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Latest PHO rollout most successful to date

12 July 2006

Latest PHO rollout most successful to date

The extension of affordable primary health care to the 45-64 age group was the most successful phase of the Primary Health Care Strategy rollout to date with nearly 100 per cent of general practices on board by 1 July, Health Minister Pete Hodgson announced today.

The quick success means that over 690,000 New Zealanders in the age group will now have significantly lower fees the next time they see their family doctor or practice nurse. For the vast majority, the reduction will be $27 – the full amount of the government subsidy.

"The Labour-led government has invested heavily in making affordable health care a reality for all New Zealand families," Pete Hodgson said.

"The rollout of affordable doctors visits and prescription medicines to the 45-64 age group was not an easy process as it was important for everyone involved to make sure we got it right.

"We concluded the negotiations in time, but the real test was always going to be how many practices would be able to get on board for 1 July. Practices needed to quickly demonstrate that they met the new requirements negotiated by district health boards and primary health organisations.

"To see 750 practices come on board so quickly is testament to their commitment to the patients they serve and to the Primary Health Care Strategy."

All but three general practices in New Zealand have now met the requirements to obtain funding for the 45-64 year old rollout. In previous years up to 20 per cent of practices were not eligible for funding by the 1 July start date.

With the full success of this year's rollout now clear, Pete Hodgson again called on the National Party to clarify their position of the future of the PHCS. National is currently on the record as opposing affordable health care for 25-64 year olds – a position that would save them over $500 million for their tax cut policy.

"Tony Ryall and the National Party had a lot to say about this year's rollout when they thought it might fail, but have said nothing since an agreement was reached three weeks ago. 700,000 45-64 year olds are now receiving cheaper doctors' visits and medicines – they have a right to know if National supports raising their fees."

Attached: Background information on the 2006 PHO rollout.

Contact: Jason Knauf, Press Secretary, (04) 471 9918 or (021) 71 9881, email:,
Results from the 45-64 age group roll-out

The $100 million new funding for 691,595 New Zealanders aged 45-64 has been made available to eligible general practices since 1 July.

The results have been immediate and significant. The cost of visiting a GP* for this age group has virtually halved and prescription costs have dropped to $3 per item. In participating practices, the average fee for this age group is now $26.48.

GPs still set their fees and a range of fees exists with 80 percent of these practices charging between $22 and $33. The national average fee varies across DHBs from $21.11 in the West Coast to $29.96 in Capital and Coast.

All but three of the 760 practices eligible for the new funding met the requirements and are now receiving the additional funds. Information from DHBs confirms that the median fee reduction for this age group is $27 per visit.

This is the fourth funding increases to PHOs which other age groups resulting in an average 50 percent fee reductions for participating GPs plus lower prescription charges. 3.15 million people are now funded for lower GP fees and $3 per prescription item.

The fifth and final rollout for 25-44 year olds is scheduled for July next year which will complete the rollout for reduced cost access for nearly 90% of all New Zealanders covered by Primary Health Organisations.

Primary Funding

Age Group Funding
2003 6 – 17 $13 million – few PHOs and this group was already heavily
2004 Over 65 $47 million – many already had Community Services Cards
2005 18 – 24 $17 million – this age group is small and consults less
2006 45 – 64 $100 million – $59 M to reduce GP fees and $41M to reduce
prescription charges.
2007 25 – 44 $66 million – this age group consults less and uses less
medicines than 45-64s

Primary Health Organisations
There are 81 registered PHOs involving 760 general practices throughout the country. Between them they cover 90 per cent of all New Zealanders.

What is particularly pleasing is that this rollout has been far more successful that last year’s.

In July 2005 the Government rolled out funding for the 18-24 age group – 80 per cent of PHOs met the requirements and reduced their fees – this year the figure is almost 100 percent (only three practices have not met requirements – and one of these has no patients in the target group).

Last year less than half of PHOs identified general practices by name – this year the DHBs have agreements with all PHOs to publish practice names and fees locally. Publication details are now being finalised although DHBs have provided statistics so we can see how successful the rollout has been.

Continued GP Support
The $100 million for this rollout should not be confused with other mechanisms we use to directly compensate GPs for cost increases.

GPs also receive a capitation fee for every person enrolled in their practice and this fee is indexed to cover increasing practice costs. In the last four years, the fee has risen automatically by more than 10.5 per cent.

The new funding process agreed for this rollout will also set an additional threshold to allow GPs to automatically raise their fees to that level compensate for other costs pressures.

This latest agreement reinforces the track record DHBs have of working with PHOs to provide better access to cheaper health care for patients while improving the profitability and viability of General Practices.

PHOs receive a monthly amount for every person enrolled in one of their general practices, regardless of whether the person sees a doctor or not – this is known as capitation funding. The rates per year are:

Age Group Sex Comm Services Card Interim Access
0-4 F N/A $373.23 $335.31
M N/A $348.22 $353.04

5-14 F N/A $84.25 $106.14
M N/A $79.85 $99.36

15-24 F N/A $97.94
N N/A $53.90

25-44 F Y $77.11 $86.06
N $7.77
M Y $45.84 55.63
N $6.28

45-64 F N/A $117.88
M N/A $88.04

65 F N/A $203.14
M N/A $175.18

Capitation Rates

The PHO capitation rates are based on the average number of times patients i are expected to consult a GP. This annual review is the fourth time the Government has increased PHO funding to maintain its value. The table below shows the annual adjustments:

Avge Subsidy per GP visit
Annual adjustment Under six Other ages
2002 $35.00 $25.00
2003 2.5% $35.80 $25.60
2004 1.5% $36.30 $25.90
2005 2.8% $37.30 $26.60
2006 3.3% $38.50 $27.40

GP Fees

Fee Ranges

PHOs and their practices receive government funding according to the people who enrol – regardless of how often they see a doctor. At present there are two funding formulae: 'Access' and 'Interim.'

Access PHOs have more people in groups with the poorest health status and they were the first PHOs to receive higher funding for all their enrollees.

The funding for Interim PHOs has gradually increased to bring funding levels in line with Access PHOs and the remaining differences will disappear with the fifth and final funding roll out in July 2007.

The tables below show the fee ranges in different age groups based on the latest available information.

Interim Practice Fees < 6 6-17 18-24 45-64 65+
count of practices reporting 760 760 760 760 760
average fee $4.63 $23.94 $26.81 $26.48 $26.98
median fee $0 $24 $26 $26 $27
maximum fee $45 $62 $60 $58 $63
minimum fee $0 $0 $0 $0 $0
10th percentile $0 $15 $20 $22 $21
25th percentile $0 $20 $24 $23 $24
50th percentile $0 $24 $26 $26 $27
75th percentile $9 $28 $30 $29 $30
90th percentile $13 $34 $35 $33 $35

Access Practices ( data is from January 2006).

Access Practice Fees < 6 6-17 18-24 45-64 65+
count of practices reporting 317 318 318 317 317
average fee $0.49 $9.13 $16.60 $16.75 $17.45
median fee $0 $10 $18 $18 $19
maximum fee $10 $25 $35 $35 $50
minimum fee $0 $0 $0 $0 $0
10th percentile 0 0 10 10 10
25th percentile 0 0 15 15 15
50th percentile 0 10 18 18 19
75th percentile 0 15 20 20 20
90th percentile 0 15 24 25 25

Under sixes
According to these data 56 percent of Interim and 90 percent of Access practices charge nothing for children under six (i.e. 65 percent of all practices are free for children under six). For the 382 practices that do charge, the median fee is $10 with 80 percent charging between $5 and $15.


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