The Government wants to adjust the funding GPs get to cater for high needs individuals. Photo / Andrey Popov
The Government is changing the way GPs are subsidised which is likely to mean that Māori, Pacific and elderly patients receive a greater level of subsidy than other patients.
Health Minister Andrew Little had to fight with Treasury to include the funding in the Budget. Treasury wanted it delayed until 2024, saying it had concerns about the deliverability of funding changes.
The Government has set aside $24 million a year for the subsidies, which will take effect next year. It is too early to say whether the subsidies will mean lower GP fees for those patients as some of the money reflects the fact those patients require visits that are longer and more frequent.
GPs receive "capitation" funding from the Government for the patients they see. Each patient enrolled with a GP receives a fee from the Government to subsidise the cost of their care regardless of whether they visit the GP or not.
The level of capitation is set based on demographic factors including age and gender, and whether the patient visits the GP often or not. There is already additional funding for outreach to "high-needs" groups including Māori and Pacific patients and patients in deprived areas.
The top-up comes as the Government looks at whether to make broader reforms to the whole capitation system and the way GPs are subsidised. The Government is reviewing the capitation system with recommendations due back next year and changes likely to come into force in two years.
Little told the Herald this first tranche of funding was aimed at "practices that have high-needs patients - so a lot of Māori and Pacific and elderly patients".
"Doctors will tell you that with high-needs patients, they can't deal with all their issues in a single consultation - they need longer," he said.
He said it could lead to extended consultations for high-needs patients or extra staff being taken on, or extending the hours of the practice to suit the needs of the patients it served.
The funding was described as an "equity adjustment to capitation" in the Budget, but Little said he wouldn't necessarily describe it as a capitation payment - "just additional funding to achieve these things".
"Capitation funding doesn't have any ethnic weighting to it, and we know just statistically Māori and Pacific populations have higher incidents of diabetes and elderly patients typically have a range of health conditions that GPs struggle to deal with in a 15-minute consultation so those factors will be relevant to how that additional money is allocated."
The minister said a possible outcome of this additional funding was adding an ethnic lens to capitation payment. "It's enough to make a difference - whether it would go as far as GPs would like is hard to know."
Little said it was "hard to be specific" about whether the funding would reduce GP fees.
"For patients who go to the GP frequently, anything that can be done to minimise the cost to them is a good thing. So one option might be to say, after so many visits you won't have the same co-payment as you would for fewer visits," Little said.
A group has been established, including GPs, to decide exactly how the money will be spent.
Tussle with Treasury
Little had to fight with Treasury to get the funding included in the Budget in the first place.
Budget documents said that while Treasury supported "additional funding into the primary and community-care sector", it did not support the bid at the Budget.
In fact, both Little and Finance Minister Grant Robertson pushed back on Treasury at the Budget after Treasury suggested scaling back the size of the health package by as much as $300 million.
Treasury analysts said there were "deliverability concerns" with the investment in GPs and suggested they be deferred until the 2024 Health Plan.
In 2021, ministers flagged with Robertson $64 billion in operating spending proposals.
By February this year, these were whittled down to $11.2b, which was still well above the Government's operating allowance of $6b.
Treasury suggested significant "scaling" of those proposals to prune back Budget bids to keep them within the allowance. Instead of lifting the operating allowance to accommodate those extra spending proposals, Treasury suggested high inflation and capacity constraints in the labour market required the Government to keep within that allowance.
Health was scaled back, although Budget papers do not reveal how much spending was cut from what Little sought.
One of the Government's goals with the health package in the 2022 Budget was to put Health NZ on a stable financial footing, wiping the persistent deficits run by district health boards (DHBs) in recent years.
Treasury suggested a scaled Budget package for health of $1.8b in cost-pressure spending and $500m of spending on new initiatives. It suggested Robertson could go even further, limiting increased funding for cost pressures to $1.6b and cutting new spending to $400m.
A Pivot to Primary Care
The Budget documents hint at one area of future reform for the health system: Primary care.
The Government's health reforms have been mainly focused on fixing problems at the level of hospitals and the DHBs that owned and ran them.
Treasury said this followed a recent trend in health investment that was directed at hospital spending, rather than at GP clinics. This has led to some criticism that the Government was funding - literally in some cases - the ambulance at the bottom of the cliff, rather than GPs who might stop people from getting so sick in the first place.
In another Treasury paper, suggesting funding changes for Little and Robertson, Treasury noted that "historically, funding growth has tended to favour hospitals rather than primary and community care".
Treasury said, "rebalancing the focus and resources across the health system towards early intervention and prevention will take time.
"Whilst some targeted investments in primary and community care will be important to test new approaches and show commitment to change, delivery constraints due to Covid-19 and the need for further work on future models of care limit investment possibilities in the first two years," the paper said.
Ministers were told that while Treasury agreed "addressing the primary-care capitation formula needs to be a high priority, developing and consulting upon a new formula will take time" and that it "needs to be considered in the context of future funding models for primary and community care more generally".
Therefore it recommended "targeted" funding in the interim.
Little said the Government was investing in primary care, including running nine locality prototypes to better integrate primary care with the rest of the health system.
"We know there need to be changes in primary care," Little said.
"I talk openly about if we are going to serve the needs of rural areas we are going to have to rethink how business models are run," he said.
Ultimately, he said, primary care could be improved to provide broader healthcare at the primary-care level, but also to stop people from needing to be "referred multiple times to ultimately get the care they need".
The president of the Royal New Zealand College of General Practitioners, Dr Sam Murton, told the Herald the capitation system was set up 20 years ago and did not reflect modern needs.
"It was based on data we had 20 years ago. Our population is changing, diseases are changing, health service delivery is changing, the treatments that we've got are changing," Murton said.
"We have data that suggests there are groups of patients that have more complexity, more burden of disease and a higher need in terms of the healthcare service that needs to be delivered to them and we don't have any mechanism in the capitation funding at the moment that meets those needs," Murton said.
"It should be focused on people who have the burden of disease - Māori, Pacific and elderly."
She said the health system was talking about "people who end up in hospital who don't need to end up in hospital after suffering heart disease and blood pressure". Some of these people could be treated more effectively and comfortably at local clinics rather than in hospitals.
Murton said this could mean taking "proactive interventions" like testing patients for other illnesses alongside whatever it is they are visiting the GP for.
Funding could also be used to deliver services locally that people might otherwise go to a hospital for.
"A lot of it would be spent with dealing with what diseases people already have and dealing with it properly because we've got the time - but also dealing with what they might get down the line," she said.
National agrees change is needed
While the National Party is vociferously opposed to health reforms, its health spokesman, Dr Shane Reti, supports changing the capitation formula.
He said $24m would be a "drop in the ocean" of what was needed.
Reti said the underlying problem with capitation was that "funding doesn't follow the work".
GPs would receive the same amount of funding for someone who hardly used the doctor as they did for someone who needed relatively intensive GP care.
Reti said he would also like to reform primary care funding if he became minister after the next election.
Reti said the Government needed to reform primary healthcare to make its own reforms work, because its reforms were based on treating more people out of hospital and then sending them back into the community earlier.
Act was less keen on the idea. Health spokeswoman Brooke van Velden said the party did "not believe in ethnic discrimination".
"Our education system is introducing a sophisticated equity index for assessing need based on multiple variables, why is our health system obsessed with blunt racial profiling?"
Van Velden said issues over funding were "secondary to the fact we are no longer a wealthy country and our economy struggles to support first world health outcomes".
'He has disregarded our voice and continued with this divisive kaupapa.'