The Health Ministry has painted a picture of a sector under pressure in its briefing to new minister Tony Ryall.
Its briefing paper said two thirds of new funding went to maintaining existing services.
It outlined well canvassed problems in the sector - from staff recruitment and retention, to inequalities affecting groups like Maori, and variations between district health boards (DHBs) - and said things were going to get worse as the population increased and people lived longer.
Long-term conditions - such as diabetes, heart disease, stroke, alzheimer's and cancer - accounted for 70 percent of health system costs and were the leading causes of early death.
"Projections are that long-term conditions overall will increase, even with improved health management," the paper said.
Cancer registrations were predicted to increase by 30 percent in the decade to 2011 and type 2 diabetes cases would be up by 45 percent in the same period.
Mr Ryall said the paper confirmed the sector faced major challenges.
"What it reveals is that we have inherited a mess in health," he said.
DHBs were recording massive deficits and there needed to be a halt in the growth of bureaucracy, he said.
Other National policies to fix problems included bonding health professionals and having a closer look at waiting lists and vulnerable services.
