said Well Dunedin would not like to see general practice disrupted by further dramatic changes.
Primary health organisations
• 10 in South Canterbury, Otago and Southland
• 81 in the whole of the country
• More than half of them serve populations of less than 40,000
• The rate of delivery of the primary health care strategy has been variable
• One reason for the variation may be the huge variety in their make-up
• Large PHOs could act more effectively as developers of new services and managers of financial risk
Source: May 2009 Treasury discussion document
