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Interim Evaluation of District Health Boards

Country: 
New Zealand
Partner Institute: 
The University of Auckland
Survey no: 
(3)2004
Author(s): 
Toni Ashton, Jackie Cumming
Health Policy Issues: 
System Organisation/ Integration
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes yes no
Featured in half-yearly report: Health Policy Developments Issue 3

Abstract

New Zealand?s publicly financed health system was restructured and 21 locally-elected District Health Boards were established. Funded on a population basis, DHBs are responsible for providing or purchasing health services for people living in their district. In November 2003, a university-based research team reported on early findings from a formative evaluation of the development of DHBs. The evaluation focused on governance, strategic decision-making, accountability and purchasing.

Purpose of health policy or idea

In 2001, the New Zealand public health system was restructured and 21 District Health Boards (DHBs) were established. Members of their governing boards are locally-elected but the Minister of Health may appoint up to 4 additional members to improve the mix of skills or ethnic representation on the board.

Funded on a population basis, the DHBs are responsible for assessing the health needs of their populations, and for providing or purchasing health services according to these assessed needs. Although decision-making appears to have been decentralised, the decisions and activities of DHBs must be in line with the vision of the central government as set out in the New Zealand Health Strategy, plus the annual and strategic plans of DHBs must be agreed with the Minister of Health.

In November 2003, a university-based research team reported on some early findings from a formative evaluation of the development of DHBs. The evaluation focused primarily on governance, strategic decision-making, accountability and purchasing.

Objectives of the restructuringThe main objectives of the restructuring were:

  • To encourage a population-based focus on the development and provision of health services.
  • To improve responsiveness to local needs and preferences.
  • To encourage greater cooperation and collaboration among providers.
  • To encourage community involvement in decision-making.

Incentives

The District Health Boards are required to provide (or purchase) their services within a fixed annual budget. This encourages them to examine their priorities with respect to service provision, and where possible, to keep expenditure within their capped budgets.

Elected board members have an incentive to represent the preferences of their constituencies if they wish to be re-elected. However under the legislation their accountability is in the first instance to the Minister of Health (who provides their funding) rather than to their constituents (who use the services).

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Characteristics of this policy

Degree of Innovation traditional rather traditional innovative
Degree of Controversy consensual rather consensual highly controversial
Structural or Systemic Impact marginal fundamental fundamental
Public Visibility very low neutral very high
Transferability strongly system-dependent neutral system-neutral

This policy was driven largely by political ideology - especially a belief that the community should have the opportunity to participate in health sector decision-making - rather than by any clear evidence that this structure is likely to be either more equitable or more efficient that the previous arrangements. The structure depends on guidance and control rather than upon any in-built incentives.

A key difference between this and previous reforms has been a willingness on the part of the government to undertake some evaluation of the reform process. While this is unlikely to lead to any major redirection or reorganisation of the system overall, it may result in some fine-tuning of current arrangements.

Political and economic background

The District Health Board structure was introduced soon after the election of a Labour-led coalition government in 1999. The restructuring was stimulated by the Labour party's opposition to the previous market-oriented system in which the roles of purchaser and provider were split, and health services were purchased via contracts. The stated concerns of the Labour party (and the reasons for the restructuring) were that the existing arrangements:

  • Lacked leadership, vision, public confidence and community input
  • Promoted competition rather than cooperation
  • Focussed on treatment rather than on health
  • Featured public organisations that were accountable neither to the community nor to the government.

Change of government

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes yes no

Origins of health policy idea

The DHB structure in many ways mirrors the organisational arrangements that were in place in New Zealand prior to 1993 and which were supported by the Labour Government at that time. Common features between the pre-1993 and post 2000 systems are:

  • Governance by locally elected boards
  • Districts funded on a weighted population basis
  • Public hospitals and other community-based services owned by local boards
  • Local decisions made within the framework of a national health plan that specifies key objectives and priorities.

Approach of idea

The approach of the idea is described as:
renewed:

Stakeholder positions

Since the early 1990s the publicly financed health care system in New Zealand has gone through a series of major changes. These changes have caused major disruptions for many people working within the system. Yet another round of restructuring was therefore not welcomed by many health professionals and others within the sector. However the focus of this opposition was primarily against further major changes of any kind, rather than against the specific structure.

Since the restructuring, political parties in opposition have continued to challenge some of the details of the new structure. There does however now appear to be a general recognition that, in the interests of maintaining stability, no further major changes should be made. The focus now is therefore on fine-tuning some aspects of the system and building the capacity and capability within the DHBs.

Influences in policy making and legislation

The new structure was enacted under the New Zealand Public Health and Disability Act 2000. This legislation sets out the roles and responsibilities of the Minister, the District Health Boards and other related government health agencies.

Monitoring and evaluation

A research project is evaluating various dimensions of the new structure in the first 3 years (2001 - 2004). An interim report has been published, and feedback is being provided to the government, the District Health Boards, and other key players within the system. The objectives are to identify strengths and weaknesses or problems with the new structure as early as possible and, if appropriate, to make any changes that are deemed desirable by the government.

Key findings of the interim report of the evaluation team included:

  • There is broad general support for the new structure. However many believe
    (a) there are too many DHBs, leading to high transaction costs and duplication of effort, and
    (b) the Ministry of Health should downsize and concentrate on national strategy.
  • Elections produced an imbalance in ethnic or skill mix. Therefore the minister needed to appoint additional members to most DHBs;
  • There is concern that governance of boards may be unstable if there is high turnover of elected members at the 3 yearly elections ;
  • Performance monitoring by the Ministry is seen by DHBs to be intrusive and costly;
  • There is a perception of reluctance on the part of the Ministry to devolve funding and decision-making to the districts, and hence a lack of clarity about the locus of decision-making, and DHBs suggest that theMinistry sometimes interferes inappropriately with local preferences;
  • DHBs acknowledge the need to stay within budget but they argue that cost drivers that are beyond their control need attention at the national level;
  • Devolution of contracts to the DHBs was seen by DHBs to be problematic;
  • Non-government providers have concerns over accountability mechanisms,  the problems and costs of having to work with multiple DHBs, and the potential for DHBs to favour in-house provision of services over contracting with non-government providers.

The restructuring has been seen by some to fragment the critical mass of expertise that had been formed under the previous arrangements, leaving some DHBs with a shortage of capacity to undertake some tasks.

Expected outcome

Impact of this policy

Quality of Health Care Services marginal rather marginal fundamental
Level of Equity system less equitable four system more equitable
Cost Efficiency very low neutral very high

References

Sources of Information

An overview of the DHB structure is described in:
Devlin, N., Maynard, A., & Mays, N. (2001). New Zealand's new health sector reforms: back to the future? British Medical Journal 322, 1171-1174.
The interim report of the research team is at: www.sog.vuw.ac.nz/vuw/fca/sog/files/Interim%20Report%20on%20Health%20Reforms%202001.pdf

Author/s and/or contributors to this survey

Toni Ashton, Jackie Cumming

Suggested citation for this online article

Toni Ashton, Jackie Cumming. "Interim Evaluation of District Health Boards". Health Policy Monitor, 04/04. Available at http://www.hpm.org/survey/nz/a3/1