Health sector productivity in New Zealand - how do we address challenges and limitations?

New Zealand’s healthcare system, like many others around the world, faces a persistent productivity challenge. This challenge is not just about increasing the quantity of healthcare services delivered but ensuring that these services meet the needs of a diverse, growing population in a cost-efficient, sustainable manner. Productivity in the health sector is often viewed through the lens of output (health services delivered) relative to input (resources used, such as workforce, technology, and capital).

However, this traditional approach overlooks nuances like the quality of care and patient outcomes, which are vital to a meaningful understanding of productivity in the healthcare context. New Zealand lacks a formal, standardised measure of health system productivity adjusted for quality, which hampers efforts to fully grasp the efficiency of its healthcare services.

One major barrier to productivity improvement in NZ’s health sector is outdated infrastructure. This creates significant inefficiencies in administrative tasks, limiting the ability of healthcare professionals to provide effective and timely care. Without modern, well-maintained systems, staff are often forced into time-consuming workarounds, diverting their attention from patient care. While increasing workforce numbers is often viewed as a solution to healthcare delivery problems, NZ has not seen proportional increases in productivity relative to the growth in staff numbers. While activity rates have been increasing, this has not translated into proportional productivity gains, as the system is simultaneously dealing with more expensive treatments and an older patient demographic.

While simply increasing staff numbers is not the answer, there is a need for a more strategic approach to workforce management. This includes improving staff retention through better morale and support systems, addressing the training pipeline to ensure a continuous flow of skilled workers, and integrating digital tools to streamline the workload. Furthermore, innovative approaches like task-shifting, where non-medical staff are trained to take on certain roles, could help alleviate the pressure on highly skilled professionals.