The interim report of the Health and Disability Review, released yesterday,  has been careful not to be seen to be endorsing a radical restructuring of the country’s DHBs at the same time as it has been highly critical of the way they currently operate.

Earlier in the Government’s term Ministers were privately suggesting that DHBs needed some rationalisation and that some specialist services could be concentrated in one location.

The previous Government had begun a programme of defacto rationalisation by appointing chairs to run multiple health boards in Auckland, Whanganui, Palmerston North, Wellington and Nelson and the West Coast.

The Wellington and Hutt DHBs are now appointing a joint CEO.

But the report, chaired by long-time Helen Clark advisor, Heather Simpson, has stopped short of advocating any further rationalisation despite describing decision making across DHBs as “unduly messy.”.

At the heart of this lies a lack of coordination and collaboration between DHBs and (therefore) hospitals.

“In 2009, the Ministerial Review Group found that the incentives for regional collaboration were not strong and parochial interests could prevent collective regional decision making from occurring,” it says.

“At that time, Treasury commented on “fragmented decision- making” in the sector and noted that “collaborative mechanisms and accountabilities are weak, and do not lead to rational and coherent service and capacity planning or efficient use of resources”.

The report says that in 2015, the Capability and Capacity Review commented that that “DHBs [are] often operating in regional and financial isolation”, suggesting that a new system operating model needed to “reject the approach that regional DHB silos are acceptable” and move towards a “cooperative and collaborative national approach of delivery of outcomes”.

But despite this, the report warns that restructuring is disruptive.


“People observed that an initial response to pressures on the system seems to be a jump to further structural change or to set up another institution,” the report says. 

“However, this response may not always address the root cause of the problems and may create further silos and confusion around accountabilities.”

And on it went, listing problems with the system.

Overall, the review formed the impression that the structure and organisation of the hospital sector was confused. 

“From our discussions with stakeholders and analysis of the system, we have identified that there is still no coherent decision-making framework to guide the sector,” it says.

“There are no transparent, consistent principles to guide what decisions should be taken where within the system.

“It appears that existing collaborative efforts are mainly dependent on goodwill and personal relationships.”

 In 2010, legislation was changed to lay the foundation for increased levels of regional collaboration so that “In the system today, we see some regional collaboration across DHBs through the development of regional services and plans and some commitment to the shared support agencies.”

“However, while the legislation provides a clear indication that coordination is important, the overall accountability framework does not hold DHBs to account collectively for regional performance,” the report says.

 “Currently, there are no standards or clear expectations against which to assess either a region’s collective planning efforts or the contributions made by individual DHBs.

“Arrangements are still largely dependent on relationships and goodwill.”

As well as structure, the review team also looked at how the health system was funded and compared various OECD models ranging from insurance-driven models through to full state-funded tightly regulated systems like New Zealand.

They found little difference in life expectancy between the models, but they did examine a social insurance scheme (like Australia’s Medicare) to see whether it might work here.

They found that it would be unlikely that shifting to a social insurance scheme would improve equity.

However, the proposal may not be completely off the agenda.

“As we progress our Phase Two work, we will explore what can be learnt from what the accident compensation scheme does well (such as case management), how the scheme and the health and disability system can better collaborate to improve services, and how the inequities created between individuals with similar needs arising from different causes can be better addressed.” 

The report says that adjusting for population growth and inflation, government health expenditure had a sustained period of growth from the mid-1990s to around 2010. However, since then, real per capita spending has been flat.

“Periods of little growth in funding clearly add pressure to the system and may have contributed to issues such as staff burnout and underinvestment in capital maintenance,” it says.

“However, the Panel is not convinced that funding pressures alone are the main reason for the current inequity of health outcomes.”

The report says the review panel’s initial focus was on how the system could operate differently to make better use of whatever financial resources were available to it.

“The Panel also recognises that previous funding levels have not been the sole cause of the system continually running financial deficits and believes accountability mechanisms need to change to hold the system more accountable for staying within future funding paths.”

The report summarises its findings on DHBs and hospitals: “The Panel is clear that progress for those individuals and communities who are currently missing out in the system, hinges crucially on two things happening.

“First, services need to be funded and provided in a way that enables them to be designed around the wellbeing of the individual and their whānau, rather than primarily the interests of providers.

“Second, services need to be available to all on a fair basis, so that where you live, your degree of disability or your ethnicity is not a determining factor in the quality of care you receive. “

The second phase of the review will now get underway and is due to report by March next year.

“We have identified the likely reform themes and directions, but significantly more discussion and evaluation is needed before we will be in a position to bring our thinking to recommendation stage,” said  Simpson yesterday.

The reaction so far has been muted.

National’s health spokesperson, Michael Woodhouse said the report’s comments on system structure “are muddled, and if there’s going to be reform, we need to know how that will look.

“It says that the current structure is too confusing, but that restructuring would be ‘disruptive’. 

“Either structural reform is on this Government’s agenda, or it isn’t.” 

Woodhouse has asked the key question — so far, the answer would appear to be that it is not.