JANUARY

NEW ZEALAND
largely through efficiency gains and cuts in spending on staff, services, and equipment. As public hospitals are
essentially free of charge, there is no mechanism to shift costs to patients. There have been experiments with
shared-savings arrangements in the past, with contracted providers such as GP networks.
The National Health Committee prioritizes health technologies and provides advice as to which technologies
no longer offer value for money, increasingly using comparative-effectiveness research in evaluation.
The Pharmaceutical Management Agency uses mechanisms such as reference pricing and tendering to set
prices for publicly subsidized drugs dispensed through community pharmacies and hospitals (Gauld, 2014).
If patients prefer unsubsidized medicines (and if there are no clinical indications that these would be more
effective), they pay the full cost. Such strategies have helped to drive down pharmaceutical costs and to keep
drug expenditure per capita the fourth-lowest in the OECD in 2012 (OECD, 2014).
What major innovations and reforms have been introduced?
Reforms over the past two years have been mostly adjustments to existing arrangements, with one standout.
In mid-2013, a new national Primary Health Organisation contract was issued, with new minimum PHO standards
and a requirement that DHBs and PHOs enter into alliances. The rationale for the requirement was to link together
the parts of the health system—GPs and public hospitals in particular—that operate largely separately but with
common populations in a region. The impetus for forming these alliances is the government’s increasing concern
over chronic disease and care for complex patients, and its desire to better support patients and their providers
in primary care settings.
These alliances reflect an important shift in the governance model and structures for designing and delivering
health services in New Zealand. Each alliance must take a whole-system approach, bringing together clinical
leaders, managers, and community representatives from across the local health system to consider health services
from a patient perspective. An alliance’s focus is primarily integration, with the alliance setting service priorities,
generating consensus on how those priorities will be met, and then sharing financial and other resources to
facilitate implementation. Many alliances are creating further clinically led “service level alliances” targeting
different areas of care design; many also govern health pathway development, which is rapidly expanding across
New Zealand (Gauld, 2014b).
The author would like to acknowledge the New Zealand Ministry of Health for its comments and for
providing updated information for this profile.
130
The Commonwealth Fund