So much to review, so little to count on

Two reviews of public health funding should be completed in a few months, but whether we can expect major changes or tinkering is unclear.

Elspeth McLean has been following the story.

The Ministry of Health says it is still on track to ''update'' the controversial funding formula for district health boards in 2016 17, even though the long awaited formula review is running late.

More than 75% of public health spending is distributed through the population based funding formula (PBFF), this year totalling $11.363 billion.

The work of a Ministry of Health project team and the nine person technical advisory group appointed to oversee the PBFF review was supposed to be completed by June, but the ministry's acting director of district health board performance, John Hazeldine, said it was running about a month late. (The five yearly formula review was due in 2012 but delayed considerably because of the postponement of the 2011 census).

By the end of June, another report on funding is due: the health system funding review, begun earlier this year, led by former National Health Board chairman Dr Murray Horn.

He will report to Director general of Health Chai Chuah on what ''funding arrangements are appropriate and how funding is allocated within the health and disability system'', the ministry's website says.

The review will look at ''incentives for innovation, efficiency and better social services integration'' but will avoid any consideration of what is the ''right'' amount to spend on health.

It will not look at overall financing and institutional arrangements, such as the level of Vote Health or the balance between public and private funding.

The ministry is being tight lipped about what to expect from the PBFF review, but comment in ministry documents released last year suggested even updating census figures could cause large shifts in DHB funding. Mr Hazeldine said the review was working ''towards an update of the formula''.

Asked to clarify whether that indicated there would not be any major changes to the make up of the formula, he said ''all aspects of the formula will be reviewed and either updated or potentially changed depending on the outcome of the review''.

''Any changes, however significant, will be considered by the PBFF advisory group and their recommendations will be subject to agreement by Cabinet.

''As this is a work in progress, we are not currently able to comment upon the scope or scale of potential changes.''

While the technical advisory group, which began meeting last September, includes staff from some of the country's 20 DHBs (including Southern's planning and funding director, Sandra Boardman), boards have been directly consulted on only two issues _ extra money for providing services to rural areas and for the most complex (tertiary) hospitals, including Dunedin Hospital.

The ministry has refused to release the submissions made by boards on these matters before the review is completed. Mr Hazeldine, in an emailed response to questions, said a detailed report would be produced and made available at the conclusion of the review, and this information could be released then. A complaint has been lodged with the Office of the Ombudsman about this decision.

Southern concernIn recent years, there has been considerable concern in Otago and Southland about the impact of the existing formula on the Southern District Health Board and its ability to adequately fund services for its fragmented and ageing population. The ''adjuster'' in the formula allowing for the extra cost of serving rural communities has not been updated since 2004.

The advisory group's terms of reference said the review would look at the structure of the formula to ensure ''it continues to allocate funding according to relative health need, including shifting the system towards wellness, and explore opportunities for improving the allocation of funding between districts''.

But there has been debate about how well the existing formula allocates funding according to relative health need. In 2012, University of Otago researchers raised concerns about the transparency and fairness of the formula and found the money allocated per person varied by almost 25% across district health boards.

Academics Erin Penno and Prof Robin Gauld argued limited information about how the formula worked meant no DHB could be sure it was receiving the right amount of funding.

Prof Gauld has questioned the in house nature of the review, calling for an independent commission working transparently to provide ''the all important critical analysis and independent advice that is not possible with the present arrangement''.

Membership of the technical advisory group did include an independent academic, Toni Ashton, professor of health economics at Auckland University, but she resigned in January for personal reasons.

Mr Hazeldine said she had not been replaced ''given the current stage of the review''. (According to the group's terms of reference, it should have met five times before the end of January with a further five meetings scheduled.)

Prof Gauld said although he could understand Mr Hazeldine's reasoning, it was ''pretty unfortunate'' there would not be an external academic voice on the advisory group, as this could further undermine the legitimacy of the process.

There was ''a lot of noise'' about the formula. Nobody thought it was unfair in principle, but the mechanism raised concerns. His preference was still for a completely independent look at the formula in order to allay those concerns.

Dr Horn's review, expected to produce its draft report this month, will consider how the ministry can improve its internal review and prioritisation processes for Vote Health.

Funding arrangements for very low cost access, aged care, primary care, disability and mental health will come under the spotlight to see if they are flexible enough and whether they encourage the development of new sustainable models of care.

It will also consider whether the existing funding arrangements ''support the appropriate balance of decision making between the Minister of Health and the district health boards''.

The review is to provide ''recommendations on how health funding arrangements can best support Government policy and ensure a sustainable health sector''.

Health prioritiesThe review is one of two providing information for the updating of the 2000 New Zealand Health Strategy, which, when completed, is expected to provide a plan identifying the best way to achieve health priorities over the next three to five years.

The second review, of the health sector's capability and capacity, is being led by corporate leader Sue Suckling, supported by Medical Council chairman Andrew Connolly, strategy and management consultant specialist Associate Prof Jens Mueller and consumer advocate David Russell.

Its work will include looking at whether the contracting environment, capacity and relationship management between DHBs and non governmental organisations is best placed to meet health system and users' needs.

Another question for that review is whether the current quality of clinical and managerial governance and leadership is consistent, adding value and supporting quality service delivery.

The ministry says the updated health strategy will reflect the pressures on the system, including the growing ageing population and fiscal sustainability.

The strategy will be developed using targeted ''engagement and consultation with key stakeholders''.

The draft will be delivered to Health Minister Jonathan Coleman by the end of June. Consultation on it will follow.


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