Lessons for Australian primary care reform from New Zealand, that great change laboratory

The Australian federal government is seeking to boost the role and organisation of primary care as part of a suite of health system reforms.1,2 Yet much of the all-important detail on what the primary care sector will look like, the shape new Medicare Locals (primary health care organisations that have the aims of supporting health professionals, improving primary care service delivery at a local level and improving access to after-hours primary care)3 will take, and how these new organisations will function remains to be worked through. New Zealand has a wealth of experience in primary care reform over the past two decades that Australian policymakers could usefully consider for lessons.

There have been two main reform eras in New Zealand (Box), with different lessons. The first, through the 1990s, saw general practitioners grouping into Independent Practitioner Associations (IPAs). Stimulated by the introduction of contracting for health services in New Zealand’s public health system, IPAs were organised and driven by doctors. Key to IPA development were a number of visionary GP leaders who saw benefits to organisation, as well as government funders willing to provide support. By the end of the 1990s over 80% of GPs belonged to an IPA and numerous innovations had emerged, including budget holding for referred services, capitation for some groups, delivery of services by allied practitioners, and commencement of research initiatives into comparative effectiveness.4 IPAs facilitated one of the highest rates of primary care computerisation among Organisation for Economic Co-operation and Development countries in the period, and developed a working model of “clinical governance”.5 Some IPAs had produced plans to purchase and integrate all health services for their patients. GPs showed that, with leadership and will, “organised primary care” focused on improved service delivery and professional development, with strong buy-in and commitment from the GP community, was possible.

The second era, in the 2000s, saw the introduction of Primary Health Organisations (PHOs) by a government opposed to the medically dominated private delivery model of the IPAs. PHOs were instead modelled on World Health Organization Alma-Ata principles of free or low-cost comprehensive primary care, delivered by multidisciplinary teams with community governance. Hastened by an additional 6%–7% in the total health budget, with the new money specifically designated for primary care, around 80 PHOs of varying sizes developed from 2002 to 2008. A PHO required an enrolled population, GPs were all moved to capitation for the government portion of their incomes (around 50%), including additional funding to reduce patient charges, and special funding was provided for “Services to Improve Access”, “Care Plus” programs for people with chronic disease, and health promotion. Perhaps expectedly, there was resistance to PHOs within the IPA movement, as the government failed to consult with GPs in the policy development process. The government thought IPAs would be subsumed under PHOs. They weren’t, and several IPAs strengthened, with PHOs requiring their management services. Furthermore, PHO implementation was poorly managed, with many GPs failing to see the relevance of a new admininstrative layer that appeared only to be a vehicle to receive funding.

The result has been a complex and confusing primary care landscape of multiple organisational layers and silos, and a failure to achieve many government goals.6 It is difficult to say how well PHOs have performed. Almost all New Zealanders are now enrolled with one, the range and scope of primary care services has broadened, many nurse-led programs have emerged, and there is a stronger focus on population-based programs in primary care settings. Patient charges have come down, although financial barriers remain for a quarter of the population with a disproportionate impact on lower socioeconomic groups and Maori.7 Very importantly, PHOs largely failed to coordinate with one another or integrate with hospital services. They have not provided a coherent structural format for comprehensive primary care.8 While some PHOs have been well run and proactive, many would not be noticed by patients or GPs. For many GPs, the IPA — which provides considerable “back-office” support — remains the most important organisational player.

What was extraordinary about the PHO era was government failure to engage with the IPAs to build on already strong foundations. Instead, a lost opportunity may be an apt description of the period. By the late 2000s, a series of questions about the shape and expectations of the primary care sector remained unanswered, with the government failing to provide clear policy.8,9

The present National Party-led coalition government (elected in 2008), while committing to PHOs, has downplayed their role. Mergers in several regions have been ordered for 40 or so PHOs. Meanwhile, the government is promoting new Integrated Family Health Centres, larger groups intended to straddle the traditional divide between community and hospital care, offer round-the-clock access to a range of primary care services, diagnostics and some specialist services. Nine pilot centres are currently being developed with IPAs and PHOs variously involved. Gazing into the crystal ball, one could see integrated centres providing the infrastructure for much of the purchasing work that is presently the role of New Zealand’s 20 District Health Boards, diminishing the need for these. New Zealand could follow the path of current GP commissioning policy in the United Kingdom National Health Service.10

Back to Australia. What is to be learned from New Zealand? First, ask whether the Medicare Locals represent a new layer of potentially ineffectual bureaucracy, as many of New Zealand’s PHOs have proved to be. Second, engage health professionals, especially GPs, unless you want the mediocrity and complexity of our PHO era. Identify GP leaders, involve them in refining policy and provide the necessary support for them to champion new directions. Third, ask how the new structures facilitate service integration, as separate funding sources for primary and hospital care could create barriers.9 Finally, consider how new policy directions might be pursued within existing structures. Ideas for new structures often appear promising, but, as with New Zealand’s PHOs, they routinely falter in implementation without careful attention to the institutions that matter to key players.11