2 July 2001 Media Statement

Key health contracts devolved to DHBs

Health Minister Annette King says today's transfer of some key health contracts to District Health Boards signals the beginning of a new era in collaboration and community ownership of public health services in New Zealand.

An Order-In-Council had formalised devolution from the Ministry of Health to 21 District Health Boards for funding and managing most contracts for personal health, Maori health, mental health and some Pacific health services, she said. From today organisations providing health services in these areas will negotiate with, be monitored by, and be accountable to DHBs rather than a central agency.

"Giving overall management of these key services to boards provides an effective way to address health and disability inequalities. This sets the scene for publicly funded health services to better reflect and be responsive to clearly identified local and community health needs."

Mrs King said today's devolution marked another development stage in the new public health system, following the merger of the Health Funding Authority and the Ministry of Health, the establishment of DHBs, and launch of the New Zealand Health and Disability strategies which set out the priorities for boards to address.

"We are now a step closer to empowering health professionals and communities to determine their own health needs and decide how best to meet them. This community focus is particularly important in enabling Maori to achieve their own health aspirations. These changes will ensure we can work with hapu, iwi, Maori communities and other organisations to improve Maori health."

Mrs King paid tribute to the work DHBs had done in preparing for this milestone. "More service agreements will be devolved to district health boards in October. And the next significant step in the development of a genuinely public and locally-driven health service will be the district health board elections in the same month.

"In total I believe the changes we are making will give New Zealanders a comprehensive, locally-driven health system," Mrs King said.

ENDS

Question and Answers on Devolution

What types of service agreements are transferring to DHBs on 1 July 2001? In all cases, service agreements that are within the Ministry's Service Agreement Management System with an expiry date of 30 June 2001 or before will not transfer on 1 July 2001. Accountability for their management will remain with the Ministry until October 1, 2001 at the latest. Otherwise, the following agreements transfer on July 1:

- Local (ie within a district) personal health service agreements for service with non-government organisations eg pharmacy contracts, contracts with local branches of national groups like the Asthma Society
- Local Mental Health service agreements for service with non-government organisations, except where the service agreements are with community residential providers who have payments processed by individual beneficiary. These providers have their payments processed through a different payment system, and the Ministry wishes to provide more time to fully test the system in the new environment prior to transferring them. An exmaple of a transferring contract would be that with an Independent Practice Association for primary mental health care.
- Local Maori health service agreements for service with non-government organisations, eg Maori child health services.

Which service agreements go where?

Local service agreements: Any service agreement that involves the delivery of services within one district has been allocated to that DHB.

Inter-district and national service agreements: Any service agreement that involves the delivery of services across districts has been allocated to a lead DHB. In the main, this has occurred in consultation with DHBs.

The Ministry of Health has conducted a capability assessment to ascertain if DHBs are ready to assume responsibilities for the management of these service agreements. The assessment was conducted with assistance of the Mental Health Commission, and its results tested with DHBs. The assessment was based on previously accepted guidelines on capability, DHB progress to this point, developing capability according to the current Crown Funding Agreement, and the progress within the Ministry toward ensuring that DHBs have the links to the central information systems that they need to meet their responsibilities. The Ministry assessed that progress was sufficient for DHBs to manage a range of inter-district and national service agreements from 1 July 2001. In the main, national service agreements will not transfer from that date.

Section 88 Notices: Transfer of obligations under section 88 notices (formerly section 51s) are also transferring on 1 July 2001, with the exception of Maternity notices (scheduled for January 1, 2002) and contact lens subsidies. There are currently negotiations in train with providers within the Maternity sector and the Ministry believes they require central management for the next seven months.

The contact lens subsidy has historically been funded from two sources: personal health and disability services. Given current Cabinet decisions on the longer devolution path for disability funding responsibility, the Ministry has decided to fund the contact lens subsidy centrally.

What if a service agreement is currently expiring on or before 30 June 2001?
The Ministry cannot transfer service agreements that expire before the date of transfer. As the Cabinet process for putting through an Order-in-Council starts around two months before, the Order-in-Council can only list those service agreements that are expiring after that date. This is so even where the Ministry and providers are currently in the process of renewing service agreements. There are two options for transferring these service agreements:

1. DHBs may work with the Ministry through their shared support agencies to renew and sign the service agreement themselves. This process means that there is no requirement to transfer under Order-in-Council.
2.Transfer them in a second Order-in-Council, to take effect on 1 October 2001, after they have been renewed.

What is happening to former HHS service agreements?
The HFA contracted with HHSs to provide a range of health and disability services. In 2001/02, the Ministry will work with DHBs to provide a similar set of services within the funds allocated by Government, but the arrangement will now be called a Crown Funding Agreement. This means that legally the former HHS service agreements will NOT be transferred under the Order-in-Council. The Ministry will initially monitor the Crown Funding Agreement as the HFA did, but more detailed accountability will exist within the DHBs as they develop new arrangements with their provider arm.

How will Providers be informed of the Changes?
The Ministry has written to providers detailing the following:
- Which DHB/Ministry their service agreement will be with, from what date
- Who will process their payments and monitor their delivery
- Who they raise problems with

For some providers, there will be an interim three-month transition period where they will have relationships with both the Ministry and the DHBs. But, in practice, many day-to-day issues will be managed by people they are familiar with, because many Ministry staff have either transferred to DHBs or accepted positions within them.

ENDS

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