Is it finally time to reduce the number of district health boards? NZIER Insight 69

New Zealand Institute of Economic Research (Inc)
Media release
Embargoed until 10am, Thursday 11 May 2017

“Compared to similar populations, New Zealand has too many DHBs”, says NZIER Principal Economist Todd Krieble.

“We can free up administrative resources and put more into healthcare services as ageing and public expectations intensify. The big problem is a lack of transparency in administrative costs.  If the costs are revealed, we can determine whether more could be put into services, especially for underserved and high need populations, including Māori and Pasifika.”

Size matters: there are returns to scale and quality

The literature shows that practice makes perfect and quality would likely improve by DHBs ‘scaling-up’. On a per-capita basis, New Zealand is well endowed with DHBs.

“British Columbia has just six DHB equivalents for a population of 4.7 million. New South Wales has 15 DHB equivalents for a population of 7.6 million. But we have 20 DHBs served by 220 board members for 4.7 million people,” says Krieble.

Large DHBs are already taking patients from small DHBs

Consolidation is already happening in practice. “37% of the revenue from patients treated at Auckland DHB locations come from other DHBs. At Wellington’s Capital and Coast DHB it’s nearly 20% from other DHBs”, Krieble noted.

“On top of that, there are four regional service agencies overlaying the 20 DHBs – a further sign that coordination across smaller DHBs is already happening,” Krieble says.

The future is integrated not fragmented

Of course, local services remain important. But future service infrastructure will be based on more complex information technology systems, such as ‘in-home monitoring’.

Krieble says it makes little sense to duplicate such systems across 20 DHBs: “New Zealand needs a single health information technology system. And we know that future health care for diseases like diabetes will require more specialist team-work because patients will have multiple diseases and complications. These patients will benefit from DHBs that are bigger and have better coordinated access to specialists”.

What next? Opening up DHB books would be a good start

Krieble says, “DHBs should report administration costs more transparently so we have a true picture of how much funding is being diverted from looking after patients. That is the best way to retain trust and confidence in, and get the most service possible from, our publicly funded health system.”

For further information please contact:
Todd Krieble
Principal Economist
027 742 6415 or todd.krieble@nzier.org.nz