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Through the looking glass to the future - Speech

National Health Spokesperson Dr Lynda Scott

Address to Private Hospital Association
Annual Conference, Auckland
3.30pm, 21 October 2003

Through the looking glass to the future

Healthcare systems around the world face challenges and New Zealand is no exception. One of the biggest challenges that all developed nations face is the ageing population.

Some countries have been slower to grapple with this than others. As I have travelled round the world looking at aged care and a country's ability to manage an ageing population, I am always struck by the fact that New Zealand has made significant gains in this area where other countries have not.

In the1990s the National Government made significant changes to the way aged care services were run and developed. To recap on some of those changes:

We combined the social funding and health funding to ensure that aged care was under the Health portfolio and Vote Health. The budget for aged care was also ring fenced. This prevented the fragmentation of the delivery of services and a focus on disability support. When I first became a Geriatrician, if you had more than $2300 in the bank you were not entitled to any home support or personal care. National changed this and instituted an ageing-in-place policy. As a Geriatrician I knew that most elderly people did want to remain in their own homes. The question is always about the level of safety and ensuring that when someone is no longer able to manage safely successfully in an independent environment then there are excellent aged care facilities available.

National introduced independent contracting for aged care services and rest homes. The individual patient had the right to choose where they wished to live. Public hospital geriatric facilities were closed. Income and asset testing ensured that those who could fund their own aged care, did, and when that was no longer possible, there was a subsidy available that could move with the patient according to their choice of accommodation.

At the same time Assessment, Treatment and Rehabilitation services were expanded to give elderly people the best chance of recovering from injury and illness. In the mid 1990s needs assessment service co-ordination services were established, with an attempt to have national consistency throughout New Zealand. On the1st October, Age Care was devolved to 21 DHBs just when a consistent national contract had been put in place. It is essential with the population growth we are experiencing, especially with the population growth of those aged over 80, the frail elderly, the ability to respond rapidly to the needs of this population is well co-ordinated, and well planned and delivered.

As you can see by the graph, by 2051 31% of New Zealand's population will be aged over 60 years. This does not necessarily mean that we have increased disability. As the population ages they are also fitter and healthier. There is an old saying that the most health expenditure is spent in the first 3 years of life and the last 3 years of life. However the ageing population does impact on geriatric services, primary health care and elective surgery. The demand for increased intervention in the way of orthopaedic surgery, ophthalmology and cardiac surgery is already being felt around the country.

Many of you may wonder why the media and politicians continually focus on the waiting lists. It is because this is where New Zealand's pressure point comes. We have poor access to first specialist assessment and long waits for surgery. Many people have been dumped from the waiting list due to the public hospital system not being able to deliver their surgery within 6 months, and this is having a marked impact on a GP's ability to manage this rejected population of patients. It has been revealed by Wellington Medical School Researcher Jan Fielder that there is an economic, social and personal cost to prolonged waiting lists and inability to access surgery.

You will hear National talk about economic growth. The reason for this is that to be able to afford modern health care, you have to have a wealthy economy. I recently visited Japan as part of the Speaker's Tour. Japan has come to the realisation that they have a markedly ageing population and with social change occurring, families are no longer able to care for aged relatives. Japan however is an extremely wealthy country - the second wealthiest in the world. I visited a hospital for the over 65s that did everything from Dementia care to Orthopaedic surgery. They had two patients per nurse and a very impressive hospital situation. In Japan health insurance is paid for via a social insurance model where businesses and the individual contribute.

You can see from the international comparison chart that New Zealand's spending on health care is now below the OECD average. It is interesting to look at Ireland, which was below New Zealand in 1990 but now, as a wealthy economy, is spending more per person on health care because they can.

The funding of health care and the role of private health insurance continues to be an issue for New Zealand. As you can see from the international comparison chart, the UK has remained static, Australia has increased it's percentage of population substantially with it's tax rebate, and all-of-life cover policies, the United States remains very high, and New Zealand has seen a fall in those that currently have private health insurance.

It is my belief that it is essential that New Zealand has a mix of public and private health provision. It is unfortunate that the Labour Government is so firmly focused on public provision only. Their setting up of 21 District Health Boards, with the DHB provider arm hospitals being so firmly attached, has seen the demise of the funder/provider split in all but name. Many Boards are firmly focused on getting more surgery in-house e.g. Capital & Coast, and are now even questioning the role of the private laboratory service.

I recently visited the UK having another look at the NHS system, Primary Care Trusts and the rationale behind the Star hospital system. I previously worked in Britain in the early 1990s and I do not believe the UK health care model is a model that many in New Zealand would wish to follow. I must say that I was very impressed previously with the move to GP fund holding, but this has been scrapped by the Blair Labour Government.

National and Labour have very different philosophies on health and one of the main reasons that I am standing before you today is that in the 990s I really appreciated some of the changes that National was driving in the health field.

In Marlborough I was Vice Chair of the Marlborough Health Trust and spent two years looking at a joint venture with Southern Cross to run health services in Marlborough. Marlborough is innovative and at Wairoa Hospital we have a private wing in the public hospital called the Churchill Trust. When I went to set up AT & R services in Marlborough no one could tell me where the money went. How can you run a health system when you don't even know what you are spending and what the outcomes are?

Big strides were made in this area during the 1990s. It is extremely unfortunate that Labour remained stuck with a 1993 view on National's health reforms. The funder/provider split was not only happening in New Zealand, it occurred over many parts of the world and was driven by the work of Alain Enthoven. By 1999 the Health Funding Authority had moved to national contracts and those contracts were becoming longer term.

New Zealand is a small country of only 4 million people geographically spread. It is essential that we have national consistency in contracting and less bureaucracy. Labour has introduced 21 District Health Boards, which is far too many. The funder/provider split has disappeared. There is no incentive at all to now drive innovation and efficiency. Boards protect their provider arms from any competition and the Ministry has expanded to over 1000 people.

Labour has focused on Primary Health Organisations, a union health clinic model, which funds primary care on location and race. National fundamentally disagrees with this model and believes funding should be on individual patient need targeted on financial and health grounds. Bureaucracy must be reduced and more credit given to the doctors and nurses who drive the front line of health care.

I have always been a great believer in clinical management as it is medicine that drives the cost of the health care system. Doctors and nurses should not be disenfranchised from making the decisions that affect the health of our nation. They are our solution when they choose to be. I understand the issues many private hospitals face with increasing compliance costs, reduced funding, wage pressures, New Zealand's small specialists doctor base, and redevelopment cost.

This speech is entitled "Through the Looking Glass to the Future". With a Labour Government we will continue to get a strong and never ending focus on only one sector of health care provision in this country, i.e. public sector provision. They will not at any time set up a system that will drive innovation and excellence. They settle for mediocrity. We are once again seeing 21 different models of health care delivery; in a small country this is unacceptable.

A National Government will increase public/private partnerships. There is room for much greater public/private collaboration. We will re-introduce choice and competition in ACC. ACC's will in purchasing of elective surgery is also being explored. This will help reduce waiting lists and stop elective patients being cancelled due to acute patients. We will aim to improve the uptake of private health insurance and the debate is still continuing about the most effective way to do this.

We will involve GPs to drive better choices for their patients and improve access to public first patient specialist assessment and outpatient clinic. This can be achieved by GP fund holding. We fully recognise the need for excellence in aged care and understand the need for effective home care, but only to the point where people are remaining safe in their own home. We recognise the place of retirement villages as an excellent lifestyle choice for many New Zealanders and that often a time comes when rest-home, dementia and hospital care are needed for patients. We believe in individual patient choice, and in funding individuals on the basis of their income and need.

Thank you for this opportunity to speak to you today. I am probably the only politician who has ever wanted to be Minister of Health and while I recognise this is an extremely hard portfolio, I will do my utmost to ensure that I work to improve health care services for all New Zealanders. I also wish to thank you for the role all of you play in delivering health care services.


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