By Tim Tenbensel –

Anyone taking a casual interest in health policy in New Zealand in 2017 would have a strong impression, based on recent media coverage, that our health system is currently severely stretched. Hardly a week has gone by without a new story about District Health Boards struggling to avoid deficits, health professionals claiming that their services are under-staffed, and patients having to wait for, or being denied needed treatment.

The past nine years of relative austerity in health funding is undoubtedly a major factor. Since 2010, the per capita figure spent on health services in New Zealand has remained static, after decades of continual growth (Cumming 2017).

Yet in order to understand the long term challenges our health system faces, it is important to lift our gaze beyond this current set of circumstances. In the 2017 election campaign, indications from all major parties were that the health sector is due a significant injection of new resources over the next four years.

The next few years, therefore, represent a critical juncture in New Zealand health policy – a relatively rare opportunity to look at the horizon, 20 – 40 years ahead, and ensure that a healthy proportion of new resources are allocated to services and activities that will address our most significant health system problems.

There are two types of long-term challenges – those that every high-income country faces, and those that are more specific to New Zealand.

elderly patient

Most countries faces rising health costs over the next forty years due to a combination of an aging population, an increasing burden of chronic health conditions such as diabetes and mental health, and increasing expectations due to technological improvement. Thirty years ago, most comparable countries spent 6-7% of GDP on health care, today the typical figure is around 10% and we can expect it to increase to 13-15% by 2050. It is already 17% in the US (Commonwealth Fund 2017).

Then there are the challenges that are specific to New Zealand. Here, comparisons with other high-income countries are instructive. In a recent report from the US-based health policy think tank, the Commonwealth Fund, New Zealand ranked 4th out of 11 countries – higher than most European countries and the US, and only behind the UK, Australia and the Netherlands (Commonwealth Fund 2017). This overall ranking is good news – it means we may be better placed to deal with some of the generic challenges facing health systems. But, digging deeper, we see that NZ has a distinct pattern of performance.

The Fund’s report uses performance criteria of care processes (i.e. quality of health services), administrative efficiency, access, equity and population health. New Zealand ranks 2nd for administrative efficiency. Despite claims that the NZ health system is overly bureaucratised, we actually run a pretty tight ship compared to other actually-existing health systems. We also rank 3rd for care processes, and while there are many well-known limitations and areas for improvement in quality of care, again we are ahead of curve internationally. However, for the other three criteria, we are nearer the bottom of the ladder (7th for access, 8th for equity, and 7th for health outcomes). This pattern of performance is consistent with relatively recent NZ research (Gauld et al 2011)


The reasons for this pattern are well-understood. As our health system is financed via taxation, we have a better chance of keeping a rein on health costs than countries that have insurance-based systems. As our hospital services are delivered by public sector organisations, we are able to adopt a more integrated approach to quality improvement. The root cause of our poor performance on access and equity is that in New Zealand, most people need to pay to see a primary care practitioner (GP). For many, those costs are often beyond their reach. In 2016, 28.8% of New Zealand adults reported at least one instance of unmet primary health care need in the previous year, the comparable figure is 39% for Māori (New Zealand Ministry of Health, 2017). As our GPs are gatekeepers to specialist services, barriers to access in primary care also constitute barriers to specialist services.

Residents of most other high-income countries do not face such barriers. The reason they exist in New Zealand is because at the time the 1938 Social Security Act was implemented, primary care doctors fought for and won the right to charge patients over and above the level of governmental reimbursement, and the legacy of this political settlement reverberates nearly eighty years later (Gauld 2009).

As such, unmet need in primary care leads to higher levels of avoidable hospitalisation for children and amenable mortality (deaths that are potentially avoidable if there was more timely diagnosis and healthcare). It falls disproportionately on those with chronic health conditions.

It is pleasing that both National and Labour made substantial election campaign commitments to reducing cost barriers (Labour Party; National Party). However, both parties’ policies amount to short-term fixes rather than addressing longer term problems, and risk making an already messy funding system even more complex.

New Zealand’s pattern of health system performance requires a broad range of policy solutions. One broad solution that is highly prominent in health policy literature internationally is improved integration of health services across the continuum of care.


Health care services have traditionally been built around isolated episodes of diagnosis and treatment which are not well integrated because different health care providers answer to different masters. Primary care is predominantly a private-for-profit cottage industry, often weakly linked to publicly-run hospital services and systems. Services delivered by medical professionals are subject to different systems and incentives to non-medical services delivered by community nurses, social workers, psychologists and allied health professionals.

The theory is that better integrated services can lead to more effective and efficient health systems because those that make highest use of the health system (e.g. through repeat visits to hospital emergency departments) do so because their care lacks integration (Wodchis et al 2016).

In New Zealand, the development of new models of service delivery, exemplified by the Whānau Ora programme, design services around the needs of people and their whanau/family, rather than around the prerogatives of service providers and professionals (Boulton et al 2013). In theory, this way of approaching health services has the potential to address many aspects of unmet health need, and there are many small-scale attempts to move in this direction being undertaken by New Zealand’s major health sector organisations – District Health Boards, Primary Health Organisations and Māori health providers.

What is largely lacking in New Zealand is robust information about which initiatives and new models of integrating health care show the most promise as solutions to our poor performance on access, equity and overall health outcomes. This requires a sustained investment in policy capacity and intelligence at both the national and local level, something that must be a key part of any health budget windfall over the next few years.


Dr Tim Tenbensel is the head of the Health Systems Group in the School of Population Health at the University of Auckland.

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