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Hodgson: Speech on Primary Health

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Hon Pete Hodgson
Minister of Health

21 June 2006 Speech

Primary Health – Low Fees are Good But What's Next?

Address to the Dunedin School of Medicine

Thank you for the invitation to speak. As the member for Dunedin North it is a pleasure to have a chance to talk about primary health care in the heart of this electorate, which has more health professionals, more health science students and more health educators than any other electorate in New Zealand, easily.

I'll start by giving you a brief indication of the ground I intend to cover today. I first need to answer the 'why' questions: why has the Labour-led government invested so heavily in Primary Health; why after 4 years of the Primary Health Care Strategy is implementation of the strategy still one of the government's top priorities, etc.

After a quick look at this year's rollout and a brief discussion about what the government's investment has achieved to date, I'll focus the remainder of my address to the 'what next' questions. I'm going to argue that the Labour-led government's reforms of primary health are still in their infancy – the health sector has achieved a lot, but the sector and their communities still have a way to go. Reduced fees are a remarkable victory for the health of families, but were actually the easy part of the rollout; the hard yards towards a full population health approach are still ahead of us.

I'll conclude by mapping out the work I intend to complete during this financial year.

In answering the question of 'why has Labour invested so heavily in primary health care', the best place to start is 1999.

Seven years ago, Labour inherited a primary health sector that was facing significant difficulties. The sustainability of General Practices was declining. Inequalities in our communities were widening, with government policy contributing to the deterioration. The full scale of the chronic disease burden was becoming clear, but the sector was without the tools to do much to get ahead of it. Hospitals weren't allowed to be called hospitals and Crown Health Enterprises were certainly not given responsibility for improving the health of their communities or responsibility for primary health. The list goes on and on.

For the newly elected Labour-led government, the situation was not just a question of addressing policy failures – we were confronted with a system that was an affront to our values.

We believe in a health system that delivers for all New Zealanders – but we inherited a health system from a National-led government that favoured Americanisation.

We believe strongly that no family should ever have to choose between putting food on the table and paying for a doctor's visit for their children – but before were elected there was no realistic plan in place to ensure affordable primary health care for all families into the future.

We know that for any primary health system to succeed, a government must be willing to back up the work of health professionals with investment in housing, education, superannuation and poverty reduction – yet the government that proceeded ours had slashed benefits and superannuation, left 1 in 3 kiwi kids in poverty, sold 13,000 state houses and systematically under-funded our schools.

Fundamentally we are a government that values fairness in health – fairness for patients, fairness for clinicians and fairness for communities. Yet we took over from a National-led government that wasn't delivering fairness for anyone – and it wasn't delivering for primary health at all.

I want to be clear here that this wasn't just about politics. When we were elected in 1999 and began to signal major reforms to New Zealand's primary health system, we benefited greatly from the support of the health sector, including clinicians right across the country. We all knew that big steps were needed and that we couldn't achieve that without working together. In fact all that was really needed was the government's endorsement of the work that many general practices, IPAs and health promoters had already started. All they were lacking was a government that supported their goals.

The result was the Primary Health Care Strategy and I won't rehash the highlights of that document here today, nor will I revisit all of the central moments in its implementation to date.

Instead, with a passing reminder that the $2.2 billion Labour has invested in primary health could not be duplicated by a government with reckless tax cuts on its mind, I'll turn to the very recent history of the 1 July low fees rollout.

Three weeks ago, the new financial year began and the latest phase of the Government's policy to reduce doctor's fees was rolled out, this time for 45-64 year olds. Fees for most people reduce by about $27, all practices are required to make fees publicly available and I had told GPs that if they didn't join up by July 1 they would miss out.

Nearly every practice in the country responded, and all passed the fee reduction through, so the end result is in this graph (#1) which I released last week.

This year's negotiation had been a little bit more testing than most because I had required the addition of a fees review process that would stop recalcitrant GPs from charging large fee increases in coming years thereby effectively pocketing the taxpayers' investment. I hasten to add that this is currently a small problem not a large one, but the risk of it becoming a growing problem had to be removed. We needed a way to identify those who wished to game the system and stop them. I was not prepared to invest another $100 million of taxpayers' money without such a guarantee.

Everyone seemed to agree with this aim but the detail of how to achieve it proved challenging. Some people saw the fees review process as a government intrusion on the freedom of small business to charge what they like, others saw it as utterly reasonable. Progressive organisations were happier and conservative ones were less happy as one might expect, but in the end everyone agreed which is where the graph comes from.

Next July, the process concludes with the rollout for the last group, the 25-44 year olds. The National Party will, at some stage, have to stop opposing this policy now that it is in place. They will have to get the money for their beloved tax cuts elsewhere.

I have another graph (#2) to show you, which is also about money. The Government is investing over half a billion dollars this year into primary health care and as you can see some of it did, after all, make it into the profit line of a GP practice owner. This is data from the Waikato University Business Survey and it shows net profit per owner rising significantly in recent years.

The figures may be inaccurate, because of the sampling technique, but the trend will be accurate. That is, there may be a bias in one direction or another, but if there is it is likely to be consistent one year to the next. GPs are worth more these days, whether they own a practice or are salaried. Five years ago a salaried GP might have been worth $85,000. These days it is half as much again.

This is a very large shift and one that is to be celebrated. If we the Government claim that primary health care is such an important part of the health system then it seems reasonable to value it more. We do.

At which point I would like to stop talking about money altogether and start talking about everything else. My speech is entitled "Low fees are good but what's next?"

Low fees are a public highlight of the primary health care strategy, but they are only a part of the substance. Most of the substance lies elsewhere and it is into that realm we should now venture. As we do, it is worth taking a look at how our primary health care system compares internationally.

From 1998 New Zealand has been part of five-nation international comparison surveys conducted by the US based Commonwealth Fund. In the last survey Germany was added to the list of the US, the UK, Canada, Australia and New Zealand (#3).

These surveys always show the New Zealand health system to be better than average and always very cost effective. But there are lessons to be learned too. While we often come first in this or that measurement, we sometimes come last in another. These studies tend to view the health system through the eyes of the patient, and in this last study the sample is biased towards sicker patients.

Thus New Zealand comes out tops when it comes to ease of access to a GP, the quality of communication, the stability of the GP relationship, ease of access to medical records, and so on. However we came last when it came to comprehensive testing of diabetics, which is one of the reasons we came last in the effectiveness category. The other one is that we sometimes don't fill our prescriptions, we skip medical tests or follow-ups, or don't see a doctor because of cost. Overall as you can see we came second to Germany, despite our per capita expenditure being lowest of all nations. The US spent the most and came last. So we have much to be proud of and I am surely entitled to sing the praises of those who work in primary care. That said the Commonwealth Fund Survey is a ringing endorsement of the aims of the primary health care strategy.

On the issue of cost, we don't score well (#4). Only the US scores worse than we do and they have about 45 million people who have no access to health insurance or public health. This slide, which predates the low fees rollout is pretty stark evidence. So is the next one (#5). New Zealand's socio-economic and ethnic gradients will be well known to you and they pervade health statistics, including this one. To add to the mix here (#6) are the voices of two very different mothers who do what mothers usually do: put their children ahead of themselves. That shouldn't be. Both mothers now have access to cheaper doctors fees and prescriptions, or soon will have.

The future of all western health systems lies in the better management of chronic disease, and good though our primary health system is overall, it doesn't score well enough on chronic disease management. Here, just to get you in the mood are some more slides about chronic disease. This one (#7) describes the essence of the problem. As we live longer, as we avoid deaths from infectious diseases or cancer or the road toll, so does chronic disease catch up with us.

Chronic disease has social gradients too, (#8) and they can be precipitously steep. These are data which, though now a decade old, are simply awful. Here is some better news however, which pays tribute to both the primary and secondary sectors. Maori and Pacific Coronary Artery Bypass Grafts (CABGs) standardised discharge rates have moved erratically upwards since 1999, such that they now exceed the national average in both cases. (#9) Catch-up is at last happening.

I can't leave the issue of chronic disease without mentioning weight, weight gain and obesity. A couple of minutes ago I put up a slide that said 30 per cent of our children are overweight or obese. I forgot to mention that 53 per cent of all adults are in those two categories.

What to do? How does New Zealand respond to the emerging chronic disease pandemic, much of which is attributable to being overweight? Our response includes the primary health care strategy which is, as I shall assert when I conclude this address, a very substantial change in the New Zealand health system. The strategy seeks to embed an affordable, population-based approach to primary health.

What is an affordable population-based approach to primary health?

Affordable refers of course to low fees. A population-based system is one which not only treats people when they arrive at the medical centre, but which looks to reach people on that medical centre's roll who don't turn up for treatment when they should be and which looks to keeping people enrolled healthy in the first place (#10). That is why the funding has changed. Visits are no longer subsidised. The medical centre receives funding (it is called capitation funding) whether they see a patient or not. This guaranteed income, unrelated to volume of consultations, allows a medical centre or a PHO to -think very differently about how they approach their population.

In addition there are other, smaller, funding streams to improve access or to undertake health promotion. Then there is funding attached to the quality of the service, as measured by the performance management programme, which is just getting underway and which is being warmly embraced by the sector.

But wait, there is more. The primary health care strategy envisages the greater use of teamwork and the greater use of health professionals other than GPs such as nurses, nurse practitioners, physiotherapists, podiatrists, pharmacists and so on.

Finally, because the future of our health system is predominantly about the management of chronic disease, the sector and the government have between themselves developed the idea of packages of care, in which patients with higher needs or special needs have a programme of activity and treatment devised for them which is funded separately and additionally, and which can be delivered by various players in the team. Examples of this include Care Plus (with over 60,000 patients enrolled), the Diabetes Get Checked programme and a number of primary mental health initiatives.

The last component I should mention is the idea of the patient as an expert, not just because of the internet, but because if one has a chronic disease then by definition it will be around long enough that self-management, under primary care supervision, is both desirable and somewhat inevitable.

So if that's the strategy, how are we getting on?

The answer is variably. Parts of the strategy, the formation of PHOs and the rollout of low fees have happened faster than planned, which is unusual in public policy (#11). This reflects well on those who devised the policy, including the Ministry, my predecessor Annette King, the Cabinet who found the money and the sector itself for the alacrity of its response as well as its contribution to policy development.

But other parts of the strategy are developing variably, and the progress ranges from stunning to barely discernable. PHOs range from embryonic to advanced.

Now that the PHO establishment phase is concluded and the low fees rollout phase is almost concluded, attention can now turn to building the rest of the strategy, and the next year or two are going to be exciting and challenging.

One of the features of this next phase is that policy development and implementation needs to move somewhat from the Minister and Ministry of Health to DHBs, PHOs, healthcare workers and communities (#12). That will challenge all of us. Me, because I have to learn to let go somewhat, and PHOs and others because they will have to build capacity. But that is the stage we are at. For example, the latest negotiations were between DHBs and PHOs, with myself and the Ministry somewhat disengaged. I stated what I wanted for my investment on behalf of taxpayers, and others worked out how to deliver it.

Because PHOs are at variable stages of development those who are currently behind the eight-ball will have to learn from those who are ahead, including learning how not to repeat mistakes. This difference in development is partly a result of government policy whereby some PHOs who service poorer populations received all of their capitation funding several years ago whereas the bulk of PHOs don't get all of theirs till next July. Other PHOs are ahead of the pack not because they received early funding but because they had in effect pioneered much of the thinking behind the strategy long before the government had cottoned on.

If PHOs are variable then so are DHBs. DHBs may be older than PHOs, but not by much. Inevitably their early thinking was dominated by secondary provision but in more recent years a population-based approach to their respective districts has emerged more and more, but variably. Relationships between DHBs and PHOs are therefore also variable, but are on average becoming stronger and richer.

An early task is to secure the financial sustainability of PHOs who service poor communities (#13). They are caught in a double bind. First their populations are unwilling or unlikely to pay, say, a $25 fee, so that they typically charge $10 or $15. Secondly, the value of a GP has risen and they are struggling to meet the market, given their lower revenue.

I am contemplating some form of investment in PHOs in return for to a fee threshold where the threshold is set a rate that most PHOs who might be interested would not exceed anyway. Such a policy change will certainly be made by 1 July next year, but I'm trying to achieve it well before then, if I can find the money. It would of course be voluntary, and the cap would have to be indexed somehow to preserve sustainability.

These PHOs are amongst the most valuable to the New Zealand health system because they operate in areas of high need and high disparity. The role of good primary health care in reducing disparity is well documented, so it is in my interests that they do not falter. The impact of the inverse care law, which states that those who need the most get the least, was alive and well in years gone by and these PHOs are helping to break it.

The performance management programme, developed in conjunction with clever people in the sector, will need to be extended as additional relevant parameters are developed, agreed and implemented. This system will become a rich source of information about what works in a population, and how chronic disease is best managed. It is an exciting development.

Then there is the workforce, which is a very busy space and somewhat confusing. Clearly the primary health care workforce is destined to grow, probably significantly, over the next few years. But two other things will happen too. Firstly, it will change, mainly by an increase in nursing and allied health professional staff. Secondly the interactions between medical centres and the myriad of other businesses and non-government organisations in the primary healthcare sector will become stronger and some will be linked contractually.

But workforce discussions seem to always begin with GPs, so let me start there too. Stories about a workforce crisis arise about four times a year, supported by some evidence. For example, as the workforce feminises, women choose a work-life balance, which has more life in it than an average bloke may choose. Similarly there are shortages of GPs in some areas, for example the West Coast. GPs don't like being on call at nights, understandably. Too few new graduates wish to become GPs, so it is--- asserted. And so on.

On the other side of the ledger, we have 50 per cent more GPs in New Zealand than we had 25 years ago. GPs now earn more money as we have seen, after hours arrangements are changing around the country, and perhaps surprisingly we have slightly more rural GPs on a population basis than non-rural.

On top of that, GP training, including rural GP training, is now an integral part of undergraduate study at this University, with Auckland following close behind. Otago medical students get to spend time on the East Coast, Balclutha or Hokitika, and the 2004 increase in intake was drawn disproportionately from people raised in the regions.

There is also a range of medical workforce policy work underway, which I shan't dwell on today but will deal with in some future speech.

As for nurses, I confidently anticipate their numbers in primary care to increase and for nurses to both enhance the quality of GP care and to do much of the work GPs currently do. This is the idea of a GP doing what he or she is uniquely trained to do.

This quote from a --Journal of the American Medical Association (JAMA) article (#14) illustrates an American view of this issue.

In the future we are more and more likely to see nurse-led services for the management of especially chronic disease. Nurse practitioners, of whom we currently have only a few, are likely to replace GPs to an extent as a point of first contact and GPs are more and more likely to specialise in complex health problems. These shifts will not be without their challenges, amongst which is a threat, or perceived threat, to the doctor-patient relationship.

The issue of linkages with other primary health providers is endlessly complex. In Wanganui the PHO is itself the employee of nurse specialists, social workers, pharmacists or GP liaison staff. Elsewhere PHOs contract for services to other providers, though not yet to any great extent. In Gisborne the PHO is half owned by GP practices and half owned by the local Maori provider. And on it goes.

Part of the cause of this complexity is that the strategy is permissive not prescriptive, part is that it makes financial sense to do different things in different regions, and part is that the small business model is under threat by the changing attitudes of young graduates, who are less inclined to want to commit to a particular community long term. This last factor is likely to see a future involving amalgamations, mutualisation or buyouts of practices, and an increase in the proportion of GPs who are salaried. Inevitably some small PHOs, who represent only one or two practices, will also amalgamate.

Some PHOs are now actively assessing how to manage this future and the various ownership models that might apply.

There are many other aspects of primary health care that I have not dwelt on but which deserve a mention.

Information technology matters. Just a couple of weeks ago I attended a demonstration of a new system that decides, electronically, whether or not to grant a special prescribing authority for a restricted drug to a patient. This used to involve a form being filled in and faxed, a decision being taken by a person in a bureaucracy, and the answer being returned by post. The patient would need to visit the doctor twice and the process might take a week or more. Now the patient visits the doctor once and the decision takes less than a minute.

Our primary health care system is a high user of IT but a lot more can be done. For example, if a practitioner could one day lodge a prescription electronically, not only would the vagaries of poor handwriting finally disappear, but the prescriber or dispenser would, using the National Health Index, be able to pick up any adverse interactions from the patient's total history automatically.

We are at a phase in our health system history where IT investment must rise substantially. The May budget announced, and funded, just that.

Other areas which need attention, but which I shall not dwell on today, are PHO governance, the devolution of services from DHBs to PHOs, laboratory referrals, the variability in prescription activity, managing patients remotely by email or phone, or the serious improvement that is needed at the primary/secondary interface. Instead I shall make some assertions, and draw some conclusions.

Several years ago New Zealand drew the curtain on a long period of structural reform of the health system. Just as a reminder we moved from Hospital Boards to Area Health Boards to CHEs to HHSs and now to DHBs. We also had RHAs, a THA, an HFA, then nothing. In all of that time, except for the brief Area Health Board era, we paid nowhere enough attention to primary health.

Primary health is a big deal. After twenty years of structural change, mainly of the secondary sector, we have come full circle and we have realised that structural change wasn’t the most important change, and that the secondary sector wasn't the only sector.

We now have a period of consolidation. The structural reformers have cleared off to other climes. Recent cartoon evidence (#15) suggests that they may have alighted on dear old Britain. Certainly the era of structural reform has ended here, thank goodness. In the ensuing period of calm, we have been able to progress things like the Primary Health Care Strategy.

The Primary Health Care Strategy is about the reform of delivery (#16). All of these photographs are to do with primary health care, and there is not a stethoscope in sight. You will notice that I have a very cute, and I hope effective, local example.

The Primary Health Care Strategy is the single most important change in New Zealand's primary health care system for many decades. It isn't approaching conclusion, it has just got underway. It is born of compelling international evidence and research, that shows time and time again that good primary healthcare improves population health, reduces inequalities and reduces health costs for what they would otherwise be (#17).

Over the next few years we will all see primary health care change and grow.

We will come to learn that as taxpayers we help fund primary health care, irrespective of whether folk actually visit the doctor.

We will start to see our medical centres or our PHOs become more involved in health promotion, more involved in contacting those who have no history or habit of using primary healthcare and more involved in working with other providers of services.

We will progressively take more responsibility for our own health, in response to health promotion awareness. For most of us that will simply mean that we eat well but moderately, that if we drink, we do that moderately, that we exercise moderately, and that we don't smoke.

We will become more open to regular checks, partly because they will come to us and they will be normal; partly because we will have a closer connection with our primary health provider, be it by internet or text reminders, by GP or Nurse or Physio or all of the above.

We will become more open to acting earlier on chronic diseases that commonly come our way, even before clinical symptoms are obvious. We will want to get ahead of whatever is challenging us rather than delay.

Many of these things are happening already. There is nothing new in health promotion, screening, or health checks. Even blokes health evenings seem to have started.

But the primary healthcare strategy will see this societal change quicken and it will see primary health providers intensify their interest in all of us who comprise that provider's population.

We should be pleased that we've made primary health care more affordable for New Zealand families, but we should not waste time congratulating ourselves for fulfilling what should have been a basic obligation of the government and the health sector. The real challenges and the real reforms are mostly still ahead of us. We need to bring that future closer, faster. Thank you for your time.


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