$11.1 billion to restructure Aotearoa’s healthcare system

An ageing population and continued health inequities provided the backdrop for the sweeping changes to the health system that the Government announced last year – namely that it was getting rid of the old regional District Health Board system in favour of one single health body. Health New Zealand is set to take over all of the functions of the 20 DHBs – with the hope that this will remove duplication, enable national planning, overcome the inequitable distribution of health services via the postcode lottery and generally create efficiencies.  

A new Māori Health Authority was also announced to work alongside Health New Zealand to achieve more equitable health outcomes for Māori, who currently face much worse health outcomes than their Pākehā counterparts.  

But detail has been light, and most health organisations are still unclear of how this will affect them. This year’s Budget is supposed to be setting up the new health system for success. But how will it affect organisations operating in the space?  

Budget overview – policy highlights

As expected, the Government has announced a significant sum ($11.1 billion) to help set up the new health system on a sustainable footing – but detail is still light and many healthcare providers will still be left wondering how this will affect them. New digital infrastructure expenditure announced today should help the healthcare system become more efficient and be more flexible to the demands of every day New Zealanders. Meanwhile, increased investment into primary and community care will hopefully lessen the pressure in other parts of the health system.  

Confirmed new policy areas

$11.1 billion to restructure and strengthening the health system, including: 

• $220 million total operating and $100 million capital set aside for investments in the data and digital infrastructure and capabilities that are essential for health system performance and health system reform 

• $488 million investment in primary and community care to refocus and strengthen the role of primary and community care, which includes rolling out local models of care that are tailored to the populations they serve, and securing and developing the capacity and capability of Māori and Pacific healthcare providers to deliver quality services to their communities 

• $1.3 billion of capital funding for upgrading our health infrastructure to support current and future demand, including priority capital projects such as Whangārei Hospital and starting the redevelopment of Nelson Hospital 

• $168 million for Hauora Māori Commissioning of health services, to ensure that primary and community care is responsive to the needs of Māori communities, and support a Māori-led approach to population health and prevention 

• $191 million to support a two-year funding boost for the Combined Pharmaceutical Budget managed by PHARMAC to ensure that more medicines are available to more New Zealanders.  

Other health expenditure 

• $202 million to invest in mental wellbeing through funding for specialist mental health and addiction services, continuing and expanding support for primary and intermediate school-aged children, and continuing an important pilot developing better tailored support for our young people  

• $943 million to transform the disability system, including establishing a new Ministry for Disabled People, and investing in the regional-based rollout of the Enabling Good Lives approach 

• $126 million to improve access to dental treatment for people on income support and low-income families and whānau by increasing the support available to $1,000 annually per person. 

Business impacts and considerations

Gina Cook, BDO Health Sector Lead Partner, says: 

“The investment into further digitising the healthcare system is welcome and should help to improve efficiencies, as well as encouraging more collaboration between healthcare providers.  

It was great to see money rolled out to some pharmacies at the end of March to help them invest in telehealth. COVID-19 has shown the advantages of telehealth for both healthcare providers and patients, and it would be great to enable both pharmacists and GPs to take full advantage of this. 

Pharmacists are under-utilised in our current healthcare system. These are highly-skilled trained professionals, and they can provide more services that people currently go to GP’s for – particularly preventative care and management of long term conditions, which could have a significant impact on the overall health of New Zealanders given that our GPs are so busy. To enable this, however, the current funding model needs to adapt and incentivise pharmacists to be able to provide these services”. 

Rachel Shoebridge, BDO Health Sector Partner, says: 

“The idea is that Health NZ will lead to more efficiency – but how? Perhaps unsurprisingly Budget 2022 has still not given us the detail necessary to understand what this looks like but we would expect this detail to come out over the coming 12 months as they transition and work with the new localities. 

That said, it’s great to see the $488 million investment in primary and community care – while we are yet to see too much detail on this, hopefully an expansion of their roles will help to lessen some of the pressures on our healthcare system. Despite this, without changing immigration settings for nursing and doctors we expect this pressure to remain high. As a Government that is focussed on wellbeing, we would have liked to have seen more on caring for the wellbeing of New Zealand’s health workers. 

The $191 million funding for more medicines is also welcome – we cannot hope to provide better health outcomes for New Zealanders without having access to the very best medicine available.” 

Quick tips & questions 

• Have you explored the telehealth options available to you? 

• If you have explored telehealth, have you ensured your customers know it’s available and understand how to use it? 

More information & help available

You can read more detail on the health expenditure announced today at the Government Budget website here.  

New Zealand’s health industry is changing. Financial results and clinical outcomes are intertwined as never before as the industry adapts to new business models, market disrupters, and cost pressures. BDO’s specialist health business advisory team has the knowledge, expertise and resources to help navigate this complex and integrated new world. We work across the public and private sectors to advise healthcare, pharmacies and senior living organisations on strategy, performance, compliance, risk and governance. Get in touch to find out how today’s Budget announcements will affect your healthcare business.