Reshaping health's ration

The Lange Labour government tried to solve the complex problems of funding and demand that had by the mid-1980s developed in public health by creating 14 area health boards to replace the 36 hospital boards.

That did not last long, for in 1992, the Bolger National government replaced area health boards with four regional health authorities whose boards were appointed rather than elected.

They were funding bodies which contracted with Crown Health Enterprises (public hospitals) or private providers to supply health services to communities.

Nine years later, the Clark Labour government replaced these with 21 district health boards whose membership was partly elected and partly appointed.

Funding was centralised with boards required to meet strict targets.

Tony Ryall, now the National Government's Minister of Health, was a vigorous critic of Labour's policies, arguing more services had to come from existing spending by reducing waste and bureaucracy.

His party also promised voters last year not to carry out another round of restructuring of the public health system.

His first major proposal to meet this ambition looks very much like restructuring, though on a limited scale.

In several respects, it appears a sensible plan, at least in theory, although two new bureaucracies will be created.

The first will be a National Health Board within the Ministry of Health to supervise existing district health boards, assume planning and funding of some national services and oversee planning for new hospital facilities, information technology and workforce development.

The second will be perhaps more immediately significant; a Shared Services Establishment Board which will have the job of consolidating many of the administrative functions of district health boards including supply purchasing and payroll management.

Mr Ryall has estimated some 500 administrative jobs will be lost and savings of $700 million over five years will be realised from the anticipated efficiencies - estimates that must be regarded with a great deal of scepticism given the record of efforts to make public health services businesslike.

From the viewpoint of patients and potential patients, there will also be considerable doubt about Mr Ryall's commitment to apply the savings to so-called "frontline services".

The Clark administration doubled health spending and was widely criticised for failing to deliver a similar level of services.

According to some reports, district health boards now employ about 11,000 in administrative roles and the Ministry of Health has 1475 staff.

Mr Ryall's restructuring supposedly will see about 320 district health board jobs and about 180 at the ministry expunged within three years.

The two new bureaucracies will each have 400-450 staff.

Nevertheless, the medical professions appear to be supportive of the changes although they have reservations about whether the presumed savings will in fact eventuate and be applied to services.

What has not been satisfactorily explained is why two new bureaucracies are needed now to ensure greater administrative gains: why has the Ministry of Health not previously centralised such routine administrative matters as purchasing and payroll?'

There are virtually daily reminders in the media about the under-resourcing of health services in our public hospitals and no-one should envy those whose task it is to cut the rations even further.

Measures such as encouraging neighbouring district health boards to merge or to work together to improve services and to contract to private providers certain functions will relieve some of the demand pressure.

But cost-effective health care is the logical outcome of a situation where a finite supply of funding is in collision with infinite demand and when no political will exists to change the traditional "rule of rescue".

Medical science does not produce the enormous funding required to apply its advances or pay for the skilled services needed within the public health system to treat patients in need, whatever the agent of that need.

The trend in the application of health funds suggests that, inevitably, services or treatments judged too expensive, even if they prolong life, must be denied because the money can be better spent elsewhere.

Vote: Health at $12.6 billion is by far the largest single core Crown expense and it has considerably outpaced the growth in the economy.

The quandary about the allocation of progressively more limited funds for diminishing services despite greater demand will not be solved by rearranging the deck-chairs in administration.

Sooner rather than later the community will need to face the unpalatable alternatives, such as a specific health tax or insurance scheme pegged to publicly fund treatment, together with a graduated tax credit to assist private health insurance premium costs.

 

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