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Health system restructuring: government response

New Zealand
Partner Institute: 
The University of Auckland
Survey no: 
(15) 2010
Kim Letford, Tim Tenbensel
Health Policy Issues: 
New Technology, System Organisation/ Integration
Reform formerly reported in: 
Taskforce report on health system restructuring
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no


In October 2009, the new National Party-led government responded to the recommendations of a Ministerial Review Group regarding the structure of the health system. Three notable aspects of the government's response are the creation of a new National Health Board (NHB) to be located within the Ministry of Health, the creation of a Shared Services Establishment Board, and a refocusing of the role of the National Health Committee.

Recent developments

A government-appointed taskforce called the Ministerial Review Group (MRG) reported in August 2009, making over 170 recommendations regarding the structure of the health system and the allocation of roles and responsibilities (see Survey No. 14, 2009).  

The government considered the report and, in its response in October 2009, made a range of decisions which aim to 'reduce duplication around planning, capital and IT, and consolidate the 21 District Health Boards' (DHB) back office administration functions'. The reform likely to have the most impact is the formation of a new National Health Board, as recommended by the Ministerial Review Group. Other significant changes include creating a Shared Services Establishment Board to consolidate DHB administrative functions and changing the focus of the National Health Committee to concentrate on prioritising new health technologies.

1) Establishment of a National Health Board within the Ministry of Health

The National Health Board (NHB) will have significant responsibility for funding and monitoring the publicly funded health system. At a national, regional and local level, the Board would co-ordinate the planning and funding of services. The NHB is to be a branded business unit which sits inside the Ministry of Health, with a ministerial advisory board to report on its performance. Members of the Board are appointed by the Minister of Health. This is a significant departure from the MRG recommendations which were for a 'stand-alone' agency, independent from the Ministry. This option has been chosen because it will keep legislative change and sector disruption to a minimum (thus speeding up the process of establishment). It also had the advantage of countering the most vocal critics who questioned the democratic accountability of a stand-alone National Health Board.

The Board will be responsible for specialist national services such as paediatric oncology and will consolidate planning and funding of IT, Workforce and Capital through three further expert boards. At present, most of this work is done by the Ministry of Health so the formation of the NHB would result in a major restructure of the Ministry with a large proportion of Ministry of Health staff transferring to the NHB, with a possible devolution of some further services to DHBs in the future. The Ministry of Health would then be left to concentrate on the 'core functions of policy, regulation and monitoring'.

2) The Shared Services Establishment Board

The overall objective of the Shared Services Establishment Board (SSEB) is to reduce the cost of DHB administrative support services. 'Backroom' functions such as payroll and purchasing, HR and transactional information systems are presently conducted independently at each of the country's 21 DHBs. The Board is responsible for the consolidation of these tasks so they are performed at a national level, thereby reducing duplication and waste at the DHBs. The government's view is that using a combination of shared services, business process outsourcing and centres of expertise will optimise administration services. The Government believes NZ$700 million will be saved over a five year period as a result of this initiative, with the reduction of an estimated 75 to 300 staff.

 3) Reshaping the role of the National Health Committee

The National Health Committee (NHC) currently advises the Ministry on priorities of health and disability services and other matters relating to public health. The 'reorienting' of the NHC may possibly involve its strengthening so it has the expertise to make decisions on the introduction and prioritisation of new treatments or technology. This attempt to tie resource allocation decisions to health technology assessment is partly motivated by perceived shortcomings in the existing voluntary, collaborative approach under the Service Planning and New Health Intervention Assessment process that was initiated in 2006. However, as yet there is no nationwide systematic process in New Zealand to make prioritisation decisions regarding new treatments.

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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 rather marginal fundamental
Public Visibility very low neutral very high
Transferability strongly system-dependent system-dependent system-neutral
current current   previous previous

Since the government responded to the MRG report, the policy changes in this area have become less controversial and more consensual. Because the NHB is located within the Ministry of Health, the structural/systemic impact is now rated as rather marginal instead of neutral. Public visibility is lower, partly because of the reduced level of conflict regarding the Minister of Health's decisions.

Purpose and process analysis

Current Process Stages

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

Initiators of idea/main actors

  • Government
  • Providers

Stakeholder positions

The positions of most groups towards the changes to the structure of the health system are similar to the positions reported in the previous survey ( 14/2009). The notable exception is the position of the Association of Salaried Medical Specialists, which was originally concerned that the creation of a stand-alone National Health Board would compromise the democratic accountability of the health system. Their stance is now more neutral since the decision to incorporate the NHB within the Ministry of Health.

Actors and positions

Description of actors and their positions
Minister of Healthvery supportivevery supportive strongly opposed
New Zealand Medical Associationvery supportivesupportive strongly opposed
Association of Salaried Medical Specialistsvery supportiveneutral strongly opposed
Public Sector Associationvery supportiveopposed strongly opposed
current current   previous previous

Influences in policy making and legislation

Some of the changes envisioned will require amendments to the New Zealand Public Health and Disability Act (2000) but so far, no legislation has been drafted.

Legislative outcome


Actors and influence

Description of actors and their influence

Minister of Healthvery strongvery strong none
New Zealand Medical Associationvery strongneutral none
Association of Salaried Medical Specialistsvery strongneutral none
Public Sector Associationvery strongweak none
current current   previous previous
Minister of HealthNew Zealand Medical AssociationAssociation of Salaried Medical SpecialistsPublic Sector Association

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

Members of the NHB have been appointed, as has the National Director, and the NHB has begun meeting. The National Health IT Board has been formed and is to sit under the NHB. The board is a slightly changed version of the Health Information Advisory Committee (HISAC). The new IT Board will develop a national IT strategy to allow all stakeholders to know their respective roles. 

The members of the SSEB have been appointed. In a recent cabinet paper on expanding the role of PHARMAC (which is responsible for managing government-subsidised pharmaceuticals) to include procurement of medical devices, the government gave the SSEB the responsibility for identifying medical devices whose collective procurement could save money.

There have been no updates on the reorienting of the NHC since the announcement by the minister in October 2009.

Monitoring and evaluation

There will be a review of the structural changes after three years (i.e. late 2012).

Expected outcome

The MRG process (the release of the report, and health sector feedback) revealed broad consensus on the need to consolidate some health system functions such as planning of (some) specialist services, planning capital expenditure, procurement of equipment and rationalising 'back office' functions such as payroll.

The government hopes to make of at least NZ $700 million  in the next five years. This may be overly optimistic. However  international experience suggests that, if the SSEB can operate effectively, large savings could be made in back room services.

While the expansion of the NHC's role has been welcomed, it remains to be seen whether it will gain much traction in moving to explicit prioritisation processes for medical technologies. The challenges in this area are formidable.

Finally, the creation of the National Health Board has the potential to shape the ways in which many publicly funded health services in New Zealand are planned and delivered. Given that the District Health Boards generally welcome some centralisation of their roles, we would expect service reconfiguration in many areas to be reasonably smooth. However, the devil will be in the detail, and while there is broad sector agreement in principle for the new model, once the NHB makes specific recommendations we will begin to see how firm or fragile this broad consensus is. Given the past history of attempts at service reconfiguartion in New Zealand, we can also reasonably expect pockets of public resistance as some hospitals are likely to have some of their functions downgraded.

Impact of this policy

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

The government believes that this suite of changes will result in a more efficient and better quality health system. Our ratings are more conservative, not because the government's analysis is overly-optimistic: advice to government on the benefits of the reforms is quite measured. Rather, we have predicted minimal impact at this stage until it is clear what hurdles will arise during the implementation process, and we begin to see whether the degree to which these hurdles are successfully negotiated by the restructured health sector.

The rating of impact on cost-efficiency has changed, however, mainly due to the prospect for savings generated by the Shared Services Establishment Board.


Sources of Information

Reform formerly reported in

Taskforce report on health system restructuring
Process Stages: Policy Paper, Idea

Author/s and/or contributors to this survey

Kim Letford, Tim Tenbensel

Suggested citation for this online article

Kim Letford, Tim Tenbensel. "Health system restructuring: government response". Health Policy Monitor, April 2010. Available at