Continuity through change: The rhetoric and reality of health reform in New Zealand

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Abstract

New Zealand, like most other developed economies, has struggled to establish the best way of organising and delivering publicly financed health care services. Before the 1990s, hospitals and some related services were planned and provided by regionally based, locally elected health boards. This system was replaced in 1993 with a quasi-market structure in which separate organisations were responsible for the purchasing and provision of services. This in turn was replaced in 2001 by a system of locally elected boards that is remarkably similar to that which existed in the 1980s. The change to and subsequent abandonment of the quasi-market structure implies major changes to the way that health services are organised in New Zealand and suggests policy U-turns in (at least) three key areas: from cooperation to competition (and back); from integration of the roles of purchaser and provider to contractual arrangements (and back); and from local decision-making to centralised decision-making (and back). The aims of this paper are to examine the depth of system change in practice and to consider the extent to which the stated goals of reformers have disguised the degree of continuity between reform eras. We conclude that simplistic distinctions between structural approaches often fail to capture salient influences upon decision-making. New Zealand has not, in fact, been “to market and back” as the rhetoric would have us believe. Key aspects of the health system have endured throughout the reform period and these arguably have more importance for system functioning and performance than the high-level structural changes.

Introduction

New Zealand, like most other developed economies, has struggled to establish the best way of organising and delivering publicly financed health care services. While retaining its commitment to general taxation as the principal means for financing health care, there have been several major changes to the structure of the publicly financed health system. Each wave of reform has reflected the particular political ideology of the government in power at the time, in particular, views about the appropriate role of the state and the market in the health sector. Taken at face value, these reforms might be viewed as radical U-turns in the way health services were organised and delivered. The aim of this paper is to examine what elements of the health system were affected in practice by these structural changes, and to identify the extent to which the stated goals of reformers have disguised the degree of continuity between reform eras.

The paper begins with a brief overview of the New Zealand health system, and of the various waves of reform that have been introduced in recent years. We then examine the depth of change, and consider which important dimensions of the system have continued unchanged throughout the reform period. The third section attempts to tease out the reality from the rhetoric. Has New Zealand been “to market and back” as the rhetoric would have it, or have the changes been somewhat less dramatic? Finally, we reflect upon the legacies of the reform era and consider what further changes are currently being made to the public health system in New Zealand.

Section snippets

Overview of the New Zealand health system and recent reforms

The New Zealand health system is fundamentally a tax-based health service: 78% of total health expenditure is financed from public sources (Ministry of Health, 2004). A further 16% of expenditure comes from out-of-pocket payments and 6% from private health insurance. Most hospital services are delivered in state-owned hospitals, while primary health services are provided by self-employed private practitioners, usually in group practices. Many other community-based services are also delivered by

The depth of change

The above account implies fundamental and far-reaching changes to the way in which health services are organised in New Zealand. However, while the administrative structures, governance arrangements, legal frameworks and allocation of responsibilities have changed with each new round of reform, many of the underlying features of the system have remained untouched. Indeed, it seems likely that some patients using the public health system remain quite unaware of the changes that have occurred:

The rhetoric and the reality

The change to, and abandonment of, the quasi-market implies some ‘boomerang’ effects in policy in (at least) three key areas: from cooperation to competition (and back); from integration of the roles of purchaser and provider to contractual arrangements (and back); and from local decision-making to centralised decision-making (and back). However, a closer examination of the way that the system has worked in practice reveals that these swings have been less dramatic than might at first appear.

Discussion

This paper has argued that, while the New Zealand health system has gone through a series of structural changes, the depth and impact of these changes have often been more apparent than real. Moreover, the reforms have tended to disguise the degree of continuity that has spanned the reform eras.

Arguably, the New Zealand experiment with supply side competition was based on an overly simple set of assumptions about the gains in quality and efficiency that could be made by introducing a

Conclusion

New Zealand has not, in fact, been “to market and back” as the rhetoric would have us believe. As we have demonstrated, many of the elements of the structural changes — of cooperation and competition, of vertical integration and a purchase–provider separation, and of central and local control — have coexisted through periods of reform. Furthermore, many of the key influences and arrangements in the health sector were never the focus of reform: continuities have endured throughout the reform

Acknowledgements

We would like to thank the editor and two anonymous peer reviewers for their helpful and insightful comments on an earlier version of this paper.

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