Analysis: Labour wants to create an independent authority that will force governments to pay GPs more for primary health care. Derek Cheng asks doctors whether it will work - and if there’s any chance it will mean lower fees for patients.
Labour leader Chris Hipkins described it as a “reasonably small announcement”, but that depends on how you feel about the level of government funding for primary care.
GPs feel very strongly about it, as we all should, as we all benefit from a timely and quality service.
An issue dealt with by your GP is less likely to flare into something much more complex – and more expensive to treat – further down the health pipeline, most likely in a hospital or emergency department.
“That’s why it’s so worrying that being able to see a GP or nurse in the community is harder and more expensive, thanks to increased fees, closed books and long waits for appointments,” said Labour MP Dr Ayesha Verrall, in an article this week in NZ Doctor outlining her proposal.
She wants to create an independent body to calculate the true cost pressures of primary care, which Health NZ/Te Whatu Ora would then be obliged to meet.
This would depoliticise the process, properly fund the system, and trickle down to lower patient fees, though she’s not pushing for abolishing or fixing the latter.
The Coalition Government agrees that general practices have been underfunded. It is in the process of fixing this, it says, pointing to an additional $175 million in funding, a 13.89% increase.
But the system remains under pressure: a strong majority of clinics in poor financial positions, long wait times, a wide range of patient fees, and ongoing workforce shortages.
Underfunding has been so prolonged that it’s affecting the quality of care, not because GPs don’t know what they’re doing, but because you can only do so much when you’re too financially stretched.
Making up the shortfall with higher patient fees would help, but also make the service unaffordable for more people.
The latest annual health survey found that one in six adults didn’t visit a GP in the previous 12 months due to cost, while one in four said the time taken to get an appointment was a barrier.
Stakeholder groups are cautiously optimistic about what Verrall is proposing, but they also point to potential fishhooks.
A main source of funding for GPs is called a capitation rate, given annually to each clinic for every patient, with the amount depending on patient age and gender.
Children under 14 are eligible for free health checks, while those with a High Use Health Card or a Community Services Card get access to lower fees.
The shortfall is made up with co-payments (patient fees) for all other patients. Raising fees is guided by the annual statement of reasonable GP fee increases. GP representatives then negotiate with Health NZ over how much fees can be lifted.
This year, for example, GPs can increase fees by up to 3.18%, despite input costs growing by 6.43%, while government funding grew by 9.69%.
If they want to raise them by more than that, they can take a case to a review committee. This is a costly process, however, and while the committee might agree, it might also find the opposite.
Independent analysis commissioned by the General Practice Owners Association of Aotearoa NZ (GenPro) found government funding increases had fallen short of cost pressures 10 times in the past 20 years.
The capitation model is currently being reviewed so it can take rurality, multimorbidity and socioeconomic deprivation into account, with further reviews every five years.
The data underpinning the model is decades old and no longer fit for purpose, said Dr Angus Chambers, a GP and GenPro chairman.
The annual statement methodology is also flawed, he argues, resulting in the system becoming increasingly and systemically underfunded.
“We’re really squeezed,” Chambers told the Herald.
“In one sense, from a business sustainability point of view, we have to put fees up. But we don’t want to because we want to keep good access for patients.
“Putting fees up means people delay care, they end up in emergency departments sicker than they should be, or, if they don’t get the diagnosis early enough, it costs the system more in the long run.
“It’s a vicious cycle.”
Dr Bryan Betty, chair of General Practice NZ, said cost pressures are only going to increase as the population ages.
“From a medical perspective, that is one of the biggest issues we’re facing: increasing comorbidity, increasing medical issues. You actually need primary care to be really responding to that, because these issues cannot be fixed by hospitals,” he said.
“A functional, robust, comprehensive primary general practice sector reduces potential costs down the track. Every bit of international research shows that a $1 invested in primary care returns approximately $8 to $14.”
A NZ Initiative report earlier this year found, in Northland alone, preventable hospital visits cost over $2.7 million a year. More than 5000 emergency visits could have been avoided with early local doctor care.
In outlining her proposal, Verrall referenced the 2022 Sapere report in GP funding, which estimated a $137 million net income deficit. This “implies that general practice makes a 7.6% loss each year”.
She said that “general practice is underfunded by design.”
“Reweighting of capitation, or a single year of ‘catch up’ funding, won’t solve the underlying problem.”
She wants to create an Independent Pricing Authority to set the level of government funding. It would look at data about costs, staffing, patient needs, and service delivery, as well as sector-wide cost studies. Servicing high needs populations would be a key feature.
A similar process takes place in Australia, but for funding for aged care and hospital care, not general practice.
Health New Zealand/Te Whatu Ora (and the Government of the day, by extension) would be bound to allocate the level of funding the authority landed on.
Betty said it sounded like an idea with “validity” that “could be positive”, while Chambers said he was ”cautiously supportive“.
Chambers added the authority would only be as useful as the people on it.
“If it was stacked with political appointees, we would not see it as a good system. It needs significant financial and commercial knowledge, and good inputs from the sector. Otherwise it’ll be a complete waste of time.
“But we recognise the intent of it, which we’d agree with.”
Verrall clarified to the Herald that her proposal wouldn’t mean fixing or abolishing co-payments. “The authority wouldn’t change how fees are set or reviewed. Practices could still ask to have their fees looked at,” she said in a statement.
“The goal is to make GP funding fairer and more transparent, so practices aren’t having to absorb costs themselves or pass them on to the patient.”
This puts a lot of faith in the authority. If it has similar shortcomings as the current system, underfunding and systemic issues would persist.
If it provided a more reliable funding figure, it would only be a game-changer if Health NZ would meet that figure, which the finance minister of the day would want to have a say over.
“Some people will say, perhaps, you couldn’t possibly commit to this kind of binding [funding] because the finance minister will be upset,” Chambers said.
“Labour’s got a track record of doing this too - significant underfunding, and when they were in a position to do something about it, they didn’t.”
Even if the authority did a fabulous job – noting the impossibility of pleasing everyone – and the necessary funding was forthcoming, there’d be no requirement for the level of patient fees to be lowered.
“There are a number of details that would have to be worked through, obviously,” said Betty.
“Whatever happens, it has to be affordable for people, it has to be accessible so people can get to their GP when they need to, and it has to be good quality.”
Chambers said there would likely be issues if the co-payments were fixed, while dropping them altogether would require too massive a hit to the Government coffers.
“We’ve very cautious about fixed fees. They usually fund it reasonably well to get people on board, and then, slowly but surely, it withers on the vine. We have no trust in our system partners, and this includes ACC, to maintain the value.”
Free visits tended to lead to people undervaluing the service, he added.
For example, he said patients seemed to become more careful with their medicines, and less likely to lose them, after prescription charges were introduced.
“There will be a range of views, but I think there is a public benefit in some charge.”
Health Minister Simeon Brown agreed that primary care has been underfunded “for too long”, noting the funding boosts for GPs from the Government, as well as expanding 24/7 online doctors and urgent care services.
Changes underway to the capitation funding model would ensure support for communities with higher health needs, he said.
“Record investment is also going into strengthening and growing the primary care workforce, including 100 clinical placements for overseas-trained doctors, and up to 120 training places for nurse practitioners in GP clinics each year.
“These actions directly respond to what the sector has been telling successive governments for years – that the funding model must be more sustainable, more responsive, and better aligned with outcomes that matter for patients."
The system needed to ensure all New Zealanders had access to timely and quality care when they needed it, he said.
“We will continue working with the sector to ensure it is funded to deliver this.”
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Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery team and is a former deputy political editor.