By GEOFF CUMMING
The Government is pressing on with sweeping changes to the health system in the face of Treasury warnings of cost blowouts and GPs being squeezed out.
Labour's health policy dismantles much of the structure - and the remains of the competitive model - imposed by National during the last decade.
The Government plans to reintroduce elected boards. And it will end the split between those providing the funds and those providing the medical services.
It will also bring GP and other community-based services under the control of the new district health boards.
The work of the Health Funding Authority, which contracts with hospitals and other service providers, will be picked up by the boards and the Ministry of Health.
The extent of the overhaul has alarmed doctors and hospital managers who believed the Government would do little more than honour an election pledge to reintroduce democracy to hospital boards.
They fear that progress made following National's reforms, particularly in community-based care, could be lost.
Their concerns are reflected in a damning, confidential Treasury analysis that urges a slowdown in the 20-month reform timetable.
The report warns of the loss of day-to-day control of hospital spending, funding pressures as locally elected representatives face demands from their constituents and "confused accountabilities" arising from the dual roles of the new boards (DHBs).
"There is a major risk that elected DHBs will mainly identify with their local community interests and will therefore give primacy to lobbying central Government for additional resources," says the Treasury.
"Having more boards with smaller populations increases the likelihood that they will have difficulties remaining within budget ... . In turn, these risk loss of financial control over the system as a whole."
The Treasury fears the boards will be dominated by the interests of the hospitals they own, conflicting with the Government's goal of boosting community-based services to reduce hospital admissions.
"...The Minister of Health's proposals risk locking the health system into a model which is not justified by her aims and which may perform far less well than expected."
The report also argues against a loss of financial oversight by Finance Minister Michael Cullen, with Health Minister Annette King solely responsible for public hospitals.
But Mrs King said the Treasury analysis, written in January, was a knee-jerk reaction and already out of date. The policy had since been unanimously endorsed by the cabinet.
She said boards would have appointed as well as elected members.
Measures would be in place to ensure they followed national guidelines and avoided local "capture."
The Treasury suggests that publicly elected boards be restricted to assessing local needs and setting priorities, and prevented from owning or managing hospitals.
It also wants planning and funding to remain separate from the provision of services.
Mrs King said: "We won't be setting them up to fail by saying, 'Take the money and do anything you like'."
A new national health strategy would ensure boards focused on the causes of poor health and spent more on preventive care in the community.
"We have a view that local communities can be involved in decision-making."
Her predecessor, Wyatt Creech, said the changes would destabilise the health sector.
"I don't think health is well-served if every change in Government brings a major change in the health system.
"The structure we had was evolving into one which the sector agreed was working pretty well."
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