How do we implement a plan to preserve and sustain the primary care sector in New Zealand?

In the 17-plus years since the implementation of the Primary Health Care Strategy, positive progress has been made in reducing financial barriers to access to primary care. Cost, however, continues to be a barrier for many people.

Capitation funding is a large component of general practice income, as are out-of-pocket payments by the patients themselves. General practices are able to restrict the enrolment of patients, either through selecting patients for enrolment or by not enrolling any new patients at all. A general practice that is not enrolling any new patients is said to have ‘closed books’.

Closed books have been a NZ issue for some time. However, the problem has been worsened by the effects of the COVID-19 pandemic for two main reasons: the extra health burden of dealing with COVID-19 prevention, protection, and illness; and the border closures that restricted foreign doctors and nurses from entering the country. We are dependent on overseas health personnel, with around 46% of GPs having been trained overseas. The extra work placed on GPs has led to lower work satisfaction with some leaving or reducing the hours they work, worsening the problem.

Since the original capitation formula was implemented in 2003, several changes have been made, while retaining the original basic formula. This has resulted in an opaque, complex set of funding arrangements. Additional funding lines include free under six funding, free under 14 funding, Very Low-Cost Access (VLCA) practice funding and CSC supplementary funding. The Ministry of Health website lists 12 different components and options for general practice core capitation funding.

There has been much said and written about the need for the capitation formula to be redesigned. These calls have had a growing sense of urgency over recent years. The urgency has its roots in two main problems: first is the contention that primary care is not funded adequately to fulfil the functions that are expected of it; and second is the equity of funding. The first problem is to do with the size of the funding cake, and the second is more to do with how the cake is divided up between practices. 

The underlying approach to capitation as an averaged fee for service subsidy has resulted in only a moderate impact on new models of care. Assumptions about episodic service still underpin the funding approach for many general practices, and that the anticipated flexibility of capitation funding was not, generally, achieved.

According to the 2022 Sapere report, the core issue is that funding does not align with patient need. This means that services that have a higher than average proportion of people with high health needs are not funded adequately to deliver care to their patients. This is a serious deficiency in a core part of New Zealand’s health system, which needs to be addressed if the sector is to sustain and flourish.