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Navigating the pinch points

What will Budget 2023 reveal for the health sector?

Key announcements from Budget 2023

  • From the 1st of July 2023, the $5 prescription co-payment is being removed for all New Zealanders. This initiative follows on the heels of some pharmacy chains already having dispensed with these fees of their own accord.
  • New Zealand needs to raise its digital maturity since part of the workforce drain is driven by access to more modern clinical practices, more innovative treatments and better digital tools with better workflow in other countries, so funding towards a digital shift in regard to our backlog of infrastructure replacements across health would have been welcome.  

Pre-Budget insights from Deloitte’s Thorsten Engel

We know that our healthcare system is in trouble: there is less planned care, longer waiting times in our emergency departments, diminished access to GPs and fewer childhood immunisations than prior to COVID-19, despite budgets having risen significantly and despite additions to our workforce. This implies system performance challenges are broader than workforce shortages alone.

At the same time, we have rising inequities for vulnerable populations such as Māori and Pacific peoples, driven by access issues as well as service configuration issues (e.g. higher Ambulatory Sensitive Hospitalisation (ASH) rates1 and higher cancer mortality2).

But there is also some good news. COVID-19-inspired investments have created an unprecedented experience for the public. Who would have thought that you would be able to choose a location for your vaccination, select from a number of available locations and then book an appointment at your convenience for your flu shot over the internet? That kind of service was unheard of 3 - 4 years ago.

These tools and technologies helped improve Māori and Pacific vaccination rates – and in fact exceeded coverage when compared to the rest of the population. For the first time ever, we have seen a concerted push to reverse the continuing slide into larger inequities.

If the Minister of Health had a magic wand to work through the present challenges, which pinch-points could they seek to unclog in order to get our health system working again? How could government best leverage COVID-19 innovations and leverage public and private partnerships?

Managing the pinch-points

If we visualise our health system as a value-chain or pipeline, there are key components that must work together effectively to avoid getting clogged up. Management decisions made at these waypoints need to be harmonious and synchronised. A poor decision made at any one level, can have a detrimental impact on how the system works as a whole. Conversely, a holistic model of performance can optimise the end-to-end performance across the entire health system:

  1. Prevent and reduce harm: Our general population gets older, has accidents, catches diseases, or is exposed to environmental factors which causes morbidities. There are things we can do to reduce downstream demand for services.
  2. Choose effective treatment options: Morbidities can be treated in different ways – but we do not always have access to the latest modern treatments.
  3. Optimise models of care: Models of care that bring early intervention services to the patient and healthcare closer to the home, are preferable to models of care in expensive institutions that have to address a worsened condition.
  4. Configure resources and workforce: Based on the chosen model of care, we need to optimise our resource and workforce model and deployment. Inefficient processes, lack of digitisation and poor operating models can add a lot of friction to service delivery.
  5. Balance supply and demand: Based on our up-stream choices, we can model the expected demand for services and configure our supply.
  6. Commission fit-for-purpose facilities and services: Modern hospitals should be designed as facilities without walls, making extensive use of telemedicine, virtual care, and mobile outreach services in their approach to care.
  7. Regulate and fund commercial arrangements: Where the market fails, investment in market-making capabilities is needed to shift the needle. This can be done through funding and regulations.

Making the choices: balance required

Announcements about more funding and more staff have not yielded tangible results to date.

It’s clear that fixing our healthcare system will require more focus on removing blockages and removing inefficiencies throughout. With an end-to-end performance perspective and holistic model, we can triage and prioritise where to intervene.

A quick turnaround on policy announcements is needed, especially with an election looming.

Our top picks for short-fuse / solid-impact decisions that could make a tangible difference in relatively short order, include the following:

  • Deal with planned care by contracting private providers to help clear the backlog but do so with a multi-year funding commitment to make it viable and efficient. The private sector were allies through COVID-19 and would welcome consistent contracting and volumes rather than inefficient spot purchasing from our public health system. ACC makes good use of the private sector, so there is no reason why the public health system could not.
  • Put in place a national virtual care contract to bolster primary and community care and assist with diversion from our overflowing hospitals. A range of commercial operators and digital solutions are already available, so we do not have to re-invent the wheel.
  • Make it attractive for allied health and clinical workers to live and work in New Zealand. This is not just about immigration but also about workforce engagement and enabling Te Whatu Ora to create a great employee experience as the largest employer in the country. We experience burnout most fiercely when we do not work at the peak of our professional practice. What are we doing to give staff the time to learn, develop skills and support each other for a rewarding career and employment experience?

No doubt Budget 2023 will signal how the Government views the healthcare situation as a whole and it will be interesting to track how health will be balanced in and amongst other pressing issues facing Aotearoa households and businesses.

End notes

  1. In 2022, Pasifika (12,427) and Māori (7,448) children had higher ambulatory sensitive hospitalisation rates when compared with other ethnicities (5,762 per 100,000 population).
  2. Once diagnosed with cancer, Māori continue to experience poorer survival rates than non-Māori for nearly all the most common cancers with 12-156% higher mortality compared with non-Māori across various cancers (Gurney et al 2020a)

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